Written by • Published 22nd July 2019 • 5 minute read

Blockchain jargon buster social post

Authentication

The process of verifying the identity of a user or process.

blue bitcoin infographic

Bitcoin

The first cryptocurrency – or digital form of currency – that was created over a decade ago. Bitcoin is completely decentralised and can be sent to another person in exchange for goods directly online without the need to involve a central bank or payments system like PayPal.

Block

Similar to a page in a book of records. A block records some piece of information that has not previously been entered into another block.

Centralised

The idea that power resides with one single entity. In centralised systems, such as traditional banks, all control over transactions is held by the bank not individuals.

Cold wallet

A store for cryptocurrency that is not connected to the internet. Usually this means the wallet is stored offline in a server.

Consensus

What is needed across all of the nodes for a new block of data to be added to a blockchain. Without consensus that the information is correct, a block cannot be added to the blockchain.

Cryptocurrencies investment

Cryptocurrency

A form of digital currency. Cryptocurrency was born out of the frustrations that followed the 2008 financial crash. The theory is that digital currency prevents people being able to “double spend” i.e. send £10 to pay off a payment but then use that same £10 to pay someone else, as all transactions are recorded on a blockchain and these cannot be overwritten or changed by anyone.

Cryptography

The practice of securing communication using clever and complex coding.

Decentralisation

The idea that power does not reside with a single, central point of authority such as the Bank of England. In a decentralised system like a blockchain, power is held equally by each individual that contributes to the chain, not by a central entity that controls and manages all the transactions.

Digital identity

Your digital identity is made up of every piece of information about you on the internet, that when added together paints a picture of “you”. This can include your name, address, IP address, images, posts from social media channels and a number of other factors.

Fingerprint digital security

Digital signature

A digital code – typically generated by public key encryption – that is attached to a document sent electronically which verifies the contents and the sender’s identity.

Ethereum

Ethereum is the name of an open source, public blockchain-based computing platform and operating system. It’s widely recognised as being one of the most well-known and used blockchains in the world. The Ether token’s blockchain is generated by the Ethereum platform.

Exchange

A platform that allows customers to exchange digital assets such as cryptocurrency for other assets such as traditional fiat currency or other cryptocurrencies.

Fork

What happens when a blockchain protocol diverges into two different paths going forward.

Hot wallet

A store for cryptocurrency that is connected to the internet. They are “hot” because you can pay out withdrawals instantly.

Hyperledger

The Hyperledger project is an umbrella project of open source blockchains that was started in 2015 to support the collaborative development of blockchain-based distributed ledgers.

ICO

Stands for “Initial Coin Offering”. Much like a traditional crowdfunding campaign, companies who ICO offer people the opportunity to invest in their company in return for tokens – usually the native token of the platform they are looking to create. The idea being that as the platform they create gets more popular, the value of the token will also increase, and investors will reap the benefits of being involved right at the start.

Ledger

The traditional definition of “ledger” is a collection of financial accounts and this is basically the same when talking about blockchain and crypto. A ledger in this sense is a record of something – a transaction in the case of crypto – that forms part of the blockchain.

Lightening network

A payment protocol that operates on top of a blockchain-based cryptocurrency like Bitcoin, that enables fast transactions. It’s been said that this could help solve cryptocurrency’s scalability problem.

Litecoin

Often compared to Bitcoin, Litecoin is an open source software project and cryptocurrency. The creation and transfer of coins isn’t managed by any central authority.

Mining

Mining is the backbone of a cryptocurrency network. Miners solve complicated computational problems which allows them to chain together blocks of transactions; for doing this they are rewarded with newly minted cryptocurrency.

Node

A fundamental piece of a blockchain’s network. The blocks of data that make up a blockchain are stored on nodes, which can be any form of device, usually computers or servers. All nodes on a blockchain are connected together and they consistently exchange the latest data with each other, so all nodes stay up to date.

P2P

Stands for “peer to peer”. This is the process of cutting out the middle-man; sending assets or currency to another person directly without the need for fees or wasting time with intermediaries.

Private currency

A currency issued by a private entity, whether an individual, company or decentralised entity such as a blockchain-based platform. Not to be confused with fiat currency, which is issued by a government.

digitalised private key

Private key

This is the secret number that allows a cryptocurrency to be spent. Every private key is mathematically related to all the cryptocurrency addresses that are generated for a person’s wallet.

Public blockchain

A completely permission-less blockchain, where no one has control over the network and data is completely secure because no one can change data once it has been added to the blockchain.

Ripple

Both a platform and a cryptocurrency. The Ripple platform is an open source protocol which was designed to enable fast and cheap transactions. The platform also has its own cryptocurrency – XRP.

digital smart contracts

Smart contracts

A computer protocol that will digitally verify, enforce or facilitate the terms of a contract. They allow credible transactions as agreed in a signed contract to be actioned without the need for a third party.

Stablecoin

A digital asset that is backed by traditional assets such as fiat currency or gold which have a more stable value; as such they are allegedly more stable than other digital assets like cryptocurrency.

Tokenisation

The process of issuing a blockchain-based token that digitally represents a real tangible and tradeable asset. This is pretty similar to the traditional process of securitisation, but with a modern twist thanks to using blockchain.

Whitepaper

The document companies use to set out their strategy and technical protocols for the product they are looking to build. Whitepapers are usually produced to offer information to people looking to invest in an ICO.

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