Blockchain and Decentralized Finance Vocabulary

Comprehensive vocabulary flashcards covering blockchain architecture, cryptography, digital assets, funding mechanisms, and decentralized finance (DeFi) based on the lecture transcript.

Blockchain

A distributed ledger where blocks of transactions are cryptographically linked together in chronological order.

Block

A container that stores transactions and information such as timestamps, hashes, and a nonce.

Chain

Created because every block stores the hash of the previous block, linking them together.

Distributed Ledger

A database copied and shared across many computers instead of being stored in one central place.

Hash

A fixed-length digital fingerprint of data that changes completely if even one character of the input changes.

Nonce

'Number Used Once'; the number miners repeatedly change until a valid block hash is produced.

Immutability

Confirmed blockchain data is extremely difficult to change because altering one block invalidates all following blocks.

Public Blockchain

A blockchain that anyone can read, verify, and participate in.

Private Blockchain

A blockchain that restricts who can access or validate it.

Blockchain Explorer

A search engine that lets anyone inspect blocks, addresses, and transactions.

Pseudonymous

Transactions are linked to wallet addresses rather than real names.

Confirmation

A transaction has been included in a block; more confirmations mean greater security.

Genesis Block

Bitcoin's very first block.

Transaction Hash

The unique identifier of a blockchain transaction.

Wallet Address

A public identifier used to send and receive cryptocurrency.

Received vs Spent

Received is total crypto sent to an address; spent is the amount sent out.

Coinbase Transaction

The first transaction in every block that creates the miner's reward.

Block Reward

The reward miners receive for adding a block, including newly created coins and transaction fees.

Mining Pool

A group of miners who combine computing power and share rewards.

Plaintext

The original readable message before encryption.

Ciphertext

The encrypted unreadable version of a message.

Key

The secret value used to encrypt or decrypt information.

Caesar Cipher

A simple symmetric encryption method that shifts every letter by a fixed number.

Symmetric Encryption

Uses the same secret key for encryption and decryption.

Asymmetric Encryption

Uses a mathematically linked public key and private key.

Public Key

Shared with everyone; used to encrypt messages or verify signatures.

Private Key

Kept secret; used to decrypt messages or create digital signatures.

Integrity

The message has not been changed during transmission.

Authenticity

The receiver can verify who actually sent the message.

Digital Signature

Proves who sent a message and that it has not been modified.

Bitcoin

A decentralized digital currency for peer-to-peer payments without banks.

Double Spending

The problem of spending the same digital money more than once.

Trusted Intermediary

A third party, such as a bank, that verifies transactions.

Proof of Work

A consensus mechanism where miners solve computational puzzles to validate blocks.

Mining

The process of validating transactions, creating new blocks, and securing the blockchain.

Fork

When two competing versions of the blockchain temporarily exist.

Soft Fork

A backward-compatible update where only one blockchain remains valid.

Hard Fork

A non-backward-compatible update that can permanently split the blockchain.

Market Capitalization

$$\text{Price} \times \text{circulating supply}$$

Trading Volume

The amount of a cryptocurrency traded during a given period.

Circulating Supply

The number of coins currently available in the market.

Stablecoin

A cryptocurrency designed to maintain a stable value, usually linked to fiat currency.

MetaMask

A crypto wallet that lets users manage assets and interact with blockchain applications.

Mainnet

The real blockchain where transactions use real cryptocurrency.

Testnet

A practice blockchain that uses test coins instead of real money.

Faucet

Distributes free test cryptocurrency for use on test networks.

DApp

A decentralized application whose core functions run on blockchain and smart contracts.

Smart Contract

Self-executing code on a blockchain that runs when predefined conditions are met.

NFT

A unique blockchain-based digital asset proving ownership.

Fungible Asset

Interchangeable with another identical unit.

Non-Fungible Asset

Unique and not interchangeable one-for-one.

Bridge

Transfers assets from one blockchain network to another.

Polygon

A Layer-2 scaling network providing cheaper and faster Ethereum transactions.

OpenSea

An NFT marketplace.

Token

A blockchain-based digital representation of value, rights, ownership, or access.

Coin

The native cryptocurrency of its own blockchain.

Utility Token

Provides access to a product, service, or blockchain ecosystem.

Security Token

Represents an investment or financial ownership claim.

Payment Token

Designed primarily to function as digital money.

Investment Token

Represents financial rights such as profits or ownership.

ERC-20

A fungible token standard built on Ethereum.

ERC-721

A non-fungible token standard for unique digital assets.

Tokenization

Representing real or digital assets as blockchain tokens.

Fractional Ownership

Dividing expensive assets into smaller tradable pieces.

Settlement

Completing and recording ownership after a transaction.

ICO

Initial Coin Offering: fundraising by selling tokens directly to the public.

IEO

Initial Exchange Offering: token sale through a centralized exchange.

IDO

Initial DEX Offering: token sale through a decentralized exchange.

STO

Security Token Offering: fundraising through regulated security tokens.

Liquidity

How easily an asset can be bought or sold without greatly affecting its price.

CBDC

Digital money issued and backed by a country's central bank.

Retail CBDC

CBDC designed for individuals and businesses.

Wholesale CBDC

CBDC designed for transactions between financial institutions.

DeFi

Financial services provided through blockchain smart contracts instead of traditional intermediaries.

Smart Contract Protocol

A blockchain application that automatically provides financial services according to programmed rules.

Aave

A decentralized lending and borrowing platform using crypto collateral.

Liquidity Pool

A collection of cryptocurrency supplied by users for decentralized trading or lending.

Collateral

An asset deposited as security when borrowing funds.

CeDeFi

A combination of centralized financial services and decentralized blockchain technology.

Financial Inclusion

Giving people access to financial services even without traditional banks.

Disintermediation

Removing traditional intermediaries, such as banks, from financial transactions.

Oracle

A service that provides real-world information to blockchain smart contracts.