What is the idea behind blockchain ?
The centralized internet is not secure. Data can be stolen, manipulated, censored and copied unlimited. This
is a problem, that should be solved, especially when it comes to digitally transfering valued assets or currencies.
The idea of decentralization and blockchain is not new, but only with the invention of Bitcoin as a digital asset in 2008, which can be used as a secure global and borderless currency, let the blockchain technology become popular and useful. Transferring assets in a global secure, fast and trustless network without risks of copying, loosing or manipulating, opened the door for a new digital eco system, that can be adopted by almost all parts of human life.
What is distributed ledger (dlt = distributed ledger technology) ?
A distributed ledger is simply a network database spread across different nodes. The database is shared, replicated, and synchronized among the members of a decentralized network. It records transactions such as the exchange of assets or data among the members of the network.
What is blockchain ?
A blockchain is a chain of blocks containing information about transactions, generating hashes that are safed
on a data block. Each block is linked and refers to the previous block and together they make the Blockchain. It is a
database, that cannot be changed after one block is confirmed and fix.
The hole blockchain software and database can be spread over many computers localy or globaly, each of which have a copy. The result is a distributed network or ledger.
What is dag (directed acryl graph) ?
A directed acyclic graph is a directed graph that has no cycles. A tree is a special kind of graph that
has no cycles, a hierarchical model. In a graph, each node has one or more predecessor nodes and successor nodes.
That means, it is impossible to traverse the entire graph starting at one edge. The edges of the directed graph
only go one way.
DAGs are scalable and fast and enables feeless transactions.
What is a smart contract ?
A smart contract is an agreement or contract between two people/users in form of a software code. It is self-executing when the defined terms of an agreement between a buyer and a seller (e.g.) are fulfilled. The smart contract is safed on a blockchain or a dag network and cannot be changed. It is also processed by the blockchain or dag automatically, what eliminates the need of a third party. Smart contracts enables trustless fast and cheap peer-to-peer transactions in a decentralized network.
What is a token ?
A token represents a role or function in a digital ecosystem. This may be a voting right, a staking option or any other utility. An ecosystem token or utility token may have several roles and values, but none outside the ecosystem.
What is a security token ?
Securities are real world assets like shares of a publicly-traded corporation (e.g. stocks). A security token is a tokenized, digital form of these securities. Security token underlay different legal frameworks then commodities like crypto currencies.
What is a stablecoin ?
A stablecoin is pegged to a currency or a precious metal to prevent to price from fluctuation like other coins and tokens, which are very volatile due to intensiv trading. The USD is used as the backing currency in most cases, but there are also Euro and gold backed coins.
What is an airdrop ?
An airdrop is a promotion and marketing tool for mostly new tokens to raise awareness and involvement in the project and to build up a community. The crypto community can participate in airdrop tasks such as following the project on social media sites and receive tokens as a reward for free.
What is a wallet ?
A crypto currency wallet can be a physical device, an application, a program or a service to store, send and
receive crypto currencies. In fact it stores the public and private keys of a blockchain, with which the owner
can track and manage coins and token. The public key is a string of alphanumeric characters and the receiving
address of the currency, that everybody may know. The private key often is a combination of 12-24 words, which
must be kept secret by the owner. Only the owner of the private key owns the wallet !
It is important to know, that wallets on crypto exchanges are owned by the exchange, not by the account user. Therefore the risk of losing coins or token due to hacker attacks or exchange shutdown should be considered.
What is a consensus ?
The goal of an consensus algorithm is to allow a group of network users (nodes) to come to an agreement on
the order in which some of the network users generated transactions, when no single member is trusted by everyone.
It is a system for generating trust, when individuals do not trust each other. A consensus proofs, that a transaction
is true and done only once.
There are several different consensus algorithms, trying to solve the task most securely and fast. Best known are proof-of-work (e.g. Bitcoin) and proof-of-stake (e.g. EOS and Cardano).
What is staking ?
Staking means to hold and freeze a cryptocurrency in a wallet of a blockchain or dag project for a choosen time period to support the network. This support is rewarded by earning interest on it. The reward that can be earned from staking varies depending on the length of the staking time and the technology behand the project. Staking rewards are offered from blockchains and dags with a proof-of-stake consensus.
What is sharding ?
Sharding is a way of partitioning a network to spread out the computational and storage workload across a
peer-to-peer network so that each node isnīt responsible for processing and storing the entire networkīs transactions.
Instead, each node only maintains information related to its shard. But the information stored in a shard can
still be shared among other nodes, which keeps the network decentralized and secure. A cross-shard protocol is
used for this purpose.
A shard is a fraction of the network, where transactions can be executed much faster and cheaper between accounts. If a blockchain uses a layer two sharding concept, applications, blockchains, companies or anything else can transact in its own shard and make the network scalable for business apllications.
What is an oracle ?
An oracle provides real world off-chain data and submits this information to a blockchain to be used by smart contracts. A data feed provided by a third party service. Since smart contracts are fully self contained and any information or access to off-chain data is restricted, most smart contracts are reliant on an outside provider (an oracle) of off-chain data points.
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