Public Unit 3: Vocabulary

To pass this unit, please study the 30 vocabulary words below.
51 percent attack
an attempt to cheat a blockchain by temporality amassing a large percentage of mining share
In 2016 hackers used a 51% attack to steal around 21,465 KR from Bittrex by double spending on the network.
a coin distribution scheme based on holding some other token or performing a simple task such as subscribing to an email
New cryptocurrency creators often airdrop coins to help jump-start coin adoption and gain publicity.
ASIC (application specific integrated circuit)
a chip designed for a specific purpose, such as processing SHA-256 or Scrypt hashes
Bitcoin Gold is a hard fork of Bitcoin which aims to promote decentralization by means of an ASIC-resistant mining algorithm.
Byzantine fault tolerance
an algorithm preventing different symptoms appearing to different observers in a system that requires 100% consensus
The engineer said the system service failures was due to poor Byzantine fault tolerance.
a coded message or secret way of writing
The boy had a difficult time time decoding the cipher in which his father's diary was written.
consensus process
a group of peers responsible for maintaining a distributed ledger
A blockchain's consensus process is a vital part of its success because it must be fast, reliable, and verifiable by everyone using it.
daps (decentralized applications)
programs designed to work without a central owner, server, or controller
One can split dapps into three major types: financial transactions, traditional commerce, and “other” including everything from games to governance systems.
DAO (distributed autonomous organization)
a contract that enables users to purchase shares and vote
A DAO is the combination of blockchain, smart contracts, and people which can form anything from a shoe company, to a baseball team, to an entire government.
double spend problem
a single financial transaction potentially happening in two places at once
The double spend problem is difficult to solve without a blockchain or trusted third party like a bank.
a programming interface used to define a common list of functions that an Ethereum token has to implement.
The ERC-20 programming interface defines six different functions including how tokens are transferred and approved.
genesis block
the first entry in a cryptocurrency ledger
The genesis block of Bitcoin was mined on Jan 3rd, 2009.
hard fork
a code release that breaks backwards compatibility
Ethereum is a hard fork of Ethereum Classic and has been much more successful than the original.
KYC (know your customer)
verification activities that financial institutions must perform to ascertain relevant information from their clients
Most ICOs now have KYC and AML requirements in order to lower the risk of scandals.
margin trading
trading with borrowed money where the invested amount acts simply as collateral on a potential loan
Margin trading is dangerous because you can lose more money than you invest.
Merkle tree
a double encrypted data structure or "binary hash" used in blockchain applications to verify transactions without completely downloading them
Merkle trees are used in distributed systems like Bitcoin for efficient data verification.
Metcalfe's law
states that the value of a telecommunications network is proportional to the square of the number of connected users of the system
Metalf's law can be explained easily because one person with a mobile phone is useless, two a little better, and 1 billion incredible.
money laundering
the illegal process off making criminal income look legitimate
Successful criminals need to be experts at money laundering and often make deals with "cash only" businesses or crooked banks to conceal the true source of their income.
private key
a long random string of text used to create your digital signature
If someone knows your private key, they can fake your signature and steal your cryptocurrency.
a consensus mechanism in a private blockchain which essentially gives one client the right to make all of the blocks in the blockchain
No mining is required in proof-of-authority blockchains so it is easier to achieve transaction scale.
an algorithm where the amount owned of something is used to determine truth and consensus
Proof-of-stake consensus requires less energy than Proof-of-Work consensus but is seen by some as less secure.
a system that ties computational achievement to truth and reward
A hashed block on the Bitcoin blockchain is considered proof of work.
an alternative proof of work system to SHA-256, designed to be particularly friendly to CPU and GPU miners, while offering little advantage to ASIC miners.
The Scrypt algorithm is a main reason why Litecoin mining uses much less energy than Bitcoin mining.
SegWit (Segregated Witness)
a soft fork change in Bitcoin and similar currencies which increases the block size limit and allows for the implementation of second-layer solutions for further improvement.
SegWit is the first step in fixing the massive scaling problems in Bitcoin, which are only getting worse with time.
the cryptographic function used as the basis for Bitcoin’s proof of work system
SHA-256 is a cryptographic hash designed by the NSA and only breakable with quantum computers.
the ability for one crypto to easily transform into another coin, often for a small fee
Exodus was the first desktop multi-asset wallet with ShapeShift built in.
a blockchain scalability technique in which ledger events are only stored on a significant fraction of nodes
Sharding is complicated and can make reaching consensus fundamentally harder in a blockchain system if done sloppily.
soft fork
a protocol change that keeps backwards compatibility with previously valid blocks
Soft forks have been used on the Bitcoin blockchain to implement new and upgraded functionalities that are 100% backwards compatible.
an order to sell if a commodity falls below a certain point
A stop-loss order can be useful if a trader is not actively watching his or her positions.
Sybil attack
an intentional subversion caused by forging identities in peer-to-peer networks
A Sybil attack is named after the famous psychological case study by Cornelia B. Wilbur of a woman diagnosed with an identity disorder.
a service offered to obscure cryptocurrency funds thus helping to mask their origin
The dark web reporter said that Monero provides anonymity without requiring a tumbler due to its privacy centric design utilizing ring signatures.
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