8 Basic Blockchain Terms Every Beginner Needs to Know  by@xamhans

8 Basic Blockchain Terms Every Beginner Needs to Know

A Decentralized Autonomous Organization, or DAO, is a theoretical organization or company operated by code instead of people. The network's nodes must reach an agreement on the network's current state. This agreement is achieved using ‘consensus mechanisms**’ These mechanisms are not directly related to building a dapp, but understanding them will illuminate concepts relevant to you and your users' experience, like gas prices and transaction times. Gas refers to the amount of computational effort required to execute specific operations on the Ethereum network.
image
Johannes Müller HackerNoon profile picture

Johannes Müller

web dev by passion

twitter social iconlinkedin social icon

Disclaimer: I didn’t write these descriptions, they are compiled from authoritative sources in the blockchain space.

1. DAO's

“A Decentralized Autonomous Organization, or DAO, is a theoretical organization or company operated by code instead of people. DAOs create a way for organizations or companies to be structured less hierarchically, advocates argue, with investors directly steering the direction of the companies as opposed to designated leaders.”

2. CONSENSUS MECHANISMS

“When it comes to blockchains like Ethereum, which are, in essence, distributed databases, the network's nodes must reach an agreement on the network's current state. This agreement is achieved using consensus mechanisms.

Although consensus mechanisms aren't directly related to building a dapp, understanding them will illuminate concepts relevant to you and your users' experience, like gas prices and transaction times.”

3. TYPES OF CONSENSUS MECHANISMS

"Proof-of-work: is done by miners, who compete to create new blocks full of processed transactions. The winner shares the new block with the rest of the network and earns some freshly minted ETH. The race is won by whosever computer can solve a math puzzle fastest – this produces the cryptographic link between the current block and the block that went before. Solving this puzzle is the work in "proof-of-work".

Proof-of-stake: is done by validators who have staked ETH to participate in the system. A validator is chosen at random to create new blocks, share them with the network and earn rewards. Instead of needing to do intense computational work, you simply need to have staked your ETH in the network. This is what incentivises healthy network behaviour.”

Source:

4. GAS⛽

“Gas refers to the unit that measures the amount of computational effort required to execute specific operations on the Ethereum network.

Since each Ethereum transaction requires computational resources to execute, each transaction requires a fee. Gas refers to the fee required to conduct a transaction on Ethereum successfully.
Gas fees are paid in Ethereum's native currency, ether (ETH). Gas prices are denoted in gwei, which itself is a denomination of ETH - each gwei is equal to 0.000000001 ETH (10-9 ETH). For example, instead of saying that your gas costs 0.000000001 ether, you can say your gas costs 1 gwei. The word 'gwei' itself means 'giga-wei', and it is equal to 1,000,000,000 wei. Wei itself (named after Wei Dai, creator of b-money) is the smallest unit of ETH.”


5. NODES AND CLIENTS


"Node refers to a running piece of client software. A client is an implementation of Ethereum that verifies all transactions in each block, keeping the network secure and the data accurate. There are different node types:

  • Full node -- Stores full blockchain data. -- Participates in block validation, verifies all blocks and states. -- All states can be derived from a full node. -- Serves the network and provides data on request
  • Light node -- Stores the header chain and requests everything else. -- Can verify the validity of the data against the state roots in the block headers. -- Useful for low capacity devices, such as embedded devices or mobile phones, which can't afford to store gigabytes of blockchain data.
  • Archive node -- Stores everything kept in the full node and builds an archive of historical states. Needed if you want to query something like an account balance at block #4,000,000, or simply and reliably test your own transactions set without mining them using OpenEthereum. -- These data represent units of terabytes which makes archive nodes less attractive for average users but can be handy for services like block explorers, wallet vendors, and chain analytics.”

Source:

6. The Ethereum Virtual Machine (EVM)

is a powerful, sandboxed virtual stack embedded within each full Ethereum node, responsible for executing contract bytecode. Contracts are typically written in higher level languages, like Solidity, then compiled to EVM bytecode.

7. IPFS (the InterPlanetary File System)

IPFS is a peer-to-peer (p2p) storage network. Content is accessible through peers located anywhere in the world, that might relay information, store it, or do both. IPFS knows how to find what you ask for using its content address rather than its location.
There are three fundamental principles to understanding IPFS:

  1. Unique identification via content addressing
  2. Content linking via directed acyclic graphs (DAGs)
  3. Content discovery via distributed hash tables (DHTs)

IPFS is a distributed file system that seeks to connect all computing devices with the same system of files. In some ways, this is similar to the original aims of the Web, but IPFS is actually more similar to a single BitTorrent swarm exchanging Git objects. You can read more about its origins in the paper IPFS - Content Addressed, Versioned, P2P File System. IPFS is becoming a new major subsystem of the internet. If built right, it could complement or replace HTTP. It could complement or replace even more.

Source:

8. JSON-RPC

In order for a software application to interact with the Ethereum blockchain (by reading blockchain data and/or sending transactions to the network), it must connect to an Ethereum node. For this purpose, every Ethereum client implements a JSON-RPC specification, so there are a uniform set of methods that applications can rely on.

JSON-RPC is a stateless, light-weight remote procedure call (RPC) protocol. Primarily this specification defines several data structures and the rules around their processing. It is transport agnostic in that the concepts can be used within the same process, over sockets, over HTTP, or in many various message passing environments. It uses JSON (RFC 4627) as data format.
Example JSON RPC Request/Response
image
Source:
react to story with heart
react to story with light
react to story with boat
react to story with money
L O A D I N G
. . . comments & more!