Blockchain Terminology | My Assignment Tutor

Blockchain Terminology:A GLOSSARY FOR BEGINNERSLearn the basic terminology for blockchain technology from CompTIA.We have the entire list of terms beginners need to know.51% AttackWhen more than 50% of the miners in a blockchain launch anattack on the rest of the nodes/users to attempt to steal assetsor double spend.AddressMuch like a URL, a blockchain address is the location to or fromwhich transactions occur on the blockchain.Alt-coinAny coin or token other than Bitcoin.Attestation LedgerA register or account book created for the purpose of providingsupport/evidence of individual transactions. Normally, anattestation ledger is used to verify that a transaction has beencarried out, or to verify the authenticity of products ortransactions.BitcoinThe first and most popular cryptocurrency based on DLTtechnology developed from a whitepaper written by SatoshiNakamoto in 2008.BlockA group of transactions entered into a blockchain; analogousto a page of a ledger or record book.BlockchainA mathematical structure for storing digital transactions ordata in an immutable, distributed, decentralized digital ledgerconsisting of blocks that are linked via cryptographic signaturethat is nearly impossible to fake, hack or disrupt.Blockchain (Private a.k.a. Permissioned)A blockchain that resides on a private network of computersthat is only accessible to those with permission.Blockchain (Public a.k.a. Permissionless)A blockchain that resides on a network of computers around theworld that is accessible to everyone.Byzantine Fault Tolerance (BFT)A property of a distributed, decentralized system to resist completefailure even when some of the nodes fail or act maliciously.CentralizedA system or process for which there is a singular (i.e., central)source of authority, control and/or truth.Chain of CustodyThe entire chain of documentation of ownership of a productduring its lifecycle from raw materials to the final end user.ChaincodeAnother name for a smart contract.Consensus Mechanism – Proof of Authority (PoA)PoA is an alternative form to the PoS algorithm. Instead of stakingcryptocurrency (wealth), in PoA you stake your identity. This meansvoluntarily disclosing who you are in exchange for the right tovalidate blocks. Any malicious actions you undertake as a validatorwill reflect back on your identity. PoA blockchains require athorough form of KYC (Know Your Customer – a verificationprocess that determines you actually are who you claim to be).Consensus Mechanism – Proof of Burn (PoB)PoB allows the miners to “burn” or destroy cryptocurrencywhich grants them the right to add blocks in proportion to thecoins destroyed. Essentially, miners burn coins/tokens to buyvirtual mining rigs that give them the power to mine blocks.The more currency burned by the miner, the bigger the ensuingvirtual mining rig. To burn, miners send currency to a verifiablyun-spendable address. This process does not consume manyresources, thus PoB is often called PoW without energy waste.Depending upon the implementation, miners are allowed toburn the native currency or the currency of an alternative chain,and in exchange, they receive a reward in the native currency ofthe blockchain.Consensus Mechanism – Proof of Capacity (PoC)PoC allows the mining devices in the network to use theiravailable hard drive space to decide the mining rights, insteadof using the mining device’s computing power (as in PoW) orthe miner’s stake in the cryptocurrency (as in PoS).Consensus Mechanism – Proof of Stake (PoS)In PoS, miners put up(i.e., “stake”) some of the blockchain’scryptocurrency (e.g., ether for the Ethereum blockchain) in orderto increase their chances of being selected to validate a block.The stake is locked up as a deposit to ensure the miner validatesthe block according to the rules. If the miner violates the rules,the deposit will be “burned” or destroyed. PoS is less resourceintensive than PoW since fewer miners are racing to solve themathematical formula.Consensus Mechanism – Proof of Work (PoW)In PoW, transaction data (block) + a random strings of digits (nonceof block) are repeatedly applied to a (hashing) mathematicalformula by miners, until a desirable outcome is found (the proofof work). Other miners then verify the proof of work by taking thealleged input string and applying it to the same formula to see ifthe outcome is indeed that what was presented. If the results arethe same, the transaction is verified and added to the blockchain.As many miners are racing to solve the formula which requires agreat deal of computing power, PoW is resource intensive.Consensus Mechanism (a.k.a. Consensus Protocol)The process used to validate a transaction across a distributedblockchain network designed to achieve Byzantine Fault Tolerance.CryptocurrencyDigital money which uses encryption and consensus algorithmsto regulate the generation of coins/tokens and transfer of funds.Cryptocurrencies are generally decentralized, operatingindependently of central authorities.CryptographyThe science of securing communication using individualizedcodes so only the participating parties can read the messages.DAO (Decentralized Autonomous Organization)A governance structure without a central authority whichrewards good behavior and penalizes bad behavior by a setof pre-defined rules which can only be changes by a vote,which typically requires a stake, adding risk to the processto discourage bad actors, amongst the participants.DAppSoftware which does not rely on a central system or databasebut can share information amongst its users via a decentralizeddatabase, such as a blockchain.Decentralization/DecentralizedA system with no single point where the decision is made. Everynode makes a decision for its own behavior and the resultingsystem behavior is the aggregate response.Digital Identity (a.k.a. Self-Sovereign Identity)The network or Internet equivalent to the real identity of aperson or entity (like a business or government agency).Advocates of blockchain-based digital identity is to returnownership and control of personal information to theindividuals. In any given transaction, personal informationis not disclosed, but rather the information required by oneparty is verified by the digital identity application.Digital SignatureA mathematical scheme for verifying digital messages ordocuments satisfy two requirements – they have authenticity(from a known sender) and integrity (were not altered in transit.Digital Signature – Multi-signatureIn order to increase security, multisig addresses require morethan one digital signature (and therefore multiple keys) to signa transaction or message.Digital Signature – RingA digital signature that can be performed by any of a group ofpeople that each have keys. A property of a ring signature isthat it is impossible to determine which of the group signedthe transaction.DistributedAs opposed to decentralized, a distributed system sharesprocessing and/or data across multiple nodes, but the decisionsmay still be centralized and use complete system knowledge.Distributed Ledger Technology (DLT)The larger class of technology of which blockchain is a subset.A digital system for recording the transaction of assets inwhich the transactions and their details are recorded inmultiple identical copies at the same time with no centraldata store or administration.Double SpendingA unique problem to cryptocurrency where the same coinsor tokens are spent or traded twice.BLOCKCHAIN TERMINOLOGY: A GLOSSARY FOR BEGINNERSEthereumA public blockchain that supports smart contracts.FiatLegal tender the value for which is backed by a government orgovernmental body (e.g., US dollars, Euros)ForkA collectively agreed upon software update by all nodes ina distributed network. Sometimes, the previous versioncontinues in parallel with the new version.FungibleThe property an item of being exchangeable with other likeitems. For example, USD and Euros are fungible. The value ofUSD can be expressed in Euros.GasA fee charged to write a transaction to a public blockchain. Thegas is used to reward the miner which validates the transaction.Genesis BlockThe first or first few blocks of a blockchain.GovernanceEstablishment of policies and continuous monitoring of theirproper implementation of an organization or system.Hash FunctionA function that receives an input of any size and returns aunique string of a uniform length.Hyperledger FabricIBM’s private (permissioned) blockchain toolset.IdentityThe information on an entity used by computer systems touniquely represent a person, organization, application, or device.Immutable/ImmutabilityThe property of being unchangeable. Once a transaction hasbeen added to a block and written to a blockchain, it cannot bechanged and therefore is immutable.Initial Coin Offering (ICO)The first sale of a blockchain coin or token.InteroperabilityThe ability of two or more systems to communicate and exchangedata. Due to various design decisions (e.g., consensus protocol)most blockchains are not interoperable, however there are manyprojects that are working to connect various blockchains.IPFS (Interplanetary File System)A peer-to-peer hypermedia protocol for storing and sharing datain a distributed file system using content-addressing touniquely identify each file in a global namespace connectingall computing devices.Know Your Customer (KYC)The legal process of a business identifying and verifying theidentity of its clients. KYC requirements vary from jurisdictionto jurisdiction.LiquidityThe ease of converting an asset (or, in this case, cryptocurrency)to cash (fiat).MainnetThe production version of a blockchain.Merkle Tree/Hash TreeIn cryptography and computer science, a Merkle or hash treeis a tree in which every leaf node is labeled with the hash ofa data block, and every non-leaf node is labeled with thecryptographic hash of the labels of its child nodes.MiningIn a public blockchain, the process of verifying a transactionand writing it to the blockchain for which the successful mineris rewarded in the cryptocurrency of the blockchain.NodeA computer which holds a copy of the blockchain ledger.Non-FungibleThe property an item of not being exchangeable with other likeitems. For example, USD and Euros are fungible. For example, aStratovarius violin is non-fungible because the value of it cannotbe expressed in a number of other violins.Off-chainData stored external to the blockchain.On-chainData stored within the blockchain.Open SourceSoftware products that include permission to use, enhance,reuse or modify the source code, design documents, or contentof the product.OracleAn application that connects blockchain applications tolegacy applications.BLOCKCHAIN TERMINOLOGY: A GLOSSARY FOR BEGINNERSPeer-to-Peer (P2P)A direct connection between two participants in a system – canbe computer to computer or person to person.ProvenanceThe entire history of a product during its lifecycle including itschain of custody and all documentation of value added servicesand activities which were used to produce that product or service.Public/Private KeyA public key is a unique string of characters derived from aprivate key which is used to encrypt a message or data. Theprivate key is used to decrypt the message or data.Satoshi NakamotoThe name used by the person or entity who developed bitcoin,authored the bitcoin white paper, and created and deployedbitcoin’s original reference implementation. As part of theimplementation, Nakamoto also devised the first blockchaindatabase.Seed PhraseA random sequence of words which can be used to restorea lost wallet.ShardingA type of database partitioning that separates very largedatabases the into smaller, faster, more easily managedparts called data shards. Sharding can potentially be usedto improve blockchain performanceSidechainA discrete blockchain that is linked to a main blockchain viatwo-way pegs which enable assets to be interchanged betweenthe main blockchain and the sidechain. Sidechains are a methodto enable scaling and increase transaction speed by onlyperforming necessary transactions on the main blockchain.Smart ContractSelf-executing computer code deployed on a blockchain toperform a function, often, but not always, the exchange ofvalue between a buyer and a seller.SolidityA JavaScript-like object-oriented programming language forEthereum for implementing smart contracts on the Ethereumblockchain.StablecoinA cryptocurrency which is underwritten by an asset or assets(e.g., fiat currency, commodities, etc.) designed to minimize thevolatility of the price of the coin/token.State ChannelA process by which blockchain transactions are executed offchain, collected and then written to the main chain as a singletransaction in order to improve performance and reduce cost.TestnetA staging blockchain environment for testing application beforebeing put into production (or onto the mainnet)TokenCryptographic tokens represent programmable assets or accessrights, managed by a smart contract and an underlying distributedledger. They are accessible only by the person who has the privatekey for that address and can only be signed using this private key.Token Generation EventThe creation and first sale of a blockchain coin or token.Token Type – ERC-20A type of fungible Ethereum token (i.e., smart contract) standardwhich is defined by a series of functions that must be supported,including functions to retrieve the total supply, transfer fromone wallet to another, and approve a transaction. Typically, anygiven ERC-20 token has many copies which are held in a varietyof crypto wallets.Token Type – ERC-721A type of non-fungible Ethereum token (i.e., smart contract)standard which is defined by a series of functions that mustbe supported, including functions to retrieve the total supply,transfer from one wallet to another, and approve a transaction.Each ERC-721 token is unique and non-interchangeable withother tokens (i.e., non-fungible).Token/Coin ExchangeAn application to buy, sell and trade cryptocurrencies.Tokenless LedgerA ledger that doesn’t require a native currency to operate.TokenomicsThe study, design and implementation of monetary managementand distribution based on blockchain technology.Transactions Per Second (TPS)A measurement of the speed of a blockchain. The low TPS ofmost blockchains is a significant barrier to using blockchainfor business, especially financial, applications.TransparencyA primary property of public blockchains whereby any participant ina system or transaction can view the transactions on the blockchain.BLOCKCHAIN TERMINOLOGY: A GLOSSARY FOR BEGINNERSTrustConfidence in the integrity of an entity (e.g., person,organization, etc.).TrustlessThe elimination of trust from a transaction. Blockchain is called atrustless system because the two entities performing a transactiondo not need to trust one another. The properties of blockchain –digital signatures, cryptography, etc. – provide the trust.VyperA Python-like programming language for the Ethereum blockchainbuilt for security, language and compiler simplicity, and auditability.WalletA digital file that holds coins and tokens held by the owner.The wallet also has a blockchain address to which transactionscan be sent.Wallet (Cold)A wallet disconnected from the internet.Wallet (Hot)A wallet connected to the Internet.Wallet (Multisignature)A wallet that requires multiple digital signatures to executea transaction.Zeppelin/Open ZeppelinA community of like-minded Smart Contract developers.BLOCKCHAIN TERMINOLOGY: A GLOSSARY FOR BEGINNERS