When you set up your own private blockchain (Ethereum private), you can set your own rules via the Genesis block. What follows is a list (as comprehensive as we can make it) of definitions of those parameters.
Glossary of terms and content
- PoW - Proof of work; Anybody can be a validator as long as they solve the PoW challenge; Suitable for big public blockchains; Examples: Public Bitcoin, Public Ethereum
- PoS - Proof of state; Anybody can be a validator as long as they “stake” enough coins; Suitable for big public blockchains; Examples: Public Ethereum (once they switch to PoS)
- Hybrid PoS/PoW - A hybrid PoS/PoW allows for both Proof of Stake and Proof of Work as consensus distribution algorithms on the network. In this method, a balance between miners and voters (holders) may be achieved, creating a system of community-based governance by both insiders (holders) and outsiders (miners).
- PoA - Proof of authority; Validators are pre-selected upfront; Adding/removing validators typically happens by voting (i.e. if a majority of existing validators agree to add a new validator); Examples: Private Ethereum; Quorum, HLF
- PoR - Proof of reputation; Used by GoChain; Same as PoA but only big players (that have a reputation to lose) are allowed as validators
- Permissioned Blockchains - another term for PoA
- Byzantine Fault Tolerance - A property of a consensus algorithm that ensures that this consensus algorithm can tolerate arbitrary (including malicious) node failures
- Fail-stop Fault Tolerance - A property of a consensus algorithm that ensures that this consensus algorithm can tolerate nodes that crash. This is a weaker guarantee than Byzantine Fault Tolerance and is usually seen as not fully decentralized because nodes need to be trusted not to be malicious.
- PBFT - Practical Byzantine fault tolerance; A consensus algorithm to implement PoA
- Federated BFT - A special version of BFT that allows it to be used in big public blockchains; Anybody can become a validator but nodes decide which validators they trust; Examples: Stellar
- Validator - A node that’s allowed to create new blocks in a PoA blockchain
- Authority node - Same as a validator (this term is mainly used by Parity)
- Sealer - Same as a validator but I see this term more often in the context of PoS
- Miner - Same as a validator; Mostly used in the context of PoW
- Public Blockchain - Anybody can listen to the blockchain - Note that this can be implemented with PoA, PoS, and PoW
- Private Blockchain - Only a selected group can listen to the blockchain - Typically these blockchains use PoA. Note that even though the blockchain itself is private to outside “eyes”, anybody who can see the blockchain still can see all transactions (compare with Private Transactions)
- Private Transactions - Some Blockchains (Quorum, HLF) allow sending some transactions “privately”. Only the receiver of the transaction can see the content. This doesn’t make any statement of whether the rest of the blockchain is public or private.
Basic blockchain definitions and terms
Blockchain - A blockchain is a shared ledger where transactions are permanently recorded by appending blocks. The blockchain serves as a historical record of all transactions that ever occurred, from the genesis block to the latest block, hence the name blockchain.
Node - A copy of the ledger operated by a participant of the blockchain network.
Public Address - A public address is the cryptographic hash of a public key. They act as email addresses that can be published anywhere, unlike private keys.
Private Key - A private key is a string of data that allows you to access the tokens in a specific wallet. They act as passwords that are kept hidden from anyone but the owner of the address.
- Mining - Mining is the act of validating blockchain transactions. The necessity of validation warrants an incentive for the miners, usually in the form of coins. In this cryptocurrency boom, mining can be a lucrative business when done properly. By choosing the most efficient and suitable hardware and mining target, mining can produce a stable form of passive income.
Block Explorer - Block explorer is an online tool to view all transactions, past and current, on the blockchain. They provide useful information such as network hash rate and transaction growth.
Difficulty - This refers to how easily a data block of transaction information can be mined successfully.
Block Height - The number of blocks connected on the blockchain.
Block Reward - A form of incentive for the miner who successfully calculated the hash in a block during mining. Verification of transactions on the blockchain generates new coins in the process, and the miner is rewarded a portion of those.
Transaction Fee - All cryptocurrency transactions involve a small transaction fee. These transaction fees add up to account for the block reward that a miner receives when he successfully processes a block.
Genesis Block - The first or first few blocks of a blockchain.
Consensus - Consensus is achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exact copies of each other.
Hard Fork - A type of fork that renders previously invalid transactions valid, and vice versa. This type of fork requires all nodes and users to upgrade to the latest version of the protocol software.
dApp - A decentralized application (dApp) is an application that is open source, operates autonomously, has its data stored on a blockchain, incentivized in the form of cryptographic tokens and operates on a protocol that shows proof of value.
Solidity - Solidity is Ethereum’s programming language for developing smart contracts.
DAO - Decentralised Autonomous Organizations can be thought of as corporations that run without any human intervention and surrender all forms of control to an incorruptible set of business rules.
Distributed Ledger - Distributed ledgers are ledgers in which data is stored across a network of decentralized nodes. A distributed ledger does not have to have its own currency and may be permissioned and private.
Distributed Network - A type of network where processing power and data are spread over the nodes rather than having a centralized data center.