Korak Bhaduri

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The Blockchain Glossary

In January 2022, I did a 30-day project on “Why Your Business Needs to Adapt to Blockchain”. This post is a part of it. To know what I covered, learned, and executed in the project, visit this page.

While writing my blog posts, I realized that any beginner would find it difficult to fully understand the posts in absence of a good dictionary. I created this glossary to solve that problem. It contains those terms that are widely used in the blockchain jargon. Most of the ‘confusing’ terms that I have used in my posts are covered here. In a way, this glossary is a synthesis of my learnings.

I’ve only covered terminologies that are specific to blockchain or have unique meanings when used in the context of it. I have excluded those that may be a part of the blockchain vocabulary but have the same meaning as when used in the context of finance, economics, programming, governance, or law. Examples of excluded terms are contract, inflation, encryption, FOMO, GitHub, etc. On the other hand, I have included regular English words that have special meanings in the context of blockchain such as coin, faucet, gas, fish, etc.

  • A
    • Altcoin: Coins other than Bitcoin are known as alternate coins or altcoins.
  • B
    • Binance Labs: A social impact fund and initiative to incubate, invest, and empower blockchain and cryptocurrency entrepreneurs and projects.
    • Bitcoin: The first-ever cryptocurrency created in 2008 by the anonymous person or group called Satoshi Nakamoto. It works with a Proof of Work consensus protocol.
    • Block: A list of records that needs to be validated by verifiers on a blockchain network to be permanently recorded on the network.
    • Blockchain 1.0: Application of the use of distributed ledger technology in a new digital payment system called cryptocurrency.
    • Blockchain 2.0: Addition of smart contracts on the blockchain.
    • Blockchain 3.0: Running dApps on blockchain. In addition to smart contracts, dApps required a web front-end.
    • Blockchain Trilemma: The belief that a blockchain cannot be secure, decentralized, and scalable at the same time. It can only be two of these. This concept is coined by Vitalik Buterin, the founder of the Ethereum network.
  • C
    • Chain Split: it is equivalent to forking. A chain split is a separation of an original blockchain into several independently managed projects.
    • Coin: Coins, in crypto, are a medium of exchange like a currency. Coins are native to their own blockchain networks. For example Ether is the native coin of the Ethereum network.
    • Collateral Tokens: Tokens deposited to cover the risk of taking a crypto loan.
    • Consensus Protocol: The underlying principles of block verification in the blockchain. Consensus protocols outline the conditions that need to be met by nodes and validators so that new blocks can be added to the blockchain. The consensus protocol varies from network to network. For example, Bitcoin has a Proof of Work consensus protocol whereas Binance Smart Chain has a delegated Proof of Stake consensus protocol and Solana has a Proof of History consensus protocol.
    • Contract Address: Contract Address refers to the address where the contract is deployed on a blockchain such as Ethereum.
  • D
    • DAOs (Decentralized Autonomous Organizations): Internet native organizations collectively owned and managed by members with no central leadership. It is an organization run by code agreed upon by people who started the DAO. Voting rights may be obtained by owning tokens. Proposals only get passed when majority stakeholders pass them. Determination of majority differs from DAO to DAO and is specified in the smart contracts. They are built on open-source blockchains and are fully autonomous and transparent. Example: Dash, The DAO
    • Decentralized Application (or dApp): Computer applications that run on a blockchain network instead of a central server. A dApp is a combination of smart contracts and front-end user-interface.
    • DeFi: Decentralized Finance or DeFi is a blockchain-based technology that offers financial instruments without the need for intermediaries such as banks, brokerages, etc. One famous DeFi project is AAVE built on the Ethereum network that allows you to earn interests on deposits and borrow assets.
  • E
    • Ether The native coin of the Ethereum network
    • Ethereum: The second-largest blockchain network. It allows smart contracts. The native coin of this network is Ether.
    • Ethereum Virtual Machine (EVM) The Ethereum Virtual Machine is the software platform that developers can use to create decentralized applications (dApps) on Ethereum. This virtual machine is where all Ethereum accounts and smart contracts live.
    • Eth-2.0 Ethereum will make a transition from Proof-of-Work (PoW) consensus mechanism to Proof-of-Stake (PoS) consensus mechanism soon. Then, it will be known as Eth 2.0 or Serenity
    • ERC-20: Tokens designed and used solely on the Ethereum platform. For example, Basic Attention Token (BAT)
    • Exchange: A digital marketplace that allows trading of cryptocurrencies with fiat money or other cryptocurrencies.
  • F
    • Fan Token: Those tokens that give holders special membership-perks related to a club, league, sports team, etc.
    • Faucet: Accounts that give you free tokens for testing on a Testnet or in exchange for completing small tasks on the Mainnet
    • Fiat currency: Currencies notes issued by the central banks of different countries such as dollars, pounds, euros, rupees, etc.
    • Fish: A person or institution holding a small amount of cryptocurrencies.
    • Fork (Blockchain): A situation when a blockchain diverges into two different chains. This can happen due to disagreements in reaching consensus, to add new features to a blockchain, to reverse a hacking attack, or to avoid potential threats from bugs
    • Fork (Software Development): Forking is when developers copy and paste someone else’s code, and start developing on that piece of code to create a distinct software.
    • Fungibility: The property of being able to be replaced by another identical thing.
  • G
    • GameFi: The application of blockchain in a combination of Gaming and Decentralized Finance. It is also referred to as Play-to-Earn (P2E) games.
    • Gas: The payment for the computational power required for a transaction on a blockchain network. As the demand for transactions on a network increases, the gas fee increases because every network allows only a limited number of transactions per second. Example: the price of a transaction on the Ethereum network is 21000 gas. For the current price of gas: visit ethgasstation.info
    • Gwei: Gwei is a Giga Wei or 1 billionth of an Ether. 1 Ether = 0.000000001 Gwei
  • H
    • Hash: A mathematical function that converts an input of arbitrary length into an encrypted output of a fixed length.
    • HODL: Hold On for Dear Life denotes a long-term investment strategy in the crypto jargon.
  • I
    • Immutability: The quality of remaining unchanged. A blockchain network is powerful because the transactions entered in a blockchain remain unaltered.
    • Initial Coin Offering (ICO): An approach for raising funds by crypto companies. The ICO is equivalent to company IPOs. The ICO begins with the crypto company launching a whitepaper. Several scams related to ICOs have happened in recent years.
    • Interoperability: The ability to access data across different blockchain networks. A major problem with the current status of blockchain networks is the lack of interoperability, which has given rise to many copycat projects.
  • J
  • K
  • L
  • M
    • Mainnet: Mainnet is just the real Bitcoin, Ethereum, or other Blockchain network. The term Mainnet is used to distinguish it from a Testnet where testing of dApps is done for free before spending real tokens to launch on the Mainnet.
    • Memecoin: A cryptocurrency that is associated with some theme, often as a joke rather than a serious product such as Dogecoin, Shiba Inu, etc.
    • MetaMask: A popular software cryptocurrency network used to interact with the blockchain. Blockchain transactions cost fees or Gas in cryptocurrencies. MetaMask stores your cryptocurrencies so that you can transact on a blockchain network.
    • Mining: The process of verifying transactions and adding blocks to the blockchain.
  • N
    • NFT (or Non-Fungible Token): NFTs are digital assets such as images, videos, music, tweets, etc. that you can own. The ownership is recorded in a blockchain network. Owning the digital asset doesn’t mean it can’t be copied. However, there may be unique benefits attached to owning an NFT such as being part of communities (for example, the Bored Ape Yacht Club). The ownership can also be transferred by exchanging an NFT on an NFT marketplace such as OpenSea or Rarible.
  • O
  • P
    • Private Key/ Secret Key: A secret string of letters and numbers that allows you to access and manage your crypto funds.
    • Public Key: The public key allows users to receive cryptocurrency transactions. You need to share your public key with the sender to receive cryptos in your wallet. It is the address to which the money is sent.
  • Q
  • R
  • S
    • Satoshi Nakamoto: The pseudonym used by the anonymous person or group who published the Bitcoin whitepaper. This person/group developed Bitcoin
    • SHA-256: Secure Hashing Algorithm (SHA) -256 is the hash function and mining algorithm of the Bitcoin protocol, referring to the cryptographic hash function that outputs a 256 bits long value.
    • Smart Contract: Smart contracts are agreements written between two parties in codes. There is no necessity of trusting a third party to uphold the contract. The code gets executed whenever the terms of the agreement are fulfilled.
    • Solidity: The programming language used to develop smart contracts for the Ethereum, Binance Smart Chain, and other blockchain networks.
    • Stablecoin: A cryptocurrency whose price is pegged to a fiat currency, commodity, or another cryptocurrency.
    • Staking: Process used to verify cryptocurrency transactions.
  • T
    • Testnet: An alternative blockchain used by a developer for testing their dApps without using actual cryptocurrencies.
    • Timestamp: The record of when a certain transaction occurred.
    • Token: Tokens are similar to coins, i.e., they store value and are used as a currency. The only difference is that tokens use another coin’s blockchain to keep a track of its data. For example, Basic Attention Token (BAT) on the Ethereum network
    • Tokenomics: The study of supply and demand of tokens. Understanding tokenomics can be one of the factors for predicting token price movements.
  • U
  • V
  • W
    • Wallet A digital wallet that allows you to store and manage your cryptocurrencies such as Bitcoin, Ether, etc.
    • Whale: Any individual or institution holding large amounts of a cryptocurrency.
    • Whitepaper: A document released by a crypto project that gives investors technical information about its concept, and a roadmap for how it plans to grow and succeed.
  • X
  • Y
    • Yield Farming: It is a way of earning interest by investing cryptos in decentralized finance markets.
  • Z