Commonly Used Blockchain Terminologies

Introduction

When we start learning new technology, we need to learn basic terms used in the technology. If we don’t know the terms and terminologies of that technology, it will be difficult to understand it. This article describes the Blockchain terminologies and their definition which is very helpful for those who want to learn and are newbies to the Blockchain.

Blockchain Terminologies and Definitions

Block height

When a block is created in the blockchain, it is assigned to a particular number. This is called a block height.

Block

Block is a package of data that contains the recorded data in the blockchain network.

Address

It’s a long alphanumeric string that is unique, and it is like a bank account number for the digital wallet. The address is used to send and receive transactions on the network.

Wallet

A wallet is a place to keep digital assets that is cryptocurrency. The wallet has an address that is needed to send and receive funds on the blockchain network.

Distributed Network

A network in which processing power and data are kept in the nodes using the decentralized database. There is no central authority in the distributed network.

Encryption

Encryption is the method of converting plain text into a data stream of ciphertext that contains the random sequence of bits and is difficult to catch in mind. It looks meaningless.

Gas

It is a unit measuring the computational work for running the transaction or smart contract in the blockchain network. Likewise, Kilowatt (kW) to measure the electricity consumption. Gas is a term in the blockchain.

Gas Limit

The gas limit is the maximum amount of gas used in a particular transaction or smart contract. Higher gas consumption means that more computational work is required to execute smart contracts or transactions.

Gas Price

It is a price need to pay for running a transaction or smart contract on the blockchain network.

Transaction Fee

The fee associated with the transaction is small in amount and goes to the blockchain network provider who maintains the chain.

Genesis block

The very first block of data created in the blockchain is called the Genesis block.

Whitelisting

It’s a security feature to allow crypto withdrawers to go to the addresses (external and Coinbase) based on the already designated address book. It’s a list of allowed or approved items. Whitelisted data is stored as a hash in the chain, and it is called a whitelisted hash.

Smart Contract

The smart contract is a computer program where the parties have consent on predetermined conditions of the agreement. Smart contract stores and self-executes in the blockchain network. It runs when the predefined conditions are met. Smart Contract allows transactions to be made without the need of a middleman and those transactions are irreversible, transparent, and traceable. To learn Smart Contract in C#, you can visit these articles Getting Started with Smart Contract in C#Write Your First Smart Contract On Stratis Blockchain, and for depth learning with tutorials of Smart Contract in C# visit Stratis Academy as well.

Initial coin offering (ICO)

It’s a kind of crowdfunding mechanism which runs on the blockchain. The main idea of an ICO is to fund new projects by selling coins/tokens to the investors who are interested in the project, for instance, Stratis provides an ICO Platform to fund new projects.

Fork

Any software is updated frequently. Likewise, Cryptocurrencies are also updated frequently with the changes in the protocol of the cryptocurrency. This change is called a fork.

Hard fork

Any new changes or update in the blockchain that conflicts with the existing rules or features and aren’t compatible to operate is called a hard fork.

Soft fork

When the new changes or update is aligned or compatible with the existing rule, it’s called a soft fork.

Blockchain as a Service

Cloud-based service based on blockchain technology.

Proof of Stake (PoS)

Proof of Stake is a consensus mechanism that allows a person to validate or mine the transaction block based on how many coins the person holds. It’s a novel consensus mechanism and alternative to PoW. It uses the coins as collateral to verify the network. More tokens you have in your wallet means you have more staking/mining power. This means, there are more chances to be selected by the network to verify and create the next block in the chain if you have more coins in your wallet. Staking doesn’t depend upon computational power. Stratis Platform uses the PoS consensus mechanism. To know more about Staking you can visit here.

Proof of Work (PoW)

It is used in cryptocurrency mining, validating for transactions and mining the new tokens. PoW provides evidence that the network has extended computational power (work) to achieve consensus in a decentralized manner and prevent fraudulent activity or economic attack and provides security. In simple terms, it prevents users to double-spend their coins.

DApp (decentralized application)

It’s a type of application that is built on a distributed and decentralized network, for example, Ethereum, and uses a decentralized database. Dapp requires to meet the below criteria.

  1. The application needs to be fully open-source with no entity controlling the tokens.
  2. Data and records of the application must be stored cryptographically in a public decentralized network and there should not be a single point of failure.
  3. The application must use cryptographic tokens using the standard cryptographic algorithm. Bitcoin and Stratis use the Proof of Work algorithm

Protocol

The protocol defines the rules or strategies to transmit or exchange data across a blockchain network.

Crypto Asset

Asset in the form of digital token which uses the cryptography for security and built on blockchain technology. Simply, we can say its digital assets such as ether (ETH) is Ethereum’s crypto asset and STRAX is Stratis's crypto asset.

Cryptocurrency

Digital money is secured by cryptography and uses blockchain technology.

Fiat

Fiat is government-issued currencies such as the U.S. dollar, the euro, etc. This currency is money created by the central bank, for instance, the U.S. Federal Reserve (U.S. dollar) or the Bank of England (pound sterling).

Cryptocurrency exchange

It’s a business that provides the trading of cryptocurrencies. Besides, this facilitates the trading between the cryptocurrency pairs. There are lots of exchanges available.

Digital Asset

It’s digitally stored content like painting, books which are owned by an individual and can be traded online.

Mooning

It’s a term used to express that cryptocurrency prices are skyrocketing.

Satoshi

It is the smallest unit of Bitcoin, which is named in the honor of Bitcoin creator, Satoshi Nakamoto.

1Satoshi= 0.00000001 bitcoins.

Scam coin

This is a cryptocurrency that has no real purpose and use to fool investors. Mostly, it is found among ICOs.

Segregated Witness (SegWit)

It helps to increase the block size limit by removing digital signature data and moving the signature at the end of a transaction to free up the block capacity. Transactions are segregated into two parts: original data and the signature segment. More transactions into a block are possible by segregating data and signatures.

SegWit solves the scaling problem as well as lightens the network.

Trustless

As there is no central authority in blockchain, no need to have a trusted central third party like banks to process and verify the transaction. Simply, we can say in a blockchain, the party doesn’t need to trust another that’s why it’s called Trustless.

Unity token

It’s a Cryptocurrency token that provides access to a particular service or product. This token is given to the company that created the product or service. Using this, token creators can access their products or services.

Whale

It’s a term used for the biggest market players in the trading. Usually, whales are responsible for atypical market fall and rise. Similarly, Whale in the ocean brings the wave, Whale in the crypto brings the wave in the crypto market as they hold a large no of shares.

Airdrop

Newly launched cryptocurrency distributes its token in exchange for a small fee or sometimes for free for marketing, publicity, or to attract the public and to popularize its crypto. This is called Airdrop.

ATH (all time high)

It helps to keep an eye on the movement of cryptocurrency prices and performance.

Altcoin

An Altcoin is a Bitcoin alternative. There are lots of Altcoins available these days, which fork the Bitcoin and have minor changes on the Proof of Work (PoW) algorithm such as Litecoin.

NFT

Non-fungible Token is blockchain-based technology that prevents users to create a duplicate copy of digital content. It’s unique and can’t be replaced with anything else. The owner of the content digitally signs the content in the blockchain which uses the cryptography algorithm and stores the signed copy on the blockchain network. This content can be traded later. Digital content can be anything such as art, music, your article, painting, etc. You can visit the article What is NFT for a detailed understanding.

51% Attack

If a single person or a single group of people can run more than half of computer power or mining hash on the network then it is called a 51% attack is in operation. Simply, which means this group or single person has full control of the network and can negatively affect cryptocurrency, can stop or change transactions, takeover the mining operation, and double spending of coins, etc.

Conclusion

This article elucidated the terminologies of blockchain and their definitions. Learning these terms will help us to understand blockchain terms, their meaning, and use them properly when communicating as well as adopt and implement blockchain technology in an efficient way.

Furthermore, you can follow the below articles and Stratis academy to start your learning journey of the blockchain in .NET and C#:

  1. Stratis Academy
  2. C# Corner Articles on Stratis Blockchain

References

  1. https://101blockchains.com/blockchain-definitions/
  2. https://consensys.net/knowledge-base/a-blockchain-glossary-for-beginners/
  3. https://data-flair.training/blogs/blockchain-terminologies/