Essential terms of the Blockchain world and Cryptocurrencies
We want to start the 2022 techie content season with a glossary with the most relevant basic terms , that everyone should know today, from the Blockchain ecosystem and cryptocurrencies. This technology appeared for the first time in the 20th year and since then, it has been evolving by leaps and bounds, reaching a greater number of areas, speeding up and facilitating numerous processes in the different sectors.
Bitcoin
Capitalized is used to refer to a decentralized peer-to-peer (P2P) network that is based on blockchain technology and its open source community . It does not have any centralized government, that is, no person or institution that controls its management, issuance, spending or reserves. It is important to distinguish it from the term bitcoin (lowercase)
which refers to monetary units.
blockchain
It is a distributed transactional database whose information is stored in blocks linked together forming an unalterable chain. Its operation is based on peer-to-peer (P2P) networks and on the link of the blocks through cryptographic functions with a reliable time stamp. That is, each new block includes a reference ( hash) to the previous block, therefore, any modification of the information of a block supposes the breaking of the chain, since the hash would be modified and would require the update of all subsequent blocks. From a practical point of view, it acts as a kind of shared and immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.
Private or permissioned blockchain
These types of blockchains depend on a central unit that controls all actions within it. This central unit is what allows access to users, in addition to controlling their functions and permissions within the blockchain development company. That is, the consultation, validation and participation processes are limited to a few nodes . Both access to blockchain data and sending transactions to be included are limited to a predefined list of nodes.
public blockchain
It is a blockchain network that anyone can join at any time from the Internet. Basically, there are no restrictions when it comes to participating. This type of blockchain keeps its data, software and its development open to the public, so that anyone can review, audit, develop or improve them. Additionally, anyone can view the ledger and participate in the consensus process. Examples of public blockchain: Ehtrereum or Bitcoin.
Block
This is a set of validated transactions that have been posted to the ledger . It can be defined by size (number of transactions per block or maximum block size) and by generation time (maximum block generation time).
Consensus
It is the fundamental part of blockchain technology , of its operation, and of cryptocurrencies. Through consensus, the security of the block chain is guaranteed, since it controls the fact that all those who participate in the network unanimously verify and approve the information that said chain contains. Thus, everyone on the network accepts that the information is free from manipulation and erroneous or duplicate data.
cryptocurrency
A new type of currency or P2P digital currency that uses cryptography (advanced mathematics) and computer techniques to secure transactions, control the creation of additional units, and verify the transfer of assets using distributed ledger technologies. All this in order not to depend on central entities that issue and control money.
DApps or decentralized applications
They are a special category of applications whose operation is based on a decentralized network of nodes interacting with each other.
DeFI or Decentralized Finance
In Spanish, Decentralized Finance. It consists of P2P applications and protocols developed on blockchain networks that do not require access rights to facilitate lending, insurance, cryptocurrencies, swaps, derivatives, asset management, or financial tool trading. Most DeFi applications abd bep20 token generator are today are built using the Ethereum network, however, many alternative public networks are emerging that provide speed, scalability, security, and lower costs.
DLT (Distributed Ledger Technology)
It is basically a single, decentralized database that is managed by multiple participants. It is a database of which there are multiple identical copies distributed among several participants and that are updated synchronously. Blockchain is a type of DLT in which transactions are stored in blocks. An example of DLT that does not use Blockchain technology is CORDA.
CKD-20
This is a standard for functional tokens. They have a property that makes each token exactly the same (in type and value) as another token.
ERC-721
Unlike the ERC-20, these types of tokens are interesting for the tokenization of unique assets that cannot be replaced by others, that is, non-fungible assets or goods such as works of art, homes, loans or any other type of right. that requires a unique identification.
ethereum
It is an open source digital platform based on blockchain technology. In the Ethereum universe, there is a single computer called an Ethereum Virtual Machine or EVM , whose state is agreed upon by all network participants. Developers can also build and deploy decentralized applications or “dapps” with the ethereum network.
Ether (ETH)
The native cryptocurrency of Ethereum, whose main objective is to allow the existence of a computational market. This market provides an economic incentive for participants to verify/execute transaction requests and provide computational resources to the network.
Fiat
Legal tender money . Traditional national currencies such as euros, dollars or rubles are called fiat money. Only central banks have the power to issue fiat money.
Gas
It refers to the unit that measures the amount of computational effort required to execute specific operations on the Ethereum network. That is, it is the commission necessary to carry out a successful transaction in Ethereum. Therefore, any participant who issues a transaction request must contribute a certain amount of ether to the network, this reward will be granted to whoever manages to do the complete job of verifying the transaction, executing it, including it in the blockchain development service and issuing it to the network.
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