Crypto glossary


#61

Atomic swaps: Atomic swaps are a way to exchange cryptocurrencies from different blockchains without a third party or intermediary such as an exchange – for example from Bitcoin to Ethereum. By removing intermediaries, Atomic swaps remove the unnecessary fees associated with exchanging cryptocurrencies.


#62

Double spend problem: The risk that a digital currency can be spent twice. Double-spending is a potential problem unique to digital currencies because digital information can be reproduced relatively easily.


#63

this kind of reminds me of how “urban dictionary” is laid out. the definition with the most votes is filtered to the top, and then it trickles down from there.


#64

Airdrop: The distribution of a cryptocurrency or token to a large number of wallets. Airdrops are often used as a marketing technique by founders to encourage use and stimulate network effects. Some airdrop campaigns work like a lottery, randomly selecting wallet addresses that meet certain criteria such as holding a specified amount of tokens. Others offer coins or tokens to people in exchange for completing tasks like joining social media channels, liking or retweeting, referring others, or downloading an app.


#65

Hash Rate / Hash Power: A hash rate can be defined as the speed at which a given mining machine operates. Crypto mining in PoW based blockchains involves finding new blocks through complex computations. The mining machine has to make thousands or even millions of guesses per second to find the right answers to get a new block added to the blockchain. To effectively mine a block, the miner should hash the block’s header such that it’s below or equal to the “target" set. The target changes with every change in difficulty. To arrive at a given hash (or target), the miner has to vary a field of block’s headers, which is known as a “nonce”. Each nonce begins with “0” and is increased every time to get the necessary hash (or target). Given that the varying of the nonce is a game of chances, the chances of getting a given hash (or target) is very low. The miner, therefore, has to make numerous tries by varying the nonce. The number of attempts that miner makes per second is known as the hash rate or hash power. Hash rate is computed in hashes per second (h/s). The various machines used to mine different cryptocurrencies don’t have equal hashes. Currently, a bitcoin mining device such as ASIC has a mining power of approximately 12 terahashes per second. The higher the hashrate, the more powerful miner it is. Thus hash rate/hash power can become a measure of 51% attack on a PoW blockchain network.


#66

Block Nonce: The “nonce” (number used once) in a block header is a 32-bit (4-byte) field whose value is adjusted by miners so that the hash of the block will be less than or equal to the current target of the network. The rest of the fields may not be changed, as they have a defined meaning. Block header data contains the block version number, a timestamp, the hash used in the previous block, the hash of the Merkle Root, the nonce, and the target hash. Successfully mining a block requires a miner to be the first to guess the nonce, which is a random string of numbers. This number is appended to the hashed contents of the block, and then rehashed. If the hash meets the requirements set forth in the target, then the block is added to the blockchain.


#67

Difficulty: The difficulty is a number that regulates how long it takes for miners to add new blocks of transactions to the blockchain. Difficulty ensures that blocks of transactions are added to the blockchain at regular intervals, even as more miners join the network. If the difficulty remained the same, it would take less time between adding new blocks to the blockchain as new miners join the network. Hence the requirement a block hash must meet corresponds to the difficulty, i.e. a valid block hash must be below a certain target value set automatically (and periodically adjusted) by the blockchain protocol. The lower the target value, the more repetitions of the hash function a miner must go through in order to get an acceptable result – in other words, the higher the difficulty. A miner can, in theory, get lucky and obtain a valid hash for a given block on the first try: over time, however, higher difficulty means that miners must iterate through more nonces and rehashes per block on average. The difficulty adjusts every 2016 blocks (roughly every 2 weeks).


#68

Blinding factor: A random value used to obscure transaction amounts. This offers privacy by granting knowledge of transaction sums only to the sender and receiver. However, third-parties can still ensure the validity of the transaction by comparing the number of inputs and outputs. This ensures the integrity of the ledger while allowing privacy. Blinding factors are a key ingredient of privacy-focused cryptocurrencies based on the Mimblewimble protocol such as Grin and Beam.


#69

coinbase: A special field used as the sole input for coinbase transactions. The coinbase allows claiming the block reward and provides up to 100 bytes for arbitrary data.


#70

coinbase transaction: The first transaction in a block. Always created by a miner, it includes a single coinbase.


#71

Nothing-at-stake problem :
In a native implementation of proof of stake based blockchain, like NXT and BitShares 1.0, when a fork happens, the optimal strategy for any miner is to mine on both chains, so that the miner gets their reward no matter which fork wins. It is a well-known problem of proof of stake that is considered solvable by Tendermint and other BFT consensus engine.

ref:
1.https://github.com/ethereum/wiki/wiki/Problems#8-proof-of-stake
2.https://blog.cosmos.network/consensus-compare-tendermint-bft-vs-eos-dpos-46c5bca7204b


#72

Proof-of-stake:
In a PoW system, the block validators are called miners. And the probability for them to mine next block is proportional to their hashing powers. While in Poff-of-stake system, the blocks are created by validators and they are chosen in a deterministic way, depending on their amount of stakes. PoS systems will save lots of energy and make the attacks on the security of the system more difficult.

Ref:
1.https://en.wikipedia.org/wiki/Proof-of-stake
2. https://blockgeeks.com/guides/proof-of-work-vs-proof-of-stake/


#73

Genesis block: The first block in the blockchain, which is used to initialize the cryptocurrency.


#74

Difficulty: A measure of how difficult it is to find a hash below a given target. The Bitcoin network has a global block difficulty. Valid blocks must have a hash below this target. The difficulty controls how much computation is required to produce a proof of work: more difficulty means more computation, lower difficulty means less computation.


#75

Block Height: The number of blocks preceding a given block on a blockchain. Usually, this refers to the order number of the newest block showing how many blocks currently exist.
The initial block on a blockchain (the “genesis block”) has a block height of zero, as nothing precedes it. All subsequent blocks are numbered sequentially from 1.


#76

Questions for this community cc @preethi

I’ve been pondering the definitions of:

Crypto networks
Blockchain protocol
Decentralized consensus system

On the Internet people tend to talk about crypto networks. However, after reading a ton of academic literature (that lacks so much knowledge of crypto) the only thing close to crypto networks mentioned is decentralized consensus systems.

How to define crypto networks, blockchain protocol and decentralized consensus system?

What is the relationship of crypto network and blockchain protocol?

So many different wordings! I’m confused. Any help with these terms would be much appreciated.


#77

Generally, yes. When people say “crypto network”, all they really mean is that it’s a network of users/nodes within a blockchain/dapp. A decentralized consensus system (e.g. Nakamoto Consensus) has a “network” of nodes that maintain the integrity of the system.


#78

Thanks Preethi! I edited the post a bit to add blockchain protocol and lost some of my text as I was editing on mobile.

Another question: what is the relationship of crypto network and blockchain protocol - aren’t they both a peer-to-peer network that works with consensus mechanism?


#79

buzzword soup :wink:

A “protocol” is simply a set of rules that defines how the system works. A “blockchain protocol”, therefore, is a set of rules that defines how a blockchain works (i.e. how it achieves consensus and maintains integrity).

A “crypto network” is just a network of users/nodes within a blockchain/dapp.


#80

Makes sense, thank you so much! Such a buzzword soup indeed :smile: For this industry to be appealing to a bigger audience, much inclusion in terms of language is needed.