Blockchain Dictionary - Vol. 1
Hello, Hola, Bonjour, Ciao, Namaste -- languages can be hard and they are all around us, including in blockchain. Obviously there aren’t countries speaking “blockchainian” or “blockchainish”, but there are a lot of words that go along with the technology that aren’t quite so easy to understand. Sorta like a computer! You know wifi, hard drive, keyboard -- all words that make complete sense to us since they are so common, but if you didn’t use/experience them everyday, they wouldn’t be so second nature. Well, same thing with blockchain.
Sooo… welcome to The Blockchain Barbie’s Blockchain Dictionary - Vol. 1. (shockingly, this isn’t even everything… and it’s definitely just the basics)
Learn It, Love It, Be a Genius Because of It
Altcoin - works similarly to bitcoin (literally means - alternative to bitcoin, duh). It’s another type of cryptocurrency, but has modifications. Basically every other type of cryptocurrency other than Bitcoin
Blockchain - In case you’re new here…. A blockchain is basically a decentralized, transparent, shared ledger. But please, do yourself a favor and just go read the Blockchain Guide for (not so) Dumb Blondes
Block - Can’t have blockchain without the blocks! Basically, a block is a collection of transactions.These files store unalterable data that have to do with the network
Sorta like a singular lego. Alone, it doesn’t do much, but you can keep adding and adding until you’re creating a castle.
Or like a page of a diary. One page ripped out won’t make much sense. Plus, we pray that that never gets out -- who knows what stuff you wrote when you were mad at your parents.
Bitcoin - Bitcoin is the first (and arguably most famous) cryptocurrency
Think of it like Uber. Totally hogs the spotlight from other ride sharing apps like Lift, but to be fair, it was the first of its kind.
The most common comparison: Bitcoin is to blockchain as Email was to the internet. The first application, first purpose, a large player, but not the entire thing.
Cryptocurrency - a digital currency that uses cryptography for security (i.e. Bitcoin, Altcoins, etc.)
Cryptography - process of turning ordinary plain text into unintelligible text aka using code so only people who should have access to something can read it
“Crypt” → “hidden”
"Graphy” → “writing”
Digital Signature - a pair of cryptographic algorithms used to authenticate messages over a public channel (public means a lot of people can have access to it). Sorta goes on top of the public and private keys (definitions to follow)
Think of it like your real signature. Your signature is supposed to identify you as you, right? Same with a digital signature and they are muuuuuuuch harder to forge.
Distributed Ledger - I’m sure you’ve only seen this like 100000 times in my blog posts… basically another term for a blockchain aka a ledger in which data is stored across a bunch of networks instead of just one, centralized one.
A bank statement from Chase is a CENTRALIZED ledger. Every entry has to do with/is controlled by Chase Bank. A distributed ledger is the opposite — not controlled by one entity
Double Spending - when money is spent more than once
Let’s say your brother owes you for covering when he snuck out last weekend, so he sends you $20. He also sent his best friend $20 to pay him back for a concert ticket. Problem? He only has $20 in his bank account and the $20 sent to you + the $20 sent to his friend is $40. He sent the same $20 twice!
Fork - forks create an alternative version of the blockchain, leaving two blockchains running simultaneously on different parts of the network
Sorta like when you update snapchat and your friend hasn’t yet, so they are still using the old version while you use the new version (okay this is a bit of stretch, but for an overall picture this is sorta similar)
Hash Function - a cryptographic function that turns data of basically any size, into a fixed data size (a hash) which is then an unforgeable digital fingerprint in the data
Yeah… not gonna lie, hash functions are a tricky and very technical concept. I could literally do a whole blog post explaining it/giving explains, hmm…. Be on the lookout ;)
Initial Coin Offering (ICO) - Fundraising thanks to blockchain. Basically, a blockchain-based fundraising technique in which entrepreneurs sell new crypto tokens to investors. Kinda like when someone is trying to start a company and they get a few investors for the initial funding
Like cheerleaders and a carwash — fundraising that just makes sense.
The Last Mile Problem - the gap between online records and the actual entities in the offline world
It’s like the gap between when your Amazon package leaves the warehouse and gets to your door. This has nothing to do with technology really, just the delivery man driving it to you and you receiving it.
Mining - process of validating blockchain transactions and adding transactions to the existing distributed ledger
Adding a new block to the blockchain!
Node - a participant in the blockchain network. Like the computer connected to the blockchain carrying out different things (mining, consensus algorithm, or maybe just storing a copy of the blockchain for querying later)
Public and Private Keys - Another tricky concept → you generate the private and public keys at the same time. If a message is encrypted with a public key, only its matching private key can decrypt it. Think of it like an actual lock and key… kinda.
Private Key - You keep the PRIVATE key to yourself aka owner keeps the private key and does not share it.
Public Key - You hand out copies of the PUBLIC key to pretty much whoever.
A public key and its corresponding private key are related to each other mathematically, so they have to be created together. A message that has been encrypted with a public key can only be decrypted with the matching private key.
Satoshi Nakamoto - The name of the guy who designed the Bitcoin protocol. No one actually knows who Satoshi Nakamoto is, that’s just some fake name. Could be a guy, could be a girl, could be one person, could be 5 people, could be a dog, who knows. Trippy, right?
Smart Contract - self executing contracts. Pretty much a computer protocol with the terms of the agreement between two parties (a buyer & seller, for example) are directly written into lines of code and, therefore, can run automatically without anyone having to do anything to make it happen #magic
Some people say smart contracts are the best part of blockchain
Wallet - a software that manages a user’s private keys
Like your cute LV wallet holding your credit cards