Dictionary

An address is basically an account number. It’s a secure and unique identifier made up of 27 to 34 alphanumeric characters used to enable transactions to an entity. A typical address starts with 1, 3, or bc1, however the format is trivial against its purpose to serve as a destination. For a Bitcoin payment, the address represents a destination on the Bitcoin network.


An “Application Specific Integrated Circuit” is a custom designed chip used for a particular application or purpose. Most electronic devices contain ASICs that can perform a variety of functions from sound conversion to processing hashing problems for mining new cryptocurrency. Because ASICs are not intended for general-purpose use, they are considered a proprietary technology.


Bitcoin with a capital “B” typically refers to the protocol and payment network ecosystem as a whole. Often referred to as BTC, the digital currency is based on the proof-of-work blockchain in which transactions are verified by a decentralized network of computers. In 2009, Bitcoin was considered to be the first revised blockchain by a person or persons under the pseudonym Satoshi Nakamoto.


An open, decentralized system that utilizes a distributed ledger to record transactions between multiple parties. Digital pieces of information are stored in packages called blocks. To distinguish one block from the next, each block is given a unique code called a “hash.” When a new block of data is added, it is recorded in an append-only fashion. These links form a chain of public data including information about the transactions, who is participating in the transaction, and distinguishing features of the block. A user of the blockchain can opt to join the blockchain and have their own copy. The ultimate goal of blockchain is that information is shared, but not edited across the network.


The cryptocurrency awarded to miners who successfully hash a transaction block. Rewards are made up of newly generated coins as well as the fees paid by the transactions included in the block. For the Bitcoin network, a miner who validates a new block can expect a reward of 25 bitcoins for their efforts.


A representation of a digital currency on its own platform, or blockchain. For instance, Bitcoin supports the native cryptocurrency on a blockchain independent from other platforms. Altcoins are simply alternative cryptocurrencies to Bitcoin. While many altcoins are based on the Bitcoin framework, they identify as the new and improved digital currency free from any perceived Bitcoin impediments.


New information can be submitted to the blockchain by unknown parties such as individuals, computers, organizations, or other entities. To ensure adjustments made to all nodes are synchronized simultaneously, consensus mechanisms are put in place. Constant confirmation of this new information from distributed operators is vital for proper functionality and protection against unsolicited tampering of the blockchain. The four main ways to reach consensus in a blockchain are the practical byzantine tolerance algorithm, proof of work algorithm, proof of stake algorithm, and delegated proof of stake algorithm.


A digital asset value that regulates financial transactions through the use of cryptography. Unlike centralized digital currency or central banking systems, a public digital currency utilizes decentralized control through a blockchain. As of October 2019, there were over 2,957 different types of cryptocurrencies being traded.


The practice of securing messages derived from mathematical theory and computer science methodology. Through a set of algorithms, the protected information is transformed by encryption and decryption processes to prevent potential decoding by third parties. Modern usage is based on four main objectives including confidentiality, integrity, non-repudiation, and authentication. In blockchain, cryptography enables secure verification of transactions throughout the network by using a digital signature.


A “decentralized autonomous organization” is represented by rules encoded as a computer program. Members of the organization share a common collaborative goal of maintaining decentralized network security and functionality. Agreements are completed when members reach majority consensus according to self-enforcing open-source code and the behavior is recorded and regulated on a blockchain. As long as consistent agreement is met, shareholders are given a piece of the pie with native network tokens. Like a coach that acts on behalf of their team, this incentivization eliminates the risk of individual influence and creates alignment among organization members. We are seeing early signs of DAOs global momentum in the non-crypto world with the UK’s Nexus Mutual and France’s La Suite du Monde.


The diffusion of power from a central authority to a distributed network. In contrast to the centralized control across financial and government sectors, decentralization is made possible by the cooperative work of organizations and individuals on the blockchain. Like the challenge of coordinating a symphony orchestra, removal of third-party accountability takes the responsibility of both risk and reward away from the conductor and creates a system that is resilient, efficient, and democratic. This shared accountability provides every single user the opportunity to become a crucial component of the network’s processes.


An application that runs on an open-source, peer-to-peer (P2P) network managed by all member actors. One or more smart contracts interact with the blockchain system to represent the core logic of decentralized applications. This communication system is executed through distributed ledger technologies such as Ethereum or Bitcoin. An early example of a decentralized application is BitTorrent, a software that allows users to share distributed files with one another.


A database that is replicated across multiple locations or people in decentralized form. The obligation to centralized authority is eradicated through a P2P network and consensus mechanism. Once consensus is met, all adjustments to the nodes are synchronized and shared among members of the network. Creating copies of the ledger establishes an immutable database that is more difficult to attack through cryptographic keys and signatures. Something important to note is that all blockchains are distributed ledgers, but not all distributed ledgers are blockchains.


A scenario in which the same digital currency is spent twice. In contrast to the cash that disappears when you buy your daily coffee, double spend is a risk unique to cryptocurrency because of the ease of reproducing the digital information. A common blockchain thief will reverse the transaction by sending multiple packets to the network creating the illusion that the transaction never took place. To combat potential infiltration, Bitcoin enforces a confirmation mechanism and a distributed ledger, or blockchain. The blockchain records all transactions from the start of its decentralized payment network in 2009.


A computing system, or instruction set, is said to be Turing complete if it can be used to solve any computation. Turing completeness is a computer science classification for a system of rules that manipulate data. Alan Turing is the computer scientist after which this classification system is named. As an aside, he invented the Turing machine; which itself is Turing complete.


A computer program that facilitates the sending and receiving of cryptocurrency transactions. These transactions are assigned to the blockchain and recorded in a distributed ledger. Wallets can vary from desktop to hardware to even paper wallets. According to Statista, there were over 42 million blockchain wallet users by the end of September 2019.