Definitions

Blockchain main 
definitions

Here you will find the main definitions related to blockchain technology.
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Blockchain is an innovative technology, first described by Satoshi Nakamoto in 2008 with the Bitcoin Whitepaper. It is an append-only shared ledger, meaning anybody can add information (by sending transactions across the network), and that this information is immutable.

Every node is synced by receiving sequential blocks of transactions. At first, blockchains could only be used to make payments. But the last decade has seen the development of additional features, like smart-contracts, that can be used in more applications.

In order to have everyone in the network agree about which transactions are made and to check their validity, blockchain can use different consensus mechanism. For example, Bitcoin and Ethereum uses Proof of Work, where users who want to build a block have to compete with computational resources. Other consensus mechanism include for example Proof of Stake, or Delegated Proof of Stake (which is more scalable and centralized than the current alternatives and is used in EOS and Tron).

A token is a cryptocurrency managed by a smart-contract. The smart-contract stores balances for all accounts and implements functions to transfer funds. Token standards adding additional features are being designed.

Two main types of tokens are used:

  • Fungible Tokens, that can be divided and are similar to other cryptocurrencies
  • Non Fungible Tokens (NFTs), that represent a unique asset.

A smart-contract is a program executed on a blockchain. Any user can call functions of a smart-contract, and every node will execute it. They can be used to make conditional payments, decentralized applications, crowdfunding, and various other applications.

ICO (Initial Coin Offering) is a way for companies to fund their projects. They issue a new token on a blockchain, and sell these tokens to investors in exchange for another cryptocurrency.

However, this process can be seen by regulators like the SEC in the US as a way to circumvent existing security regulation laws. This lead to an increase of STOs (Security Token Offerings), a token offering similar to an ICO but where the underlying token is registered as a security.

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