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On-Chain vs. Off-Chain data

The basic design principle of using blockchain in real systems is that only the minimum amount of data should be recorded on the chain.

Decentralized vs. Distributed Systems

Decentralized systems are much more secure and unhackable as compared to centralized distributed systems, they are also relatively slower for the same reasons and characteristics.

Multi-Signature Wallets

Multi-signature wallets are used to execute blockchain transactions that require more than one signatures.

Initial Coin Offering (ICO)

To fund blockchain startups, the founders do ICOs to sell tokens to potential users as a future right to use the application.

Tokens

Tokens are digital assets representing a user's right to use a system/service/application or to participate in a process based on blockchain.

Proof of Stake

Proof of Stake is a blockchain consensus algorithm where the nodes put an economic value on stake to participate in block production.

Proof of Work

Proof of work is basically about producing some data that can be verified easily, but it is hard to produce. In the Bitcoin blockchain, this data is a hash with a predefined number of zeroes as its prefix.

Double Spends

Double spend is a scenario when digital currency could be spent more than once because of blockchain network forks.

Transaction Fee

In a blockchain, the transaction fee is the fee paid to blockchain nodes to include the transaction in a block. Generally, the transaction fee is paid in the native cryptocurrency of the blockchain.

Block Rewards

Block rewards are a way to incentivize the nodes for creating new blocks and contributing to the decentralization and security of the blockchain.

Blockchain Economics: Part 1 - Basics

Blockchain economics - what, why, and how. Block rewards, incentives, transaction fees, cryptocurrency supply, and demand.

Blockchain is NOT (just) Bitcoin

Just like a car is just an application of a four-wheeled vehicle, Bitcoin is an application of blockchain.

Block Finality

The finality of a block means that the majority of the nodes in a blockchain network have verified and accepted that block and their state has been updated accordingly.

Fork

When some of the nodes decide not to update to the new rules, then a fork happens on the chain. Forks are of two types - soft and hard.

Blockchain Governance

Blockchains are decentralized systems. There is no single point of control or administration. In contrast to other IT systems, there is no admin in a blockchain. Instead, blockchains are governed.

Public and Private Chains

Blockchains, depending on who can read the state and who can participate in block production (updating the state), could be classified in mainly two ways - Private or Public, and Permissionless or Permissioned.

Decentralized Apps (DApps)

Applications which use a decentralized backend (like a blockchain), are called Decentralized Applications or DApps.

Smart Contracts

Smart Contracts allow users to add business logic to blockchains to make them useful for several business use-cases.

Wallets

A blockchain wallet is a software program or a hardware device that could be used to store cryptographic keys.

Accounts and Keys

Accounts are a way of representing users on the blockchain. In a blockchain, accounts are generally a representation of a user's keys.

Block Production and Mining

Block Production is the process of proposing and appending new blocks to the blockchain so that the state of the chain could be updated.

Signing

Signing is the process of associating your identity with information so that it could be verified that the information is coming from you.

Hashing

Hashing is the process of deriving fixed-length strings from arbitrary-length data.

Transactions and Blocks

Transactions are used to propose an update to the state of the blockchain. Blocks are groups of transactions.

Blockchain Node & Network

Blockchain node software running on a physical or virtual machine and accepting connections is a blockchain node.

Consensus

In the context of blockchain, consensus is the agreement on the state of the blockchain among all the nodes in a network.

Blockchain

Blockchain  is a system that allows two or more mutually unknown parties to reach an agreement without middlemen.

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