The blockchain is a LEDGER that is shared across a network while recording transactions and tracking assets in the business industry. An asset is tangible (car, house, cash, etc.) or intangible (branding, intellectual property, patents copyrights).
15 general terms that are used in the blockchain
Within the blockchain, there are a few terms you should know
A Block is a digital space where data is stored and encrypted. It is mostly identified by a long chain of numbers that holds the encrypted transactions from previous blocks.
- Blockchain is a combination of blocks each new block is added to the back while the older blocks are at the front of the chain. Most blockchains contain rules on what is supposed to be stored in the block (food to entertainment or bank ledgers to bank statements)
- Non-fungible Tokens (NFT) are a type of digital currency used in online transactions. It is commonly known as cryptocurrency. The value of each NFT will increase each time it is purchased.
- Bitcoin is also a known cryptocurrency and it operates without a central control such as a government or bank. It does function on a peer-to-peer type of software and cryptography. Every type of bitcoin transaction is recorded on a DLT and stored in servers all around the world.
- Distributed Ledger Technology (DLT) is a database that is managed by many participants and across multiple nodes. Using an immutable cryptographic signature named a HASH, the transactions done online are recorded by the DLT
- Blockchain Decentralization is when each member of the network receives a copy of the same data which is distributed in form of a ledger. And if one ledger is corrupted or altered the majority of ledger holders would reject it within the network.
- Cryptocurrency is simply known as a digital currency where it is secured by cryptography making it hard or nearly impossible to be stolen.
- Wallet which is also known as the vault is a space where all the cryptocurrency is stored. A vault holds every member’s private key which enables them to communicate within the network and sign for transactions.
- Private keys would determine whether or not you are the owner of the asset or not. Unlike a public key which only allows you to receive funds and decrypt messages, the private key is known to the mainstream public network and the security is almost impossible to get into.
- Decentralized Finance (Defi) as an emerging financial technology, is based on the protective distribution of ledgers that are the same as the ones used in cryptocurrency.
- E- contracts are based on electronic systems rather than paper contracts. These are most commonly used as contracts for two or more parties living in two or more countries.
- ICOs are methods to market cryptocurrency in startups and to begin funding. It has close similarities with IPOs. ICO falls under the category of SEC which improves the trust of customers in ICOs.
- Block Rewards are given every time a miner spends resources and energy for mining and when the network reaches a consensus. Each reward will vary on how valuable the mining was or how much of an improvement was seen in reaching a consensus.
- Consensus is known as a network-wide agreement where the transactions in a blockchain ledger are recorded so the members would be able to validify them.
- Block nodes are members that are connected to multiple peers and are the ones who create new blocks and new transactions within the network. They also manage the blocks and edit or delete them to fit the criteria that are required by the majority.
- Consortiums are managed by just a few members or by a single organization. Among tier 1 management the networks are centralized. if the member wishes to publish a block, read a ledger or be a part of such a network, the member will have to have the required level of access into the blockchain.
Before heading on to the blockchain you must be familiar with the most common terms used within the blockchain community. Therefore, you can avoid being at a loss whenever you make a transaction or begin a business online. Another benefit of learning about the blockchain is that you will have access to business transactions and ledger details that were made online and recorded and encrypted within the blockchain. As time goes by the terms that are used in the blockchain will increase but if you know the definitions of the blockchain basics, you will be able to manage through the world of blockchains and cryptocurrency.
As cryptocurrency and blockchains are the future of banking, teaching as well as entertainment it is important to be familiar with the most common definitions stated above.
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