Understanding blockchain technology begins with mastering its language. Whether you're a developer, investor, or enthusiast, familiarity with core blockchain terms is essential for navigating this rapidly evolving space. This comprehensive glossary presents key blockchain, cryptocurrency, and decentralized technology terms in both English and Chinese, helping you build fluency in the digital economy’s native vocabulary.
The terminology below reflects foundational concepts across networks like Bitcoin, Ethereum, and broader distributed ledger technology (DLT) systems. These terms are widely used in technical documentation, whitepapers, wallets, mining protocols, and smart contract development.
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Core Blockchain Concepts
Decentralization & Consensus
At the heart of blockchain lies decentralization — the removal of central authorities from transaction validation. Instead, networks rely on consensus mechanisms to agree on the state of the ledger.
- Proof of Work (PoW): A consensus algorithm where miners compete to solve complex mathematical puzzles. The first to solve earns the right to add a new block.
- Proof of Stake (PoS): Validators are chosen based on the amount of cryptocurrency they "stake" as collateral.
- Delegated Proof of Stake (DPoS): Token holders vote for delegates who validate transactions on their behalf.
- Byzantine Fault Tolerance (BFT): A system's ability to function correctly even if some nodes fail or act maliciously.
Consensus ensures immutability of blockchain — once data is recorded, it cannot be altered without network-wide agreement.
Blocks and Chain Structure
A blockchain is a sequence of blocks, each containing transaction data, a timestamp, and a cryptographic hash of the previous block.
Key components include:
- Block header: Contains metadata like version number, timestamp, and Merkle root.
- Block hash: A unique identifier generated by hashing the block header.
- Block height: The position of a block in the chain (e.g., Genesis Block = height 0).
- Merkle tree (Merkle Hash Tree): A binary hash tree that summarizes all transactions in a block, enabling efficient verification.
Blocks are linked via cryptographic hashes, forming an unbreakable chain. This structure supports independent verification by any participant.
Cryptography & Security
Blockchain relies heavily on cryptographic techniques to secure transactions and identities.
Key Cryptographic Elements
- ECDSA (Elliptic Curve Digital Signature Algorithm): Used to generate digital signatures that prove ownership without revealing private keys.
- SHA-256: The secure hash algorithm used by Bitcoin; produces a fixed-size 256-bit output.
- Base58Check Encoding: A format used for Bitcoin addresses to prevent typing errors.
- Public Key / Private Key: A cryptographic pair where the public key can be shared openly, while the private key must remain secret.
Wallets use these keys to sign transactions securely. Formats like Wallet Import Format (WIF) simplify key handling.
Wallet Types
Different wallets offer varying levels of security and convenience:
- Hardware wallets: Physical devices storing private keys offline (cold storage).
- Deterministic wallets: Generate keys from a single seed phrase.
- HD wallet system (Hierarchical Deterministic): Allows creation of multiple accounts from one master seed.
- SPV nodes (Simplified Payment Verification): Lightweight clients that verify transactions without downloading the full blockchain.
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Transactions & Network Operations
Transactions are the lifeblood of any blockchain network.
Transaction Lifecycle
A typical transaction includes:
- Inputs: References to previous unspent outputs (UTXOs).
- Outputs: New balances sent to recipient addresses.
- Transaction fees: Paid to miners for processing.
Special features include:
- Coinbase transaction: The first transaction in a block, which awards mining rewards.
- Transaction malleability: The ability to alter a transaction ID before confirmation — mitigated by SegWit.
- RBF (Replace By Fee): Allows users to increase fees to speed up confirmation.
- Child Pays For Parent (CPFP): A method where a child transaction pays higher fees to prioritize its parent.
Unconfirmed transactions reside in the mempool (memory pool) until included in a block.
Scripting & Smart Contracts
Bitcoin uses a scripting language for transaction logic:
- Locking scripts: Define conditions for spending outputs.
- Multi-signature scripts: Require multiple parties to sign before funds can be spent.
- P2SH (Pay to Script Hash): Enables complex scripts without burdening senders.
More advanced platforms like Ethereum support smart contracts — self-executing agreements written in code. These run on a Turing Complete virtual machine, enabling decentralized applications (dApps).
Network Architecture & Scaling
Nodes and Participation
Participants in a blockchain network are called nodes. Types include:
- Full nodes: Validate all transactions and maintain a complete copy of the blockchain.
- Lightweight nodes (SPV nodes): Rely on full nodes for verification but consume less bandwidth.
- Seed nodes: Help new nodes discover peers during synchronization.
Syncing the blockchain refers to downloading and verifying all historical data.
Scaling Solutions
To improve performance, several innovations exist:
- Segregated Witness (SegWit): Separates signature data from transaction data, increasing capacity and fixing malleability.
- Lightning Network: A layer-2 payment channel allowing instant, low-cost transactions off-chain.
- Sidechains: Independent blockchains connected to a mainchain (e.g., Bitcoin) via two-way pegs.
- Compact block relay: Reduces bandwidth usage during block propagation.
These solutions enhance scalability while preserving security.
Blockchain Variants & Ecosystems
Types of Blockchains
Not all blockchains are public. They fall into categories:
- Public blockchain / Permissionless blockchain: Open to anyone (e.g., Bitcoin, Ethereum).
- Private blockchain / Permissioned blockchain: Restricted access; often used by enterprises.
- Consortium blockchains: Governed by a group of organizations.
- Token-less blockchain: Operates without native cryptocurrency — typically private chains.
Tokens and Digital Assets
Beyond currency, blockchains support various digital assets:
- Native token: The primary cryptocurrency of a network (e.g., ETH on Ethereum).
- Colored coins: Represent real-world assets on Bitcoin’s blockchain.
- User Token / Equity Token / Debt Token: Represent ownership, equity, or debt in a project.
- Confidential Transactions: Hide transaction amounts while preserving verifiability.
Platforms like Counterparty and Mastercoin pioneered early token systems before Ethereum’s ERC-20 standard.
Frequently Asked Questions
Q: What does "UTXO" mean in blockchain?
A: UTXO stands for Unspent Transaction Output. It represents coins not yet spent and serves as input for future transactions. The collective set is known as the UTXO set.
Q: How is a "Genesis Block" different from other blocks?
A: The Genesis Block is the first block in any blockchain. It has no parent and is hardcoded into the software. No mining reward precedes it.
Q: What is the difference between a hard fork and soft fork?
A: A hard fork creates a permanent divergence in the blockchain, requiring all nodes to upgrade. A soft fork is backward-compatible; old nodes can still validate under new rules.
Q: What is "dust" in cryptocurrency?
A: Dust refers to extremely small amounts of cryptocurrency that aren't worth transacting due to high fees. Wallets often hide or consolidate dust using the dust rule.
Q: Why is "immutability" important in blockchain?
A: Immutability ensures data integrity. Once recorded, transactions cannot be altered or deleted, making fraud extremely difficult and enhancing trust.
Q: What is "off-chain" activity?
A: Off-chain refers to transactions or operations that occur outside the main blockchain — such as payment channels or sidechains — improving speed and reducing costs.
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This glossary equips you with essential terminology to understand technical discussions, read whitepapers, and participate confidently in the world of decentralized technologies. As innovation continues — from zero-knowledge proofs to cross-chain interoperability — staying fluent in blockchain language will remain crucial for every digital participant.