Blockchain: The database of transactions that forms the backbone of a cryptocurrency. Each block in the chain contains information about all the previous blocks, a hash of that new block’s contents, and a timestamp. The chain is public, meaning anyone can see it, but its contents are encrypted, meaning only the sender and recipient can see them.
Proof-of-Work: A proof-of-work system uses complex algorithms to generate a ‘nonce’ (a number which must be less than or equal to the ‘target’). The first person to find such a nonce is awarded the block reward and transaction fees associated with that block; this incentive mechanism prevents malicious users from generating infinite blocks.
Proof-of-Stake: Proof-of-Stake is a type of distributed consensus system where coin holders vote on which blocks are valid – rather than mining for new blocks as in proof-of-work systems. It uses an inflationary approach where a portion of newly created coins are used to fund the next generation of miners who will continue to secure future transactions by finding nonces.
This glossary was originally posted on Medium at https://www.medium.com/blockchain-glossary/the-crypto-space15d028cbb
Blockchain is a way of recording things that was first discussed by a person called Satoshi Nakamoto. It was originally designed for accounting but has since become an open source platform that can be used for anything. The blockchain is what gives Bitcoin value and where the name Bitcoin came from.
Blockchain technology can be applied to many different areas and industries. It can be used to store medical records, store apartments, store cars, vote in elections and even exchange money without any middlemen.
There are several ways to improve the blockchain system. One of them is known as “sidechains” which allows you to implement features such as smart contracts, asset backed tokens and decentralized exchanges on top of a stronger blockchain with less risk.
The most popular term in blockchain is “blockchain.” It appears in almost every article and gets used by almost everyone. This can be confusing, because there are many different kinds of blockchains, each with its own terminology.
“Blockchain” is a marketing term that was invented by one person: Gavin Wood, a co-founder of Ethereum. So it’s not an official term, but it’s widely used.
The first difference between “blockchain” and other terms you will encounter is this: blockchain is what the enthusiasts call their favorite part of the technology. But other people might use the same words to mean something else entirely.
In this glossary we try to stick to one word for each new thing you are likely to meet. For example, if you want to find out about smart contracts, go to blockchain.info/tutorials. The glossary doesn’t cover everything; it just lists the most important technical words in the space, and includes links to articles that explain them.
Blockchain is the name given to a family of technologies that use a distributed ledger to keep track of transactions and make them transparent. The ledger consists of blocks linked together in a chain, each block containing information about the previous one and a cryptographic hash of the content of the current block. Currently this technology is used to create cryptocurrencies like Bitcoin, Ethereum, Litecoin and Ripple.
The technology behind blockchain was first described by Satoshi Nakamoto in 2008, with the publication of his white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”, although the invention’s roots can be traced back further.
There are two main types of blockchain: public and private. A public blockchain is open for anyone to inspect it; anyone can see who owns what and when they own it. A private blockchain has some degree of anonymity; users must have a digital certificate issued by a third party to prove their identity and prevent double spending (spending the same bitcoins twice).
The blockchain is a distributed, decentralized, public ledger of all transactions. A blockchain is essentially a distributed database. It’s a chain-of-custody: every computer in the network has a copy of the whole blockchain, namely the full sequence of history.
A blockchain isn’t an old-style database with one entry for each party and one record for each transaction. It’s more like a spreadsheet that anyone can contribute to. Each row of data contains an encrypted hash of all the previous rows in the chain, so that if you change one row you change all the others. Every time someone wants to make a new transaction, she must provide the current version of this hash along with some proof that it is non-changing and non-reversible.”
Crypto is a kind of technology for creating money, but there are many other kinds of crypto-technologies that exist outside the context of cryptocurrencies. One common one is cryto, which stands for cryptography: the practice of writing messages on computers to ensure their secrecy.
Cryptography has been around since World War II. Anyone who has sent a message on a computer, or used email or a credit card, is using it. It’s not as glamorous as bitcoin itself, but it’s just as fundamental.
Another very common kind of crypto-technology is called blockchain technology, and it’s what gives cryptocurrencies their value. I won’t go into all the details of what it does here; I’ll leave that to my next blog post, “Blockchain: A Quick Primer.” But an important property of blockchain technology is that it allows a network of people to have a shared database without having any central authority controlling it. (In fact the whole purpose of bitcoin is to replace central banks with decentralized ones.) So if you’re interested in how blockchain technology changes how we do business, you should keep reading.
When the price of bitcoin plunged from a peak of $1,200 to $360 in just a few minutes in late 2013, it was big news. But its collapse has been largely forgotten. Why? It had just happened. We are used to things happening fast and then being gone, or at least not happening anymore.
Of course, if bitcoin had remained stable, it would still have been news. But we would have become accustomed to the idea that it is resistant to crashes, that it is a stable store of value.
The truth is that bitcoin is not immune to crashes. Its price did drop this week by 12 percent and was trading at around $570 on Friday afternoon in New York as I write. There is nothing about bitcoin itself that makes it immune to crashes; it is only immune to them in relation to other assets. The reason nobody talks about crashes anymore with bitcoin is that we have become used to them with everything else: stocks and bonds and money markets, too, even gold and silver, which Mr. Buffett calls “a barbarous relic.”
Bitcoin’s strength comes from the way its volatility works on a macro scale: because its price changes quickly, and because the fluctuations are large enough for people to notice, it has become an interesting topic