The blockchain industry seems profound, but many 'cool-sounding' terms can be understood instantly once you grasp the core meaning.
Today, we will quickly introduce you to the core terms of the blockchain world in a simple and easy-to-understand way, so you won't feel like you're listening to a foreign language when chatting, and you might even impress someone.
📚 10 core terms every blockchain beginner must understand
1️⃣ Blockchain
One-sentence explanation: A 'distributed ledger' that everyone can view and no one can arbitrarily alter.
It divides data into blocks and connects them in chronological order to form a chain.
Application scenarios: Bitcoin, Ethereum, supply chain tracking, digital identity, etc.
2️⃣ Decentralization
One-sentence explanation: A network structure with no 'single leader'.
Traditional bank transfers require a bank, but transfers in the blockchain world do not need a central institution; all network nodes verify transactions together, dispersing power and risk.
3️⃣ Consensus Mechanism
One-sentence explanation: A rule that makes everyone agree on the contents of the ledger.
Common types:
• PoW (Proof of Work): Based on computational power competition (used by Bitcoin)
• PoS (Proof of Stake): The right to record transactions is determined by the amount of tokens held and the duration.
• DPoS (Delegated Proof of Stake): Representatives are elected to help record transactions.
4️⃣ Smart Contract
One-sentence explanation: A 'code contract' that executes itself.
For example, setting 'if condition A is met, then automatically execute B', with no manual intervention throughout, and cannot be changed arbitrarily.
Applications: DeFi protocols, NFT trading, DAO governance, etc.
5️⃣ Token
One-sentence explanation: Digital assets on the blockchain that can represent currency, rights, items, etc.
• Native Tokens: Issued by the blockchain itself (like BTC, ETH)
• Contract Tokens: Issued based on a specific chain (like USDT, UNI)
6️⃣ Wallet
One-sentence explanation: Your 'digital pocket' in the blockchain world.
Divided into:
• Hot Wallet (online, convenient but relatively high risk, like MetaMask)
• Cold Wallet (offline storage, secure but not very convenient, like Ledger)
7️⃣ Private Key & Public Key
One-sentence explanation:
• Public Key: Your 'bank account number', used by others to transfer funds to you.
• Private Key: Your 'password + U shield', must be kept safe; losing it equals losing control over your assets.
8️⃣ NFT (Non-Fungible Token)
One-sentence explanation: A unique, non-replaceable digital certificate.
Can be used for artworks, game items, tickets, digital identities, etc.
Highlights: On-chain proof, open and transparent, strong anti-counterfeiting capabilities.
9️⃣ DeFi (Decentralized Finance)
One-sentence explanation: Decentralized financial services.
Allows you to complete borrowing, trading, and wealth management operations without a bank, fully executed by smart contracts.
🔟 DAO (Decentralized Autonomous Organization)
One-sentence explanation: A 'decentralized organization' that operates on blockchain and smart contracts.
Members vote to determine the project direction, with rules written into the chain code, open and transparent.
📌 Summary
Mastering these terms gives you a 'pass' to enter the blockchain world.
In the future, whether chatting about cryptocurrency with friends or reading industry news, you'll be able to easily keep up.
Remember: Blockchain is not just about trading coins; it is a completely new system of trust and value exchange. Understanding it today may help you catch the next wave tomorrow.
