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Commonly Used Crypto And Blockchain Terminologies You Should Know

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commonly used crypto and blockchain terminologies you should know

The Blockchain and cryptocurrency ecosystem frequently use terminologies like “decentralization”, “cryptography”, “keys” and “wallet address”. However, to those that are not familiar, these blockchain terminologies can be a bit confusing even for early adopters, the Blockchain technology is an ever-evolving technology which produces terms that can be quite difficult to grasp.
While some terms are newly developed slangs, others are technical blockchain terminologies that have been in existence for a long time. This ever-growing list is a starter pack that offers a simplified explanation of some of the frequently used terms in the Blockchain sphere.

Cryptography

Cryptography is heavily based on mathematical theory and computer science practice that ensures information is transmitted in secrecy. That is, the process of encrypting and decrypting information so that only the only the audience that the information is intended for can access it. In a nutshell, it is the practice and study of techniques for secure communication.

Blocks

Blocks are files where data pertaining to the Bitcoin network is permanently recorded. By way of analogy, you can compare block as the individual pages of your book. A block represents the ‘present’ and contains information about its past and future. Each time a block is completed it becomes part of the past and gives way to a new block in the Blockchain.

Block Chain

This is a type of distributed ledger, when blocks are created, they are structured into a sequence over a period of time. Each time the computer solves a mathematical puzzle, that block is added to the previous one, and the process continues. The addition of these individual blocks forms a chain of blocks called Blockchain.

A DAO (Decentralized Autonomous Organization)

This can be thought of as a corporation run without human involvement under the control of an incorruptible set of business rules.

Gas

A layman interpretation of gas would be a substance in a form like the air that is neither solid nor liquid. However in the crypto space, gas is a measurement roughly equivalent to computational steps (for Ethereum). Every transaction is required to include a gas limit and a fee that it is willing to pay per gas; miners have the choice to including the transaction and collecting the fee or not. Furthermore, every operation has a gas expenditure; for most operations, it is 3-10, although some expensive operations have expenditure up to 700 and a transaction itself have an expenditure of 21000.

Mining

Mining is the process of several computers competing to solve a mathematical puzzle found inside a block. This process verifies the transaction, add it to the Blockchain and triggers the release of cryptocurrency as the output. Also, the people that verify the transactions are called Miners.

Cryptocurrency

A cryptocurrency is a form of digital currency that uses cryptography, where encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. Unlike fiat currency, cryptocurrencies operate independently of a central bank. Examples of cryptocurrencies are Bitcoin, Ethereum, Dash, Tron, Kurecoin, Litecoin, etc.

 A private key

A private key is a string of data that shows you have access to bitcoin in a specific wallet. Private keys can be thought of as your password or ATM pin and should not be revealed to anyone as they allow you to spend the cryptocurrency from your wallet.

Cryptocurrency wallet

A wallet is a digital storage location – a file that contains a collection of private keys for your cryptocurrency – same as your physical wallet but in this case for digital currencies. Typically, it is like the “bank account” for your digital assets. There are different types of wallets, including software and hardware wallets.

Consensus

A consensus is a mechanism on the Blockchain that allows the computers responsible for validating transactions are in agreement. A consensus is reached when the majority of the miners validate a block on the Blockchain.

Hash rate

This is the speed at which a mining computer used to verify and validate transaction on a Blockchain can go. Computers with higher hash rates would be able to verify transactions faster than those with a low hash rate.

A Node

A node is any computer that connects to the Blockchain network/database. Nodes are instrumental in making cryptocurrencies decentralized with every node keeping a version of the entire Blockchain.

Proof of Work (PoW)

Proof of work is a system that ties mining capacity to computational power. Blocks must be hashed, which is in itself an easy computational process but an additional variable is added to the hashing process to make it more difficult. Upon the successful hashing of the block, some time and computational effort must have been taken. Hence, a hashed block is considered proof of work.

Proof of Stake (PoS)

This is an alternative to proof of work system, in which the amount of crypto that you hold that is your existing stake in the crypto is used to calculate the amount of cryptocurrency that you can mine.

Testnet

Testnet- Testing network is an alternative bitcoin blockchain where developers can test their system. The cryptocurrencies used in testnet do not have any real world value as the application allows developers to experiment without having to worry about breaking the main bitcoin blockchain.
There are other blockchain terminologies that can not all be presented in this article, you can also refer to cryptocurrency terms every crypto-newbie should know.
 

Find this Article helpful? Do share your thoughts, contributions or suggestions with us in the comment section.

 
 
 

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I Didn’t Own Any Cryptocurrency Before Beam, Not Even Bitcoin – Beam CTO, Alex Romanov 

I did not have any relation or experience with any other cryptocurrency or blockchain.

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The Chief Technical Officer of Beam Alex Romanov has revealed the first cryptocurrency he ever owned. He said in the CryptoTvplus AMA Series on the 25th of November that Beam was the first cryptocurrency he owned. Not even bitcoin, he emphasized. 

He said the Beam project was the first blockchain related project he undertook. Before I started, he explained, “I did not have any relation or experience with any other cryptocurrency or blockchain. In fact, I didn’t even own any other cryptocurrency before Beam. Beam was the first cryptocurrency I actually first owned.”

This is like true for most of the team I think. We were new to this space and had to learn everything from scratch very quickly, which we did and eventually we produce Beam, Alex added. 

In the AMA session which was focused on the Beam Confidential DeFi Ecosystem, Alex also revealed the project did a hard fork in July and added a feature amongst others called Confidential Assets. 

This feature allows anyone to create a confidential token easily without special development skills. 

He also expressed his opinion on the future of the industry with emphasis on regulations as it affects privacy coins.

He said “we’ll see regulations moving forward to adapt to the new reality and understanding privacy is not something bad but something good that people need to be able to trade on blockchain”

You can watch the full session here. 

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Beam is building Decentralized Bridges Between Chains to allow Interoperability- Beam CTO, Alex Romanov 

According to Alex Romanov, there’s a current strong trend in the industry in terms of interoperability. Beam is building  decentralized bridges between Beam, Polkadot and Ethereum. These bridges will enable anyone to move value between either of these networks and Beam in a completely decentralized way. 

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The CTO of Beam and Tech Lead has been revealed Beam is building decentralized bridges between blockchains. The bridge is designed to allow interoperability between blockchain networks such that values can be easily transferred between chains. 

This was made known on the CryptoTvplus AMA Series which aired on Wednesday, the 25th of November, 2020.

According to Alex Romanov, there’s a current strong trend in the industry in terms of interoperability. Beam is building  decentralized bridges between Beam, Polkadot and Ethereum. These bridges will enable anyone to move value between either of these networks and Beam in a completely decentralized way. 

The Beam CTO went on saying Beam definitely will lead the direction of building blockchain connecting tools. In his words 

Alex Romanov, CTO & Tech Lead, Beam
Alex Romanov, CTO & Team Lead, Beam.

Interoperability is happening, there will be more projects that connect to each other in the future and Beam will definitely lead this direction by building completely decentralized bridges that will allow to freely move value across chains and trade confidentially.”

Considering the development in the industry as regards to regulatory impact on privacy coins which Beam is one such, Alex Romanov said, in few years, we’ll see regulations moving forward to adapt to the new reality and understanding that privacy is not something bad but something good that people need to be able to trade on blockchain. 

He also said the industry will see much more serious trading on blockchain because it’s convenient and has lots of advantages. 

You can watch the AMA Session here below:

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Cypherpunk Ditches its Investment in Monero and Ether to Purchase BTC 

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A Canada-based investment outfit dubbed Cypherpunk Holdings recently ditched its store of value in two different Altcoins, Monero and Ether and stashed its gains from both into Bitcoin BTC.  

Cypherpunk Holdings revealed on Thursday the 26th of November,  2020 that its store of BTC is now worth 276.479 BTC. Its Bitcoin holdings rose from  72.979 BTC to its current 276.479 BTC estimated to be the remainder for the second quarter of 2020. This stands as a whopping 279% increase.

The holding company liquidated their investments in the privacy coin dubbed Monero, and Ether, one of the most valuable cryptos. They in turn used the money they got to buy more and more BTC. 

Cypherpunk also used monies obtained from the private placement of CA$505,000 which is approximately USD 400,000, a deal closed on the 27th of August to buy BTC. 

Cypherpunk is not the only company that took the BTC route, publicly quoted companies like MicroStrategy and Square have diversified their investments into BTC in 2020.

These trends suggest that BTC is a worthy store of value and an alternative hedge for inflation. 

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