Glossary

Addresses

Used to receive and send transactions on the network. An address is a string of alphanumeric characters, but can also be represented as a scannable QR code. They are derived from the public/private ECDSA key pair.

Agreement Ledgers

Distributed ledgers used by two or more parties to negotiate and reach and agreement.

Altcoin

An abbreviation of “Bitcoin alternative”. Currently, the majority of altcoins are forks of Bitcoin with usually minor changes to the proof of work (POW) algorithm of the Bitcoin blockchain. The most prominent altcoin is Litecoin. Litecoin introduces changes to the original Bitcoin protocol such as decreased block generation time, increased maximum number of coins and different hashing algorithm.

Attestation Ledgers

Distributed ledgers that provide a durable record of agreements, commitments or statements, providing evidence (attestation) that these agreements, commitments or statements were made.

ASIC

An acronym for “Application Specific Integrated Circuit”. ASICs are silicon chips specifically designed to do a single task. In the case of bitcoin, they are designed to process SHA-256 hashing problems to mine new bitcoins.

Bitcoin

Currently the most well known cryptocurrency, based on the proof-of-work blockchain.

Blockchain

A type of distributed ledger, comprised of unchangable, digitally recorded data in packages called blocks (rather like collating them on to a single sheet of paper). Each block is then ‘chained’ to the next block, using a cryptographic signature. This allows block chains to be used like a ledger, which can be shared and accessed by anyone with the appropriate permissions.

Block Ciphers

A method of encrypting text (to produce ciphertext) in which a cryptographic key and algorithm are applied to a block of data at once as a group rather than to one bit at a time.

Block Height

Refers to the number of blocks connected together in the block chain. For example, Height 0, would be the very first block, which is also called the Genesis Block.

Block Rewards

Rewards given to a miner which has successfully hashed a transaction block. Block rewards can be a mixture of coins and transaction fees, depending on the policy used by the cryptocurrency in question, and whether all of the coins have already been successfully mined. The current block reward for the Bitcoin network is 25 bitcoins for each block.

Central Ledger

Refers to a ledger maintained by a central agency.

Chain Linking

The process of connecting two blockchains with each other, thus allowing transactions between the chains to take place. This will allow blockchains like Bitcoin to communicate with other sidechains, allowing the exchange of assets between them

Cipher

The algorithm used for the encryption and/or decryption of information. In common language, ‘cipher’ is also used to refer to an encryption message, also known as ‘code’.

Confirmation

The blockchain transaction has been verified by the network. This happens through a process known as mining, in a proof-of-work system (e.g. Bitcoin). Once a transaction is confirmed, it cannot be reversed or double spent. The more confirmations a transaction has, the harder it becomes to perform a double spend attack.

Consensus Process

A group of peers responsible for maintaining a distributed ledger use to reach consensus on the ledger’s contents.

Consortium Blockchain

A blockchain where the consensus process is controlled by a pre-selected set of nodes; for example, one might imagine a consortium of 15 financial institutions, each of which operates a node and of which ten must sign every block for the block to be valid. The right to read the blockchain may be public or restricted to the participants. There are also hybrid routes such as the root hashes of the blocks being public together with an API that allows members of the public to make a limited number of queries and get back cryptographic proofs of some parts of the blockchain state. These blockchains may be considered “partially decentralized”.

Cryptoanalysis

The study of methods for obtaining the meaning of encrypted information, without access to the secret information that is normally required to do so.

Cryptocurrency

A form of digital currency based on mathematics, where encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. Furthermore, cryptocurrencies operate independently of a central bank.

Cryptography

Refers to the process of encrypting and decrypting information.

dApp

A decentralized application that must be completely open-source, it must operate autonomously, and with no entity controlling the majority of its tokens.

DAO

(Decentralized Autonomous Organization) can be thought of as a corporation run without any human involvement under the control of an incorruptible set of business rules.

The DAO

A venture capital fund built on Ethereum that caused a soft and hark fork.

Decryption

The process of turning cipher-text back into plaintext

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.

ERC

ERC stands for Ethereum Request for Comments. An ERC is a proposal for Ethereum.

ERC-20

A specfication for tokens on Ethereum.

Ether

The native token of the Ethereum blockchain which is used to pay for transaction fees, miner rewards and other services on the network.

Ethereum

An open software platform based on blockchain technology that enables developers to write smart contracts and build and deploy decentralized applications.

Ethereum Classic

A split from an existing cryptocurrency, Ethereum after a hard fork. To learn more about this, click here.

EVM

The Ethereum Virtual Machine.

EVM Bytecode

The programming language in which accounts on the Ethereum blockchain can contain code. The EVM code associated with an account is executed every time a message is sent to that account, and has the ability to read/write storage and itself send messages.

Digital Commodity

A scarce, electronically transferrable, intangible, with a market value.

Digital Identity

An online or networked identity adopted or claimed in cyberspace by an individual, organization, or electronic device.

Distributed Ledgers

A type of database that are spread across multiple sites, countries or institutions. Records are stored one after the other in a continuous ledger. Distributed ledger data can be either “permissioned” or “unpermissioned” to control who can view it.

Difficulty

In Proof-of-Work mining, 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.

Double Spend

Refers to a scenario, in the Bitcoin network, where someone tries to send a bitcoin transaction to two different recipients at the same time. However, once a bitcoin transaction is confirmed, it makes it nearly impossible to double spend it. The more confirmations that a particular transaction has, the harder it becomes to double spend the bitcoins.

Fiat currency

is any money declared by a government to be to be valid for meeting a financial obligation, like USD or EUR.

Fork

The creation of an ongoing alternative version of the blockchain, by creating two blocks simultaneously on different parts of the network. This creates two parallel blockchains, where one of the two is the winning blockchain.

Gas

A measurement roughly equivalent to computational steps (for Ethereum). Every transaction is required to include a gas limit and a fee that it is willing to pay per gas; miners have the choice of including the transaction and collecting the fee or not. Every operation has a gas expenditure; for most operations it is ~3–10, although some expensive operations have expenditures up to 700 and a transaction itself has an expenditure of 21000.

Gas Cost

Gas cost is the gas limit multiplied by the gas price.

Gas Limit

Max number of computational units that the transaction should use up in the smart contrat execution.

Gas Price

The price per computational unit.

Geth

An Ethereum node implementation in Golang. https://github.com/ethereum/go-ethereum

Go

Go is a programming language created at Google in 2009 by Robert Griesemer, Rob Pike, and Ken Thompson.

Golang

The Go programming language.

go-ethereum

The Ethereum implementation in Golang.

Halving

Bitcoins have a finite supply, which makes them a scarce digital commodity. The total amount of bitcoins that will ever be issued is 21 million. The number of bitcoins generated per block is decreased 50% every four years. This is called “halving”. The final halving will take place in the year 2140.

Hard fork

A change to the blockchain protocol that makes previously invalid blocks/transactions valid, and therefore requires all users to upgrade their clients.

Hashcash

A proof-of-work system used to limit email spam and denial-of-service attacks, and more recently has become known for its use in bitcoin (and other cryptocurrencies) as part of the mining algorithm.

Hashrate

The number of hashes that can be performed by a bitcoin miner in a given period of time (usually a second).

HD Wallet

An HD Wallet, or Hierarchical Deterministic wallet, is a new-age digital wallet that automatically generates a hierarchical tree-like structure of private/public addresses (or keys), thereby addressing the problem of the user having to generate them on his own.

Infura

Infura provides secure, reliable, and scalable gateways to the Ethereum network. https://infura.io/

Initial Coin Offering

(ICO) is an event in which a new cryptocurrency sells advance tokens from its overall coinbase, in exchange for upfront capital. ICOs are frequently used for developers of a new cryptocurrency to raise capital.

IPFS

InterPlanetary File System (IPFS) is a protocol and network designed to create a content-addressable, peer-to-peer method of storing and sharing hypermedia in a distributed file system.

Keccak-256

The hashing algorithm used in Ethereum.

Keystore

A file containing an encrypted wallet private keys and wallet metadata.

Kovan

A proof-of-authority testnet on the Ethereum blockchain. Supported by Parity only.

Ledger

An append-only record store, where records are immutable and may hold more general information than financial records.

Litecoin

A peer-to-peer cryptocurrency based on the Scrypt proof-of-work network. Sometimes referred to as the silver of bitcoin’s gold.

Mining

The process by which transactions are verified and added to a blockchain. This process of solving cryptographic problems using computing hardware also triggers the release of cryptocurrencies.

Mnemonic

A mnemonic phrase, mnemonic recovery phrase or mnemonic seed is a list of words used as a seed to generate the master private key and master chain code for an HD wallet.

Multi-signature

(multisig) addresses allow multiple parties to require more than one key to authorize a transaction. The needed number of signatures is agreed at the creation of the address. Multi signature addresses have a much greater resistance to theft.

Node

Any computer that connects to the blockchain network.

Nonce

A number only used once.

Full node

A node that fully enforces all of the rules of the blockchain.

Parity

An Ethereum implementation written in the Rust language. https://github.com/paritytech/parity

P2P

P2P stands for Peer to Peer.

Peer-to-peer

Refers to the decentralized interactions that happen between at least two parties in a highly interconnected network. P2P participants deal directly with each other through a single mediation point.

Permissioned Ledger

Is a ledger where actors must have permission to access the ledger. Permissioned ledgers may have one or many owners. When a new record is added, the ledger’s integrity is checked by a limited consensus process. This is carried out by trusted actors — government departments or banks, for example — which makes maintaining a shared record much simpler that the consensus process used by unpermissioned ledgers.

Permissioned Blockchains

Provide highly-verifiable data sets because the consensus process creates a digital signature, which can be seen by all parties.

Private Key

A string of data that shows you have access to bitcoins in a specific wallet. Private keys can be thought of as a password; private keys must never be revealed to anyone but you, as they allow you to spend the bitcoins from your bitcoin wallet through a cryptographic signature.

Proof of Authority

A consensus mechanism in a private blockchain which essentially gives one client (or a specific number of clients) with one particular private key the right to make all of the blocks in the blockchain.

Proof of Stake

An alternative to the proof-of-work system, in which your existing stake in a cryptocurrency (the amount of that currency that you hold) is used to calculate the amount of that currency that you can mine.

Proof of Work

A system that ties mining capability to computational power. Blocks must be hashed, which is in itself an easy computational process, but an additional variable is added to the hashing process to make it more difficult. When a block is successfully hashed, the hashing must have taken some time and computational effort. Thus, a hashed block is considered proof of work.

Protocols

Sets of formal rules describing how to transmit or exchange data, especially across a network.

Rinkeby

A proof-of-authority testnet on the Ethereum blockchain. Supported by Geth only.

RLP

Recursive Length Prefix (RLP) is a standard to encode arbitrarily nested arrays of binary data. RLP is the main encoding method used to serialize objects in Ethereum.

Ropsten

A proof-of-work testnet on the Ethereum blockchain which best simulates production environment. Supported by Geth and Parity.

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.

SHA256

The cryptographic function used as the basis for bitcoin’s proof of work system.

Signature

A digital signature is a mathematical scheme for presenting the authenticity of digital messages or documents.

Smart contract

Contracts whose terms are recorded in a computer language instead of legal language. Smart contracts can be automatically executed by a computing system, such as a suitable distributed ledger system.

Soft fork

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.

Sokol

A proof-of-authority testnet on the Ethereum blockchain. Supported by Parity only.

Stream ciphers

A method of encrypting text (cyphertext) in which a cryptographic key and algorithm are applied to each binary digit in a data stream, one bit at a time.

Swarm

Decentralized file storage as part of Ethereum.

Token

Is a digital identity for something that can be owned.

Tokenless Ledger

Refers to a distributed ledger that doesn’t require a native currency to operate.

Transaction Block

A collection of transactions on the bitcoin network, gathered into a block that can then be hashed and added to the blockchain.

Transaction Fees

Small fees imposed on some transactions sent across the bitcoin network. The transaction fee is awarded to the miner that successfully hashes the block containing the relevant transaction.

Unpermissioned ledgers

Blockchains that do not have a single owner; they cannot be owned. The purpose of an unpermissioned ledger is to allow anyone to contribute data to the ledger and for everyone in possession of the ledger to have identical copies.

Wallet

A file that contains a collection of private keys.

Whisper

A peer-to-peer messaging system as part of Ethereum.