To some, the blockchain world sounds like a Sci-fi movie due to the terms used to describe different areas of the space. Below we explore 31 top terms used in the blockchain and cryptocurrency mining worlds.
31 top terms used in the blockchain and cryptocurrency mining worlds
Blockchain – A chronologically ordered list of blocks. Blocks contain crypto transactions. For example, the Bitcoin blockchain contains an ordered list of blocks containing BTC transactions.
Block – A block is the single-most component of a blockchain. Apart from containing transactions made on a decentralized network, it also contains extra information that links it to the previous block to help create a chain, a block-chain.
Block height – A block’s number on a chain from the first block. If a blockchain has 1000 blocks, the last block is at block height 1000.
Block reward – This is the remuneration that goes to miners for successfully adding a block to the network. The reward contains the designated amount a miner should receive for a new block plus a section of transaction fees paid by users on the protocol.
Block header – It’s the part of a block that holds information about the contents of a block, a link to the previous block, block height, etc.
Block size limit – This is the maximum capacity of a block measured in bytes. The Bitcoin blockchain has a block size limit of 1 megabyte while that of Ethereum is around 12.5 megabytes.
Double spend – A double spend is a situation where an entity can spend their crypto twice on the blockchain. For example, if a wallet has 2 BTC, an entity can send 2 BTC to multiple individuals.
Genesis block – The first block on a blockchain
Hash power – It’s the computing power of a mining device and is measured in hashes per second.
Hash rate – It’s the total hash power dedicated to a blockchain.
Hash – A unique piece of data generated by a hash function/algorithm
Hashing – The process of producing a hash
Hash algorithm – A mathematical function used to compress data to a uniform output
Halving – A predetermined automatic reduction of the amount paid to miners.
Hard fork – A type of blockchain upgrade that can lead to two separate chains with each network governed by separate rules.
Mining Difficulty – This is a measure of how hard it is to mine a block.
Mining Difficulty adjustment – It’s an automatic adjustment of the mining difficulty depending on how much computing power miners dedicate to a network.
Mempool – A pool of blockchain transactions awaiting confirmation from miners
Miner – A person or machine that conducts crypto mining activities.
Mining – The act of using computational power to confirm transactions or add new blocks on a blockchain.
Mining pool – A collection of miners combining their hash power to mine a specific coin.
Mining rig – A group of crypto mining hardware devices working together as a single device.
Mining farm – A large number of miners working in the same facility. Most mining farms are large-scale corporate entities.
Node – A computing device within a blockchain network. A node can be a light or a full node. A full node that stores a copy of the entire blockchain is mostly run by miners. A light node, on the other hand, enables users to access a limited set of a blockchain’s functionality.
On-chain – A transaction that happens purely on the blockchain.
Off-chain – A transaction that happens outside the blockchain but can later be added to the blockchain.
Orphaned/Stale block – A valid block rejected by a blockchain due to another block being added to the chain before them.
Proof of Work – A blockchain consensus mechanism where a miner must show “proof” that they used their computing power or “worked” to add a block on a chain.
Proof of Stake – A blockchain consensus mechanism where a user must show proof that they have staked their coins and successfully added a block on the network.
Soft fork – A type of blockchain upgrade that doesn’t result in the splitting of the blockchain.
51% attack – A blockchain attack where the attacker controls over 51% of the network’s hash rate. Such an attack gives the malicious entity the power to reverse transactions and decide which blocks are added to the network.
Conclusion
Mystery solved. In case you are new to the decentralized space, the above 31 top terms used in the blockchain and cryptocurrency mining world gives you a head start.
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