Digital Assets Glossary

 

A

Account

Accounts have an intrinsic balance and transaction count maintained by a blockchain network. Each Account has a unique Address that identifies it.

Address

An identifier for Accounts, often composed of 160 bits.

B

Blockchain

A Blockchain is a distributed ledger database that maintains a list of records called Blocks. Each Block contains a timestamp and a reference to a previous Block in a sequential structure.

Block

A Block is the basic element of a Blockchain. It functions as a ledger, recording a series of transactions together with a reference to the previous Block. A Block is connected to its preceding Block by a cryptographic hash. Blocks contain a unique identifier for the final state after all transactions contained in it are validated, called the Block Header. In any Blockchain network, there needs to be an incentive mechanism to generate, or mine, new Blocks.

Block Creation Time

The amount of time it takes for a new block to be amended to the Blockchain. The Block Creation Time usually follows a time target, set by the Block Difficulty.

Block Timestamp

The Block's inception date and time.

Block Difficulty

A value corresponding to the difficulty level of this Block. This can be calculated from the previous Block's difficulty level and the timestamp. See Difficulty.

Block Header

Each Block in a Blockchain Network, has a single, unique, identifier, called the Block header. It serves as a summary of past transactions of the Blockchain. It is usually generated by compiling transaction receipts, block difficulty, gas limits & usage, into a unique identifier, the Block hash.

Block hash

Once the Block Header is calculated, the protocol uses a Hash function to encrypt that data. The Block hash is the encrypted 256-bit output of the Block Header.

Block number

A value equal to the number of previous Blocks. The genesis Block has a number of zero.

Block reward

The reward a miner gets for finding, or “mining” a new Block.

C

Contract Account

Smart contracts, in the context of Ethereum and other smart contract platforms, are Contract Accounts that execute transactions based on programmable functions.

Confirmations

A digital token transaction is considered unconfirmed until it has been referenced in one of the Blocks of the Blockchain. Each additional block represents additional confirmations. Online exchanges usually require three or more confirmations to consider a transaction final.

D

DAO (Decentralized Autonomous Organization)

A Decentralized Autonomous Organization is a decentralized entity that is run through a set of rules encoded as computer programs in a Smart Contract. DAOs often issue special tokens that represent ownership and voting power in the organization. Token holders govern how the evolution of the DAO by periodically voting on changes.

The DAO (Ethereum Venture)

The DAO was a decentralized venture capital fund intended to invest in Blockchain-related projects. The DAO was crowdfunded via a token sale in May 2016 and at the time broke the record for the largest ICO in history, raising a total of $150M. Immediately after its launch in June 2016, the DAO was hacked and approximately $50M worth of ETH were stolen. The hack was reversed in the following days when the Ethereum Foundation engineered a hard fork and restored the stolen funds. A small constituency rejected this hard fork and continued to transact on the original chain, which is now referred to Ethereum Classic network.

Difficulty

Difficulty is a scalar number that represents how difficult it is to find a new Block in a Blockchain network, compared to the easiest it can ever be. In the context of the Bitcoin Blockchain, it is defined by the a maximum difficulty target divided by the current target. Most Blockchain networks use difficulty determine Block creation times. In the Bitcoin Blockchain, for example, every block must be meet a difficulty target to ensure a 10 minute interval between blocks.

Digital Token

A digital representation of an asset.

E

ERC-20

A standard for digital tokens issued on the Ethereum network that makes tokens adhering to such standard more easily interchangeable with one another.

Ethereum

Ethereum is an open-source, blockchain-based distributed computing platform featuring smart contract functionality. It provides a decentralized virtual machine, the Ethereum Virtual Machine (EVM), which can execute code using a vast network of public nodes.

External Actor

A person or entity that is able to interact with a Blockchain node, but external to the network of that Blockchain. It can interact with the node by depositing signed Transactions and inspecting the Blockchain and associated state.

Externally controlled Account

An Account owned by an External Actor.

F

Full Node

A Full Node is a participant in a Blockchain Network that 1) engages in mining, and 2) keeps a full record of the Blockchain, from Block 0 (genesis block) to the current Block.

Fork

A fork occurs every time different blocks of the same height are created at the same time. A fork is a split of the blockchain when two constituencies of the network see different main chains. That split might be either a result of a software upgrade, or a computer bug. Forks resulted from software upgrades can be 1) Hard Forks, when the new software is not compatible with previous versions and all nodes of the network must upgrade or 2) Soft Forks, when the update is compatible with previous versions and nodes are encouraged (but not required) to upgrade.

G

Gas

Gas is the standardized price for running a transaction or contract in a Blockchain network. It accounts for all computation costs incurred as a result of the execution of the transaction or contract.

Gas limit

A value equal to the maximum amount of gas that should be used in executing a transaction or contract. This value is paid up-front, before any computation is done and may not be subsequently changed.

Gas used

A value equal to the total gas used in transactions in a Block.

Genesis Block

A Genesis Block is the very first unmined Block of a Blockchain. It has no predecessors, or parent blocks, and its Block Number is 0.

H

Hash

The cryptographic process (function) that takes an input of data and produces a shorter output with a fixed-length.

Hash Rate

The number of hash functions that a miner performs in a specific amount of time.


I

Improvement Proposal (IP)

Improvement Proposals describe and propose changes made to a Blockchain Protocol. Developers wishing to submit Improvement Proposals first propose their idea as pull request on the token’s Github, which is then voted and implemented by the miners of the network.

Initial Coin Offering or ICO

An Initial Coin Offering or ICO is a fundraising tool whereby a project sells digital tokens related to the project in return for digital tokens that have existing value, such as Bitcoin or Ethereum.

 

L

Light Node

A light node is a participant in a Blockchain Network that does not: 1) store the full version of the Blockchain, and 2) engage in mining.

M

Miner

Full Nodes that engage in transaction validation.

Message

A message is comprised of two elements 1) data, often code, and 2) value (as a function of the digital token) that is passed between two Accounts.

MultiSig

A security-enhancing feature that requires multiple private key signatures in order for transfers of value to take place.

N

Node

A participant in a blockchain network. Nodes share a copy of the blockchain and relay new transactions to other nodes. See Full Node.

P

Private Key

A combination of letters and numbers that can be used to spend the digital token associated with a specific Address.

Proof-of-Work (System), also noted as PoW

The mathematical proof of an economically costly, time consuming, computing process. This computing process is often random and has low probability, so that on average a lot of trial and error is required to generate proof-of-work data. This mechanism ensures that there are economic incentives when it comes to adding new Blocks to the Blockchain.

Proof-of-Stake (System), also noted as PoS

An alternative process to determine the economic incentives behind adding new Blocks to the Blockchain, where transaction validation is proportionate to token ownership.

Protocol (Networks)

A protocol is a set of standardized rules that dictate how participants of a network interact. The protocol governing a digital token often specifies how each node connects with the others, how many tokens will exist at any point in time, and how new Blocks are added to the Blockchain.

R

Relaying (Transactions)

The process in which connected nodes of a distributed network relay, or broadcast, new transactions between one another. Full nodes will then compile the transactions that are being broadcast to them into a new Block.

S

Signature

A mathematical proof that a message, or transaction, was acknowledged by a party holding a specific Public Key.

Split

A split of a blockchain. See Fork.

T

Transaction

A transaction is a single cryptographically-signed instruction constructed by two or more parties.

Transaction nonce

A scalar value equal to the number of transactions sent by the sender.

Transaction Receipt

The transaction receipt is a mathematical proof that a transaction happened in the past.

U

UniSig

The requirement of only one private key signature for transfers of value to take place.

w

Wallet

A software or a service that secures an account’s Private Keys. Wallets do not keep the digital tokens themselves - their sole purpose is to store one or more Private Keys.