51% attack (s.v. "51% attack"): A condition in which more than half the computing power of a cryptocurrency network is controlled by a single malicious miner or group of miners. If he controls 51% of the network that makes him the authority on the network, giving him the power to spend the same coins multiple times, issue transactions that conflict with someone else’s or stop someone else’s transaction from being confirmed. (†2299)
block (s.v. "Block (on the Bitcoin Blockchain)"): Data is permanently recorded in the Bitcoin network through files called blocks. A block is a record of some or all of the most recent Bitcoin transactions that have not yet been recorded in any prior blocks. New blocks are added to the end of the record (known as the blockchain), and can never be changed or removed once written (although some software will remove them if they are orphaned). Each block memorializes what took place in the minutes before it was created. Each block contains a record of some or all recent transactions and a reference to the block that came immediately before it. It also contains an answer to a difficult-to-solve mathematical puzzle – the answer to which is unique to each block. New blocks cannot be submitted to the network without the correct answer – the process of “mining” is essentially the process of competing to be the next to find the answer that “solves” the current block. (†2289)
block reward (s.v. "Block reward"): An amount of crypto-currency a miner receives for processing transactions in a given block. Because creating (or “mining”) blocks is so crucial to the security of the Bitcoin network and yet so hard, the Bitcoin protocol includes a mechanism to encourage people to mine: every time a block is added, the miner who found the block is given 12,5 BTC(this number will change at the next halving in 2020) as a block reward. (†2363)
blockchain (s.v. "Blockchain"): Shared, trusted, public ledger of transactions, that everyone can inspect but which no single user controls. It is a cryptographed, secure, tamper resistant distributed database. It solves a complex mathematical problem to exist. A blockchain is a perfect place to store value, identities, agreements, property rights, credentials, etc. Once you put something like a Bitcoin into it, it will stay there forever. It is decentralized, disintermediated, cheap and censorship resistant. Applications of Blockchain: Bitcoin (cryptocurrency), Namecoin (wants to replace the entire DNS system of the Internet), or Blocksign (non-disclosure agreements at very low costs of only a few cents), Ethereum (Turing complete Virtual Machine where you can run any smart contract); Any centralized service like eBay, Dropbox can potentially be built in a decentralized way using blockchain technology, considerably lowering transaction costs. (†2288)
chain linking (s.v. "Chain linking"): Chain linking is the process of connecting two blockchains with each other, thus allowing transactions between the chains to take place. This will allow blockchains like bitcoin to communicate with another sidechains, allowing the exchange of assets between them. (†2075)
double spending (s.v. "Double Spending"): Double-spending is the result of successfully spending some money more than once. Bitcoin is the first to implemented a solution in early 2009 which protects against double spending by verifying each transaction added to the blockchain to ensure that the inputs for the transaction had not previously already been spent. (†2291)
Ethereum (s.v. "Ethereum"): Ethereum is a virtual machine running atop a decentralized blockchain mining so called Ethers, allowing a wide range of smart contracts. The Ethereum Project, based in Switzerland, raised millions in seed money by pre-mining and selling ethers to supporters & investors. As opposed to bitcoin, its scripting language is Turing-complete and full-featured, expanding the kinds of smart contracts that it can support. The Ethereum project wants to “decentralize the web” by introducing four components as part of its roadmap: static content publication, dynamic messages, trustless transactions and an integrated user-interface. (†2065)
fork (s.v. "Fork"): The creation of an alternative ongoing version of the blockchain, by creating two blocks simultaneously on different parts of the network. This creates two parallel blockchains, where one of the two is the winning blockchain. The winning blockchain gets determined by its users, by the majority choosing on which blockchain their clients should be listening. (†2060)
genesis block (s.v. "Genesis block"): The very first block in the block chain. (†2365)
halvening, the (s.v. "Halving"): A reduction in the block reward given to crypto-currency miners once a certain number of blocks have been mined. (†2366)
hard fork (s.v. "Hard Fork"): A hardfork is a change to the blockchain protocol that makes previously invalid blocks/transactions valid, and therefore requires all users to upgrade their clients. The most recent example of a hardfork in public blockchains is the Ethereum hardfork which happened on July 21st 2016. The hardfork changed the Ethereum protocol, therefore second blockchain emerged (Ethereum Classic, ETC) which supports the old Ethereum protocol. In order to continue existing ETC needs miners, which would validate the transactions on the blockchain. (†2061)
hash function (s.v. "Cryptographic Hash Function"): is a one-way hash function which is considered practically impossible to invert, that is, to recreate the input data from its hash value alone. The input data is often called the message, and the hash value is often called the message digest or simply the digest. Main properties (1) easy to compute the hash value for any given message (2) infeasible to generate a message from its hash (3) infeasible to modify a message without changing the hash (4) infeasible to find two different messages with the same hash. Cryptographic hash functions have many information security applications, notably in digital signatures, message authentication codes (MACs), and other forms of authentication. They can also be used as ordinary hash functions, to index data in hash tables, for fingerprinting, to detect duplicate data or uniquely identify files, and as checksums to detect accidental data corruption. (†2364)
lightweight node (s.v. "Light Node"): A computer on a blockchain network that only verifies a limited number of transactions relevant to its dealings, making use of the simplified payment verification (SPV) mode. (†2062)
Merkle Tree (s.v. "Merkle tree"): The basic idea behind Merkle tree is to have some piece of data that is linking to another. You can do this by linking things together with a cryptographic hash. The content itself can be used to determine the hash. By using the cryptographic hashing we can address the content, and content gets immutable because if you change anything in the data, the cryptographic hash changes and the link will be different. Bitcoin uses cryptographic hashing, where every block points to the previous one if you modify the block, the hash will change and will make the block invalid. (†2292)
mining (s.v. "Block (on the Bitcoin Blockchain)"): Each block memorializes what took place in the minutes before it was created. Each block contains a record of some or all recent transactions and a reference to the block that came immediately before it. It also contains an answer to a difficult-to-solve mathematical puzzle – the answer to which is unique to each block. New blocks cannot be submitted to the network without the correct answer – the process of “mining” is essentially the process of competing to be the next to find the answer that “solves” the current block. The mathematical problem in each block is extremely difficult to solve, but once a valid solution is found, it is very easy for the rest of the network to confirm that the solution is correct. There are multiple valid solutions for any given block – only one of the solutions needs to be found for the block to be solved. (†2290)
mining (s.v. "Mining (Bitcoin)"): Mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions or blockchain. This ledger of past transactions is called the blockchain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere. Mining is intentionally designed to be resource-intensive and challenging so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. This proof of work is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses the hashcash proof-of-work function. The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid any transaction fees as well as a “subsidy” of newly created coins. This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system. (†2293)
node (s.v. "Node (Full Node)): Any computer that connects to the blockchain network is called a node. Nodes that fully enforce all of the rules of the blockchain (ie Bitcoin) are called full nodes. Most nodes on the network are lightweight nodes instead of full nodes, but full nodes form the backbone of the network. (†2063)
oracle (s.v. "Oracles"): Smart contracts on the blockchain can not access the outside network on their own. Therefore oracles sit between a smart contract and the external world, providing the data needed by the smart contract to prove performance while sending its commands to external systems. (†2367)
private blockchain (s.v. "Private Blockchains"): a fully private blockchain is a blockchain where write permissions are kept centralized to one organization. Read permissions may be public or restricted to an arbitrary extent. Likely applications include database management, auditing, etc internal to a single company, and so public readability may not be necessary in many cases at all, though in other cases public auditability is desired. (†2078)
proof of stake (s.v. "Proof of Stake"): Proof-of-stake (PoS) is a method by which a cryptocurrency blockchain network aims to achieve distributed consensus. While the proof-of-work (PoW) method asks users to repeatedly run hashing algorithms or other client puzzles, to validate electronic transactions, proof-of-stake asks users to prove ownership of a certain amount of currency (their “stake” in the currency). Peercoin was the first cryptocurrency to launch using proof-of-Stake. Other prominent implementations are found in BitShares, Nxt, BlackCoin, NuShares/NuBits and Qora. Ethereum has planned a hard fork transition from PoW to PoS consensus. Decred hybridizes PoW with PoS and combines elements of both in an attempt to garner the benefits of the two systems and create a more robust notion of consensus. With Proof of Work, the probability of mining a block depends on the work done by the miner (e.g. CPU/GPU cycles spent checking hashes). In the case of Bitcoin, with Proof of Stake, the resource that’s compared is the amount of Bitcoin a miner holds – someone holding 1% of the Bitcoin can mine 1% of the “Proof of Stake blocks”. Instead of sacrificing energy to mine a block, a user must prove they own a certain amount of the cryptocurrency to generate a block. The more stake you own, the more likely you are to generate a block. In theory, this should prevent users from creating forks because it will devalue their stake and it should save a lot of energy. Proof of Stake sounds like a good idea, but ironically, there is the “Nothing at Stake” problem. Since mining Bitcoins is costly, it is not smart to waste your energy on a fork that won’t earn you any money, however with Proof of Stake, it is free to mine a fork. (†2294)
proof of work (s.v. "Proof of Work"): POW system/protocol/function is an economic measure to deter denial of service attacks and other service abuses such as spam on a network by requiring some work from the service requester, usually meaning processing time by a computer. The concept may have been first presented by Cynthia Dwork and Moni Naor in a 1993 journal. The term “Proof of Work” was first coined and formalized in a 1999 paper by Markus Jakobsson and Ari Juels. A key feature of these schemes is their asymmetry: the work must be moderately hard (but feasible) on the requester side but easy to check for the service provider. This idea is also known as a CPU cost function, client puzzle, computational puzzle or CPU pricing function. (†2295)
public blockchain (s.v. "Public Blockchains"): a public blockchain is a blockchain that anyone in the world can read, anyone in the world can send transactions to and expect to see them included if they are valid, and anyone in the world can participate in the consensus process – the process for determining what blocks get added to the chain and what the current state is. As a substitute for centralized or quasi-centralized trust, public blockchains are secured by cryptoeconomics – the combination of economic incentives and cryptographic verification using mechanisms such as proof of work or proof of stake, following a general principle that the degree to which someone can have an influence in the consensus process is proportional to the quantity of economic resources that they can bring to bear. These blockchains are generally considered to be “fully decentralized”. (†2079)
sidechain (s.v. "Sidechains"): are blockchains that are interoperable with each other and with Bitcoin, avoiding liquidity shortages, market fluctuations, fragmentation, security breaches and outright fraud associated with alternative crypto-currencies. (†2297)
smart contract (s.v. "Smart contracts"): are computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or that obviate the need for a contractual clause. Smart contracts usually also have a user interface and often emulate the logic of contractual clauses. Proponents of smart contracts claim that many kinds of contractual clauses may thus be made partially or fully self-executing, self-enforcing, or both. Smart contracts aim to provide security superior to traditional contract law and to reduce other transaction costs associated with contracting (†2296)
soft fork (s.v. "Softfork"): A softfork is a change to the bitcoin protocol wherein only previously valid blocks/transactions are made invalid. Since old nodes will recognize the new blocks as valid, a softfork is backward-compatible. This kind of fork requires only a majority of the miners upgrading to enforce the new rules. (†2298)
Turing-complete (s.v. "Turing completeness" ): A machine is Turing complete if it can perform any calculation that any other programmable computer is capable of. All modern computers are Turing-complete in this sense. The Ethereum Virtual Machine (EVM) which runs on the Ethereum blockchain is Turing complete. Thus it can process any “computable function”. It is, in short, able to do what you could do with any conventional computer and programming language. (†2064)
wallet (s.v. "Wallet"): is a file that contains a collection of private keys. (†2368)
