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Blockchain glossary
44 terms used across the lessons, defined once and grouped by category.
10 terms
Fundamentals
- Blockchain
- An append-only ledger of transactions grouped into blocks, each cryptographically linked to the one before it and replicated across many independent computers.
- Block
- A batch of transactions bundled together with a timestamp and a reference (hash) to the previous block.
- Hash
- A fixed-length fingerprint produced by a one-way function. The same input always yields the same hash; the smallest change produces a completely different one.
- Node
- A computer running the blockchain's software that stores a copy of the ledger and helps validate and relay transactions.
- Consensus
- The process by which distributed nodes agree on which transactions are valid and what the current state of the ledger is.
- Proof of Work
- A consensus mechanism where miners spend computing power to find a valid hash, securing the chain by making attacks expensive.
- Proof of Stake
- A consensus mechanism where validators lock up (stake) tokens for the right to propose and attest blocks, and can lose the stake for misbehaving.
- Immutable
- Unable to be changed after the fact. Once confirmed, blockchain records cannot be edited or deleted.
- Decentralized
- Operated by many independent participants rather than a single authority, so no one party can unilaterally control it.
- 51% attack
- An attack where a single party controls a majority of the network's mining or staking power and can rewrite recent history.
17 terms
Layer 1, Layer 2 & Rollups
- Layer 1
- The base blockchain itself - like Bitcoin or Ethereum - that provides its own consensus, security, and data availability. Every other layer ultimately settles back to it.
- Layer 2
- A protocol built on top of a Layer 1 that processes transactions elsewhere and periodically commits a compressed summary back to the L1, inheriting its security.
- Rollup
- A Layer 2 that executes transactions off-chain, then posts the resulting data and a proof back to Layer 1, so anyone can verify its history without trusting the operator.
- Optimistic rollup
- A rollup that assumes transactions are valid by default and only checks them if someone submits a fraud proof during a challenge window.
- ZK-rollup
- A rollup that submits a cryptographic validity proof with every batch, mathematically guaranteeing correctness with no waiting period.
- Fraud proof
- Evidence submitted during an optimistic rollup's challenge window showing a posted batch was invalid, which reverts it and penalizes the poster.
- Validity proof
- A cryptographic proof (e.g. a zk-SNARK) that mathematically demonstrates a batch of transactions was executed correctly, without re-running them.
- Sequencer
- The party - often centralized, at least initially - that orders and batches transactions on a Layer 2 before posting them to Layer 1.
- Data availability
- The guarantee that the underlying transaction data behind a block or batch is actually published, so anyone can verify or reconstruct the chain's state.
- Finality
- The point at which a transaction is considered irreversible. L2 transactions often have quick 'soft' finality but only reach 'hard' finality once settled on L1.
- Blockchain trilemma
- The observation that decentralization, security, and scalability are hard to maximize simultaneously - improving one tends to pressure the others.
- Sidechain
- An independent blockchain connected to a main chain via a bridge, with its own consensus and security - meaning it does not inherit the main chain's security.
- Bridge
- A protocol that moves assets or data between two blockchains, typically by locking tokens on one chain and minting a representative version on the other.
- State channel
- A scaling technique where participants transact off-chain directly with each other and only settle the final outcome on-chain.
- Sharding
- Splitting a blockchain's data and transaction processing across multiple parallel chains ('shards') so the network can handle more throughput.
- TPS
- Transactions per second - a common (if imperfect) measure of a blockchain's throughput capacity.
- Calldata
- The transaction data field where rollups post compressed L2 transaction data to Ethereum, making it a main cost driver for many rollups.
5 terms
Wallets & Keys
- Wallet
- Software (or hardware) that stores your private keys and lets you sign transactions. The wallet holds keys, not coins - the coins live on-chain.
- Private key
- A secret number that controls an account. Anyone with it can move the funds, so it must never be shared.
- Public key
- A value derived from the private key that others use to verify your signatures. Your address is usually derived from it.
- Seed phrase
- A human-readable list of 12–24 words that can regenerate all the private keys in a wallet. Whoever holds it controls the wallet.
- Cold storage
- Keeping private keys fully offline (e.g. on a hardware wallet or paper) so they can't be reached by online attackers.
10 terms
DeFi & Tokens
- Gas
- The fee paid to have the network process a transaction or run a smart contract. Priced in the chain's native token.
- Smart contract
- A program deployed on-chain that runs exactly as written when called, without a middleman. The basis of DeFi, NFTs, and most dApps.
- DeFi
- Decentralized Finance - financial services (lending, trading, saving) built from smart contracts instead of banks or brokers.
- DEX
- A decentralized exchange that lets users swap tokens peer-to-contract, often using an automated market maker instead of an order book.
- AMM
- Automated Market Maker - a smart contract that prices swaps from a pool of two assets using a formula rather than matching buyers and sellers.
- Liquidity
- Assets deposited into a pool or market so that others can trade against them. Providers earn a share of the fees.
- Stablecoin
- A token designed to hold a steady value, usually pegged to a currency like the US dollar, via reserves or algorithms.
- Token
- A unit of value issued on top of a blockchain via a smart contract, following a standard like ERC-20 (fungible) or ERC-721 (non-fungible).
- Mint
- To create a new token or NFT on-chain, recording its existence and initial owner.
- Gas fee
- The total cost of a transaction: gas used multiplied by the price per unit of gas.
1 terms
NFTs & Ownership
- NFT
- Non-Fungible Token - a unique on-chain token used to represent ownership of a specific item such as art, collectibles, or access passes.
1 terms
Security & Safety
- Rug pull
- A scam where a project's creators drain the liquidity or funds and disappear, leaving holders with worthless tokens.