An Artist’s Dictionary for the Blockchain
A huge dictionary of crypto terms; Part 03 of “An Artist’s Guide to the Blockchain”
What follows is a ton of definitions and background for the various terms you’ll see thrown around the web!
Looking for Parts 01 and 02? They’ll provide additional background and context for the terms defined below.
Explore the potentials of this emerging technology, and become an active participant to help shape what’s to come.medium.com
Explore the potentials of this emerging technology, and become an active participant to help shape what’s to come.medium.com
First, some background on web 1.0, 2.0, and 3.0
- Web1 websites are centrally controlled, and convey content for passive consumption. Users have limited ability to interact with each other or content. This is the “geocities” style situation; no comment boxes, and the web primarily functioned as a personal publishing platform.
- Web2 interfaces, while often centrally controlled, make for a more social and collaborative medium. It is the social web of Wikis, Social Media and Web Applications. Mobile phones are ubiquitous portals for this, making users ever-ready participants in the production, curation, and consumption of content. This internet era has resulted in vast stores of reproducible content in rolling feeds for quick consumption.
- Web3 still lacks a clear definition. Some see blockchain as a foundation for what’s to come. It’s a re-decentralization of the internet, which began decentralized but decayed into monolithic resources providing access.
Now, the Definitions
“Decentralization” is why we’re all here! It refers to the process of removing central entities that traditionally serve as gatekeepers to services. Because these central entities can and do abuse their power, a new wave of interest in removing them from power has sprung up. We can create a “decentralized Facebook” where each user owns their own data and the rights to change it, without relying on the servers of Facebook.com to provide that service.
Smart contracts are computer code that runs within a decentralized network. Because everyone is checks-and-balancing each other in the network, we can be sure that the computer code executes exactly, every time, giving the data that it manages some really interesting properties. We talked more about smart contracts in Part 01.
Ethereum is a decentralized network that uses a blockchain to store any sort of information you can think of, not just monetary balances. It uses smart contracts to decide how this information is managed, enforced by the large network of miners. This effectively turns it into a world-wide computer owned in-part by everyone in the network.
A “transaction” is just an encapsulated description of what should happen to something else. That’s super vague! But in real life it’s generally used for buying and selling things — like a transaction to buy a car. In computer science it’s frequently used to describe a set of changes to be made that are all related. Sometimes this transaction is “send $5 from me to my friend” — as in bitcoin — , or it can also be something like “vote for proposal number three” — as is possible in Ethereum.
A block is simply a collection of transactions, bundled together for convenience. If there were no concept of a block, a blockchain network would validate every transaction individually, meaning that in Bitcoin, for example, we could only have 1 transaction every 10 minutes, which is a little useless. Collecting transactions into blocks allows miners to treat them as individual entities and process many more transactions by default.
Solidity is a programming language. It’s currently the most popular method of writing smart contracts for Ethereum, the most popular network, so you’ll probably see the term eventually. If you’re a programmer, it’s worth understanding at a high level, but as an artist it’s less of a concern.
Fungibility and Non-Fungibility
An item is fungible if one version of it is indistinguishable from another, like a dollar bill. I don’t care if my dollar bill was used to smuggle drugs into the country — I can still spend it at the grocery store.
Non-fungible assets are unique among their peers, like art or your gaming character’s fancy hat.
ERC-20, ERC-721 Tokens
ERC stands for “Ethereum Request for Comments” and is a way for developers to create standards about how their smart contracts talk to each other.
Smart contracts don’t give us any guidelines on how to store the information like “who owns this artwork” or “this is how you transfer the ownership of an artwork to someone else”. We had to make up all that stuff as we went along! Luckily, a few people realized that if we all invented our own way of storing this information, it’d be impossible to create a thriving ecosystem, so we got together and created some standards for interoperability’s sake.
ERC20 defines a normal, fungible token. This standard is particularly popular for pretty much any system that needs to keep track of how much of something a person owns. Often when people say “token” they mean this specific type of token: an ERC20 token.
ERC 721 is a standard for non-fungible tokens, designed to represent literally anything that can be non-fungible. It’s used in apps like CryptoPunks and CryptoKitties, as well as for tracking licensing, supply chain operations, you name it.
A “wallet” is an interface that (i) securely stores your private keys and (ii) lets you easily use those keys to send transactions, sign messages, and manage your identity. It can take many shapes, forms, and designs. Most wallets are digital wallets that are desktop apps, mobile apps, or web apps. There are also “hardware” wallets that use specialized hardware to generate secret keys that never leave the device for additional layers of security.
Pretty much anything that fulfills those functions above is called a wallet, so you’ll see the term being used to label almost anything that touches the blockchain network. Many apps with include a wallet as one of their features.
dApp stands for “decentralized app” (you know we love our acronyms) — it’s just a normal app that we’re all familiar with that happens to talk to a decentralized service like Ethereum, Bitcoin, and similar. A decentralized social network like Leeroy is a dApp, for example.
A “Token” is a unit of accounting used in some decentralized network. Tokens are different from coins, which are generally considered a native currency that’s used to power a network like Bitcoin or Ethereum. Tokens are higher-level concepts that are built on top of one of those platforms.
Many tokens in the ecosystem today are built on Ethereum, Waves, Stellar, and NEO. At the end of the day, a “token” is just a smart contract keeping track of who owns what amount of the token.
Like we just learned, tokens are built on top of existing smart contracts — they’re not a special concept. We can use the same smart contract technology to keep track of other assets like art or real estate. The process of using a smart contract to manage an asset is called “tokenizing”. We can tokenize art, for example, and create a digital marketplace and exchange for the ownership or rights to artwork.
A token-curated registry is a method of using the crowd to decide whether or not something belongs in a group of other things. For example, AdChain is using a token-curated registry (TCR) to keep track non-fraudulent publishers. TCRs use tokens to keep track of the voting rights within the network, making the token’s value grow as the popularity and valuation of the registry it manages grows.
Digital assets are any sort of property that can be digitally owned. Your Facebook profile is a digital asset, as well as your cosmetic items in virtual gaming worlds. Digital assets can be tokenized and then secured with cryptography, allowing the end user to directly own the digital asset without a trusted middleman.
A digital collectible is a (possibly tokenized) digital asset that doesn’t have any specific economic value, but functions more as a “token of appreciation” or collectible representing some fact. You can receive a digital collectible for donating to charity or winning first place in a tournament, for example.
Digital collectibles that are also tokenized are called “cryptocollectibles”. It’s a nice, specific word for the types of collectible digital assets tracked by a decentralized network of some sort.
In the real world, ownership is generally divided into two types: first, there’s direct ownership, in which you physically own something and nobody else has a right to it. This is how we view things like clothing or a TV. Second, there is indirect ownership: where some person or company grants you the right to modify an asset. Think about your Facebook profile, for example; Facebook technically has total control over your profile, but they allow you (and only you, ideally) to change it.
The neat thing about using smart contracts to tokenize your ownership is that even though we don’t physically own our digital property and we don’t trust Facebook, we can replace the middleman with a smart contract that we can trust — we trust the Ethereum network to run the smart contract code correctly. This concept of direct digital ownership is relatively new — it’s only been possible since the invention of Bitcoin in 2008.
Proof of Ownership
By using smart contracts to directly own digital assets, we can cryptographically sign a message and prove, irrefutably, that we own an asset. More specifically, we prove that we have the right to change or transfer an asset (which is basically the same as owning it). This is what lets us remove the middleman involved with ensuring that only the correct person can own an asset; the cryptography, verified by the network, does that for us.
Provenance is just the “history” of an item: who used to own it? Who did they sell it to? For how much?
Smart contracts are just code, so we can use this code to enforce things like “only allow 10 rights of this artwork to exist” or “only create this cryptocollectible if someone trades us 5 of this other cryptocollectible”. This allows us to create provable scarcity — anyone can check the code and confirm that, yes, only 10 of this asset will ever exist, which can be a very, very cool property. Imagine a trading card game, for example, that has public and provable scarcity and issuance rates; the market for the cards will be more intelligent and efficient because users have a more reasonable method of pricing the rarity of a single card. You could issue replicas of your digital artwork, usage rights of your downloadable font, or access to the beta version of you video game.
DAO / ArtDAO
A Decentralized Autonomous Organization, or DAO, can be created to collectively manage things like money, assets, projects, and more. It’s simply a community of people using some software to decide on what happens with the community. For example, a gardening club can use a DAO to decide which plants to grow for the next season and then fund the winning proposal. There are a lot of fun things you can do with decentralized organizations!
You can also create a DAO to manage art, which is exactly what we’re doing with the #ArtProject!
Some More General Topics
“Open source” refers to the idea that the “source” of something (usually a program) is open for the world to learn from, use, and remix. The movement recently picked up incredible support in the software industry, accounting for a ton of the improvements the space has seen in the last 10 years. By sharing code and best practices, the ecosystem as a whole thrives. We’re more recently seeing this open source philosophy enter other ecosystems as well, like business management, artistic processes, and community curation.
Richard Stallman, the Free Software Movement, and the beginnings of Open Sourcemedium.com
Github is the veritable leader in the open source software movement — anyone can put their code on Github for others to view and contribute to. A huge variety of projects are managed completely decentrally on Github, via a mix of industry involvement and individual contributors. For example, Google originally wrote a bunch of secret code to solve their large application scaling problems, but after open sourcing it (and naming it Kubernetes), it took on a life of its own, currently managed by a vibrant community of 20k+ members and 1,500+ contributors from around the world.
A Merkle tree is a data structure from the late 70s that enables a lot of the technical features we see in today’s distributed networks. It allows you to prove that you know a lot of information in a small amount of space, making it very valuable for blockchains.
What’s super interesting about most of these decentralized networks is that no one person or central controlling authority has the power to change any of them — it’s majority rule. This means that your boss or even the government, for example, can’t change what has been recorded on the network. These features make decentralized networks particularly nice for avoiding censorship. Traditionally, centralized platforms like Twitter and Facebook remove things they don’t want on their platform; nothing stops them from doing that! Whether or not this immutability is a feature is more of a philosophical and personal perspective, but the potential for abuse is there, and frequently exploited.
The ability to use censorship-resistant networks is incredibly valuable for creative thought and innovative ideas.
Hashing and Trap-Doors
In computer programming, “hashing” refers to using a specific type of function that compresses some large amount of data into a fixed-sized amount of data. This is generally even more useful with cryptographic hash functions, which use “trap-door” algorithms. A trap-door algorithm is one that, like a physical trap door, is very easy to perform in one direction and not conceivably possible to perform in the reverse direction. This sort of function is incredibly useful in cryptography, which relies on the fact that when you give someone a public key, they can’t reverse your algorithm to discover your private key.
So no matter how much information you put into the hashing algorithm, you always end up with, say, 40 characters of information that is so unique that you can’t conceivably take another set of input data and get the same output. This is the type of function that powers public and private keys. A public key, for example, is a hash of a private key, so no other possible private key could hash to that exact same public key.
(more specifically, the chances of one different private key hashing to the same public key is absurdly, absurdly low)
Peer to Peer
Peer-to-peer networks are those where individuals in the network communicate with one or many other individuals, rather than a central location. For example, messaging a friend on Facebook is not peer-to-peer; your message goes to Facebook’s servers and then your friend reads it from there. A peer-to-peer messaging service would have you send your message directly from your computer to your friend’s, without Facebook in the middle.
If something is immutable, it is unchangeable. “Immutability” is generally used across computer science to describe data that cannot be changed. For example, blockchains are immutable; there’s no way for someone to change the data contained within.
IPFS stands for Inter-Planetary FileSystem. It’s a project by Protocol Labs to create a new file-distribution protocol that better fits the goals of the decentralized web. It’s a deep subject, but it’s basically like bittorrent but easier to use.
Open Dime is an open-source piece of hardware that looks like a USB stick. It’s a bitcoin or litecoin hardware wallet with a twist; you can’t send any bitcoin away from the Open Dime unless you physically break it to release the private key. This lets you treat the Open Dime like physical cash, being confident that nobody has secretly copied the private key stored within.
A hacker has two separate definitions; a hacker can be someone who experiments and plays with different technologies, “hacking” them together. This definition is related to the fact that you can combine two unrelated things to accomplish a goal; that’s a “hack”. “Hacker” is also used to describe users who break security (usually digital security) barriers to access whatever they were protecting. This definition is much more popular in media today, and how you’ll see it used in mainstream media.
A hackathon is a hacking (the good kind!) marathon. It involves a group of people working on projects together or separately at the same time, around some kind of theme. College hackathons have become particularly popular in the last few years; groups of college students from around the country will converge on a host college in their gym or student center and collaborate and compete on building apps, websites, and more. There have been thousands of hackathons around the world, both in-person and over the internet, with a huge variety of themes. If you’re looking for a community that’s interested in building fun things, participating in hackathons are a great way to get involved!
A bounty, just like it sounds, is a prize for completing a task. Relevant to crypto, projects can offer bounties to incentivize development of apps or tools for their platform. It’s a great way to work on open-source and ecosystem-benefit projects while being paid!