For our users' convenience, we've put together a glossary of the most used terms in blockchain.
Blockchain is a decentralized, distributed ledger that is used to record transactions across a network of computers. Each block in the chain contains a cryptographic hash of the previous block, a timestamp, and transaction data. This allows the blockchain to serve as a tamper-evident, immutable record of all the transactions that have been executed on the network.
A blockchain bridge is a piece of software that enables two separate blockchain networks to interoperate and exchange data and assets. A blockchain bridge can facilitate the transfer of tokens, smart contracts, and other data between the two networks, allowing users on one network to access services and assets on the other network. This can be useful for enabling cross-chain interactions and creating a more interconnected and interoperable blockchain ecosystem. Blockchain bridges are often built using special protocols and technologies, such as atomic swaps and sidechains, to ensure the security and reliability of the data and asset transfers.
Centralized exchange (CEX)
CEX is a type of platform that allows users to buy and sell cryptocurrencies using fiat currencies or other digital assets. Transactions are organized via an order book, it means that there is a list of orders to buy or sell, and they are sorted according to their price. CEX is typically owned and operated by a single company or organization, and all transactions are processed through its servers. The exchange has control over users' assets and funds, and it is responsible for ensuring the security and integrity of the transaction data.
A cryptocurrency wallet is a digital wallet that is used to store, send, and receive cryptocurrencies. A crypto wallet typically consists of two parts: a private key and a public address. The private key is a secret piece of information that is used to access and manage the wallet, while the public address is a string of characters that can be used by others to send cryptocurrencies to the wallet. Most crypto wallets are software applications that can be installed on a computer or mobile device, although there are also hardware wallets that are specifically designed to store cryptocurrencies in a secure, offline environment.
Decentralized application (dApp)
dApp is a type of application that is built on top of a blockchain or other decentralized platform. Unlike traditional applications, which are typically controlled by a single entity, dApps are decentralized and are run on a network of distributed nodes. This allows dApps to offer a number of advantages over traditional applications, such as increased security, censorship resistance, and trustlessness. dApps can be built on a variety of blockchain platforms, and they can be used for a wide range of purposes, including decentralized finance, gaming, and social networking.
Decentralized exchange (DEX)
DEX is a type of crypto exchange that operates without a central authority or intermediary. DEX users can buy and sell cryptocurrencies directly with each other, using smart contracts to facilitate the transactions. This means that the exchange does not hold users' assets or funds, and users have complete control over their own funds at all times.
DeFilending refers to the practice of lending and borrowing cryptocurrencies and other digital assets on a blockchain platform. Borrowers can access funds from a pool of assets that are provided by lenders, and lenders can earn interest on their assets by lending them out to borrowers. DeFi lending is typically facilitated by smart contracts, which are self-executing contracts that enforce the terms of the loan agreement automatically. DeFi lending can offer a number of advantages over traditional lending, such as lower fees, faster transaction times, and greater accessibility to a wider range of borrowers and lenders.
A liquidity pool is a pool of digital assets that is managed by a crypto exchange or other platform and is available for trading by users of the platform. A liquidity pool can help to increase the liquidity of the assets and make it easier for users to buy and sell them. For example, if a user wants to sell a certain cryptocurrency but there are no buyers available on the exchange at that moment, the exchange can use funds from its liquidity pool to buy the cryptocurrency from the user, thus providing the user with immediate liquidity. In return for providing liquidity to the pool, the exchange may charge a fee or offer other incentives to liquidity providers.
NFT, or non-fungible token, is a type of a unique digital asset that cannot be interchanged. NFTs are created using blockchain technology and stored on a decentralized ledger, making them immutable and secure. NFTs differ from traditional cryptocurrencies, which are interchangeable (a Bitcoin is no different from another Bitcoin). Collectibles, digital art, or even virtual real estate can be represented by NFTs.
A node is a computer that is connected to the network and participates in the distribution and validation of transactions. Nodes can take on various roles and responsibilities, depending on the specific blockchain and its architecture. For example, some nodes may be responsible for maintaining a copy of the entire blockchain and propagating new blocks to other nodes, while others may be tasked with validating transactions and adding them to the blockchain. In general, nodes are an essential part of a blockchain network, as they enable it to operate in a decentralized and distributed manner.
Proof-of-stake (PoS) is a type of algorithm used by some blockchain networks to achieve distributed consensus. In a PoS system, the probability that a node will be chosen to add a new block to the blockchain is proportional to the amount of stake (e.g. coins or tokens) that the node holds. This is in contrast to proof-of-work (PoW) systems, where the probability of adding a new block is proportional to the amount of computing power that a node contributes to the network.
Proof-of-work (PoW) is a type of algorithm used by some blockchain networks to achieve distributed consensus. In a PoW system, nodes compete to solve a computationally difficult puzzle in order to validate transactions and add new blocks to the blockchain. The first node to solve the puzzle and add a new block is rewarded with a certain amount of cryptocurrency. This incentivizes nodes to continue contributing computing power to the network, ensuring its security and decentralization.
Satoshi Nakamoto is a pseudonym for the person or people who helped develop the first Bitcoin software and introduced the concept of cryptocurrency to the world in a 2008 paper. This fact is based on the famous Bitcoin whitepaper, Bitcoin: A Peer-to-Peer Electronic Cash System, published online in October 2008. Nakamoto remained active in the creation of Bitcoin and the blockchain until about 2010 but has not been heard from since.
A smart contract is a type of contract where the terms are written into the lines of code and is self-executed between the parties. These agreements reside on a distributed and decentralized blockchain network. Smart contracts allow for the automation of contract execution and enforcement, without the need for intermediaries. This can help to reduce transaction costs and increase the efficiency and security of the contracting process. Smart contracts are typically written in a programming language and are executed on a blockchain platform. They can be used in a variety of contexts, including financial transactions, supply chain management, and voting systems.
Staking is a process through which individuals can earn rewards by holding and supporting the operations of a blockchain network. In a proof-of-stake (PoS) system, nodes that hold a certain amount of cryptocurrency (i.e. stake) can participate in the network's consensus mechanism by "staking" their coins. This typically involves locking up the coins in a special wallet and running a staking node, which helps to validate transactions and add new blocks to the blockchain. In return for their contribution to the network, stakers are typically rewarded with a portion of the transaction fees and/or new coins that are generated by the blockchain.
The word swap has two definitions. Its first definition is the mutual exchange of two cryptocurrencies. The second definition is the transition of the project from one blockchain to another blockchain and the exchange of tokens.
Whitepaper (technical document) is the document that a project team or company writes and publishes to provide information on the purpose, scope, innovations, philosophy and technical details of the product to be developed. They are written in an academic and technical language, different from the materials used in the product marketing.
Yield farming is a method of generating rewards from crypto assets. It implies locking up cryptocurrency and receiving rewards. Farming usually works with users referred to as liquidity providers who add funds to liquidity pools.