What is a Distributed Ledger? – The Blockchain Buzzwords Explained

Hey there, Web3sy verse!

If you have heard of Web3sy in any capacity, it is probably because you have some interest in Web3, Blockchain, or other emerging technologies. But how much do you really know?

In recent years, the buzz surrounding blockchain technology and Web3 has been hard to ignore. From cryptocurrencies to decentralised finance (DeFi) and non-fungible tokens (NFTs), these terms are becoming increasingly prevalent in both tech circles and mainstream discourse. However, for many, the world of blockchain and Web3 can seem daunting and complex, filled with unfamiliar jargon and concepts.

Fear not, as in this beginner’s guide, we’re going to demystify these buzzwords and provide clear explanations for some of the fundamental concepts associated with blockchain and Web3. Whether you’re completely new to the space or looking to deepen your understanding, this guide will serve as a valuable resource to help you navigate the exciting world of decentralised technologies.

Test your knowledge with these 15 Blockchain related keywords. Have a go, below!

Transactions: Actions that transfer value or data on a blockchain network.

Mining: The process of validating and adding transactions to the blockchain by solving complex mathematical problems, often associated with proof-of-work consensus mechanisms.

Smart contract: Self-executing contracts with the terms of the agreement directly written into code. They automatically execute and enforce the terms of the contract when predefined conditions are met.

Ledger: A decentralised and distributed database that records all transactions across a network of computers.

ERC-20: A technical standard used for smart contracts on the Ethereum blockchain for implementing tokens. ERC-20 defines a common list of rules for Ethereum tokens to follow.

Gas: The fee required to perform transactions or execute smart contracts on the Ethereum blockchain. It helps prevent spam and abuse of the network.

Decentralised application (dApp): An application that runs on a decentralised network of computers rather than a single central server. dApps typically leverage blockchain technology.

NFT (Non-Fungible Token): A type of digital asset that represents ownership or proof of authenticity of a unique item or piece of content, often used for digital art, collectibles, and gaming items.

DeFi (Decentralised Finance): Financial services built on blockchain technology that aims to provide alternatives to traditional financial intermediaries such as banks and exchanges, enabling greater access, transparency, and efficiency.

Layer 1 (L1) / Layer 2 (L2): Refers to the architectural layers of blockchain networks. Layer 1 is the main blockchain layer, while Layer 2 solutions are built on top of Layer 1 to enhance scalability and functionality.

Ethereum Virtual Machine (EVM): A runtime environment that executes smart contracts on the Ethereum blockchain, allowing for decentralised applications to be built on the platform.

Rollup: A Layer 2 scaling solution that aggregates and bundles transactions off-chain before submitting them to the main blockchain, improving scalability and reducing fees.

Minting: The process of creating new tokens on a blockchain, often associated with NFTs and other tokenized assets.

Zero-Knowledge (ZK): A cryptographic technique that allows one party (the prover) to prove to another party (the verifier) that a statement is true without revealing any information beyond the validity of the statement itself.

Consensus algorithm: The mechanism used by blockchain networks to achieve agreement on the state of the ledger. Examples include proof-of-work, proof-of-stake, and delegated proof-of-stake.

And that’s it! How many did you get? Comment below and share if you think you’ve done better than your friends!

If you want to find out more about all of these keywords and put them into context, check our our introduction to Blockchain, course!

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