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Blockchain glossary 

A comprehensive list of the technical terms and abbreviations associated with Blockchain, alongside definitions written by experts at ICAEW to help practitioners.

A

B

Bitcoin

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Bitcoin

  1. A cryptocurrency that uses blockchain technology to operate.
  2. The unit of that currency (one bitcoin, or 1 BTC).

Block

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Block

A group of new transactions that are gathered together by a miner and added to the blockchain, using a cryptographic process that is difficult to compute but once created, easily allows users to check that the block refers back to the previous block.

Blockchain

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Blockchain

  1. The most successful and common implementation of a distributed ledger system.
  2. The specific system underpinning bitcoin, the original blockchain.
  3. A bitcoin service provision company.

C

Chain

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Chain

The complete and ordered list of blocks of transactions that are linked together.

Consensus

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Consensus

The process by which blockchain works: whatever the majority of the nodes, weighed by computing power, believe is the accurate current status of the blockchain, that is the official truth.

Consensus mechanism

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Consensus mechanism

Consensus mechanisms make blockchains more secure by making it labour intensive to tamper with blocks. Different blockchains use different mechanisms; one common mechanism is called “proof of work” – where servers within the network solve a mathematical puzzle derived from the block’s header to validate the record. To change a block would mean solving mathematical puzzles for all of the blocks in the chain. This would take a long time, giving members of the network time to identify the change taking place.

Cryptocurrency

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Cryptocurrency

An online cash or currency, such as bitcoin.

Cryptography

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Cryptography

The science of using computer-driven mathematics to create secure systems and codes.

D

DAO

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DAO

  1. A ‘digital autonomous organisation’, a sort of online company or investment vehicle run via smart contracts.
  2. A specific DAO simply called “The DAO” which was run on the Ethereum platform, but which suffered an attack exploiting a vulnerability in the contract code.
 

Distributed ledger system

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Distributed ledger system

Any system that spreads the ownership of a ledger across multiple parties, each with their own copy, instead of being held centrally.

E

Ethereum

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Ethereum

The second largest blockchain implementation after bitcoin.  Ethereum distributes a currency called ether, but also allows for the storage and operation of computer code, allowing for so-called smart contracts.

F

G

H

Hash

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Hash

A sort of digital signature or summary of a block that is used to authenticate it and its place in the chain.

I

J

K

L

M

Miner

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Miner

A node that not only participates in the blockchain, but helps to keep it running by running computations that allow new transactions to be posted.

In bitcoin, miners are rewarded automatically with a transaction fee and with some newly-minted bitcoins. This is a very computation-intensive – and lucrative – business. Other systems have been proposed for computing and maintaining new transactions that are more sustainable, cheaper, and more efficient, but no one system has yet risen to prominence.

MtGox

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MtGox

A former bitcoin service company which collapsed, leading to the loss of many users’ access details and hence money.

N

Node

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Node

A computer that is participating in a blockchain by posting transactions and maintaining a copy of the ledger. Nodes may or may not be miners.

O

P

Permissioned

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Permissioned

A ledger that has some rules about which parties can add transactions, but is usually still open to public examination. Contrast unpermissioned and private.

Private

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Private

A private ledger is shared only between certain nodes by invitation, and in many ways is simply a shared database with a multiplicity of copies instead of a single one. Contrast unpermissioned and permissioned.

Q

R

S

Satoshi Nakamoto

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Satoshi Nakamoto

  1. The unknown person or persons who, writing under this pseudonym, originally designed and launched bitcoin and blockchain.
  2. A ‘satoshi’ is the smallest possible division of one bitcoin, equivalent to one one-hundred-millionth of 1 BTC.
 

Smart contract

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Smart contract

Computer code that is placed onto a blockchain, and which is set to add certain transactions automatically upon certain trigger events taking place. A smart contract works something like a self-operating escrow account.

The code that makes up the smart contract is examinable, so that the parties can confirm how it will operate ahead of time. 

 

T

Tokenisation

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Tokenisation

Representing real-world assets via the use of representative tokens in a blockchain system; in theory, whoever owns the token, owns the asset.

U

Unpermissioned

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Unpermissioned

A ledger that allows anyone at all to view or add transactions, eg, bitcoin. Contrast permissioned and private.

V-Z

Votecoin

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Votecoin

The use of a blockchain to hold an open voting process – each voter is allocated a votecoin which they can give to their preferred candidate. Maintains transparency of who voted for whom. Useful for eg, corporate shareholder voting.

Wallet

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Wallet

A third-party service that helps users interact with a blockchain like bitcoin, and tracks what assets they own.

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