A situation in which a majority of miners in the blockchain launch an attack on the rest of the nodes (or users). This kind of attack allows for double spending. When more than half of the computing power of a cryptocurrency network is controlled by a single entity or group, this entity or group may issue conflicting transactions to harm the network.
When two or more miners find a block almost simultaneously, an accidental fork may occur. If one chain becomes longer than the other, the network may eventually abandon the blocks not in the longer chain. These blocks are then classified as "orphaned blocks".
Transactions are sent to and from cryptocurrency "addresses" over the network. An Address is used as a sending or receiving point on the network. An address is typically a string of alphanumeric characters.
An "Agreement Ledger" is simply a distributed ledger used by two or more parties to negotiate and reach consensus.
An altcoin is simply any digital currency alternative to Bitcoin. There are quite a few altcoins that are simply derivatives or forks of Bitcoin such as Bitcoin Cash (BCH).
Acronym for Application Programming Interface, which is a software connector that helps two separate applications communicate with each other. API's typically pass sets of data from one platform to another. https://whotakescoin.com/ticker is built on a API.
Application Specific Integrated Circuit is a "chip" made for a very specific purpose such as mining SHA-256 based coins. Because ASIC's are specific with faster processing designed for a specific task (hashing), they far outperform gpu mining gear. ASIC miners (hardware) are designed to perform specific hashes as fast as possible in order to increase mining revenue.
This is a distributed ledger providing a durable record of agreements, commitments or statements. In turn, this provides evidence, or "Attests" that agreements, promises, commitments or statements were made in fact.
The first and by far most popular cryptocurrency based off SHA-256 encryption, this decentralized ledger is considered the original blockchain. Bitcoin cryptocurrency is open source and operates on a global P2P (peer-to-peer) network without the need for intermediaries or a centralized issuer.
These are packages of data distributed across the network that hold permanently recorded information in specified and immutable buckets of data.
A block explorer is a web based tool any authorized user can view all transactions, past and current, on a particular blockchain. Most block explorers are open to the public. They provide useful data including network hash rate, transactions, historical growth data and address information.
Refers to the number of connected blocks on any given blockchain. The Genesis block, or Height 0, is the very first block on a blockchain.
Verification of a transaction on the blockchain generates new cryptocurrency. For expending the energy to perform this work a miner is rewarded an entire coin, or fraction of a coin. Typically, the miner who successfully "hashes" or discovers a block receives the reward. Block rewards can be either a transaction fee or a portion of the coin itself depending on the mining algorithm. It can also be a hybrid of both.
The blockchain is a historical record of all transactions that ever occurred, from the genesis block to current block. The blockchain provides a mathematical structure for storing digital "sets of encrypted data" in a location that is immutable because it is stored on a distributed ledger (peer to peer network) where the information cannot be manipulated (short of a 51% attack) because it is stored and validated in multiple locations that confirm each other.
Proof of work and proof of stake consensus algorithm. To be used by Ethereum as a transition to proof of stake mining.
A ledger created and maintained in one single place without verification or validation of P2P network.
Client software is local (on your machine) and accesses any "server" point of information or data including blockchain for the purpose of processing transactions or disseminating data. Typical examples of client software can include a crypto currency wallet or email program.
A digital asset whose collection represents the blockchain. A fraction of the blockchain can also be considered a "coin" or "altcoin" where that digital asset has value and is generated via an independent blockchain.
Off-line and inaccessible by any computer on or off a private or public network, a cold wallet is digital currency store where nobody can reach it for security purposes. Often a flash drive or removable media is where this information is stored. Since the data is not available a network, it keeps hackers from stealing the data. A cold wallet can even be a piece of paper with key information written on it.
Every block added to the blockchain counts as a confirmation since all nodes on the network directly or indirectly verify or confirm preceding blocks and they continue to repeat that process. For instance, if 10 blocks are added to a chain, then the previous block has 5 confirmations. The more confirmations the better since it becomes more difficult to alter or attack the block as it grows.
Consensus is when everyone agrees. For blockchain, it is when a majority of participants on a network agree about the validity of a transaction. This agreement ensures that the ledgers are consistently kept the same as each other.
The consensus algorithm is the mechanism that verifies consensus is reached on any given blockchain. It is the part of the blockchain protocol that determines block validation for chain data and then who earns the reward for that validation. Everyone participating in the validation process must abide by the rules of validation, which ensures consistent application of the algorithm.
Tokens, coins, altcoins, digital assets along with several others are the terms used to describe cryptocurrency. "Cryptocurrency" is simply the representations of digital assets. Based on mathematical and cryptographic functions, cryptocurrency is a result of the aggregation and distribution of encrypted data as it is maintained in a multi-user state. This ensures the validity and immutability of the data on a blockchain and facilitates the generation and transfer of data. This decentralized process is what makes crypto so attractive in that it cannot be manipulated by any single source such as governments or central banks. As a currency, cryptocurrency gained popularity as a completely free-market form of currency.
Cryptographic Hash Function
A string returned that is unique for each and every input. This string is used to create a digital identity or thumbprint of user input. These cryptographic hashes generate a unique, fixed-size hash value out of variable-size transaction input. There are multiple computational algorithms. Examples of cryptographic hashes include SHA-224, SHA-256, SHA-384, SHA-512, SHA-512/224, and SHA-512/256. These are all part of a family of hash functions, but they all differ slightly in how they create output.
In its simplest form, according to Oxford, Cryptography (n) is the "art of writing or solving codes". For blockchain, it is the art of creating hash sets that contain encrypted data and/or transactions in each block, or set of encrypted data. It is a method for securing that data in a public environment. To decipher the data, you need the proper matching key to unlock it and make it readable. Additionally, there are different "types" of keys. Bitcoin uses symmetric-key cryptography and "addresses" or unique identifiers generate private keys and match these keys to public keys on the chain to post or read data from the blockchain.
This is an abbreviation for the term "Decentralised Application". A dApp is an open-source, autonomous application that interacts with and stores data on a blockchain. This decentralized application derives value in the form of digital assets. The only difference between a regular app and a dApp is that the dApp is decentralized and runs on the chain versus operating in a centralized environment.
A "Decentralized Autonomous Organization" is an entity that is run through rules encoded as computer programs called smart contracts. Decentralised Autonomous Organizations can be thought of as businesses whose bylaws are predetermined by a set of computer rules and not by a centralized seat of power. The leadership of a true DAO is the set of bylaws and not human interference.
Acronym for "Decentralized Autonomous Learning Organization", the DALO is similar to the DAO, but also encompasses the delivery of educational content and the management of the learning process independently of human leadership. It is, at its core, an entirely free-market driven set of educational courses whose course work is set by the market and not by committee.
Without central control or influence. A government or most typical organizations are run from a central point. Decentralized, especially in the blockchain and cryptocurrency world, refers to a completely free market system run with zero input, influence or control by anyone other than the actual participants. The implications are that, from a currency perspective, a government or central bank would not be able to control, influence or manipulate a currency. Only the free market would have any impact.
For Proof of Work, or PoW mining, "Difficulty" is how much competition there is for mining. Many think diffieculty can only increase as more mining participants get involved, but it is actually possible for difficulty to decrease as miners exit a coin. Difficulty is reverse engineered to control the pace of mining. It keeps block production at one every ten minutes and adjusts every 2016 blocks.
Also known as a coin, altcoin or digital asset, this term refers to any electronically transferrable, intangible asset with value in the marketplace due to finite supply and scarcity.
Similar to a thumbprint, a digital identity is a unique identifier for any online or network resource that clearly identifies an individual, organization or electronic device. For cybersecurity, the primary objective is to prevent theft, electronically or physically, of a digital identity.
As part of a digital identity, a digital signature presents proof of authenticity, delivery, interaction or acceptance between two or more parties. It is a mathematical function used to prove the identity and validity of digital assets. A digital signature is a public key / private key encrypted relationship associated with an electronically transmitted document or program.
This ia a database or record set that is kept and maintained across a network rather than stored in a central location. It is independently held in individual nodes (participants) in a large network. Records are not stored or maintained by a central authority and this redundancy is what makes the blockchain immutable. Once a record is in the public domain, it is there permanently. Aside from cryptocurrency, there are many business and personal applications for distributed data.
Similar to a distributed ledger, a distributed network uses the concept of spreading functionality and computing power across a large network rather than keeping it contained in a single location. Using smaller pieces of individual computing power, distributed networks can apply massive computing power by taking the small pieces and aggregating them as a collective computing unit.
When someone attemps to send the same bitcoin to two different recipients, you get something called Double Spending. A double spend attack is synonymous with a 51% attack where a group of miners on a blockchain who hold a majority elect to collude in an effor to spend their cryptocurrency twice. Once a transaction is confirmed however, it makes it almost impossible to double spend. The more confirmations, the harder it is to perform this type of attack.
Acronym for Ethereum Request for Comments (ERC), this is a standard for the development of the Ethereum blockchain. Basically, the range of ERC's comprise the recommended development standards across the Ethereum network and, in line with a decentralized approach, the adopted standards are those most accepted by the community. The currently adopted standard is ERC 20, which comprises almost all issued ERC tokens.
ERC 20 Token Standard
The flagship standard of Ethereum development, ERC 20 accounts for almost all issued tokens. Because it is the most widely adopted standard, the Ethereum community has a stable, non-conflicting set of applications and smart contracts across the network. It is anticipated that the community will continue with the ERC 20 standard for the foreseeable future. Other token standards exist such as ERC 20, ERC 223, ERC 621, ERC 721 and others, but these have not reached widespread acceptance over ERC 20.
ERC 223 Token Standard
In order to help prevent or recover lost tokens, the ERC 223 standard was created. This standard solved the problem of tokens sent to a contract not designed to work with sent tokens, so the tokens are lost. This uncommon event has diminished in importance, especially with ENS (Ethereum Name Service) which has reduced the number of times this happens even further. For that reason, this standard was not widely supported. It is worth noting that ERC 223 uses less gas to complete the transaction than the ERC 20 standard.
This standard allows for the increase and decrease of token supply. Where ERC 20 allows for static supply amounts, ERC 621 allows for change in token supply. As an extension of ERC 20, ERC 621 is cross-compatible.
ERC 721 Token Standard
Most coins are identical. Non fungible means that coins, while they spend in the same fashion, may represent a different underlying asset. Real estate where a coin, equal in value, represents a specific portion of that real estate, is called non-fungible. Crypto Kitties is another example. The token spends the same, but the Kitty is different. ERC 721 solves that problem.
As a derivative of the ERC 20 standard, ERC 827 is cross compatible with ERC 20. This extension allows for the transfer or tokens and also allows token holders to approve spending of tokens by third parties. This opens a entirely new realm of transaction types for token holders.
This standard would allow for the acceptance of multiple types of Ethereum tokens in a single transaction. This would include fungible, non-fungible and alternate configurations that could be spent in one transaction.
Whenever a transaction occurs on the Ethereum network, a transaction fee also known as gas is used to facilitate the transaction. Ether is the gasoline that makes the Ethereum Blockchain network and entire Ethereum ecosystem run. It is the incentive for network participants to facilitate transactions.
Think of Ethereum as another coin. The blockchain application, operates on the same principles as Bitcoin but with significant modifications that allow it to utilize smart contracts and carry a heavier data payload than its bigger counterpart. These smart contracts are the result of users creating their own decentralized "chains" as it were to create functionality and data within the Ethereum blockchain.
A Turing complete, 256 bit Virtual Machine, the Ethereum Virtual Machine or EVM allows anyone to execute arbitrary EVM byte code. It is part of the protocol for ETH and is critical to consensus in the Ethereum (ETH) ecosystem. Every Ethereum node runs on the EVM and works to maintain consensus through the entire Ethereum network.
Almost identical to a stock exchange as we know it, the primary function of the exchange in the crypto space is to exchange one cryptocurrency for another. All crypto exchanges accept certain forms of crypto as deposits and will payout in crypto as well. There are two primary differentiators when researching exchanges in the blockchain space. First is liquidity, which often dictates ability to payout quickly and always impacts volatility. The second differentiator to look for is whether the exchange also accepts fiat for deposits and can payout fiat in withdrawals as well. The exchange makes their money via spreads and transaction fees. The location of the exchange and government oversight may regulate exchange policies.
Government-issued currency currently accepted for transactional purchases. These include the US Dollar (USD), Euro (EUR), Japanese Yen (YEN) and many others totalling approximately 775 fiat currencies.
A fork is an alteration or bifurcating of the blockchain data in a public blockchain. Forking results in an alternate version of the blockchain, which leaves two blockchains to run simultaneously on a different "leg" of the network.
When you say a coin is "fungible", you are saying that the coin or digital asset and the value it represents is identical. Bitcoin is a fungible coin because every Bitcoin is the same and represents the same asset class. In other words, while the value of a fungible coin is always the same, so is what it stands for. If I bought a pizza with a fungible coin, then the coin does not represent any part of the pizza. If I bought a pizze with a non-fungible coin, then the coin might represent a particular slice of the pizza.
Gas measures the amount of effort it takes to complete a transaction in Ethereum. By measuring the effort, an algorithm calculates the amount in Ether necessary to process, or compute, a transaction. A complex transaction may take more Gas to complete than a simple transaction.
The very first block of a blockchain. The definition means "first" block, but often times the genesis block is referring to the first several blocks on a chain. The genesis block is often referred to as the first block on a blockchain. Interesting note is that the genesis block for Bitcoin quotes the headline of the New York Times the day the block was created, “03/Jan/2009 Chancellor on brink of second bailout for banks”.
Governance is equitable to leadership in a centralized organization. In a decentralized manner, governance is the adminstration of a blockchain company driven by the calculated rules of an organization. For instance, masternode governance is the adoption of rules based on the number of masternodes in a network.
Reducing the number of Bitcoins generated per block as a calculated means of reducing the acquisition of a finite supply of Bitcoin. In other words, only 21 million Bitcoin can ever be generated and collected through mining. Every 4 years, the amount of reward is cut in half to reduce the supply created from mining efforts. This allows more control over "when" the asset will be completely mined. This is estimated to be in 2140.
Alters the blockchain data and how it is generated or mined on a public chain. This results in a split where a miner has to go one direction or another, not both. It is the creation of a new chain (coin) where the history of the new chain will no longer reflect the old chain from the time of the split.
A physical device for the storage of digital assets designed to connect online and also be disconnected to operate as a cold storage device.
Hash, or hashing, is the act of processing a function to interact with the chain and output data to the chain. Hashing is used to find new blocks in mining and output new data sets in order to confirm transactions on the blockchain.
A mapping function for data of any size or construct.
This is the rate at which a device can process transactions. CPU, GPU and ASIC devices all perform hash rates, measured in hashes per second, at different speeds.
Usually a piece of software on a personal phone, tablet or computer, a hot wallet is a digital storage device connected to the web. An exchange wallet is also considered hot because people can connect to it via the Internet. A hot wallet, because it is connected, is most at risk for hacking and digital asset theft.
A hybrid model is both Proof of Stake (PoS) and Proof of Work (PoW). This creates a consensus distribution algorithm on the network that is both Masternode and Mining. In this method, a balance between miners and masternodes (aka - voters / holders) can be achieved thus creating a system of governance driven by the entire community.
The Linux Foundation started a project of open source blockchains termed the "Hyperledger". It is a collaboration effort to advance and promote blockchain technology across multiple industries. The intent is to unify companies and blockchain developers to construct blockchain frameworks impacting core business silos. The initiative is driven by multiple globally significant organizations.
The Blockchain Application Development for Hyperledger. It is designed to make application development on Hyperledger Fabric manageable for developers across varied development platforms.
A permissioned blockchain infrastructure, Hyperledger Fabric is a modular architecture designed for the execution of "Chaincode" (Smart Contracts).
Unchangeable. With an inherent inability to be altered by any party or parties with a permanently published state for viewing in a public format. The blockchain ledger is designed to be immutable making it an excellent platform for public information.
Initial Coin Offering (ICO)
Still viable in 2019 but far less utilized as a funding vehicle, the ICO generated millions as people and investors wanted to put money behind blockchain ideas. Many failed due to lack of management and or ideas that ended up not being viable products or services or that never reached implementation due to execution failure. Investors are now far more wary of ICO opportunities. The form in which capital is raised to fund new cryptocurrency ventures. Modeled after an Initial Public Offering (IPO). Funders of an ICO receive tokens.
IEO (Initial Exchange Offering)
Very similar to ICO's the primary difference is that funding is delivered through exchanges rather than directly to the investor. One negative aspect of an ICO is that, in most cases, the coin never reached an exchange so was not marketable for all intents and purposes. In an IEO, the exchange piece is already there so the entity has at least registered on a domain and the coin is sellable. Although one step closer, you still have to do extensive research and find someone to buy the coin if the IEO is not able to execute.
Initial Token Offering (ITO)
Initial Token Offerings are similar to ICOs (initial Coin Offerings), but different in that not every blockchain project that is tokenized has developed a new coin. A project built on the Ethereum network that is tokenized using ETH would be considered an ITO, the project isn’t launching a new coin, just a new application on an established coin platform.
Used by development teams to repair a broken or unintentionally forked chain. By purposely forking a chain, blockchain participants are forced back onto the primary chain so that the chain is singular and growing in the right direction. Another intentional fork is where two teams want to take a coin in separate directions for functional reasons. Bitcoin has experienced several intentional forks.
InterPlanetary File System (IPFS)
Interplanetary Networks open source project for the purpose of developing P2P storage and media sharing hypermedia across a distributed file system. There is no single point of failure in an IPFS structure, which creates a trustless node relationship for access and redundancy.
J - Empty
K - Empty
Just like a physical ledger, this is a collection of information attributed to a unique identifier (account, individual, etc.) where the information is entered and maintained. Different from a physical ledger, the information is immutable and cannot be erased, changed or altered because it exists not in one place, but in the blockchain record held on every node (participant) in the network. This ledger can only be appended.
An added layer (Layer 2) allows for faster transaction processing by using a "Payment Channel" that can be opened by participants without actually sending them to the blockchain. Once the channel is closed, the payment is recorded and then sent to the blockchain for entry. This speeds up the time it takes to complete a transaction.
The ability to convert assets to a form of payment accepted in exchange for a service or product. For cryptocurrency, it is the ability to readily exchange digital assets for goods or services.
Also known as Market Capitalization, this is a measure of how much money is in a coin. By multiply outstanding coins by the current value of a coin, we get to the capitalization measure which tells us about reach of the coin, liquidity for investors and, comparatively, the direction of the valuation for the coin.
A data structure used in computer science applications, bitcoin and other cryptocurrencies, Merkle trees work to encode data from the blockchain more effectively, efficiently and securely. Also known as "binary hash trees", a Merkle tree is a hash-based data structure with a branching factor of 2. They represent a hash of block data with up to 2 children.
A combination of hardware and software used to mine data from the blockchain network in effort to "discover" new blocks and add them to the chain. This is achieved by "hashing" for miners and "forging" for stakers. The miner (staker) receives a reward for adding a new block to the blockchain.
Mining is the act of "hashing" through data on the blockchain network to validate blockchain transactions and discover new blocks to add to the chain. It is a combination of hardware and software to process data in a specific format. The faster the processing, the more a miner earns.
When multiple miners join together to increase hash rate as a collective unit, they are termed a mining pool. Several mining pool entities exist that band miners together for a fee. The upside is that more blocks are discovered than in individual mining due to the increased computing power of the pool.
An Ethereum based browser for using Decentralized Applications (dApps) and interacting with the Ethereum blockchain.
MSP (Membership Service Provider)
A governing unit on Hyperledger Fabric blockchain network, the network can be managed by one or more Membership Service Providers.
Multi-signature is a term used to identify addresses that require multiple signatures. This provides an extra security layer by mandating that more than one key be used to authorize a transaction. A multi-signature is a signature formed by multiple other signatures combined. Some operations require a multi-signature in order for it to become executed.
(aka Validator, Client) Whether a Masternode or a wallet, a node is a term used for a copy of the blockchain ledger held by a user or participant. It stores, updates and broadcasts a complete copy of the blockchain. A node is also considered a "peer" in the P2P or Peer to Peer network meaning that the blockchain exists on many nodes.
In cryptography, a nonce is a number that is only used once and often has a timestamp associated with it.
Non-Fungible Token (NFT)
A non-fungible token is a token that spends like any other token, but also has an asset representation associated with the token. Using our pizza example, if you were to buy a pizza with a fungible token, that pizza would simply cost some coin amount and you would share it with your friends not knowing which piece of pizza was purchased by which coin you spent. When you buy that piece of pizza with a non-fungible token, you could assign a slice of the pizza to each token you used. A non-fungible token would be able to represent ownership of a specific underlying asset class.
Open Authorization Protocol is an authorization framework where unrelated platforms can share authenticated access without exposing the logon credentials of a user. Similar to, but not the same as SSO (Single Sign On) OAuth does not share credentials with third party. What happens in laymen's terms is that you create credentials on a single server, access the second server, which validates you have access to the original server, and then you are allowed onto the second server. This is much more secure than sharing your credentials across multiple platforms.
Also known as an Uncle Block, this is a mined block that is considered stale and will not typically be added to the blockchain. This happens in the case where two blocks are found and an attempt is made to add the block to the blockchain at the same time. The second block is not added to the blockchain and the transactions in that block are not considered valid. Typically, the faster the blockchain, the higher the ratio of uncle blocks.
This is currency created outside of the ledger, but that is spent on the ledger. The connection to crypto is thin, but there is a valid application. The term "Off-Ledger" is currently more applicable to fiat currencies where currency is minted off-ledger (outside the economic system) and used on-ledger. In reality, even fiat is minted on-ledger in the sense that governments know how much they create. This is a challenging concept, but for crypto, just think of off-ledger as crypto on distributed wallets.
Blockchain governance is the set of rules baked into algorithms within which the blockchain operates. While business decisions can be made outside the chain, the method in which the blockchain generates rewards and processes transactions is considered "On-chain Governance".
This is more representative of cryptocurrency in that currency is printed "On-Ledger" (generated within the ledger) and transactions processed within the blockchain.
An individual or software program that verifies an event to satisfy a smart contract is considered an Oracle. If payment is pending a service or shipping of products, the Oracle will verify that the service is complete, or the product has been delivered and the Oracle will then submit that information to the blockchain so that the smart contract can be completed.
Pertaining to Hyperledger Fabric, an orderer network refers to the orderers within an Ethereum based Hyperledger Fabric network. An orderer is also termed an Orderer Peer Node.
If you were to validate your ancestry and did not have or could not find parentage on either side of your family, you would be considered an orphan. The same is true in blockchain. If the network is unable to locate the parents or grandparents of a block, the block is considered an orphan. Because it does not have lineage on the chain, the details and transactions within that block are considered invalid. If the orphaned block were to continue forward, then it would turn into a fork, but it won't. Using the longest chain rule, the network will look to the original chain for the longest lineage and revert back to that chain. Since no transactions were executed from the orphan block, no coin is lost.
Peer to Peer (P2P)
A traditional model for computing is to have a single server or set of servers that delivers content to multiple users. Peer to Peer computing changes that model. Rather than have a single server, think of content living on many computers in a shared environment where they are not directly connected to each other and, if one computer fails, all of the other computers with that content would still be able to serve it to users. This is called "decentralized" since all of the content is not stored in one single place and can be delivered to whoever asks for it, even if some of those computers are not available. Redundancy and computing power are now distributed across multiple peers.
A permissionless blockchain is a public blockchain where no permission is required to join or interact with the network. The blockchain is available to anyone and is transparent and decentralized. Voting is equally distributed between all network participants. Bitcoin and Litecoin are examples of permissionless blockchains.
Permissioned blockchains require access to be granted in order to access or interact with the blockchain. Authority is granted to nodes or other entities who have the ability to allow or deny access to the network. Permissioned blockchains can also be private and typically have less transparency and centralized governance. This type of blockchain can be useful where blockchains interact with business operations.
Similar to the Lightning Network for Bitcoin, Plasma is the Layer 2 concept for Ethereum focused on improving transaction speed to increase scalable viability.
Pragma(s) or Pragma-line
The same definition in programming, Pragma refers to instructions to the compiler. In the case of crypto, Pragma refers to the specific version a smart contract will use.
Usually falling into the Permissioned Blockchain class, a Private Blockchain has complete control over who is allowed to interact with that blockchain. Rather than use a PoW or PoS consensus model, a Private Blockchain utilizes a system known as "Byzantine Fault Tolerant (BFT)", which is not a trustless system making the BFT system less secure.
Currency issued by a non-governmental agency is considered private currency. Cryptocurrency is still technically labeled "Private Currency" since most governments will not officially recognize crypto as currency. Doing so would purportedly diminish the value of fiat currencies.
In the world of cryptography and cryptocurrency, a private key is what allows access to funds in your wallet. A private key is an encrypted set of data that is highly secure. When matched with a public key, it opens the door and allows authorized access to data kept behind the locked door. It is imperative that any private keys be kept safe and inaccessible from the outside world. Do not send your private key to anyone as this grants them access to your crypto funds.
Proof of Activity
This is another consensus algorithm that combines Proof of Work and Proof of Stake concepts and, based on successful completion of the required work in the Proof of Activity algorithm, authorizes reward payments to stakers on that blockchain.
Proof of Authority
Identity based consensus algorithm that secures blockchains by validating nodes based on reputation rather than staking coins. Blocks and transactions are validated by preapproved participants on the chain acting as moderators rather than using coins as a means to purchase masternodes and validating transactions via traditional PoS systems. This is especially effective in private networks where trusting a node based on identity is more secure.
Proof of Burn
Burns are the elimination of coins on a blockchain. This is done to reduce supply or eliminate supply given back to the issuing organization depending on the structure. A miner will send coin to a pre-assigned burn address and that miner will receive a reward based on Proof of Burn.
Proof of Capacity
Instead of using computing power (PoW) or a stake in coins (PoS), PoC (Proof of Capacity) is a consensus algorithm that enables miners to use their available hard disk drive space to determine mining rights. PoC stores potential hashing solutions on the HDD prior to actual mining so the bigger the list that can be stored, the faster the solution and higher the probability of earning the reward.
Proof of Elapsed Time
The Proof of Elapsed Time (PoET) is a consensus algorithm where nodes generate a random time period and then sleep during that period. The first to wake and submit the block, is the winner of the block.
Proof of Stake (POS)
A blockchain can require that a masternode owner holds a predetermined amount of coin to "purchase" a masternode. This is created in the governance rules of that chain. The masternode owner then begins earning rewards by processing transactions with that masternode and earning transaction fees. The more masternodes, the more rewards. This is known as the Proof of Stake consensus algorithm.
Proof of Work (POW)
A miner buys hardware designed to solve mathematical problems in the fastest time possible to verify a transaction and earn a block reward. The faster the solution, the more block rewards earned. Mining hardware evolution for speed of processing is historically CPU, GPU and ASIC mining devices with each being progressively faster. This process is the Proof of Work consensus algorithm.
For crypto, protocol is the basic set of rules by which a process is executed. The most important application of this term pertains to how underlying blockchain governance and rules are executed and whether the rules are sufficient or consistent with the objectives of the blockchain network.
The cypher of the public key is also known as the Public Address. The Public Key is the entry point to a Private Key for any transaction. A public address is the translation of the public key which is a long string of text.
When a transaction is generated between two parties, each party generates a private key. Because each party does not want the private key exposed, a matching public key is generated to send to the other party. The other party executes the transaction using the public key and the transaction is matched for final execution. The public key is a long string of text often translated cryptographically into a public address.
Public Key Cryptography
This is the act of creating a relationship between a public key and a private key. It is not possible to determine the private key by knowing the public key, but the relationship between the public key and private key allows a transaction to complete. In essence, a public key turns the private key in the lock allowing the lock to open.
Using the concept of a single "authoritative" ledger, copies are made and then distributed to all of the participants in a blockchain network. This is a Replicated Network.
A derivative based on the name of the founder of Bitcoin, Satoshi Nakamoto, the Satoshi is the smallest fraction of Bitcoin one can possess - One-hundred millionth of a Bitcoin (.00000001). The principle economic theory behind Bitcoin is that, over time, it will continue to gain. The reason is that, unlike fiat, no more Bitcoin will be created after the 21,000,000 mark. Supply is finite so as the value increases, users will divide downward rather than add to the overall supply.
The individual or pseudonym of the person, people or organization that created Bitcoin in 2009. Based in theory on the concept of a free market, peer 2 peer network of currency and the resolution of political influence on economic systems, Nakamoto worked to find a cryptographic solution. In 2008, a paper outlining Bitcoin was issued and the first software was released a year later.
The ability to maintain performance standards as the user base grows is called scalability. From a crypto perspective, scalability means the acceptance of additional network traffic without degradation to transactional processing. Seemingly simple, this is a complex balance between processing speed, accuracy and network growth.
Often mispronounced, "ess-crypt" is a password based key derivation function designed to make it cost ineffective to conduct large-scale hardware attacks because too much memory would be required to carry out the attack. Created by Colin Percival for Tarsnap, this is a mining algorithm that makes it, unlike SHA-256 (Bitcoin), more difficult to apply ASIC miners to mine because the faster you mine, the more memory is required.
Security Token Offering (STO)
Tokenization of stocks and bonds is a new buzzword in the crypto space. Aka STO, or Security Token Offering, the difference is the idea of a crypto currency backed by an asset such as stocks, bonds or other tangible assets. Much how the dollar started out when it was backed by gold. An STO is also regulated much the same as a stock.
A cryptographic hashing algorithm used as the encryption platform for cryptocurrencies such as Bitcoin and its derivatives. SHA is an acronym for Secure Hash Algorithm with a 256-bit key. It is a member of the SHA-2 family, a standard adopted in 2016.
Blockchain is data. Data processing is diametrically opposed to efficiency as the size of the data set grows. Sharding is a method developed in the mid to late 1990's to break up centralized databases so they would perform more efficiently. It is the logical division of data. As it applies to the blockchain, sharding is the breaking up of blocks so they can be read more quickly and transactions processed faster.
When business rules are programmatically incorporated into an agreement for automatic execution based on some measure of performance between two or more parties on the Ethereum blockchain, there exists a smart contract. A smart contract is immutable once deployed. Smart contracts, unlike coins not on the Ethereum chain, can be manipulated based on business requirements. This makes them desirable in the business world where contracts can be programmed to perform a function in exchange for payment.
While a soft fork is technically still a chain split, it is mostly a rule change and the split is between machines following legacy blocks versus those following the new fork. The soft fork will invalidate a block previously considered valid if the rules are broken and the soft fork will also allow the recognition of the new fork once the soft fork is activated. In a battle to adopt the soft fork chain over the legacy chain, the soft fork typically wins.
As its name implies, it is a coin with the objective of stabilizing price in a world of crypto volatility. While some might find wild swings attractive, crypto use in an economic environment requires some stability and predictability. That is the objective of any coin classified as a stablecoin. To smooth price swings, stablecoins are backed by assets and can be pegged to any commodity or currency mechanism. Change in coin pricing is reflective of change in asset pricing.
Orphan blocks and stale blocks are not the same. Orphan blocks belong to a shorter chain and are left there to wither away. Stale blocks are valid and are on the longest chain but are not active due to a conflict or multiple blocks being mined at the same time. The miners who continue to work on an inactive block are working on a stale block that is not eligible for rewards.
In Bitcoin and most other coins / tokens, developers create a chain on which to test development and changes in code. This chain remains active and can be connected to in the same way you would connect to a "live" chain but is solely for the purpose of testing and development.
A block is a section of data. Within that block are subsets of data including transactions. Transactions are encrypted, collected into a block and added to the blockchain.
When a transaction is processed, either by PoS, PoW or some other relevant consensus algorithm, a fee is charged for the processing effort. This "transaction fee" is paid out as a reward to the entity who processed the transaction. The rules of the chain dictate who pays the transaction fee.
Representation of a digital asset built on an existing blockchain.
This refers to a distributed ledger where a currency or coin is not needed in order for the ledger to operate.
If a machine can perform mathematical calculations, then it is Turing Complete. It is the capability of a machine to perform calculations that any other programmable computer is capable of performing.
Also known as an Ommer Block, this is a mined block that is considered stale and will not be added to the blockchain. This happens in the case where two blocks are found and an attempt is made to add the block to the blockchain at the same time. The second block is not added to the blockchain and the transactions in that block are not considered valid. Typically, the faster the blockchain, the higher the ratio of uncle blocks.
Unspent Transaction Outputs (UTXO)
Every transaction begins and ends with an Unspent Transaction Output. As a balancing tool, every transaction is confirmed as valid with a UTXO as the confirmation results in the removal of spent coins from the UTXO database. The Unspent Transaction Output is also what prevents double spends.
An experimental coding language for Ethereum and smart contracts. Support for this language is sparse and there are still some limiting factors such as the inability to call methods or other smart contracts, but it is an alternative to Solidity so worth observing.
A client-side software program that stores private and public keys along with other blockchain components to interact with the blockchain and keep balances and transactions for the user. It is critical that every user protect private keys and that every wallet be encrypted to prevent hacking. There have been some multi-coin wallets, but for the most part, every coin has its own wallet.
In the crypto world, every organization that presented crypto for any investment vehicle created a whitepaper, which is an authoritative document designed to provide information about a project, the team, goals and objectives, market differentiators and more. This is the definitive tool to communicate everything about a cryptocurrency project.
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