Blockchain Semantics Insights
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Blockchain Glossary For Blockchain-HardcoreBy Abhishek Singh | July 7, 2018, 8:38 a.m. GMT
You would have read our glossary of Blockchain terms for the noob. If not, head there right now. If you are not a noob, however, this one is for you.
You will be the savviest Blockchain person at your office water cooler in five minutes. Thank me later.
1) Chain fork:
One complication of miners competing with each other is that two miners may each create a new valid header at the same time and both headers will refer to the same parent header, this is called a chain fork. This issue is resolved by the longest chain rule.
2) Longest chain rule:
If there are 2 versions of Blockchain, miners are directed and advised by the network to always pick the longest chain, meaning the version with the most number of blocks. The longer the chain, the more proof of work done on it. Thus, making it more difficult to hack.
3) Hard fork:
A hard fork is the type of forking in which is a change to the protocol such that the new blocks are incompatible with old blocks aka reverse incompatible and the nodes with old software cannot mine the new blocks. For example, an increase in the block size from 1MB to 2MB would result in a hard fork.
4) Soft fork:
A soft fork is a type of forking where there is a change in the protocol which is reverse compatible, meaning which doesn’t affect the structure of Blockchain. The old nodes may or may not update their software to mine. For example, adding multi-signature transactions in Bitcoin Blockchain.
5) Digital Signature:
A digital signature is analogous to real-world signature but in a digital way. It is used to authenticate the sender of a transaction in Blockchain (or sender of a message in general).
6) Ring Signature:
Ring signature is a type of digital signature which deals with sending anonymous messages (or transaction in Blockchain). In Ring signature, there is a group of signers and a message transferred from that group can be signed by any of the members of the group, which is unknown to the verifier.
7) Hash rate:
Hash rate for a system is defined as the number of hashes it can compute per second. Thus, think of it as a proxy for its computational power. Now, what is a hash rate for a Blockchain network? The total number of hashes all the nodes connected on the network can together compute per second. More nodes mean more hash rate, also loosely called hash(ing) power.
8) Double spending:
Double spending in terms of Blockchain is spending the same asset twice. This problem is unique to digital or virtual money.
9) 51% attack:
If a miner or group of miners control more than 50% of the hash rate of a Blockchain network, then they control the network. They can double-spend, decline transactions can change recent blocks. But, they can’t change an older block and they cannot create new coins.
10) Sybil attack:
Sybil attack happens when an attacker node tries to fill the network with other attacking node or the nodes that he controls. What happens here is if you are trying to become a mining node then you may connect to the attacking node.
11) ASIC resistance:
ASIC resistance means that the network values ASIC mining and GPU mining almost equally. This means that mining rigs (ASIC mining machines) don’t take away all the rewards and small players can also contribute to the network, increasing the level of decentralization. If you want to learn about ASIC’s you can go to our Blog on ASIC resistance
In Proof-of-Work, the miner who relays the block first wins the block reward; until then, all miners in a network compete with one another to add the block which consumes a lot of electrical power. In proof-of-stake, the validator a.k.a. miner who will add the block in Blockchain is decided by the wealth the validators have.
13) Byzantine fault tolerance:
Byzantine fault tolerance is characteristic of a system where systems are resistant to a class of attack that belongs to Byzantine general problem.
Delegated-Proof-of-Stake is a variant of PoS that provides a high level of scalability at the cost of limiting the number of validators on the network. In DPOS, a set of block producers or witnesses are selected to create blocks in round robin order. The users in the network vote to select block producers or witnesses, voting is an ongoing process.
Proof-of-Burn is a mechanism, where the miners get chance to mine a block on the basis of cryptocurrencies they have burned. How does the system decide who has burned the coins? Here miners have to send any cryptocurrencies like Bitcoin, Ether to a verifiably unspendable address. By sending more coins you increase the chance of getting a block to mine.
Proof-of-Authority is an alternate version of Proof-of-Stake, where identity is placed instead of putting wealth at stake. Identity means the same as KYC verification. To join the network, a person needs to upload all his identity proofs, and the same identity is used when using the network.
Proof-of-Activity is a hybrid of PoW and PoS. First, miners need to solve the puzzle using computational power same as PoW. Once the miners have solved the puzzle, the system switches to PoS. The block with header and miner rewards is assigned to a group of validators or signers to verify the block. Here, the one who has more cryptocurrency of the network is selected by the system to be a signer.
To mine a block in Proof-of-Capacity you need to prove that you have more storage capacity in your hard drive. Before mining, the system generates large data sets known as "Plots", which you are supposed to store on your hard drive. The more plots you have the chances of getting a block to mine increases.
Proof-of-Elapsed-Time is used by private or permissioned Blockchain network. In this network, the nodes are assigned random wait period. All the nodes have to wait to finish the waiting period in order to mine, The one who has the shortest wait time is the winner.
A sidechain is a separate Blockchain attached to a parent Blockchain, where the operations (transactions) determine the actions on the parent Blockchain. It can be used to add a feature to Blockchain and increase the scalability of the Blockchain.
SegWit or Segregated Witnesses is the name of the soft fork that happened on Bitcoin Blockchain that changes the transaction format and placed the signature part of a transaction in the sidechain.
DAO is a humanless venture capital firm which allows investors to make all the decisions through smart contracts.
Hashcash is a proof-of-work system used to limit email spam and denial-of-service attacks.
24) Lightning network:
The Lightning Network is a decentralized system for instant, high-volume micropayments that remove the risk of delegating custody of funds to trusted third parties. The lightning network aims to solve the problem of non-confirmation of micropayments and high confirmation time of transactions.
An Oracle, in the context of Blockchain, is a third party service that delivers data from an external source to smart contracts.
27) SPV node:
SPV node is lightweight nodes of Bitcoin Blockchain, in which even to verify transactions you won’t need to download entire block, only the block header of all the blocks is downloaded.
IPFS or Inter Planetary File system is a peer-to-peer model based protocol designed to store and share files in a distributed file system.
Swarm is a distributed storage platform and content sharing service, a service for Ethereum web3 stack.
30) Colored coins:
The concept of colored coins comprises methods used for representing and managing real-world assets on a Blockchain. Here token is attached with some metadata that can a unique identifier of an asset on Blockchain.