Blockchain Glossary: From A-Z
a trader with a fat account, usually one who is bullish on the price of bitcoin. Also, there can be a #BearWhale – a big-time trader who is bearish on the price of bitcoin. Basically BearWhale is a dangerous creature because he/she/it tries to sell large quantities of bitcoin on the open market, lowering the price for everyone else. But if the hodlers align with whales, they can slay it. The most common example is an epic battle, bitcoin believers slayed a $9 million BearWhale in 2014. Someone posted a limit order to sell 30,000 bitcoins at $300 each—well below the mid-300s price level the cryptocurrency had been trading at throughout the weekend. In the still-nascent market, an order of that size spooked the market, sending prices plummeting to levels not seen for a long time. And although he was eventually defeated—the order was cleared after making a remarkable pattern in the bitcoin price chart (below)—the community of cryptocurrency enthusiasts has begun to mythologize the incident, creating artwork and poetry in honor of the battle. Not only are they proud of successfully pushing against this perceived bearishness, but also no one can really figure out why the BearWhale emerged to begin with.
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, should they have the malicious intent to do so.
Cryptocurrency addresses are used to send or receive transactions on the network. An address usually presents itself as a string of alphanumeric characters.
Basically any coin that is not bitcoin is an alt coin. Altcoins are the alternative cryptocurrencies launched after the success of Bitcoin. Generally, they project themselves as better substitutes to Bitcoin. Many altcoins are trying to target any perceived limitations that Bitcoin has and come up with newer versions with competitive advantages. There is a great variety of altcoins.
Bitcoin is the first decentralised, open source cryptocurrency that runs on a global peer to peer network, without the need for middlemen and a centralised issuer.
Blocks are packages of data that carry permanently recorded data on the blockchain network.
A blockchain is a shared ledger where transactions are permanently recorded by appending blocks. The blockchain serves as a historical record of all transactions that ever occurred, from the genesis block to the latest block, hence the name blockchain.
Block explorer is an online tool to view all transactions, past and current, on the blockchain. They provide useful information such as network hash rate and transaction growth.
The number of blocks connected on the blockchain.
A form of incentive for the miner who successfully calculated the hash in a block during mining. Verification of transactions on the blockchain generates new coins in the process, and the miner is rewarded a portion of those.
A ledger maintained by a central agency.
A distortion of “China,” a country that is hugely influential to bitcoin because it’s where the most trading and mining activity occurs.
The successful act of hashing a transaction and adding it to the blockchain.
Consensus is achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exact copies of each other.
Also known as tokens, cryptocurrencies are representations of digital assets.
Cryptographic Hash Function
Cryptographic hashes produce a fixed-size and unique hash value from variable-size transaction input. The SHA-256 computational algorithm is an example of a cryptographic hash.
A decentralised application (Dapp) is an application that is open source, operates autonomously, has its data stored on a blockchain, incentivised in the form of cryptographic tokens and operates on a protocol that shows proof of value.
Decentralised Autonomous Organizations can be thought of as corporations that run without any human intervention and surrender all forms of control to an incorruptible set of business rules.
Distributed ledgers are ledgers in which data is stored across a network of decentralized nodes. A distributed ledger does not have to have its own currency and may be permissioned and private.
A type of network where processing power and data are spread over the nodes rather than having a centralised data centre.
This refers to how easily a data block of transaction information can be mined successfully.
A digital code generated by public key encryption that is attached to an electronically transmitted document to verify its contents and the sender’s identity.
Double spending occurs when a sum of money is spent more than once.
Ethereum is a blockchain-based decentralised platform for apps that run smart contracts, and is aimed at solving issues associated with censorship, fraud and third party interference.
The Ethereum Virtual Machine (EVM) is a Turing complete virtual machine that allows anyone to execute arbitrary EVM Byte Code. Every Ethereum node runs on the EVM to maintain consensus across the blockchain.
Forks create an alternate version of the blockchain, leaving two blockchains to run simultaneously on different parts of the network.
The first or first few blocks of a blockchain.
A type of fork that renders previously invalid transactions valid, and vice versa. This type of fork requires all nodes and users to upgrade to the latest version of the protocol software.
The act of performing a hash function on the output data. This is used for confirming coin transactions.
Measurement of performance for the mining rig is expressed in hashes per second.
Hold your coins! Set the stop loss (if you are in trading platform) order as low as possible. A stop-loss is designed to limit an investor’s loss on a security position. Setting a stop-loss order for 10% below the price at which you bought the stock will limit your loss to 10%. But because we don’t want to sell our bitcoin, set your stop-loss order for 99%. This will save you from price fluctuations, because any crypto can fall down by 20-30% in minutes, and go back up. But you already lost your money. So, don’tcapitulate in the face of plunging prices. The term was established by a GameKyuubi in the great bitcoin crash of 2013: “I AM HODLING” a post on Bitcointalk. But be careful and don’t become a #Bagholder — An investor who has been hodling for too long, and is left to face the consequences.
A hybrid PoS/PoW allows for both Proof of Stake and Proof of Work as consensus distribution algorithms on the network. In this method, a balance between miners and voters (holders) may be achieved, creating a system of community-based governance by both insiders (holders) and outsiders (miners).
Mining is the act of validating blockchain transactions. The necessity of validation warrants an incentive for the miners, usually in the form of coins. In this cryptocurrency boom, mining can be a lucrative business when done properly. By choosing the most efficient and suitable hardware and mining target, mining can produce a stable form of passive income.
Bitcoin mining is the process by which transactions are verified and added to the public ledger, known as the block chain, and also the means through which new bitcoin are released. Anyone with access to the internet and suitable hardware can participate in mining. The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle. The participant who first solves the puzzle gets to place the next block on the block chain and claim the rewards. The rewards, which incentivize mining, are both the transaction fees associated with the transactions compiled in the block as well as newly released bitcoin.
Multi-signature addresses provide an added layer of security by requiring more than one key to authorize a transaction.
A copy of the ledger operated by a participant of the blockchain network.
Oracles work as a bridge between the real world and the blockchain by providing data to the smart contracts.
Peer to Peer
Peer to Peer (P2P) refers to the decentralized interactions between two parties or more in a highly-interconnected network. Participants of a P2P network deal directly with each other through a single mediation point.
A public address is the cryptographic hash of a public key. They act as email addresses that can be published anywhere, unlike private keys.
A private key is a string of data that allows you to access the tokens in a specific wallet. They act as passwords that are kept hidden from anyone but the owner of the address.
Proof of Stake
A consensus distribution algorithm that rewards earnings based on the number of coins you own or hold. The more you invest in the coin, the more you gain by mining with this protocol.
Proof of Work
A consensus distribution algorithm that requires an active role in mining data blocks, often consuming resources, such as electricity. The more ‘work’ you do or the more computational power you provide, the more coins you are rewarded with.
This does not mean what you think it means. Alt Coins are so full of Pump and Dumps that the term has a different meaning. Basically, anything that goes up is a ‘Pump’ and anything that goes down is a ‘dump’. Noobs will get the most of the latter. But if you really want some real life examples, Pump N’ Dump is a process of acquiring a girl’s love, having your way with her in bed, and then dumping her immediately afterwards and never returning her calls.
Borrowed from online gaming slang, to mean utterly destroyed or ruined when you discover that you were the last person to ever place an order to buy that shitcoin. One trader on r/bitcoin put out this this elegiac call after one of bitcoin’s many crashes: “MOMENT OF SILENCE FOR ALL OF THOSE #REKT ON MARGIN CALLS”.
Scrypt is a type of cryptographic algorithm and is used by Litecoin. Compared to SHA256, this is quicker as it does not use up as much processing time.
SHA-256 is a cryptographic algorithm used by cryptocurrencies such as Bitcoin. However, it uses a lot of computing power and processing time, forcing miners to form mining pools to capture gains.
this is not necessarily a bad term, but usually a great ways to lose your money. But traders don’t avoid a coin because it is a shitcoin. There is traders who rally a coin with a broken blockchain. Just never fool yourself and start believing in a shitcoin.
Smart contracts encode business rules in a programmable language onto the blockchain and are enforced by the participants of the network.
A soft fork differs from a hard fork in that only previously valid transactions are made invalid. Since old nodes recognize the new blocks as valid, a soft fork is essentially backward-compatible. This type of fork requires most miners upgrading in order to enforce, while a hard fork requires all nodes to agree on the new version.
Solidity is Ethereum’s programming language for developing smart contracts.
A test blockchain used by developers to prevent expending assets on the main chain.
A collection of transactions gathered into a block that can then be hashed and added to the blockchain.
All cryptocurrency transactions involve a small transaction fee. These transaction fees add up to account for the block reward that a miner receives when he successfully processes a block.
Turing complete refers to the ability of a machine to perform calculations that any other programmable computer is capable of. An example of this is the Ethereum Virtual Machine (EVM).
A file that houses private keys. It usually contains a software client which allows access to view and create transactions on a specific blockchain that the wallet is designed for.
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