Basic BlockchainTerms | swarm.city

Basic BlockchainTerms

If you're new to Swarm City or cryptocurrency in general, you may have stumbled upon some unfamiliar terms along the way. Finding easy to understand reliable answers can often become it's own challenge.

No worries, we're here to help.

Below you will find terms commonly used in Swarm City, a brief semi-technical defintion, a basic explanation on how it applies to you, and lots of useful link to a more in depth explanation.

  • Decentralized- distrubuted administrative functions of authority in to smaller autonomous units; can be applied to organizations, businesses, apps, or any other group. 
  • Blockchain- the blockchain is a publicy shared ledger that chronologically records all transactions between two parties in a secure, verifiable, and permanent way. A common comparison for the blockchain is a bank ledger. Except by using blockchain technology, we can remove the bank, and let the computers use specific programable protocol to verify transactions using mathematical algorithms. It sounds complicated, and indeed it is, but it simplifies transactions by eliminating the need for a middleman or 3rd party. In Swarm City, we provide a marketplace for indivuals to connect and transact without a middleman. We did this by building on the Ethereum blockchain. Learn more about how blockchain could be the new internet in Blockgeeks guide
  • Ethereum blockchain- the structure of the Ethereum blockchain is similiar to the bitcoin blockchain, in that it is a shared record of the entire transaction history. Every node on the networks stores a copy of this record. With the Ethereum blockchain, the most recent state of each smart contract is included. Read here for more
  • Blocks- blocks are detailed, time stamped, and dated individual transaction files that are automatically, transparently, and permanently stored on the blockchain network. Each block contains a record of some or all of the recent blockchain transactions, a reference to the previous block, and the answer to a difficult to solve mathematical alorithm. These blocks securely store data and allow info to be synced across a decentralized networks of mining computers specifically running to process transactions effectively and rapidly, without depeneding on a possible untrustworthy 3rd party approval, therefore preventing human error and unneccessary delays
  • Mining- block mining is the process by which each transaction is added to the blockchain. Mining computers solve the mathematical equations attached to transactions in exchange for mining rewards. Therefore, the mining equipment eliminates the need for third party processors
  • Cryptography- the art or study of secret writing or solving codes
  • Cryptocurrency- a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds operating independently of the bank
  • Wallet- the interface/client/wrapper/holder that you use to manage your accounts. Examples: Swarm City, MyEtherWallet, Ledger, Trezor
  • Account- a public and private key pair that "holds" your funds. All funds are actually stored on the blockchain not in the wallet. Each user has an account that they use to access the blockchain data
  • Address- often referred to as a public key, and is always paired with a private key; is used to send funds "TO:" an account. It consists of a keystring that CAN BE SHARED publicly. The address can be compared to your physical home address; you can share them publicly without worries that your account will be jeopardized. Example: in Ethereum it looks like, 0x... followed by 40 hexidecimal characters, like 0x06A85356DCb5b307096726FB86A78c59D38e08ee
  • Public key-  (Advanced) you can derive a public key from a private key, but can not derive a private key from a public key. In Ethereum, the address "acts" like the public key, but it's not actually the public key, the public key is derived from the private key and is 128 hex characters. You then take the "SHA3"(Keccak-256) hash of this (64 characters), take the last 40 characters, and prefix with 0x, give you your 42-character address
  • Private key- use this keystring to send funds "FROM:" an account. The private key is almost always has 64 hexidecimal characters. The private key should NOT BE SHARED openly. The private key can be compared to the door key to your home; you will always want to know where it is, have at least one backup, and if you lose it or share it with an untrusted party, you could lose everything contained within it. You will use need the private key to gain access to your wallet. You have sole ownership of thr private key. There is no 3rd party middleman that can recover this info for you if lost or stolen. The owners of the private key is the owner of the funds. Example: afdfd9c3d2095ef696594f6cedcae59e72dcd697e2a7521b1578140422a4f890
  • Hardware wallet- Typically, a single-purpose device that "holds" your private key(s), ensuring your private keys are safe. They generally use a 24-word phrase. You should write down this phrase (not on your computer) and store separately from your hardware wallet. If you lose your hardware wallet, you can still gain access to your accounts & funds via the word-phrase you wrote down. Never type the word-phrase on your computer. It defeats the purpose of your hardware wallet.
 
This list and content was gathered from numerous sources. I have included links to the refernce article for sited content or if there is a more in depth explanation available.
 
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