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Glossary of Terms

This is a list of terms that are generally related to conversations about distributed ledger technology. We will do our best to continually update this list. If there are terms that need to be added, by all means provide a comment and suggest additions. 

Anti-money laundering (AML):  To help detect and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.

Atomic Swap: A smart contract technology that enables exchange of one cryptocurrency for another without using centralized intermediaries, such as exchanges. Atomic swaps can take place directly between blockchains of different cryptocurrencies or they can be conducted off-chain, away from the main blockchain.


Blockchain:  A blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. Constantly growing as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central recordkeeping. Each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically.

Originally developed as the accounting method for the virtual currency Bitcoin, blockchains – which use what's known as distributed ledger technology (DLT) – are appearing in a variety of commercial applications today. Currently, the technology is primarily used to verify transactions, within digital currencies though it is possible to digitize, code and insert practically any document into the blockchain. Doing so creates an indelible record that cannot be changed; furthermore, the record’s authenticity can be verified by the entire community using the blockchain instead of a single centralized authority.


Centralized Exchanges (CEX):  Acting as mediating third parties, they facilitate trading on their platforms in exchange for a fee. Operations on such exchanges are straightforward- Buyers can set their terms of trade and have the platform’s matching algorithm find them a seller with a corresponding request. Alternatively, they can select an existing offer that seems reasonable and have the platform execute it on their behalf. Ex: Coinbase, Binance, Bitfinex, Robinhood, Kraken


Commercial National Security Algorithm Suite (CNSA): The Commercial National Security Algorithm Suite (CNSA Suite) will provide new algorithms for those customers who are looking for mitigations to perform, replacing the current Suite B algorithms.

In the current global environment, rapid and secure information sharing is important to protect our Nation, its citizens and its interests. Strong cryptographic algorithms and secure protocol standards are vital tools that contribute to our national security and help address the ubiquitous need for secure, interoperable communications.

Currently, Suite B cryptographic algorithms are specified by the National Institute of Standards and Technology (NIST) and are used by NSA's Information Assurance Directorate in solutions approved for protecting classified and unclassified National Security Systems (NSS). Below, we announce preliminary plans for transitioning to quantum resistant algorithms.

Decentralized Exchanges (DEX): Decentralized exchanges seek to eliminate the role of intermediaries between cryptocurrency buyers and sellers. Instead, they offer a trustless environment in which all processes are automated. Smart contracts facilitate transactions which occur directly between platform users, peer-to-peer. Ex. Coineffeine, bitShares, bitsquare. 


Digital Asset Exchange: A digital asset exchange is an online platform on which users can exchange one virtual currency for another or for fiat money. The role of such a platform is either to act as an intermediary between currency buyers and sellers or to facilitate direct peer-to-peer trading by matching traders.

Distributed Computing:Distributed computing is a computing concept that, in its most general sense, refers to multiple computer systems working on a single problem. In distributed computing, a single problem is divided into many parts, and each part is solved by different computers. As long as the computers are networked, they can communicate with each other to solve the problem. If done properly, the computers perform like a single entity.
The ultimate goal of distributed computing is to maximize performance by connecting users and IT resources in a cost-effective, transparent and reliable manner. It also ensures fault tolerance and enables resource accessibility in the event that one of the components fails.


Distributed Ledger: is a database held and updated independently by each participant (or node) in a large network. The distribution is unique: records are not communicated to various nodes by a central authority, but are instead independently constructed and held by every node. That is, every single node on the network processes every transaction, coming to its own conclusions and then voting on those conclusions to make certain the majority agree with the conclusions.  Once there is this consensus, the distributed ledger has been updated, and all nodes maintain their own identical copy of the ledger. This architecture allows for a new dexterity as a system of record that goes beyond being a simple database.

Distributed System:a number of independent computers linked by a network.  A model in which components located on networked computerscommunicate and coordinate their actions by passing messages.[1]The components interact with each other in order to achieve a common goal. Three significant characteristics of distributed systems are: concurrency of components, lack of a global clock, and independent failure of components.[1]Examples of distributed systems vary from SOA-based systemsto massively multiplayer online gamesto peer-to-peer applications.

ERC:Ethereum Request for Comments.  An ERC is authored by Ethereum community developers in the form of a memorandum describing methods, behaviors, research, or innovations applicable to the working of the Ethereum ecosystem. It is submitted either for peer review or simply to convey new concepts or information. After core developers and community approval, the proposal becomes a standard.

ERC-20:It is the most common and well-known standard within all crypto community. 99% (if not all) issued ICO tokens on top of the Ethereum implements this standard. 

ERC-721: advanced Ethereum token that is non-fungible.  Defines a set of behaviors and events that the token contract can do that involve the movement, ownership, and information about non-fungible items.  Ex. baseball cards, collectibles, identity etc.

Ethereum: is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference.

These apps run on a custom built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property. 
This enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middleman or counterparty risk.


the practice by market makers of dealing on advance information provided by their brokers and investment analysts, before their clients have been given the information. 

Fungible Token:having one token is interchangeable or additive to the same type of token.

General Data Protection Regulation (GDPR) (EU):a regulation in EU law on data protection and privacy for all individuals within the European Union. It addresses the export of personal data outside the EU.


Initial Coin Offering (ICO): An Initial Coin Offering, also commonly referred to as an ICO, is a fundraising mechanism in which new projects sell their underlying crypto tokens in exchange for bitcoin and ether. It's somewhat similar to an Initial Public Offering (  IPO) in which investors purchase shares of a company. 


Know Your Customer (KYC):the process of a business identifying and verifying the identity of its clients.  The objective of KYC guidelines in banks is to prevent the banks from being used, intentionally or unintentionally, by criminal elements for money laundering activities.


Merkle Tree: A Merkle tree summarizes all the transactions in a block by producing a digital fingerprint of the entire set of transactions, thereby enabling a user to verify whether or not a transaction is included in a block.
Merkle trees are created by repeatedly hashing pairs of nodes until there is only one hash left (this hash is called the Root Hash, or the Merkle Root). They are constructed from the bottom up, from hashes of individual transactions (known as Transaction IDs).
Each leaf node is a hash of transactional data, and each non-leaf node is a hash of its previous hashes. Merkle trees are binary and therefore require an even number of leaf nodes. If the number of transactions is odd, the last hash will be duplicated once to create an even number of leaf nodes.


Non-fungible Token:tokens are distinguishable from the rest of the same type of token.  They are unique and not interchangeable.  Examples include collectables and identity. 


Public Ledger: a public ledger can be viewed as a data management or storage system, similar to a database system of bank records. A blockchainis a form of public ledger, which is a series (or chain) of blockson which transaction details are recorded after suitable authentication and verification by the designated network participants. The recording and storage of all confirmed transactions on such public ledgers start right from the creation and start of a cryptocurrency’s working. As a block is filled to capacity with transaction details, new ones are mined and are added to the blockchain by the network participants called miners.
Select network participants, often called full nodes, maintain a copy of the whole ledger on their devices that are connected to the cryptocurrency network. Depending on the participants’ interest and their spread across the globe, the public ledger becomes distributed, as they connect and contribute to the blockchain network activities to keep it agile and functional.
Since hundreds and thousands of such participants maintain a copy of the ledger, everyone knows the true state of the network in terms of who holds how many cryptotokens, what transactions are authentic to be recorded, and prevent any misuse like double spending. A combination of the various intrinsic features of the public ledger, like consensus algorithm, encryption, and reward mechanism, ensures that the participants’ identities are protected, and only genuine transactions are carried on the network.
To carry on a transaction, like Alice sending 1 bitcoin to Bob, she only needs to broadcast the information which contains her and Bob’s encrypted account numbers (wallet addresses), and the transaction amount of 1 bitcoin. Even the amount can be obfuscated, depending upon the network configuration. An internal digital signature mechanism ensures that only the person with the necessary cryptocoins is able to carry out spend transactions from their wallets/accounts. All full nodes on the network see this transaction broadcast, verify it for authenticity, and if found genuine they update the public ledger records on the various nodes that form the part of the blockchain cryptocurrency network.

Root Hash: 
Merkle trees are created by repeatedly hashing pairs of nodes until there is only one hash left.


Security Token: If a crypto token derives its value from an external, tradable asset, it is classified as a security token and becomes subject to federal securities regulations. Failure to abide by these regulations could result in costly penalties and could threaten to derail a project. However, if a startup meets all its regulatory obligations, the security token classification creates the potential for a wide variety of applications, the most promising of which is the ability to issue tokens that represent shares of company stock.  Online retailer Overstock recently announced that tZERO, one of its portfolio companies, will hold an ICO to fund the development of a licensed security token trading platform. The tZERO tokens will be issued in accordance with SEC regulations, and Overstock CEO Patrick Byrne has stated that token holders will be entitled toquarterly dividendsderived from the profits of the tZERO platform.


U.S. Securities and Exchange Commission (SEC):  Protects investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.  The laws and rules that govern the securities industry in the United States derive from a simple and straightforward concept: all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment prior to buying it, and so long as they hold it. To achieve this, the SEC requires public companies to disclose meaningful financial and other information to the public. This provides a common pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or hold a particular security. Only through the steady flow of timely, comprehensive, and accurate information can people make sound investment decisions.

                  It is the responsibility of the Commission to:

  • interpret and enforce federal securities laws;
  • issue new rules and amend existing rules;
  • oversee the inspection of securities firms, brokers, investment advisers, and ratings agencies;
  • oversee private regulatory organizations in the securities, accounting, and auditing fields; and
  • coordinate U.S. securities regulation with federal, state, and foreign authorities.

Utility Token:Utility tokens, also called user tokens or app coins, represent future access to a company’s product or service. The defining characteristic of utility tokens is that they are not designed as investments; if properly structured, this feature exempts utility tokens them from federal laws governing securities.  By creating utility tokens, a startup can sell “digital coupons” for the service it is developing, much as electronics retailers accept pre-orders for video games that might not be released for several months. Usually refer to these crowdsales as token generation events (TGEs) or token distribution events (TDEs) to avoid the appearance that they are engaging in a securities offering.



  • George_ThielGeorge_Thiel Posts: 4
    in my studies of Hedera Hashgraph I have heard it dose not take much storage or memory. How does it not over time with growth and usage not require a large amount of Gigabits of memory. And if so is it in every node or chards?  If it is only stored in a chards how would other chards know where to retrieve info when required?  Can anyone help me with This?
  • Paul MadsenPaul Madsen Posts: 4 mod
    Hi George, let's distinguish between memory and storage. Nodes use memory to hold transactions as they are processed into consensus and state. Nodes use their storage to hold that state over time, ie hold the hbar balances of all accounts, files, and smart contracts. Nodes do not by default persist the transactions but rather just the continually changing state that those transactions impact. Consequently  nodes don't confront the same bloat challenge of Blockchains that require nodes store all blocks back to genesis. 
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