50 Cryptocurrency Terminologies Everyone Need to Know

With so much information published already on blockchain and cryptocurrency, we thought why not to gather the important information and concepts scattered over thousands of articles to save everyone’s time and resource.

So here we present the comprehensive blockchain glossary:

1. 51% attack: A condition when more than half of the total CPU power of a cryptocurrency network is controlled by a single entity or group, able to issue conflicting transactions harming the entire network
2. Altcoin: Cryptocurrencies other than bitcoin like ethereum, ripple, litecoin etc. There are currently thousands of cryptocurrencies available with their own set of protocols and features.
3. ASIC: ASIC stands for “Application Specific Integrated Circuit”. They are silicon chips specifically designed to do a single task like processing SHA-256 hashing problems in case of bitcoin mining.
4. Bitcoin: First decentralized, open source cryptocurrency that runs on a blockchain network powering peer-to-peer exchange without needing any central authority.
5. Bitcoin Cash: It is a hard fork of bitcoin blockchain ledger. It aimed at increasing the block size to 8 MB, thereby allowing more no. of transactions to be processed in a single block resulting in faster payment settlements.
6. Block: Packages of data that carry non-immutable data on the blockchain network.
7. Blockchain: Open and distributed database of records called ‘blocks’ linked and secured by sophisticated hashing algorithms.
8. Block confirmations: To confirm the validation of transaction, a minimum number of blocks are needed to be added to the initial block. On a bitcoin network, minimum 6 block confirmations are needed to confirm the validity of transactions.
9. Block explorer: As the name suggests, it is an online tool to view all transactions, past and current, on the blockchain network.
10. Block height: It refers to the number of blocks connected together in the blockchain. For example, Height 0, would be the very first block, which is also called the Genesis Block.
11. Block rewards: Rewards given to a ‘miner’ upon successfully publishing a block on the blockchain network. Usually, block rewards are given as a mixture of coins or transaction fees depending on the type of cryptocurrency or if all the coins have already been mined.
12. Consensus: Consensus is achieved when all participants of the network agree on the validity of the transactions, ensuring that everyone has the same exact copy of ledger.
13. Coinbase transaction: A transaction that rewards a miner with the block reward for their work. It is the first transaction of the next block to be added after the recently mined block.
14. Cryptocurrency: A digital asset designed to work as a medium of exchange without the need for any centralised authority.
15. DAO: Decentralised Autonomous Organisations (DAO) are autonomous corporations driven by agreed and incorruptible set of business rules removing the need for any central authority.
16. DAPP: Decentralized application is an open source application which operates autonomously with its data stored on blockchain and requires users to spend digital tokens in order to use the service.
17. Digital Signature: A digital code generated by inputting the combination of transaction content and the sender’s private key in a hash function. This is used to verify the ownership of the transaction balance in a blockchain network.
18. Distributed Ledger: Distributed ledgers are ledgers in which data is stored across a network of decentralised nodes.
19. Difficulty: Difficulty, in context of “Proof of Work”, is how hard it is to verify blocks in a blockchain network. In the Bitcoin network, the difficulty of mining adjusts verifying blocks every 2016 blocks. This is to keep block verification time at ten minutes.
20. Double spend: Ability to spend a digital asset balance more than once.
21. ECDSA: Elliptic Curve Digital Signature Algorithm (ECDSA) uses Elliptic Curve Cryptography (ECC) to digitally sign a transaction in order to ensure that the asset can only be spent by their rightful owners.
22. Ethereum: A blockchain-based decentralized platform to run smart contract based apps, aimed at solving issues associated with censorship, fraud and third party interference.
23. ERC-20: Ethereum Token Standard defining the set of rules required to built a new digital token within the ethereum ecosystem.
24. EVM: The Ethereum Virtual Machine (EVM) is a Turing complete virtual machine that allows anyone to execute arbitrary EVM Byte Code. Every Ethereum node runs on the EVM to maintain consensus across the blockchain.
25. Fiat currency: A legal tender declared by a government to be valid for meeting a financial obligation, like INR or USD.
26. Full node: A node that fully enforces all of the rules of the blockchain.
27. Gas: It is a measurement unit of amount of work required for the transaction or contract executed on the ethereum platform. Operations requiring more computational resources would require more gas compared to the ones having lower computation requirement. It is paid in terms of ether, digital token of the ethereum platform.
28. Hard Fork: A process of splitting any currency’s Blockchain that renders previously invalid transactions valid, and vice versa. It may be done for several reasons, such as fixing serious security loopholes in a cryptocurrency’s source code, implementing new features and reverting transactions (as was the case for Ethereum’s hard fork after The DAO was hacked). It requires a consensus of the majority of the nodes within the network of a cryptocurrency, after which they all upgrade to the newer version of blockchain.
29. ICO: Initial coin offering (ICO) is an unregulated and controversial means of crowdfunding via use of cryptocurrency, which can be a source of capital for startup companies.
30. Litecoin: It is simply an improved version of bitcoin in terms of faster block generation and faster transaction verifications. Litecoin uses “scrpyt” as “proof of work” algorithm instead of “SHA-256” used in bitcoin.
31. Ledger: An append-only record store, where records are immutable and may hold more general information than financial records.
32. Merkle Tree: Named after Ralph Merkle, it is basically a tree data structure in which every non-leaf (parent) node is labelled with a cryptographic hash of the label of its leaf (child) nodes. It helps maintaining data integrity as change in any node content will affect its linking with other downstream nodes and currently widely used in P2P transaction systems.
33. Mining: A process to validate the blockchain transactions based on various consensus building algorithms. ‘Proof of work’ (POW), ‘Proof of stake’ (POS) are some of such popular algorithms.
34. Multi-signature: It provides an added layer of security by requiring more than one key to authorise a transaction.
35. Node: Any computing machine that connects to the blockchain network.
36. P2P: Peer-to-peer (P2P) refers to the decentralized interactions that happen directly between at least two parties without needing any 3rd party mediator.
37. Private key: A secret randomly generated number known only to the person who generated it
38. Proof of work: A popular consensus building algorithm which requires the transaction validators (‘miners’) to spend some CPU power in order to create a new record on the blockchain.
39. Proof of stake: A consensus distribution algorithm that rewards transaction validators as per their stake in the currency. Validators are given only transaction fees and are called “forgers” instead of “miners” as no new coin is created for the block formation.
40. Public key: A number related to private key used to verify the authenticity of the digital signature without needing to know the private key
41. Ripple: A popular cryptocurrency which allow payments transfer in any currency by connecting banks, payment providers, digital asset exchanges and corporates via RippleNet. Currently, transactions are being handled centrally by the ripple team and has not yet been decentralised.
42. Ring signatures: A cryptographic technology that enables endorsing a signed message by someone in a particular network, thus making computationally infeasible to determine the parties involved in transaction.
43. Satoshi Nakamoto: A person or group of people who created the bitcoin protocol and reference software, Bitcoin Core (formerly known as Bitcoin-Qt). In 2008, Nakamoto published a paper on The Cryptography Mailing list at metzdowd.com describing the bitcoin digital currency.
44. SHA-256: SHA-256 is a type of cryptographic hash function used by cryptocurrencies such as Bitcoin. It is used to create digital signatures to ascertain the data ownership and to check the data integrity.
45. Scrypt: An alternative proof of work system to SHA-256, designed to be particularly friendly to CPU and GPU miners, while offering little advantage to ASIC miners.
46. Smart contract: Encoding the business rules in a programming language enforced by the participants of the network.
47. Softfork: A change to the bitcoin protocol wherein only previously valid blocks/transactions are made invalid. Since old nodes will recognize the new blocks as valid, a softfork is backward-compatible. This kind of fork requires only a majority of the miners upgrading to enforce the new rules
48. Solidity: Ethereum’s programming language for developing smart contracts.
49. TestNet: A test blockchain used by developers to set up the blockchain node and execute test transactions prevent expending assets on the main chain.
50. Wallet: A file that houses private keys of the user. It usually contains a software client which allows access to view and create transactions on a specific blockchain that the wallet is designed for.

References

1. en.wikipedia.org
2. blockgeeks.com/guides/blockchain-glossary-from-a-z/
3. blockchaintechnologies.com/blockchain-glossary
4. blockchaintechnologies.com/blockchain-glossary
5. lopp.net/bitcoin.html
6. en.bitcoin.it

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