Blockchain WIKI

BitExplorer

Hereafter we explain the most important terms from the Bitcoin and cryptocurrency world.

What is a wallet. What is a faucet or a hash? Here are the answers ….

 

A

Altcoins
#Altcoin is an abbreviation of “#Bitcoin alternative”. Currently, the majority of #altcoins are #forks of Bitcoin with usually minor changes to the proof of work (#POW) algorithm of the Bitcoin #blockchain. The most prominent altcoin is #Litecoin. #Litecoin introduces changes to the original Bitcoin #protocol such as decreased block generation time, increased maximum number of #coins and different hashing algorithm

ASIC
ASIC means “Application Specific Integrated Circuit”. It´s a silicon chip specifically designed for a single task. In the case of Bitcoin, they are designed to process #SHA-256 hashing problems to mine new bitcoins. ASICs are considered to be much more efficient than conventional #hardware(CPUs, GPUs). Using a regular computer for Bitcoin mining is seen as unprofitable and only results in higher #electricity bill

51% Attack
A condition in which more than half the #computing power of a #cryptocurrency network is controlled by a single malicious miner or group of #miners. If he controls 51% of the #network that makes him the authority on the network, giving him the power to spend the same coins multiple times, issue #transactions that conflict with someone else’s or stop someone else’s #transaction from being confirmed

B

Bitcoin
Is a #cryptocurrency that runs on a (1) global peer to peer network, is (2) decentralised (no single entity can control it), it’s (3) open source (wallet & transaction verification), (4) bypassing #middlemen or #central authority, with (5) no issuer or acquirer, (6) anyone with a #computer or #smartphone can use it

Bitcoin ATM
A cash point where people can trade fiat #currency and #bitcoins

Blockchain
Shared, trusted, public #ledger of #transactions, that everyone can inspect but which no single user controls. It is a #cryptographed, secure, tamper-resistant distributed #database. It solves a #complex #mathematical problem to exist. A #blockchain is a perfect place to store value, #identities, #agreements, property rights, credentials, etc. Once you put something like a #Bitcoin into it, it will stay there forever. It is decentralized, #disintermediated, cheap and censorship-resistant. Applications of #Blockchain: #Bitcoin (cryptocurrency), #Namecoin (wants to replace the entire #DNS system of the #Internet), or Sia (a decentralized cloud storage), #Ethereum (Turing complete Virtual Machine where you can run any smart contract); Any centralized service like eBay, Dropbox can potentially be built in a #decentralized way using #blockchain technology, considerably lowering #transaction costs

Block (on the Bitcoin Blockchain)
Data is permanently recorded on the Bitcoin #network through files called #blocks. A block is a record of some or all of the most recent Bitcoin transactions that have not yet been recorded in any prior #blocks. New blocks are added to the end of the #record (known as the #blockchain), and can never be changed or removed once written (although some software will remove them if they are #orphaned). Each #block #memorializes what took place in the minutes before it was created. Each #block contains a record of some or all recent #transactions and a reference to the block that came immediately before it. It also contains an answer to a difficult-to-solve #mathematical #puzzle – the answer to which is unique to each block. New blocks cannot be submitted to the #network without the correct answer – the #process of “mining” is #essentially the #process of competing to be the next to find the answer that “solves” the #current block. The #mathematical problem in each block is extremely difficult to solve, but once a #valid solution is found, it is very easy for the rest of the network to confirm that the solution is correct. There are #multiple valid #solutions for any given block – only one of the solutions needs to be found for the #block to be solved. #Because there is a reward of brand new bitcoins for solving each block, every #block also contains a record of which #Bitcoin addresses or scripts are entitled to receive the reward. This record is known as a generation transaction, or a #coinbase transaction, and is always the first t#ransaction appearing in every block. The number of #Bitcoins generated per block starts at 50 and is halved every 210,000 #blocks (about four years). Bitcoin transactions are #broadcast to the network by the sender, and all #peers trying to solve blocks collect the transaction #records and add them to the block they are working to solve.#Miners get an incentive to include #transactions in their blocks because of attached transaction fees. The #difficulty of the #mathematical problem is automatically adjusted by the network, such that it #targets a goal of solving an average of 6 #blocks per hour. Every 2016 blocks (solved in about two weeks), all #Bitcoin clients compare the actual #number created with this goal and modify the target by the percentage that it varied. The network comes to a #consensus and automatically increases (or decreases) the difficulty of generating #blocks. Because each #block contains a reference to the prior block, the collection of all blocks in #existence can be said to form a #chain. However, it’s possible for the chain to have temporary splits – for #example, if two miners arrive at two different #valid solutions for the same #block at the same time, unbeknownst to one another. The #peer-to-peer network is designed to resolve these splits within a short period of time so that only one #branch of the chain survives. The client accepts the ‘longest’ chain of #blocks as valid. The ‘length’ of the entire# blockchain refers to the chain with the most combined #difficulty, not the one with the most blocks. This prevents someone from #forking the chain and creating a large number of #low-difficulty blocks and having it accepted by the #network as ‘longest’

Block explorer
An online tool for exploring the #blockchain of a particular #cryptocurrency, where you can watch and follow live all the #transactions happening on the blockchain. Block explorers can serve as #blockchain analysis and provide information such as total #network hash rate, coin supply, transaction #growth, etc.

Block reward
An amount of #crypto-currency a miner receives for processing transactions in a given #block. Because creating (or “mining”) #blocks is so crucial to the security of the Bitcoin network and yet so hard, the #Bitcoin protocol includes a #mechanism to encourage people to mine: every time a block is added, the #miner who found the #block is given 12,5 BTC(this number will change at the next halving in 2020) as a #block reward

C

Chain linking
Chain #linking is the process of connecting two blockchains with each other, thus allowing #transactions between the #chains to take place. This will allow blockchains like #Bitcoin to communicate with other #sidechains, allowing the #exchange of assets between them

Client
A software #program a user executes on a desktop, laptop or a mobile device to launch an #application

Cloud Mining
Classical #cryptocurrency mining requires huge investments in hardware and electricity. Cloud #mining companies aim to make mining #accessible to everybody. People just can log in to a #website and invest money in the #company which already has mining datacenters. The money is managed by the #company and it is invested in #mining equipment. Investors get a share of the revenue. The #disadvantage for the user is that #cloud mining has low returns compared to traditional mining.

Consensus (general)
A fundamental #problem in distributed computing is to achieve overall system #reliability in the presence of a number of faulty #processes. This often requires processes to agree on some #data value that is needed during computation. The #consensus problem requires agreement among a number of #processes for a single data value. Some of the #processes may fail or be unreliable in other ways, so #consensus protocols must be fault tolerant. The #processes must somehow put forth their candidate #values, communicate with one another, and agree on a single #consensus value. The bitcoin blockchain uses #electricity to ensure the security of the #system. It creates an economic system where you can only participate by incurring# costs, Proof of work (#POW). You do that for the possibility of reward/bitcoin. If you spend #money, and you play fair by the rules, you get #money back. If you cheat, you lose money. It doesn’t pay to #cheat. This simple game theoretical #equilibrium is the core of the bitcoin consensus algorithm

Consensus (Bitcoin’s Process Consensus)
#Developers suggest bitcoin #improvements/modifications, small or big, proposals on #Github, #Bitcointalk, #Reddit, mailing lists, etc. Discussion on this level is critical to enable smooth runtime #consensus transitions. #Modifications with reference implementations get tested on the #testnet. After successful testing #developers implement the changes into the Bitcoin software. Who has a say in the #consensus process?: (1) Software #Developers (do the reference implementations), (2) #Miners (Runtime consensus for mining blocks), (3) #Exchanges (They run nodes that validate transactions), (4) #Wallet companies (create transactions run on nodes), (5) #Merchants (Merchant processing also through #nodes)

Consortium blockchains
A consortium blockchain is a #blockchain where the consensus process is controlled by a #pre-selected set of nodes; for example, one might imagine a #consortium of 15 financial #institutions, each of which operates a node and of which ten must #sign every block for the block to be valid. The right to read the# blockchain may be public or restricted to the #participants. There are also hybrid routes such as the root #hashes of the blocks being #public together with an API that allows members of the public to make a limited #number of queries and get back #cryptographic proofs of some parts of the blockchain state. These #blockchains may be considered “partially #decentralized”

Cryptographic Hash Function
iThe cryptographic hash #function is a mathematical algorithm that takes a #particular input which can be any kind of digital #data be it a password or jpeg file and produces a single fixed length #output. Some examples of different #hash function algorithms are MD5, MD4 or SHA256. The last one is used in the #Bitcoin protocol. Main #properties: (1) easy to compute hash value for any given #message (2) #infeasible to generate a #message from its hash except by trying all possible input combinations(brute force #attack) (3) infeasible to modify a #message without changing the hash (4) infeasible to find two different #messages with the same #hash (5) deterministic so the same message always results in the same hash. #Cryptographic hash functions have many #information security applications, notably in digital signatures, #message authentication #codes (MACs), and other forms of authentication. They can also be used as ordinary #hash functions, to index #data in hash tables, for fingerprinting, to detect duplicate data or uniquely identify #files, and as checksums to detect accidental data #corruption

Cryptojacking
Cryptojacking is referred as a #secret use of a device to mine cryptocurrency. The first widely known #attempt for cryptojacking was the #torrent tracker Piratebay. They enabled an in-browser #mining software so when somebody visits the #website his/her computer will start mining cryptocurrency via the browser. #Users started noticing the unusual #behavior in their browsers and Piratebay took down the #software. There have been many attempts for #cryptojacking since then. The easiest way to find out if a #computer is mining #cryptocurrency is to check the resources monitor for unusual CPU behavior or using the #debug console of your #browser an look for mining scripts. Developers also released Chrome #browser #extensions to protect users from #mining occurring on their devices.

D

dApp (decentralized application)
For an #application to be considered a Dapp or decentralized application it must meet the following #criteria (1) #Application must be completely open-source, it must operate #autonomously, and with no #entity controlling the majority of its #tokens. The application may adapt its #protocol in response to proposed improvements and market #feedback, but all changes must be decided by #consensus of its users. (2) Application data and records of o#peration must be cryptographically stored in a #public, decentralized blockchain in order to avoid any central points of #failure. (3) The application must use a #cryptographic token (#bitcoin or a token native to its system) which is necessary for access to the #application, and any contribution of #value from miners or farmers should be rewarded with the tokens from the #applications. (4) The #application must generate tokens according to a standard cryptographic #algorithm acting as a proof of the value #nodes are contributing to the application (Bitcoin uses the Proof of #Work Algorithm)

DAOs (Decentralized Autonomous Organization)
fully automated business #entity (FAB), or distributed autonomous corporation/company (#DAC) is a decentralized network of narrow-#AI autonomous agents which perform an output-maximizing #production function and which divides its l#abor into computationally intractable tasks (which it #incentivizes humans to do) and #tasks which it performs itself. It can be thought of as a corporation run without any #human involvement under the #control of an incorruptible set of #business rules. These rules are typically implemented as #publicly auditable open-source software distributed across the #computers of their stakeholders. A human becomes a #stakeholder by buying stock in the #company or being paid in that stock to provide services for the #company. This stock may entitle its owner to a share of the #profits of the DAO, participation in its #growth, and/or a say in how it is run…

Digital Signature
Private keys are used for signing #transactions. Each time a transaction is sent over the #blockchain it gets signed by the user’s #private key. The signed transaction is broadcasted over the #network together with the corresponding public #key. Each miner is able to verify the signature by verifying the #signature with the public key.

Double Spending
Double-spending is the #result of successfully spending some money more than once. #Bitcoin is the first to implemented a #solution in early 2009 which protects against double spending by verifying each #transaction added to the #blockchain to ensure that the inputs for the transaction had not #previously already been spent

E

Ethereum
Ethereum is an open #software platform based on blockchain technology that enables #developers to write smart #contracts and build and deploy decentralized applications(Dapps). The native #token of the blockchain is called #Ether which is used to pay for transaction fees, miner rewards and other #services on the network. The main #innovation of Ethereum is the Ethereum Virtual Machine (#EVM) which runs on the Ethereum #network and enables anyone to run any application. The #EVM makes the process of developing blockchain #applications much easier. Before the emergence of #Ethereum developers had to develop a dedicated #blockchain for each application they wanted to create. This process is #time-consuming and resource-intensive. #Ethereum will enable the development of many #applications on the same platform, making the #process much easier and accessible for developers. The #Ethereum Project, based in #Switzerland, raised millions in seed money by pre-mining and selling ethers to #supporters & investors. As opposed to #Bitcoin, its scripting language is Turing-complete and full-featured, expanding the kinds of #smart #contracts that it can support. The Ethereum project wants to “#decentralize the web” by introducing four #components as part of its roadmap: static content publication, #dynamic messages, trustless #transactions and an integrated user-interface

F

Fiat currency
Any money declared by a #government to be to be valid for meeting a financial #obligation, like USD or EUR

Fork
The creation of an ongoing alternative #version of the blockchain, by creating two #blocks simultaneously on different parts of the #network. This creates two parallel #blockchains, where one of the two is the winning blockchain. The winning #blockchain gets determined by its users, by the #majority choosing on which blockchain their #clients should be listening

G

Genesis block
The very first block in the #blockchain

H

Hardfork
A #hardfork is a change to the #blockchain protocol that makes previously #invalid blocks/transactions valid, and therefore requires all users to upgrade their #clients. The most recent example of a #hardfork in public blockchains is the #Ethereum hardfork which happened on July 21st, 2016. The #hardfork changed the Ethereum #protocol, therefore a second blockchain emerged (Ethereum Classic, ETC) which #supports the old Ethereum #protocol. In order to continue existing ETC needs miners, which would #validate the transactions on the #blockchain

Hashcash
is a proof-of-work #system used to limit email spam and denial-of-service #attacks, and more recently has become known for its use in #bitcoin (and other cryptocurrencies) as part of the #mining algorithm. #Hashcash was proposed in May 1997 by #Adam #Back

Halving
A reduction in the #block reward given to crypto-currency miners once a certain number of# blocks have been mined. The #Bitcoin block mining reward halves every 210,000 #blocks

I

Initial Coin Offering (ICO)
ICOs are types of #crowdfunding mechanisms conducted on the blockchain. Originally, the main #idea of an #ICO was to fund new projects by pre-selling coins/tokens to investors interested in the #project. #Entrepreneurs present a whitepaper describing the business model and the technical #specifications of a project before the #ICO. They lay out a timeline for the #project and set a target budget where they describe the #future funds spending (marketing, R&D, etc.) as well as coin #distribution (how many coins are they going to keep for themselves, #token supply, etc.). During the crowdfunding #campaign, investors purchase tokens with already established #cryptocurrencies like Bitcoin and #Ethereum.

IPFS
The InterPlanetary File System (IPFS) is a hypermedia distribution #protocol, addressed by content and identities. #IPFS enables the creation of completely distributed #applications. It aims to make the web faster, safer, and more open. #IPFS is an open source project developed by the team at Interplanetary #Networks and many contributors from the open source #community. It is a peer-to-peer distributed file #system that seeks to connect all #computing devices with the same system of files. In some ways, #IPFS is similar to the Web, but #IPFS could be seen as a single BitTorrent swarm, exchanging objects within one #Git repository. In other words, #IPFS provides a high throughput content-addressed block storage #model, with content-addressed #hyperlinks. This forms a generalized Merkle DAG, a data #structure upon which one can build versioned file systems, #blockchains, and even a Permanent Web. #IPFS combines a distributed hash table, an incentivized block #exchange, and a self-certifying namespace. #IPFS has no single point of failure, and #nodes do not need to trust each other

J

K

L

Light Node
A computer on a #blockchain network that only verifies a limited number of #transactions relevant to its dealings, making use of the simplified #payment verification (SPV) #mode

Lightning Network
The #Lightning network is a decentralized network using smart contract functionality on the #blockchain to enable instant #payments across a network of participants. The Lightning Network will allow #bitcoin #transactions to happen instantly, without worrying about block confirmation times. It will allow #millions of #transactions in a few seconds, at low costs, even between different blockchains, as long as both #chains use the same #cryptographic hash function. The #Lightning network will allow two participants on the #network to create a #ledger entry, conduct a number of #transactions between themselves and after the process has finished, record the state of the #transactions on the blockchain. As for now, the #bitcoin network is #capable of processing up to 7 transactions per second. The Visa payment network, for #instance, is believed to complete 45,000 #transactions per second during a regular holiday period. This #protocol tries to solve the bitcoin #scalability problem

M

Merkle tree
The basic idea behind #Merkle tree is to have some piece of #data that is linking to another. You can do this by linking things together with a #cryptographic hash. The content itself can be used to determine the #hash. By using the #cryptographic hashing we can address the content, and #content gets immutable because if you change anything in the #data, the cryptographic hash changes and the #link will be different. #Bitcoin uses #cryptographic hashing, where every block points to the previous one if you modify the block, the #hash will change and will make the #block invalid

Mining (Bitcoin)
Mining is the process of adding #transaction records to Bitcoin’s public ledger of past #transactions or blockchain. This #ledger of past transactions is called the blockchain as it is a chain of #blocks. The #blockchain serves to confirm transactions to the rest of the network as having taken place. #Bitcoin nodes use the #blockchain to distinguish legitimate Bitcoin transactions from attempts to re-spend #coins that have already been spent elsewhere. #Mining is intentionally designed to be #resource-intensive and challenging so that the number of #blocks found each day by miners remains steady. Individual #blocks must contain a proof of work to be considered valid. This #proof of work is verified by other Bitcoin #nodes each time they receive a block. #Bitcoin uses the hashcash proof-of-work function. The primary purpose of #mining is to allow Bitcoin #nodes to reach a secure, tamper-resistant consensus. Mining is also the #mechanism used to introduce #Bitcoins into the system: Miners are paid any transaction fees as well as a “#subsidy” of newly created coins. This #both serves the purpose of disseminating new coins in a decentralized #manner as well as motivating people to provide #security for the system

Mining Difficulty
Mining #difficulty measures how hard it would be to find the next Bitcoin block. Every #proof of work consensus #algorithm has a mining difficulty which is also adjustable. Depending on how many #miners join the network the #difficulty might rise or fall. The aim of the difficulty is to keep the #block times even and make the #network secure. The average time for finding a Bitcoin block is set for 10 minutes. #Litecoin is set for 2.5 minutes.

Mining Pool
In a mining #pool, different users organize together in order to provide computing power for the #bitcoin network. If a #Bitcoin block is newly created, each of the users in the mining pool receives its fair #share proportionately to his #mining power. To become a member of a mining pool, the user needs to run #software provided by the #mining pool. The advantage of the mining pools is that #block #rewards get distributed across the #pool providing more stable income.

N

Node (Full Node)
Any computer that connects to the #blockchain network is called a node. #Nodes that fully enforce all of the rules of the #blockchain (i.e., Bitcoin) are called full nodes. Most nodes on the #network are lightweight nodes instead of full #nodes, but full nodes form the backbone of the #network

O

Oracles
Smart contracts on the #blockchain cannot access the outside #network on their own. Therefore oracles sit between a smart #contract and the external world, providing the #data needed by the smart contract to prove #performance while sending its commands to external #systems

P

Private Blockchains
a fully private blockchain is a #blockchain where write permissions are kept centralized to one #organization. Read permissions may be #public or restricted to an arbitrary extent. Likely applications include #database management, #auditing, etc. internal to a single company, and so public #readability may not be necessary in many cases at all, though in other cases public #auditability is desired

Private key
Each time a user runs a #cryptocurrency wallet for the first time a #public-private key pair gets generated. The #private key is a randomly generated number which allows users to #transact over the blockchain. It is locally stored and kept secret. Each time a #Bitcoin gets sent a private key has to sign the #transaction. This action is automatically executed by the software of the wallet. When a wallet asks users to do a #backup what this means is that the users must secure their private #key. There are different types of wallets such as online #wallets, mobile# wallets, desktop wallet, hardware wallets or paper wallets. The category of each #wallet is determined by where private keys are stored. Online #wallets are mostly provided by #exchanges and keep user’s #private keys on their servers. If the service provider goes offline users would lose #access to their funds. #Hardware wallets for example store user’s private keys in a secure device which looks like a #USB flash drive.

Proof of Authority(PoA)
A #Proof of authority is a consensus mechanism in a private blockchain which essentially gives one #client(or a specific number of clients) with one particular #private key the right to make all of the #blocks in the #blockchain

Proof of Stake
#Proof-of-stake (PoS) is a method by which a #cryptocurrency blockchain network aims to achieve #distributed consensus. While the #proof-of-work (PoW) #method asks users to repeatedly run hashing algorithms or other client #puzzles, to validate electronic #transactions, proof-of-stake asks users to prove ownership of a certain amount of #currency (their “stake” in the currency). #Peercoin was the first #cryptocurrency to launch using proof-of-Stake. Other prominent implementations are found in #BitShares, Nxt, BlackCoin, #NuShares/NuBits and Qora. Ethereum has planned a hard fork transition from #PoW to PoS consensus. Decred #hybridizes PoW with PoS and combines elements of both in an attempt to g#arner the benefits of the two #systems and create a more robust notion of consensus. With #Proof of #Work, the probability of mining a #block depends on the work done by the miner (e.g. #CPU/#GPU cycles spent checking hashes). In the case of #Bitcoin, with Proof of Stake, the resource that’s compared is the a#mount of #Bitcoin a miner holds – someone holding 1% of the Bitcoin can mine 1% of the “Proof of Stake #blocks”. Instead of #sacrificing energy to mine a block, a user must prove they own a certain #amount of the #cryptocurrency to generate a block. The more #stake you own, the more you are to generate a #block. In theory, this should prevent users from creating #forks because it will devalue their #stake and it should save a lot of energy. Proof of #Stake sounds like a good idea, but ironically, there is the “Nothing at Stake” #problem. Since mining #Bitcoins is costly, it is not smart to waste your energy on a fork that won’t earn you any #money, however with #Proof of Stake, it is free to mine a #fork

Proof of Work
POW system/protocol/function is an #economic measure to deter denial of service #attacks and other service abuses such as spam on a #network by requiring some work from the service #requester, usually meaning processing time by a #computer. The concept may have been first presented by #Cynthia Dwork and Moni #Naor in a 1993 journal. The term “Proof of Work” was first coined and formalized in a #1999 paper by Markus #Jakobsson and Ari Juels. A key feature of these schemes is their asymmetry: the #work must be moderately# hard (but feasible) on the requester side but easy to check for the service #provider. This idea is also known as a #CPU cost function, client puzzle, computational puzzle or CPU pricing #function

Public Blockchains
a public #blockchain is a blockchain that anyone in the world can read, anyone in the #world can send #transactions to and expect to see them included if they are valid, and anyone in the #world can participate in the consensus process – the #process for determining what blocks get added to the #chain and what the current state is. As a #substitute for centralized or quasi-centralized trust, public #blockchains are secured by crypto #economics – the combination of economic incentives and cryptographic #verification using mechanisms such as #proof of work or proof of stake, following a general principle that the #degree to which someone can have an #influence in the consensus process is proportional to the quantity of #economic #resources that they can bring to bear. Those blockchains are generally considered to be “fully #decentralized”

Q

R

Ring Signature
Ring signature is a #cryptographic technology that could provide a decent level of #anonymisation on a blockchain. Ring #signatures make sure individual transaction outputs on the #blockchain can’t be traced. A message signed with a ring #signature is endorsed by someone in a particular group of #people. One of the #security properties of a ring signature is that it should be computationally #infeasible to determine which of the #group members’ keys was used to produce the #signature

S

Satoshi
The smallest unit of one #Bitcoin is equal to 0.00000001 #BTC

Satoshi Nakamoto
is a #person or group of people who created the bitcoin #protocol and reference software, #Bitcoin Core (formerly known as #Bitcoin-Qt). In 2008, Nakamoto published a paper on The #Cryptography Mailing list at #metzdowd.com describing the bitcoin digital currency. In 2009, they released the first #bitcoin software that launched the #network and the first units of the bitcoin cryptocurrency, called #bitcoins

SHA (Secure Hash Algorithm)
is a family of #cryptographic hash functions published by the National Institute of #Standards and #Technology (NIST) as a U.S. Federal Information Processing Standard (FIPS). #SHA256 is an algorithm used in #Bitcoin that takes an input of any size which can be any form of data(text, jpeg, pdf, etc.), mixes it up and creates a fixed size #output(a hash) which is 256-bit (32-byte) long . You can think of the #hash as the fingerprint of the #data. Hashes are one-way functions – they cannot be #decrypted back. The only way to decrypt a #hash is by brute forcing it. Brute force means to systematically try all the #combinations for an input. Brute force #attack will always find the input, no matter its #complexity.

Smart contracts
are computer #protocols that facilitate, verify, or enforce the negotiation or #performance of a contract, or that obviate the need for a #contractual clause. Smart contracts usually also have a user #interface and often emulate the logic of contractual #clauses. Proponents of smart contracts claim that many #kinds of contractual #clauses may thus be made partially or fully self-executing, #self-enforcing, or both. #Smart #contracts aim to provide security superior to traditional contract law and to reduce other #transaction costs associated with #contracting

Sidechains
are #blockchains that are interoperable with each other and with Bitcoin, avoiding #liquidity #shortages, market #fluctuations, fragmentation, security breaches and outright fraud associated with #alternative crypto-currencies. “#Sidechains are new blockchains which are backed by Bitcoins, via Bitcoin #contracts, just as dollars and #pounds used to be backed by cold hard gold. You could in principle have #thousands of sidechains “pegged” to #Bitcoin, all with different characteristics and #purposes … and all of them taking advantage of the #scarcity and resilience guaranteed by the main Bitcoin #blockchain, which in turn could iterate to implement #experimental #sidechain #features once they have been tried and tested…” more

Softfork
A #softfork is a change to the protocol of bitcoin wherein only previously valid blocks/transactions are made invalid. Since old #nodes will recognize the new blocks as valid, a softfork is backward-compatible. This kind of #fork requires only a majority of the miners upgrading to enforce the new rules

Solidity
#Solidity is a programming language. Designed for developing smart contracts. Its #syntax is similar to that of #JavaScript, and it is intended to compile into bytecode for the #Ethereum Virtual Machine(EVM)

SPV (Simplified #Payment Verification) client
SPV clients are #Bitcoin lightweight clients which do not download and store the whole #blockchain locally. These #wallets provide a way to verify payments without having to download the complete#blockchain. An SPV #client only downloads the block headers by connecting to a full #node

State Channel
State #channels are interactions which get conducted off the blockchain without #significantly increasing the risk of any #participant. Moving these interactions off of the chain without requiring any additional #trust can lead to significant #improvements in cost and speed. State channels work by locking part of the #blockchain state so that a #specific set of #participants must completely agree with each other to update it

Swarm
Swarm is a distributed #storage platform and content distribution service, a native base layer #service of the Ethereum web three #stack. The primary objective of Swarm is to provide a decentralized and redundant #store of #Ethereum’s public record, in particular, to store and distribute #dApp code and data as well as blockchain #data

T

Token
In the context of #Blockchains, a token is a digital identity for something that can be owned. #Historically, tokens started as #meta information encoded in simple Bitcoin transactions, thereby taking #advantage of the Bitcoin #blockchain’s strong immutability. At a protocol layer, tokens were outsourced #extensions to Bitcoin’s core #protocol. Instead of being integrated as a feature on a software level, those #tokens were created by misappropriating #data fields in Bitcoin transactions (such as encoding data in the #amount or op_return field). Today, modern #tokens are created as sophisticated smart contract systems with #complex permission systems and interaction #paths attached. Smart contracts can be understood as #software #agents, which act deterministically and #autonomously, within the scope of a given #network, according to a predefined rule set. If the #governance rules around issuance and management of a #token are sufficiently #complex regarding how they coordinate a group of stakeholders, token smart #contracts may be understood as #organizations sui generis. The management rules may reflect those of known #legal, organizational entities such as stock #corporations, but they do not have to

Testnet
a second #blockchain used by #developers for testing new versions of client #software without putting a real value at #risk

Transaction Fees (Bitcoin)
may be included with any #transfer of bitcoins from one address to another. At the #moment, many #transactions are typically processed in a way where no fee is expected at all, but for #transactions which draw coins from many #bitcoin addresses and therefore have a large data size, a small #transaction fee is usually expected. The #transaction fee is processed by and received by the bitcoin #miner. When a new bitcoin #block is generated with a successful hash, the information for all of the #transactions is included with the block, and all t#ransaction fees are collected by that user creating the #block, who is free to assign those fees to himself. #Transaction fees are voluntary on the part of the person making the #bitcoin transaction, as the #person attempting to make a transaction can include any #fee or none at all in the #transaction. On the other hand, nobody mining new bitcoins necessarily needs to accept the #transactions and include them in the new block being created. The transaction fee is, therefore, an incentive on the #part of the #bitcoin user to make sure that a particular transaction will get included in the next #block which is generated. It is envisioned that over time the cumulative effect of collecting transaction #fees will allow somebody creating new blocks to “earn” more #bitcoins that will be mined from new #bitcoins created by the new block itself. This is also an #incentive to keep trying to create new blocks even if the #value of the newly created block from the #mining activity is zero in the far #future

Turing completeness
A machine is Turing complete if it can perform any #calculation that any other programmable #computer is capable of. All modern #computers are Turing-complete in this sense. The #Ethereum #Virtual #Machine (EVM) which runs on the #Ethereum blockchain is Turing complete. Thus it can #process any “computable #function”. It is, in short, able to do what you could do with any conventional #computer and programming language

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Wallet
is a file that contains a #collection of private keys and communicates with the corresponding #blockchain. Wallets contain keys, not #coins. Wallets require backups for security #reasons.

Whisper
Whisper is a part of the #Ethereum p2p protocol suite that allows for messaging between #users via the same network that the #blockchain runs on. The main task of whisper will be the #provision of a communication protocol between #dapps

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