Glossary of Blockchain Terminology: A Beginner’s Guide
Blockchain terminology can be complex and tricky to understand for novice developers. However, given the rapid growth of blockchain, you must understand our list of blockchain terms if you wish to break into the blockchain industry and advance your career.
Furthermore, this new generation of blockchain technology means it is now necessary for anyone who uses the Internet to familiarize themselves with these challenging blockchain terms.
Our glossary of blockchain terminology is ideal for everyday Internet users and for people who want to dabble in cryptocurrencies. Our blockchain terminology cheat sheet will examine more advanced terms and is essential reading for budding blockchain developers.
What Is Blockchain?
Blockchain is a digital database that stores any kind of data. Unlike conventional databases that use centralized exchanges, blockchain uses decentralized exchanges. This means that identical copies of a blockchain database are stored across multiple computers on a blockchain network. These computers are known as nodes.
Blockchain stores its data in blocks that are linked together by cryptographic signatures. This makes the data nearly impossible to forge, hack, or disrupt. These blocks have limited storage, and when full, are linked to the previous block, raising the block height. The three types of blocks in a blockchain are genesis blocks, orphan blocks, and valid blocks.
Blockchain is mainly used for financial transactions, such as cryptocurrency exchange. It is also used for the purchase of non-fungible tokens (NFTs). Blockchain permanently records a list of transactions that can be viewed, but not edited, by anyone. It can also be used for smart contracts, health care records, property records, and supply chain management.
Who Uses Blockchain Terminology?
Standard blockchain terminology is used by a variety of professionals including government officials, bank employees, insurance agents, real estate agents, and personal financial advisers. However, advanced blockchain technology is used primarily by professional blockchain software developers.
Blockchain software developers create decentralized software applications, also known as Dapps. They’re typically in charge of Dapp development for backend and front end development. Software developers with blockchain technology skills earn an average annual salary of $112,000.
List of Blockchain Terms: Things Every Blockchain Developer Should Know
- Blockchain platform
- Blockchain protocol
- Consensus Mechanism
- Cryptocurrency Tokens
- Decentralized Autonomous Organizations
- Digital Mining
- Digital Signature
- Distributed Ledger Technology
- Hashing Algorithms
- Initial Coin Offering (ICO)
- Non-Fungible token
- Proof of Stake
- Smart Contracts
- Zero-Knowledge Proof
- White Paper
Glossary of Blockchain Terminology: 5 Common Blockchain Terms
Blockchain technology is becoming increasingly popular today and a basic understanding of blockchain terminology is vital for many jobs. Furthermore, novice blockchain software developers will require adept knowledge of the following common blockchain terms.
Bitcoin is a digital currency that can be transferred from one user to another without an intermediary third party. The Bitcoin network does not have a centralized authority. Users can store the native cryptocurrency, Bitcoins, in a digital wallet, such as the Binance Smart Chain. From here, they can transfer their coins into other cryptocurrencies or fiat currency. Bitcoin cash can also be traded at a Bitcoin ATM.
Why Blockchain Developers Need to Know About Bitcoin
Blockchain was created as a platform for Bitcoin. It is important for aspiring developers to be familiar with the origin of blockchain technology and why it was created. It is good practice for developers to familiarize themselves with the process of buying and trading Bitcoin.
Cryptocurrencies are digital assets stored on a decentralized system. Cryptocurrency is nearly impossible to counterfeit and double-spend. The idea behind cryptocurrencies is to take the power away from banks and centralized authorities and put the responsibility and authority into the user’s hands. Cryptocurrency exchange typically requires a cryptocurrency transaction fee.
Why Blockchain Developers Need to Know About Cryptocurrency
Blockchain developers must learn how cryptocurrency works. Cryptocurrency plays a crucial role in the operation of a decentralized network. Developers will need to understand the different types of digital currency available, how they are issued, and how a decentralized payment system performs fully automatically.
Cryptocurrency tokens, or crypto tokens, are a type of cryptocurrency that resides on their own blockchains. These tokens represent a specific value or use. These tokens can be used to invest, store value, or make purchases.
Why Blockchain Developers Need to Know About Crypto Tokens
Understanding crypto tokens is essential for blockchain developers as they are used in the creation and execution of decentralized apps and smart contracts. Tokens are often used for fundraising, which is a great asset for up-and-coming developers.
Digital mining is the process of generating and verifying new cryptocurrencies for the digital market. This means that all blockchain transactions are completed correctly. This is done using the computer power of nodes with the block validation performed by miners, who get block rewards for their work.
Why Blockchain Developers Need to Know About Digital Mining
Blockchain developers must understand how to validate each transaction, generate the blocks, and locate the hash key, commonly known as the digital key, for each block to link it to the next.
Encryption guarantees the security of cryptocurrency transactions. This allows users to protect their data when trading coins and makes the verification process secure. Furthermore, encryption protects against double-spending. One example is public-key encryption which uses a set of private and public keys generated cryptographic algorithms.
Why Blockchain Developers Need to Know About Encryption
Blockchain developers must be able to offer sufficient security and protection for transactions. This is especially important when using unprotected routes. As such, knowledge of encryption is a prerequisite for blockchain developers.
Blockchain Terminology Cheat Sheet: 5 Advanced Blockchain Terms
If you are considering becoming a professional blockchain software developer you will need adept knowledge of advanced blockchain terminology. Read on, and use our handy cheat sheet to learn the top six advanced blockchain terms.
Decentralized Autonomous Organizations
A decentralized autonomous organization, commonly known as a DAO, is an organization that has no governing authority and is instead community-led through rules encoded by smart contracts.
Why Blockchain Developers Should Know About Decentralized Autonomous Organizations
These decentralized networks rely on smart contracts to execute automatically when its conditions are satisfied. Because there is no central authority of a DAO, blockchain technology is vital to the operation of its processes.
A hashing algorithm is a cryptographic hash function. It’s a mathematical process that converts data of any size into a fixed-size hash code, a password, or a digital fingerprint that identifies a group of blocks in the blockchain. A hash algorithm is designed to be a one-way, non-reversible function.
Why Blockchain Developers Should Know About Hashing Algorithms
Compared to any other data structure, hashing provides a more secure and customizable technique for obtaining data. Therefore, knowledge of hashing algorithms is a must for blockchain developers.
An oracle is any entity or person who is trusted to predict the result of an event. An oracle in a blockchain network communicates data to a smart contract, which can subsequently be used to authenticate an event or specified conclusion.
Why Blockchain Developers Should Know About Oracle
A smart contract can run on real-world inputs and outputs thanks to blockchain oracles, which connect blockchains to other systems. Oracles are critical in the blockchain ecosystem. For this reason, any aspiring blockchain developer should be familiar with this concept.
A smart contract is an agreement in the form of coded mathematical algorithms. The conclusion, modification, execution, and termination of which are only possible with the use of computer programs within the Internet. A smart contract is sometimes used in conjunction with physical legal contracts.
Why Blockchain Developers Should Know About Smart Contracts
Smart contracts are one of the most important applications of blockchain technology, enabling two parties to exchange goods and services without an intermediary. Blockchain developers should be familiar with smart contracts and how they enforce business logic.
Solidity is an object oriented programming language used for writing smart contracts. Solidity allows developers to create self-sufficient programs that contain the business logic that results in transactional blockchain records. It is mainly used on the Ethereum Virtual Machine (EVC).
Why Blockchain Developers Should Know About Solidity
Blockchain developers are required to write smart contracts, and you must know Solidity to do this. Furthermore, it enables blockchain developers to create business logic or automate specific portions for a specific decentralized application.
Vyper is a contract-oriented programming language for the Ethereum Virtual Machine (EVM). It aspires to be similar to Python. Vyper has a relatively simple and intelligible syntax. One of Vyper’s founding concepts is to make it practically impossible for programmers to write deceptive code.
Why Blockchain Developers Should Know About Vyper
Vyper allows blockchain developers to program on Ethereum, a blockchain-based virtual computer that allows smart contracts to be created and executed without the need for a central authority or trusted intermediaries.
How Can I Learn Blockchain Terminology in 2022?
The best way to learn blockchain terminology in 2022 is by enrolling in blockchain coding bootcamps. These bootcamps teach students job-ready blockchain skills in a short period of time. They are generally less expensive than traditional schooling and they provide graduates with job placement aid.
Alternatively, you may consider getting a bachelor’s degree from a college, enrolling in online programs, or acquiring a blockchain developer certification. These resources will help you to become a blockchain developer and thus, be proficient in blockchain terminology.
Blockchain 3.0 is the most up-to-date blockchain version. Blockchain 3.0 is an upgraded version of Blockchain 2.0, improving the technology’s capabilities by making it faster, more secure, and more efficient. The first iteration of blockchain was Blockchain 1.0.
There are over 80 million blockchain wallets today. There are also thousands of active cryptocurrencies in the blockchain industry and hundreds of non-crypto currency blockchains in 2022. The various types of wallets include a cold wallet, also called hardware wallets, which are not connected to the Internet. Alternatively, a hot wallet is always connected to the Internet.
The four types of blockchain are public blockchain, private blockchain, consortium blockchain, and hybrid blockchain.
Tether, Bitcoin, and Ethereum are the most traded cryptocurrencies on the market today. While Tether is at the top of the list, it was designed as a stablecoin and it constantly holds the market price value of $1.