Blockchain Glossary: 50+ Must-Know Terms

 🧠 Blockchain Glossary: 50+ Must-Know Terms

🔗 Core Concepts

Term Definition

Blockchain A distributed ledger of records ("blocks") securely linked together using cryptography.

Block A container that holds transaction data, timestamps, and a reference to the previous block.

Distributed Ledger A decentralized database shared across multiple nodes or participants.

Node A computer that participates in a blockchain network, validating and relaying transactions.

Decentralization The removal of central authority, distributing control across a network.

Peer-to-Peer (P2P) A network model where participants interact directly, without intermediaries.

📜 Transactions & Consensus

Term Definition

Transaction A record of value transfer or state change on the blockchain.

Consensus Mechanism The method by which nodes agree on the validity of transactions.

Proof of Work (PoW) Consensus via solving complex cryptographic puzzles (e.g., Bitcoin).

Proof of Stake (PoS) Validators are chosen to confirm transactions based on the amount of cryptocurrency they hold and stake.

Delegated Proof of Stake (DPoS) A voting-based PoS system where stakeholders elect validators.

Validator A participant in PoS-based blockchains that verifies and adds new blocks.

Mining The process of validating transactions and creating new blocks (mainly in PoW systems).

💰 Tokens & Crypto Assets

Term Definition

Cryptocurrency Digital currency secured by cryptography, operating on blockchain technology.

Token A digital asset built on top of an existing blockchain (e.g., ERC-20 on Ethereum).

Coin A cryptocurrency that operates on its own native blockchain (e.g., BTC, ETH).

Altcoin Any cryptocurrency that is not Bitcoin.

Stablecoin A crypto asset pegged to a stable asset like USD to reduce volatility.

Utility Token A token that provides access to a product or service.

Security Token A token representing ownership in a real-world asset, subject to securities regulations.

📁 Smart Contracts & DApps

Term Definition

Smart Contract Self-executing code stored on the blockchain that runs when predefined conditions are met.

DApp (Decentralized Application) An application running on a decentralized network like Ethereum.

Solidity The primary programming language for writing smart contracts on Ethereum.

Gas A fee required to execute transactions or smart contracts on the Ethereum network.

Gas Limit The maximum amount of gas a user is willing to spend on a transaction.

Gas Price The cost per unit of gas (measured in Gwei) a user is willing to pay.

🛡️ Security & Privacy

Term Definition

Public Key A cryptographic key used to receive transactions; openly shared.

Private Key A secret key used to sign transactions and prove ownership.

Wallet Software or hardware that stores public and private keys for cryptocurrency transactions.

Cold Wallet An offline wallet offering enhanced security.

Hot Wallet A wallet connected to the internet, convenient but more vulnerable.

Hash Function A mathematical algorithm that converts data into a fixed-length hash (e.g., SHA-256).

51% Attack When a group controls over half of the network's mining or validation power, enabling fraud.

🧩 Infrastructure & Interoperability

Term Definition

Layer 1 The base blockchain (e.g., Bitcoin, Ethereum).

Layer 2 Solutions built on top of Layer 1 to improve scalability (e.g., Lightning Network, Optimism).

Sidechain A separate blockchain connected to the main chain, allowing asset transfers between them.

Fork A split in a blockchain network, resulting in two separate versions (soft or hard fork).

Bridge A tool that enables transfer of assets or data across different blockchains.

Oracles Services that bring off-chain data to smart contracts (e.g., Chainlink).

💱 DeFi & NFTs

Term Definition

DeFi (Decentralized Finance) Financial services like lending, trading, and insurance built on blockchain.

DEX (Decentralized Exchange) A peer-to-peer marketplace for crypto trading without intermediaries.

Liquidity Pool A collection of tokens locked in a smart contract to facilitate trading on a DEX.

Yield Farming Earning rewards by staking or lending crypto in DeFi platforms.

NFT (Non-Fungible Token) A unique digital asset representing ownership of an item or content (e.g., art, music).

ERC-20 A standard for fungible tokens on Ethereum.

ERC-721 A standard for NFTs on Ethereum.

🧭 Governance & Ecosystem

Term Definition

DAO (Decentralized Autonomous Organization) A blockchain-based organization governed by smart contracts and community voting.

Governance Token A token that grants holders voting rights in a DAO or protocol.

Whitepaper A document detailing the vision, technology, and mechanics of a blockchain project.

Mainnet A fully operational blockchain where real transactions occur.

Testnet A testing version of a blockchain for experimentation without real value.

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