VOL. 42 | NO. 20 | Friday, May 18, 2018
Blockchain and cryptocurrencies have their own lingo, and you'll probably be hearing a lot more of it in years to come. Here's a glossary of common terms related to these emerging technologies.
Address: Cryptocurrency addresses are used to receive and send transactions on the network. An address is a string of alphanumeric characters, but can also be represented as a scannable QR code.
Agreement Ledger: An agreement ledger is a distributed ledger used by two or more parties to negotiate and reach agreement.
Attestation Ledger: A distributed ledger providing a durable record of agreements, commitments or statements, providing evidence (attestation) that these agreements, commitments or statements were made.
ASIC: ASIC is an acronym for “Application Specific Integrated Circuit.”ASICs are silicon chips specifically designed to do a single task. In the case of bitcoin, they are designed to process SHA-256 hashing problems to mine new bitcoins.
Bitcoin (uppercase): The well-known cryptocurrency, based on the proof-of-work blockchain.
bitcoin (lowercase): The specific collection of technologies used by Bitcoin’s ledger, a particular solution. Note that the currency is itself one of these technologies, as it provides the miners with the incentive to mine.
Blockchain: A blockchain is a type of distributed ledger, comprised of unchangeable, digitally recorded data in packages called blocks (rather like collating them on to a single sheet of paper). Each block is then ‘chained’ to the next block, using a cryptographic signature. This allows block chains to be used like a ledger, which can be shared and accessed by anyone with the appropriate permissions.
Cryptocurrency: A form of digital currency based on mathematics, where encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. Furthermore, cryptocurrencies operate independently of a central bank.
Digital Identity: A digital identity is an online or networked identity adopted or claimed in cyberspace by an individual, organization, or electronic device.
Distributed Ledger: Distributed ledgers are a type of database that are spread across multiple sites, countries or institutions. Records are stored one after the other in a continuous ledger. Distributed ledger data can be either “permissioned” or “unpermissioned” to control who can view it.
Ethereum: An open software platform based on blockchain technology that enables developers to build and deploy decentralized applications. Like Bitcoin, Ethereum is a distributed public blockchain network. Although there are some significant technical differences between the two, the most important distinction to note is that Bitcoin and Ethereum differs substantially in purpose and capability. Bitcoin offers one particular application of blockchain technology, a peer-to-peer electronic cash system that enables online Bitcoin payments. While the Bitcoin blockchain is used to track ownership of digital currency (bitcoins), the Ethereum blockchain focuses on running the programming code of any decentralized application.
ICO: Initial Coin Offering
Ledger: An append-only store of records, where records are immutable and may hold more general information than financial records.
Litecoin: A peer-to-peer cryptocurrency based on the Scrypt proof-of-work network. Sometimes referred to as the silver of bitcoin’s gold.
Mining: The process by which transactions are verified and added to a blockchain. This process of solving cryptographic problems using computing hardware also triggers the release of cryptocurrencies.
P2P: Peer-to-peer, or the decentralized interactions that happen between at least two parties in a highly-interconnected network. P2P participants deal directly with each other through a single mediation point.
Participant: An actor who can access the ledger: read records or add records to.
Private Currency: A currency issued by a private individual or firm, typically secured against uninsured assets.
Private Key: A private key is a string of data that shows you have access to bitcoins in a specific wallet. Private keys can be thought of as a password; private keys must never be revealed to anyone but you, as they allow you to spend the bitcoins from your bitcoin wallet through a cryptographic signature.
Ripple: A payment network built on distributed ledgers that can be used to transfer any currency. The network consists of payment nodes and gateways operated by authorities. Payments are made using a series of IOUs, and the network is based on trust relationships.
Replicated Ledger: A ledger with one master (authoritative) copy of the data, and many slave (non-authoritative) copies.
Smart Contracts: Smart contracts are contracts whose terms are recorded in a computer language instead of legal language. Smart contracts can be automatically executed by a computing system, such as a suitable distributed ledger system.
Tokenless Ledger: A tokenless ledger refers to a distributed ledger that doesn’t require a native currency to operate.
Transaction Block: A collection of transactions on the bitcoin network, gathered into a block that can then be hashed and added to the blockchain.