100,000 Questions and Answers about Cryptocurrencies 10

What is a hard fork?

A hard fork is a type of blockchain fork that results in two incompatible blockchains. After a hard fork, nodes running the old software will no longer be able to validate blocks on the new blockchain, and vice versa.

What is a soft fork?

A soft fork is a type of blockchain fork that is backward compatible. Nodes running the old software can still validate blocks on the new blockchain, but nodes running the new software enforce additional rules.

What is a 51% attack?

A 51% attack occurs when a single entity or group controls more than half of the mining hash rate on a proof-of-work blockchain. This allows them to double-spend coins, reverse transactions, and potentially take over the network.

What is a Proof-of-Stake (PoS) consensus mechanism?

Proof-of-Stake (PoS) is a consensus mechanism used by some blockchains to determine who can validate blocks and add them to the blockchain. Instead of relying on mining hash rate, PoS selects validators based on the amount of stake (tokens) they have pledged.

What is a Proof-of-Work (PoW) consensus mechanism?

Proof-of-Work (PoW) is a consensus mechanism used by many blockchains, including Bitcoin, to determine who can validate blocks and add them to the blockchain. It involves miners solving cryptographic puzzles using computing power to earn block rewards.

What is a mempool in a blockchain?

The mempool (memory pool) is a collection of unconfirmed transactions that are waiting to be included in the next block on a blockchain. Miners select transactions from the mempool to include in their blocks.

What is a smart contract?

A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. Once predefined conditions are met, the smart contract automatically enforces the agreement.

What is a dApp (decentralized application)?

A dApp (decentralized application) is an application that runs on a blockchain network. It utilizes smart contracts and blockchain technology to provide decentralized services and functionality without relying on a central authority.

What is the ERC-20 token standard?

ERC-20 is a technical standard used for smart contracts on the Ethereum blockchain for implementing tokens. ERC-20 defines a common list of rules that all Ethereum tokens must follow, including how they are transferred and how data within each token is accessed.

What is a non-fungible token (NFT)?

A non-fungible token (NFT) is a unique digital asset that represents ownership of a real-world or digital item. Unlike cryptocurrencies, NFTs are not interchangeable and each one is unique. They are often used to represent digital art, collectibles, and other unique items.

What is a blockchain oracle?

A blockchain oracle is a service that provides external data to smart contracts on a blockchain. Since blockchains are isolated and cannot access external data directly, oracles are used to bridge the gap and provide data such as stock prices, weather information, or other real-world data.

What is a zk-SNARK?

zk-SNARK (zero-knowledge Succinct Non-interactive ARguments of Knowledge) is a type of cryptographic proof that allows someone to prove possession of certain information, such as a secret key, without revealing that information. It is used in some blockchains to enable privacy-preserving transactions and smart contracts.

What is a zero-knowledge proof?

A zero-knowledge proof is a cryptographic technique that allows one party to prove to another party that a statement is true without revealing any additional information beyond the fact that the statement is indeed true. This technique is used in various applications, including blockchains, to provide privacy and security.

What is a Layer 2 solution?

Layer 2 solutions are scaling techniques that operate on top of the base blockchain layer (Layer 1) to improve transaction throughput, reduce fees, and enhance user experience. Common Layer 2 solutions include state channels, sidechains, and rollups.

What is a sidechain?

A sidechain is a separate blockchain that is pegged to the main blockchain, allowing assets to be transferred between the two. Sidechains can have different consensus mechanisms, rules, and functionalities, providing additional flexibility and scalability.

What is an atomic swap?

An atomic swap is a trustless and decentralized way to exchange one type of cryptocurrency for another without the need for a trusted third party. It involves using smart contracts to lock up funds on both blockchains until the exchange is complete.

What is a cross-chain bridge?

A cross-chain bridge is a technology that enables the transfer of assets and data between different blockchains. It allows for interoperability between blockchains, opening up new possibilities for decentralized finance and cross-chain applications.

What is the Lightning Network?

The Lightning Network is a Layer 2 scaling solution for Bitcoin that enables fast, low-fee payments without needing to record every transaction on the main Bitcoin blockchain. It uses payment channels to facilitate off-chain transactions.

What is a hash function?

A hash function is a cryptographic function that takes an input of any size and produces a fixed-size output, known as a hash. Hash functions are used in blockchains to generate unique identifiers for blocks and transactions.

What is a blockchain explorer?

A blockchain explorer is a tool that allows users to view and search the contents of a blockchain. It provides information about blocks, transactions, addresses, and other data on the blockchain, enabling users to track and analyze blockchain activity.