Comprehensive Blockchain Glossary

Address

Addresses are basically ‘accounts’ where bitcoins are held. To compare this with today’s existing banking infrastructure the public address can be compared to a bank account number that is used for transactions.

Bitcoin

Bitcoin can be defined by three main attributes: a digital currency, a digital asset and a trust network.

Bitcoin was designed to be an alternative to existing financial systems, but in addition to this aspiration, it was structured to allow the transfer of ownership of anything of value, by tying the rights to an asset to a unit of the digital currency.

Blockchain

A type of distributed digital ledger to which data is recorded sequentially and permanently in ’blocks’ is known as Blockchain.

Each new block is linked to the immediately previous block with a cryptographic signature, forming a ‘chain’. This tamper-proof self-validation of the data allows transactions to be processed and recorded to the chain without recourse to a third party certification agent. The ledger is not hosted in one location or managed by a single owner, but is shared and accessed by anyone with the appropriate permissions – hence ‘distributed’.

Block Reward

In order to incentivise free market participants to provide the security for an open blockchain, they are regularly rewarded with a share of a predefined number of the blockchain’s native tokens if they provide the computing power required to validate transactions and include them in blocks. This is called the block reward.

Cryptographic Hash Function

A function that intakes a variable-size input and produces a fixed-size unique value output is a Cryptographic Hash Function. Example: SHA-256 algorithm.

Consensus

A process which is encoded in software, by which computers in a network, called nodes, agree on the shared state set of data is Consensus.

Distributed Ledger

A ledger which works on many nodes and in a decentralized network is a Distributed Ledger. It is a type of database that are spread across multiple sites, countries or institutions.

Ethereum

A public blockchain system developed as an open-source project is called Ethereum. Its architecture works remotely on the Ethereum Virtual Machine.

Hyperledger

Hyperledger is an umbrella project started by the Linux Foundation which comprises various tools and systems for building open-source blockchains.

Oracle

A bridge from a blockchain to an external data source that allows a smart contract to complete its business by referencing timely real-world and authentic information. The platform is called Oracle.

Permissioned ledger

A large distributed network which uses a native token with access restricted to those with specific roles is known as permissioned ledger.

Private Key

An alphanumeric string kept secret by the user and designed to sign a digital communication when hashed with a public key is known as Private Key.

Proof of work

The mechanism by which data miners win the right to add blocks to a bitcoin-style blockchainis termed as Proof of work.

Public key

A unique string of data that identifies a participant within the blockchain which can be shared publicly is a Public key.

Token

The token is a means of exchange to give value to a transaction, typically a native cryptocurrency. Some non-currency blockchain architectures can be tokenless.