Welcome to the Block Foundation Glossary, a comprehensive resource that seeks to demystify the language and terms used in the blockchain, cryptocurrency, and digital real estate space. Whether you're a blockchain beginner or a seasoned cryptocurrency enthusiast, the definitions provided in this glossary are designed to offer a clear and concise understanding of the terminology used in this exciting and rapidly evolving field.
From basic terms such as 'Blockchain' and 'Cryptocurrency' to more complex concepts like 'Decentralized Autonomous Organizations (DAOs)' and 'Zero Knowledge Proofs (ZKP)', this glossary covers a broad spectrum of topics. You'll find information on blockchain technology and its various applications, the world of cryptocurrencies and digital tokens, the workings of smart contracts, the nuances of consensus mechanisms, and much more.
It's not just for those interested in the technical aspects either. The glossary also delves into areas such as the Creator Economy, Sustainability, and the Metaverse, reflecting the multifaceted impact blockchain technology and digital currencies are having on our world.
The Block Foundation Glossary is more than just a list of definitions - it's a gateway into understanding the powerful technologies that are reshaping our world. As you navigate your way through this glossary, we hope it deepens your comprehension of these complex topics and sparks a curiosity to learn more. Whether you're a developer, investor, or simply a technology enthusiast, there's something here for everyone. Welcome to your journey into the universe of blockchain and beyond!
- 51% Attack: A situation where more than half of the computing power on a network is operated by a single individual or concentrated group, which gives them complete and total control over a network. Things that an entity with 51% of the computing power can do include halting mining, stopping or changing transactions, and double-spending coins.
- Altcoin: Refers to all cryptocurrencies other than Bitcoin. The term stands for "alternative to Bitcoin" and is used describe any cryptocurrency that isn't a Bitcoin.
- AirDrop: The process of distributing a cryptocurrency token to the wallets of some users free of charge, usually for marketing purposes or rewards.
- Asset-backed Tokens (ABT): Cryptographic tokens that represent a claim on an underlying asset, such as real estate. They allow for the division of real-world assets into tradable digital tokens.
- Atomic Swaps: These are smart contracts that enable exchanges from one cryptocurrency to another without using intermediaries.
- Bag Holder: A term borrowed from the stock market, it refers to an investor who holds a significant amount of a certain cryptocurrency that has decreased in value, often to the point where selling would not be beneficial.
- Bitcoin Improvement Proposals (BIP)): These are the design documents for introducing features or updates to the Bitcoin network. The suggestions are proposed to the Bitcoin community for review.
- Blockchain: A system of recording information in a manner that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain.
- Blockchain Explorer: An online tool to view all transaction, past and current, on the blockchain.
- Building Information Modeling (BIM)): A digital representation of physical and functional characteristics of a facility. It's a shared knowledge resource for information about a facility forming a reliable basis for decisions during its life-cycle.
- Bounty: A sum of money offered as a reward for completing a task in the cryptocurrency world. Often used by new projects to incentivize actions such as finding software bugs, promoting the project on social media, etc.
- Cold Wallet/Storage: It refers to a wallet which is completely offline and used for storing cryptocurrencies. This method is used to prevent unauthorized access, cyber hacks, and other types of vulnerabilities that a system connected to the internet is susceptible to.
- Consensus Mechanism: A process used in computer systems to achieve agreement on a single data value among distributed processes or systems. Consensus mechanisms are essential in blockchain systems for validating transactions.
- Creator Economy: A class of businesses built by independent content creators, curators, and community builders including social media influencers, bloggers, and videographers, across various platforms.
- Cryptocurrency: A digital or virtual form of currency that uses cryptography for security. It's decentralized and based on blockchain technology.
- Cryptoeconomics: A practical science that focuses on the design and characterization of these protocols. Cryptoeconomics is a practical discipline that focuses on the economic security guarantees that a network can offer, as long as certain assumptions hold about the behaviors of participants.
- Cryptographic Hash Function: A mathematical algorithm that takes input (or 'message') and returns a fixed-size string of bytes. The output is typically a 'digest' that is unique to each unique input. Hash functions are foundational to blockchain technology.
- Cyberspace: A term coined by William Gibson in his novel Neuromancer, it refers to the digital universe created by networked computers. It's a widespread, interconnected digital technology.
- Decentralized Application (dApp)): An application that runs on a decentralized network, avoiding failures from a central point. They are typically open-source and leverage blockchain technology.
- Decentralized Autonomous Corporation (DAC)): This refers to an organization that is run by rules encoded as computer programs called smart contracts, controlled by shareholders and not influenced by a central government.
- Decentralized Autonomous Organization (DAO): This is an organization represented by rules encoded as a computer program that is transparent, controlled by the organization members and not influenced by a central government.
- Decentralized Finance (DeFi): A blockchain-based form of finance that does not rely on central financial intermediaries such as brokerages, exchanges, or banks to offer traditional financial instruments. Instead, it utilizes smart contracts on blockchains.
- Decentralized Marketplaces: These are peer-to-peer trading platforms facilitated by blockchain, where buyers and sellers can transact directly with each other. In real estate, decentralized marketplaces can significantly reduce the need for intermediaries, making the process cheaper and more efficient.
- Deed Tokenization: The process of converting a real estate deed or title into a digital token on a blockchain. This can greatly reduce the time and complexity of title transfers and disputes.
- Digital Currency: A type of currency that is only available in digital or electronic form. It exhibits properties similar to physical currencies but allows for instantaneous transactions and borderless transfer-of-ownership.
- Digital Identity: It is an online or networked identity adopted or claimed in cyberspace by an individual, organization, or electronic device.
- Digital Twins: In the context of real estate, this refers to a digital replica of physical assets (like properties or infrastructure) that exist in the physical world. Paired with blockchain, it ensures data integrity, enables secure transactions and paves the way for innovative applications.
- Distributed Ledger Technology (DLT): This is a digital system for recording the transaction of assets. The transactions and their details are recorded in multiple places at the same time.
- Double Spend Problem: This is a potential issue with digital currencies where a user can spend the same amount twice, creating fraudulent transactions. Blockchain technology solves the double spend problem through its decentralized consensus mechanisms.
- ERC-20: This stands for Ethereum Request for Comments and 20 is the number assigned to this request. It's a specific set of functions which developers must use when coding the token. ERC-20 tokens are blockchain-based assets that have value and can be sent and received.
- Ethereum: An open-source, blockchain-based platform that enables the creation of smart contracts and distributes them as decentralized applications (dApps). Ethereum also has a native cryptocurrency called Ether (ETH).
- Fiat Money: Currency that a government has declared to be legal tender, but it is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material from which the money is made.
- Fractional Ownership: The division of any asset into portions or shares. If the asset is expensive, such as real estate, multiple shareholders may own a portion of these shares, which allows them to enter the market at a lower price.
- Gas Fees: A term used on the Ethereum platform to represent the cost of performing a transaction or executing a contract on the network.
- Hard Fork: A type of protocol upgrade that isn't compatible with the older version. This means all users must update to the latest version to stay in consensus with the rest of the network.
- Hashrate: The measure of computational power per second used when mining. A higher hash rate means increased opportunity for cryptocurrency mining and receiving block reward.
- HODL: A type of passive investment strategy where you hold an investment for a long period of time, regardless of any changes in the price or markets. The term was created in 2013 in a Bitcoin forum when a user spelled "hold" wrong.
- Initial Coin Offering (ICO): An unregulated means by which a blockchain project can raise funds from interested parties. It's similar to an Initial Public Offering (IPO) in the non-digital world.
- Interoperability: The ability of different information systems, devices, or applications to access, exchange, integrate, and cooperatively use data in a coordinated manner.
- KYC/AML: Stands for "Know Your Customer" and "Anti-Money Laundering". These are regulatory standards in the financial industry to prevent illegal activities such as fraud and money laundering.
- Layer-2 Scaling Solutions: These are technologies that increase the processing capacity of a blockchain (hence scaling) and reduce transaction fees. They operate on a secondary layer atop the primary blockchain (layer-1).
- Lightning Network: A "second layer" payment protocol that operates on top of a blockchain. The term is usually used to refer to the Lightning Network for bitcoin, but it could be used to describe any layer 2 protocol for a cryptocurrency.
- Liquidity: The degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price.
- Mechanism Design: A field in game theory that studies how to design a game or scenario in order to achieve desired outcomes, given that the participants might behave strategically.
- Merkle Trees: They are a fundamental part of blockchain technology. A Merkle tree is a structure that allows for efficient and secure verification of content in a large body of data.
- Metaverse: A virtual reality space where users can interact with a computer-generated environment and other users. This technology is expected to play a significant role in social, commercial, and creative interactions in the future.
- Mining: The process through which new blocks are added to the blockchain, resulting in the release of new cryptocurrency.
- Multisignature (Multi-Sig): An authorization system that requires more than one valid signatures—actually a private key, used in the context of cryptocurrencies to sign transactions—to successfully execute a transaction.
- Nomic: A game in which the rules of the game, including the rules for changing the rules, are decided and modified by the players as part of gameplay.
- Non-Fungible Tokens (NFTs): Cryptographic assets on blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded on a like-for-like basis (hence, non-fungible). In the context of real estate, NFTs can represent ownership of a specific, unique piece of property.
- Open Source Software: Computer software released under a license in which the copyright holder grants users the rights to use, study, change, and distribute the software and its source code to anyone and for any purpose. Open source software promotes collaboration and transparency.
- Oracles: Entities that provide smart contracts with external information. They serve as a bridge between blockchain and the real world.
- Peer-to-Peer (P2P) Network: This is a decentralized network where the responsibilities and tasks are allocated evenly among all parties involved. There is no centralized server, and each node, or peer, has the same capabilities and responsibilities.
- Permissioned Blockchain: A type of blockchain that is not open to everyone. Only individuals or entities invited by the network administrators can join and participate in the network's consensus protocol.
- Private Blockchain: A type of blockchain which is permissioned. They are only accessible to selected members. Transactions are private and are only shared among the participating parties.
- Proof-of-Authority (PoA): A consensus mechanism in a private blockchain which essentially gives one client (or a specific number of clients) with one particular private key the right to make all of the blocks in the blockchain.
- Proof-of-Stake (PoS): A type of consensus mechanism used by blockchain networks to achieve distributed consensus. It requires users to show ownership of a certain number of cryptocurrency units (the "stake") to create a new block of transactions.
- Proof-of-Work (PoW): A type of consensus algorithm in a blockchain network where miners solve computationally intensive puzzles to validate transactions and create new blocks.
- Property Token Exchange (PTX): A platform for buying and selling tokenized real estate. Such exchanges can create a liquid market for real estate properties that have typically been illiquid assets.
- Proptech: Stands for Property Technology. While not exclusively blockchain-based, it's an umbrella term for the wave of technological innovations changing the way we research, rent, buy, and manage property.
- Public Blockchain: A blockchain network where any individual can join or leave at any time without permissions. These blockchains are more decentralized but also can be slower and less efficient.
- Public/Private Key: A cryptographic system involving two keys, with the private key remaining known only to the user while the public key is available to others. In the context of cryptocurrencies, this allows users to securely transact with one another.
- Real Estate Token (RET): A digital representation of ownership or equity in a real property, stored on the blockchain. RETs can be traded on specific platforms and can represent fractional ownership in properties.
- Quadratic Payments: A system that allows people to fund public goods while preventing undue influence by large contributors. The cost of contribution becomes progressively more expensive, encouraging a large number of small contributions.
- Quadratic Voting: A method of collective decision-making in which a participant votes not just for or against an issue, but also expresses how strongly they feel about it. This is done by allocating a number of votes to that issue, with the cost of votes increasing quadratically.
- Reverse Game Theory: An alternative term for mechanism design. Rather than taking the rules of the game as given and predicting outcomes, it asks what rules should we design to achieve a desired outcome.
- Scalability: Refers to the ability of a system, network, or process to handle a growing amount of work in a capable manner.
- Security Token: A type of cryptocurrency that represents ownership in a real-world asset, such as real estate or a company's equity.
- Segregated Witness (SegWit): A protocol upgrade that changes the way data is stored. It was activated on bitcoin in August 2017.
- Sharding: A scalability technique where the blockchain is divided into smaller parts, or shards, that can process transactions and smart contracts separately.
- Sidechains: These are separate blockchain ledgers derived from a primary blockchain and can operate independently of the primary blockchain. They enable different blockchains to interact with one another and offer more efficient data processing methods.
- Smart Contract: Self-executing contracts with the agreement terms directly written into lines of code. These are programs that run when predetermined conditions are met and are stored on a blockchain.
- Social 3.0: This term describes a future phase of social networks characterized by decentralized, user-owned data and interoperability between platforms. It's closely associated with the principles of Web 3.0.
- Soft Fork: A type of protocol upgrade that is backward compatible, which means non-upgraded nodes can still participate in verifying transactions.
- Solidity: This is a programming language used for implementing smart contracts on various blockchain platforms, especially on Ethereum.
- Spatial Web: A computing environment that exists in three-dimensional space—a fusion of real and virtual realities—enabled via billions of connected devices and accessed through the interfaces of virtual and augmented reality.
- Staking: The act of participating in a Proof-of-Stake (PoS) consensus mechanism by holding and "staking" a cryptocurrency in a wallet to support operations such as block validation, security, and governance on a blockchain network.
- Stablecoin: A type of cryptocurrency that is designed to maintain a stable value, as opposed to highly volatile cryptocurrencies like Bitcoin. Stablecoins are often pegged to a reserve of assets.
- Sustainability: In the context of real estate, this term refers to constructing and managing buildings in ways that are environmentally responsible and resource-efficient, from siting to design, construction, operation, maintenance, renovation, and deconstruction.
- Token Burn: The process of intentionally and permanently removing tokens from circulation, reducing the total supply, often to control the inflation rate of a cryptocurrency.
- Tokenization: The process of converting rights to an asset into a digital token on a blockchain. This can be done with any asset, including real estate.
- Tokenized Real Estate: The process of converting the ownership rights of a real estate asset into a digital token on a blockchain. This allows for fractional ownership, easier transfers of ownership, and the potential for a global pool of buyers and sellers.
- Utility Token: A type of cryptocurrency that provides users with access to a product or service, but does not represent ownership.
- Wallet: In the context of cryptocurrency, a wallet is a digital place to store cryptocurrency tokens securely.
- Web 3.0: Also known as the semantic web, it represents a future phase of the internet where information is connected in meaningful, machine-readable ways. It's often associated with the use of blockchain and decentralized systems.
- Whale: In the context of cryptocurrencies, a whale is an entity with enough power to directly influence the price of that cryptocurrency by initiating large buy or sell orders.
- Wrapped Tokens: These are cryptocurrencies hosted on the Ethereum blockchain that mirror the value of another asset.
- Yield Farming: Also referred to as liquidity mining, yield farming is a way to generate rewards with cryptocurrency holdings, typically in the DeFi space. In simple terms, it means locking up cryptocurrencies and getting rewards.
- Zero Knowledge Proofs (ZKP): This is a cryptographic method which allows one party (the prover) to prove to another party (the verifier) that they know a specific piece of information, without revealing that information.
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