A Newbie’s Guide to Blockchain Terminology
When I began learning about blockchain, there were concepts I understood from previous knowledge, but most I hadn’t heard of. It was, and still is, mind blowing how quickly new catchphrases are introduced and adopted. To say I felt outside my comfort zone is an understatement, so learning the basics is vital to understanding newer concepts as they are introduced.
This list contains definitions that are most useful to me. These initial terms are those you will see most often, and will give you a good starting place to learn and carry on conversations.
Make sure to check out the Sources linked below the definitions to find more terms.
Altcoin: any digital currency alternative to Bitcoin. Many altcoins are forks of Bitcoin with minor changes (e.g. Litecoin). [1]
bitcoin (lowercase): The specific collection of technologies used by Bitcoin’s ledger. Note that the currency is itself one of these technologies, as it provides the miners with the incentive to mine. [1]
Bitcoin (BTC): The most well known cryptocurrency. Bitcoin was created in 2009 by Satoshi Nakomoto. [1]
Blockchain: a digital record of transactions (cryptocurrency and other) in which individual records (blocks) are linked together in single lists (chains). [2]
Coin: a representation of digital asset value that is generated via their own independent blockchain. [1]
Cryptocurrency (or crypto-token): a digital asset defined by a blockchain protocol and exchanged via that blockchain system. [3]
Cryptography (Cryptographic): refers to the process of encrypting and decrypting information. [4]
Decentralization: The transfer of authority and responsibility from a centralized organization, government, or party to a distributed network. [1]
Decryption: the process of turning a data stream (cipher-text) back into a clear-text message (plaintext). [4]
DApp (Decentralized Application): An open source, trustless software application with the backend code running on a decentralized peer-to-peer network rather than a centralized server. [1]
Distributed Ledger: a type of database that are spread across multiple sites, countries or institutions. Records are stored one after the other in a continuous ledger. [1]
Encryption: the process of turning a clear-text message (plaintext) into a data stream (cipher-text), which looks like a meaningless and random sequence of bits.[4]
Ether (ETH): the native currency of the Ethereum Blockchain network. Ether functions as a fuel of the Ethereum ecosystem. Ether acts as a medium of incentive or form of payment for the network participants to execute their requested operations on the network. [1]
Ethereum: an open software platform where developers build and run decentralized apps that contribute to the value of ETH cryptocurrency ecosystem. Ethereum is a public blockchain network. [1]
Exchange: a place to buy and sell cryptocurrency. The exchange charges fees in many cases for transactions, withdrawals, or deposits. Exchanges are a way to link your fiat funds to a location where you can purchase cryptocurrency. [1]
Fiat Currency: any money declared by a government to be to be valid for meeting a financial obligation, like USD or EUR. [4]
Fork: a change to the way a blockchain’s software rules define valid transactions, or blocks. [3]
Gas: a way to measure computational steps necessary for a transaction on the Ethereum network that then equates to a fee for network users. More intensive actions require more gas. [1]
Genesis Block: the very first block in a block chain. [1]
ICO (Initial Coin Offering): a blockchain-based fund-raising mechanism in which entrepreneurs mint new crypto tokens and sell them to investors. [3]
ITO (Initial Token Offering): similar to ICOs (initial coin offerings), but different in that not every blockchain project that is tokenized has developed a new coin. A project built on the Ethereum network that is tokenized using ETH would be considered an ITO, the project isn’t launching a new coin, just a new application on an established coin platform. [1]
Ledger: an append-only record store, where records are immutable and may hold more general information than financial records. [1]
Liquidity: availability of assets as determined by the ability for that asset to be converted into cash without dramatically affecting market prices. [1]
Mining: process by which transactions are verified and added to a blockchain. [1]
Node: any computer that connects to the blockchain network. [4]
Satoshi Nakamoto: an individual or entity who created Bitcoin. Nakamoto first published his paper describing the project in 2008 and the first bitcoin software was released one year later. [1]
Smart contracts: a computer program stored in a blockchain that automatically moves cryptocurrency between accounts if conditions encoded in the program are met. It serves as a way to create a mathematically guaranteed promise between two parties. [3]
Solidity: the programming language developers use to write smart contracts on the Ethereum network. [1]
Stablecoin: any cryptocurrency pegged to a stable asset, like fiat or gold. It theoretically remains stable in price as it is measured against a known amount of an assets not subject to change. [1]
Token: represents an asset built on an existing blockchain (different from a coin). [1]
Wallet: a designated storage location for cryptocurrency that has an address used for sending and receiving funds to and from the wallet. The wallet can be online, offline, or on a physical device. [1]
Whitepaper: an authoritative report or proposal that is used as an integral marketing tool to attract investors, educate the public about the project, and present to venture capital firms. Almost every ICO or ITO has a whitepaper on their website that is essentially an informative sales pitch. [1]
