Key Blockchain Terminology Explained
Key Blockchain Terminology Explained
Understanding blockchain can be easier once you know the most common terms. Here’s a list of key words and what they mean — in plain English.
1. Blockchain
A digital ledger or record book that stores information in blocks, which are linked together in a chain. It's secure, transparent, and decentralized.
2. Block
A group of transactions bundled together and added to the blockchain. Each block contains:
A list of transactions
A timestamp
A unique code (hash)
The hash of the previous block
3. Transaction
Any kind of action recorded on the blockchain — for example, sending cryptocurrency from one person to another.
4. Node
A computer connected to the blockchain network. Nodes store a copy of the blockchain and help verify new transactions.
5. Hash
A unique digital fingerprint for a block or transaction. It’s created using complex math and ensures the block's data hasn't been tampered with.
6. Ledger
A record of all transactions that have ever happened on the blockchain. It's shared across all nodes.
7. Decentralization
Means there is no central authority (like a bank or company) controlling the system. Power is distributed among all participants.
8. Consensus Mechanism
A method used by the network to agree on which transactions are valid. Common types include:
Proof of Work (PoW)
Proof of Stake (PoS)
9. Proof of Work (PoW)
A system where computers solve complex puzzles to validate transactions. It's energy-intensive but very secure. Used by Bitcoin.
10. Proof of Stake (PoS)
A system where people "stake" (lock up) coins to get a chance to validate transactions. It uses less energy than PoW. Used by Ethereum now.
11. Smart Contract
A self-executing program on the blockchain. It runs automatically when certain conditions are met — no middleman needed.
12. Wallet
A digital tool used to store, send, and receive cryptocurrency. It has:
A public key (like an address)
A private key (like a password — keep it secret!)
13. Cryptocurrency
A digital currency that uses blockchain to track ownership and transactions. Examples include Bitcoin, Ethereum, and Solana.
14. Token
A digital asset built on top of an existing blockchain. It can represent money, a product, access, or even a vote.
15. Gas Fees
Small payments users make to use the blockchain network, especially for Ethereum. It pays for computing power.
16. Mining
The process of verifying and adding new transactions to the blockchain (mostly in PoW systems like Bitcoin). Miners are rewarded with cryptocurrency.
17. Fork
A change in the rules of a blockchain that splits the network. It can create two versions — like Bitcoin and Bitcoin Cash.
18. NFT (Non-Fungible Token)
A unique digital asset (often art or collectibles) stored on a blockchain. It proves ownership and authenticity.
19. dApp (Decentralized Application)
An app built on blockchain that runs without central control — often using smart contracts.
20. Web3
A vision for a decentralized internet where users control their own data, powered by blockchain and crypto technology.
Conclusion
These terms are the foundation of understanding blockchain and cryptocurrency. As the technology grows, learning these basics will help you explore it with confidence.
Read More
What Is Blockchain? A Beginner’s Guide
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