A blockchain block is a group of transactions on a blockchain. When a block is “confirmed” it becomes a part of the immutable ledger known as the blockchain and all the transactions in it are confirmed with it. Once a block is confirmed, all the transactions in it cannot be changed or charged back. Depending on the blockchain, blocks hold can hold differing numbers of transactions and are confirmed at different rates. Bitcoin blocks usually contain between two and three thousand transactions and take roughly 10 minutes to be confirmed.
A blockchain is a huge digital ledger that is created by grouping transactions (edits to this ledger) into “blocks” (groups of transactions) and linking them to the previous “blocks” (edits to the ledger) to prove their validity.
The first and most well known blockchain is the Bitcoin blockchain. The Bitcoin blockchain is permissionless meaning that anyone who pays a fee is allowed to make an edit to the ledger (send a transaction), no exceptions. Once an edit is suggested (a transaction is sent), a peer to peer network of computers works on solving a math problem involving all of the previous blocks (the full ledger), and a couple of other variables. This math problem proves that the suggested edits are in fact valid and confirms those transactions.
This specific type of math problem that all of the computers on the bitcoin network are working on solving is called a cryptographic hash function. To solve this math problem a huge amount of computational power is required, which means that it is impossible to solve the problem without owning lots of expensive computers that use lots of electricity. The requirement to use lots of computational power in order to solve the math problem (cryptographic hash function) is know as proof of work, often abbreviated to PoW. The requirement of PoW to solve the math problem makes it very expensive to make an unauthorized edit to the ledger, so expensive that it would never be worth anyone’s effort to try. Because unauthorized edits to the ledger are effectively impossible, when this network of computers solves this math problem, the latest block (group) of transactions are proved valid and are added to the blockchain permanently. In other words, transactions added to the blockchain are impossible to remove or change.
When we reference “blockchain” in this guide, it will be referring to any of the many technologies that work in this manner. In other words, a technology that operates across a neutral peer to peer network and that is made secure through proof of work and cryptography. If a technology does not meet these requirements, it is not a blockchain, or at least not the type this guide it referring to.
A “bull” in any market is someone who expects the price to go up. This term comes from the way a bull attacks, by swiping up at its prey. When a market is bullish, the prices are consistently going up. The opposite of a bull is a bear, the opposite of bullish is bearish.
Centralization is a way to organize a system. This organizational strategy is a lot like it sounds; it involves taking all the information and power required to operate a system and putting it in one central place. An example of a centralized system is the human body. The brain is at the center of this system and has power over it. Without the brain, the human body doesn’t work. Because all of the power in a centralized system is kept in one place, the whole system is vulnerable to an attack on that central point.
Crypto-Anarchy is a flavor of anarchy where democratically generated digital mathematical rules are believed to be superior to those created by the government. Crypto anarchists believe in the use of cryptography to make their digital communications private and secure in order to preserve their political and economic freedom. Bitcoin was originally created by Cypherpunks who believed in crypto-anarchist ideologies.
Cryptoasset is a broad term for any digital token which is recorded on a blockchain. This term is more open than the term cryptocurrency and more appropriate because all kinds of non currency based assets can also be recorded on most blockchains. The term cryptocurrency can be misleading because it automatically makes people think of money. Because of its flexibility, cryptoasset is the largest umbrella term to refer to well over 2000 new digital tokens that are currently bought and sold.
A cryptocurrency (or crypto currency) is a controversial digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. Cryptocurrency is a kind of digital currency, virtual currency or alternative currency. Cryptocurrencies use decentralized control as opposed to centralized electronic money and central banking systems. The decentralized control of each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database
A cryptocurrency is a digital token which is intended to be used as a digital currency. Cryptocurrencies exist on blockchains and their ownership can be proved using cryptography. Sometimes cryptocurrencies are designed as simple digital cash, while other times they serve more complex purposes. Because of the ambiguity of the term cryptocurrency, the broader term cryptoasset is usually more appropriate when in doubt.
While at first it can be a frightening term, cryptography is our friend, and most people use it on a daily basis. Put simply, cryptography is the science of secure communication. This science involves taking information and scrambling it so that it can only be read by its intended recipient. Cryptography involves encryption and decryption. When you create a password for something, you are “encrypting” whatever information this password unlocks. When you type in the password to unlock something, you are “decrypting” this information. Without cryptography it would be very easy for our sensitive information to be modified and stolen.
As it relates to the blockchain, cryptography is what allows people to prove ownership of transactions on the blockchain. In the context of a blockchain, a specific type of encryption known as “asymmetric” encryption is used. The exact details of how this works is explained in the guide.
Cypherpunks are activists who advocate for widespread use of cryptography and any other privacy-enhancing technology. Cypherpunks were some of the early adopters of Bitcoin, and if you use cryptocurrency, you just might be a cypherpunk yourself.