Must know Technical terms in Bitcoin/Blockchain for Newbies

[ash_waz]

Hello folks,

Just compiled a list for sharing some technical terms relating to Bitcoin/ Blockchain technology which are worth knowing. Please note this is a summarized list and I have excluded terms that I considered as very common and known. Hope it helps in learning even a little in this vast topic.

1. 51% Attack
When more than half of the computing power of a crypto currency network is controlled by a one entity or group, and they are in a position to issue conflicting transactions on the network if they have malicious intentions to do so.  

2. Block Height
The number of blocks connected together in a blockchain.

3. Block Reward
Block rewards also known as coinbase are the only way in which new coins are created on the Bitcoin network. When a miner mines a new block he is given a block reward. The reward given is halved every 210,000 blocks which happens approximately 4 years and currently the reward is 12.5 BTC.

4. Confirmation
When a new transaction is included in a block and verified, it receives the first confirmation. Thereafter when a block is created every 10 minutes a transaction is reconfirmed by the network.

5. Consensus
Consensus in a decentralized network is achieved when the participants agree not only on the validation of transactions that would be added to the network but also in deciding the rules/ regulations and all major and minor improvements to a network.

6. Cold Storage
Methods of storing cryptocurrencies  offline. Suitable for long term storage.

7. Cryptography
Mathamatical and computer science algorithms used to encrypt & decrypt information and used in a blockchain addresses, hash functions & the blockchain.

8. Dapp
Daap is a open source application that is decentralized, has its data stored on the blockchain, incentivized in the form of tokens and operates on a protocol that shows proof of value

9. DAO
Decentralized autonomous organizations is a business which is run electronically through rules that are encoded as computer programs which is also  known as smart contracts.

10. Double spending
Occurs when a sum of money is spent twice

11. Ethereum
An open sourced, public blockchain based decentralized platform for apps that run smart contracts. Ethereum aims to solve a multitude of the world’s problems including issues associated with censorship, fraud, third party interference etc.

12. Fork
The updating of a cryptocurrency/blockchain protocol is known as a fork. A fork can be backward compatible ( a soft fork where old rules are still valid) or cannot be backward compatible ( a hard fork where old rules become obsolete and its mandatory to follow new rules)

13. Genesis Block
The first block in a blockchain

14. Halving
Bitcoin has a finite supply of 21 million and the number of Bitcoins generated per block decreases by 50% every four years. This is called “halving” and the final halving will take place in the year of 2140

15. Hash Rate
A performance measure which expresses the mining power of a mining network and is expressed as hashes per second

16. Mining
The process of using computer power to solve mathematical calculations inorder to validate transactions in the Bitcoin/Blockchain network. Mineres are paid a transaction fee for the transactions they confirm and are awarded Bitcoin for blocks verified.

17. Multi Signature
Multi signature address provide added security to Bitcoin transaction by requiring more than one key to authorize a transaction

18. Node
Any computer that connects to the blockchain is known as a node. A node could be a full node or a light weight node. A full node enforces all of the rules of a blockchain network.

18. Oracles
A bridge connecting the real world with the blockchain by providing data for smart contracts

19. Pool
A network of miners who work together to mine a block and thereafter split the reward among the participating miners. Mining pools combine their resources to increase the probability of mining a block.

20. Scrypt
A cryptographic algorithm used by Litecoin which uses less processing power compared to SHA256

21. SHA256   
Cryptographic algorithm used by Bitcoin. Compared to Scrypt, SHA256 uses a lot of hash power and processing time resulting in the miners forming mining pool for the combination of resources to increase processing power.

22. Smart Contracts
Self-executing contracts where the terms of the agreement are coded into computer programs and exist across a decentralized blockchain network. Smart contracts enable trustless transactions and agreements to be carried on a peer to peer basis in a trustless fashion without the need of a central authority, legal system or a external enforcement mechanism.

23. Solidity
Ethereums programming language used to develop smart contracts

24. Testnet
A alternative version of the main network used by developers for testing purposes

[1715089787]

1715089787

[1715089787]

1715089787

[1715089787]

1715089787

[iRespo]

Casper - Consensus algorithm that combines proof of work and proof of stake. Ethereum is going to use casper as a transition to proof of stake.

Cryptographic Hash Function - a function that returns a unique fixed-length string. The returned string is unique for every unique input. Used to create a "digital ID" or "digital thumbprint" of an input string.

EOA - Externally Owned Account

[pooya87]

most of these aren't important for a newbie to even know and some of them are even wrong.
1. why in the world made you think  the number 1 thing for a newbie to know is  a 51% attack with only 1 line of incomplete explanation?

3. Block Reward
When a miner mines a new block( adds the first transaction to a block) he is given a block reward. The reward give is halved every 210,000 blocks which happens every 4 years and currently the reward is 12.5 BTC

"adds the first transaction" is misleading the reward is claimed in a mandatory transaction which is always the first transaction called coinbase.
also it happens "approximately" every 4 years.

4. Confirmation
Successful hashing/processing a transaction and adding it to the blockchain

hashing doesn't concern the transaction. all the work goes into finding the block then when the block is found you include the transactions in it and that is called confirmation.
1 conf. means it is included in a block
more than 1 conf. means more blocks have been found and now your transaction is deeper in the blockchain and safer against double spend attacks.

5. Consensus
Consensus is achieved when all nodes of the network agree on the validity of a transaction, ensuring the ledgers of exact copies of each other.

consensus isn't just about validity of transactions. it is all the rules that make bitcoin, bitcoin.

8. Daap

it is dapps ... d-apps ... decentralized applications.

12. Fork

fork in different contexts means different things. for example when you copy the code of a project you are making a fork of that project. for example Electrum-ltc is a fork of Electrum.

18. Node
A copy of the blockchain ledger operated by a participant of the blockchain network

the "copy of the blockchain" is not node! the computer that holds that copy and is sharing blocks and transaction across the network is called a node or a full node.

24. Testnet
A alternative version of the main blockchain used by developers for testing purposes

it is best to call it "an alternative version of the main network" not just blockchain.

[ash_waz]

most of these aren't important for a newbie to even know and some of them are even wrong.
1. why in the world made you think  the number 1 thing for a newbie to know is  a 51% attack with only 1 line of incomplete explanation?

Thank you so much for your response. I really appreciate it and I have done the changes/ corrections.

I love to learn and improve my knowledge in the crypto space, its really interesting and kind of challenge for a person who does not have a IT background, assuming there are more like minded folk like me made me write this post and yes I agree with you it might be a bit too much for a newbie but still knowledge is power.

With regard to the "51% attack" being the no one thing for a newbie to know, I arranged the list alphabetically and since it has numericals at the start it topped the list. :-)

Thanks again for your great input. Really appreciate it.

[jacee]

There's the Terminology thread already for these.  .

IIRC that thread was pinned before or maybe I remembered wrong.