The journey of studying and learning new technologies isn’t going to be smooth. It is filled with dusty roads, forks, and unexpected diversions like “Jargon”. Starting to learn new technology and not knowing about buzzwords used in it makes you feel like leaving it.
With that in mind, one should know the 12 terms described below before starting their journey into the world of blockchain.
Bitcoin
Bitcoin is cryptocurrency, or one can say that it’s a form of electronic money. Bitcoin was founded by Satoshi Nakamoto.
Bitcoin is the digital decentralized currency which doesn’t need any third-party/intermediaries. It can be sent from user to user on the peer-to-peer bitcoin network.
Bitcoin was first used to buy a pizza. (1000 Bitcoins for two pizzas, May, 2010)
1 Bitcoin = 823342.43 Indian Rupee (at time of writing this)
Here are two detailed articles on Bitcoin:
Ledger
In blockchain, ledger refers to sequential records of the transaction which is decentralized. One simply can’t interact with it or have access to it without the permission of the authority.
Ledger can be called a file which keeps growing. We can define it as a file containing chronological transactions.
Hash
Hash In blockchain can be defined as any number which represents data stored in blocks of chain. If data in blocks gets modified, then that hash will be reflected and it's going to be changed.
Smart contacts
In 1994, Nick Szabo came up with the idea of being able to record contracts in the form of computer code.
A smart contract refers to a computerized transaction protocol that executes the term of contracts between two parties. It can also be defined as agreements between people making a transaction.
Smarts contracts get automatically activated when certain conditions are met.
Consensus
Consensus is the decision-making algorithm used in blockchain for validating a transaction and taking profitable steps for the enterprise which is running over a blockchain.
Consensus refers to listening and understanding from all the miners about their view regarding the validation of the transaction.
Peer-to-peer
It refers to having one of the most useful benefits of blockchain called ‘Removal of Third Party’.
There is no need of having intermediaries while transmitting assets from sender to receiver.
Block
Block in blockchain refers to an entity which includes block number, nonce, data of that particular block, previous hash and current hash.
Merkle tree
In blockchain, Merkle tree takes place when a leaf node possesses the hash of the data block in the chain and every non-leaf node possesses the cryptography hash of their leaf nodes.
Pow
Pow stands for Pow, is a consensus algorithm founded by Satoshi Nakamoto.
It refers that miner who finds the hash for a transaction will be allowed to add a new block in the chain.
For that, miners have to solve math problems.
PoS
Proof of stack refers that the miner who is having more stack of the coin is most likely to add a new block into the blockchain.
There is no reward for the miner. The stacker’s rewards are only the transaction fee.
Nonce
Nonce refers to that random which is assigned to transaction block related with data of that particular block.
If data in the block is modified, then the block needs to be mined again for getting its appropriate nonce.
51% attack
It is a hypothetical attack. In these, miners controlling more than 50% of hash rate or computers can stop other miners and they introduce new blocks by their selves only.
However, they can’t remove previously created blocks but they would be able to reverse the transaction that was made under their control.