27+ Important Blockchain Terminology Explained in 5 minutes

Simple Blockchain Glossary for Beginners

In this post, I’ll be sharing with you some important blockchain terminology that will help you to kickstart your blockchain journey. This post is completely a blockchain glossary for beginners and would help you get a knack for this technology.

Alternatively, you can also watch this video,

1. Node

This is a term we use to refer to any member of the Blockchain network.

2. Address

It’s simply a string of alphanumeric characters that identify an entity in the blockchain network and is used to send and receive cryptocurrency transactions.

3. Distributed ledger

It's a ledger that is maintained on many nodes in a decentralized network and organizes them in chronological order.

4. Peer to peer

Also short-termed as P2P. As the name suggests, it signifies interactions that happen between two peers(parties/entities) in a highly interconnected network.

5. Block

A block is a data structure that contains all the necessary metadata about the Block Header and related transactions.

6. Block Height

Block height is regarded as the number of blocks connected in the blockchain network. Block height is usually a measure of the amount of data stored in the blockchain.

7. Blockchain

It is a chain of blocks that stores information in a specific type of database and keeps a record of every transaction which is carried across the network.

8. Block explorer

It's a tool to see statistics of a block in a blockchain. You can discover block explorer of Bitcoin and Ethereum via this link.

9. Hash

It's a term used whenever we are performing a hash function on the output data in a blockchain. For eg, the hash of the ‘AmarpreetSingh’ file is “8ik526v35v63vwjoi2v31vc15v4” and is used in verifying transactions.

10. Hash rate

Its a term used to measure the performance of a computer mining process. It is also sometimes regarded as hashes per second.

11. Cryptographic hash function

It is a function that takes a variable-size input and gives the output as a fixed-size unique value. For eg, the SHA-256 algorithm

12. Mining

Its regarded as a process of solving a complex mathematical problem in order to attach the new block of transactions to an existing blockchain.

13. Difficulty

It's a term used to signify the hardness with which a new block of transactions can be connected to an existing blockchain network.

14. Block reward

It's a term used when a reward is given to the entity which connects the new block to the blockchain. For eg, as in the case of Bitcoin, miners get a reward of 12.5 Bitcoins for attaching a new block to the blockchain.

15. Cryptocurrency

It is regarded as decentralized digital money, which is based on blockchain technology.

16. Satoshi

It is the smallest recordable unit of currency in the Bitcoin. Currently, a satoshi is numerically equal to 0.00000001 BTC.

17. Altcoin

It's a term used as an alternative to Bitcoin (, i.e., ALTernative COIN). A famous altcoin is Litecoin.

18. Wallet

A wallet is a file that contains the private keys of an entity. and provides an interface to view and do transactions on the blockchain network.

19. Consensus

Consensus is a way for all the nodes in a network to agree on the shared state of the ledger (i.e., list of transactions). Some common consensus mechanisms are Raft, Paxos, Proof-of-Work(PoW), Proof-of-Stake (PoS), etc.

20. Smart contract

A smart contract has details and permissions written in code that require an exact sequence of events to take place to trigger the agreement of the terms mentioned in the smart contract. It is also known as a crypto contract or a digital contract.

21. Transaction

It’s a term used to signify an exchange of assets between two parties or entities.

22. Transaction Fee

It’s a part of the digital asset (usually cryptocurrency) that is charged from the parties who perform that transaction as a way to pay the networks that invest their resources to sustain the blockchain.

23. Blockchain forking

It’s an act of blockchain software update which leads to the splitting of a blockchain into two or more valid blockchains. Watch this video to learn more about forking in blockchain.

24. 51% attack

It’s a term used to signify an attack in which a single organization (or group of entities) performs invalid activities on the blockchain network simply because they control 51% or more of the network’s resources. With context to Bitcoin, it refers to owning 51% of bitcoin miners.

25. Double Spend

its regarded as an act of using the same digital asset (i.e. cryptocurrency) twice. It's a quite common type of attack in the blockchain networks.

26. Confirmation

which is regarded as the act of successfully adding a transaction to the blockchain after verification. As a rule of thumb, more confirmations mean more security against a double-spend attack.

27. Testnet

In a nutshell, a Testnet is an alternative blockchain that is generally used for testing. Testnet coins are distinct from actual coins, and Testnet coins do not have any monetary value.

28. dApp

it stands for decentralized Application. and are a piece of software that communicates with the blockchain, and manages the state of all network nodes. The interface of the decentralized applications does not look any different than any website or mobile app that we see today. A smart contract represents the core logic of a decentralized application and it usually offers some kind of incentive for the members who help to construct it.

29. ASIC

ASIC stands for “Application Specific Integrated Circuit”. These are a type of computers which are designed for performing a special task. In the case of Bitcoin, ASIC computers are used to solve the SHA-256 hashing problem which helps to connect the new blocks to the blockchain.

Conclusion

There’s probably a lot more of these, but I believe that these many are enough to help you get started with your blockchain journey. In case I’m wrong and I should make some additions, please feel free to suggest your views so I may improvise this blockchain glossary for beginners post. Thanks!

Lastly, if you are someone who wants to build a career in the blockchain industry. I’ll recommend you to get certified with EC-Council’s blockchain certification program. It provides practical knowledge and helps you get familiar with industry standards while you’re getting used to technology by yourself. Also, not to forget that it's among the accredited certifications for blockchain, so you carry more chances of getting a job after completing the course.

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