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Coming to Terms
With Blockchain

Blockchain terminology can sometimes be a challenge to understand, especially if you’re in the early stages of exploration. Here’s a blockchain terminology guide to help you navigate the exciting frontier of Web3.


Address / Public Key

A public key is a cryptographic form of communication that is used to create and access information about cryptocurrency transactions. The public key is the wallet address that will be shared in order to conduct transactions.

Apothem Network

Apothem is the test network (testnet) of the XDC Network. Projects building on XDC Network should deploy to the Apothem Network in order to fully test the project’s code and functionality prior to deploying to XDC’s main network (mainnet).

Application Binary Interface (ABI)

An ABI defines the methods and structures used to interact with the deployed smart contract that has been compiled to binary code, just like API does but on a lower-level.  The ABI provides a specification of the data types and names, creating a standard for exposing and invoking methods in a smart contract.

Application Programming Interface (API)

An API allows for the creation of applications that have access to the features or data from another service, application, or operating system. An API is created through a set of procedures and functions.



A block is the data structure of a blockchain network where transaction data are permanently recorded. The transactions are initially recorded to the block, and once the data are validated, the block is time stamped and closed, and a new block is created for new transactions. The new block will be linked to the previous block through the previous block’s header hash.

Block Height

In blockchain, the block height is the total number of blocks connected since the genesis (initial) block, and any individual block’s height is the number of blocks between it and the genesis block.


Blockchain is a trustless, record-keeping technology that allows a network of unrelated validators called nodes to reach consensus in publishing executions to a broader network, on which participants can read and interact. It functions as a distributed ledger system allowing users to store, manage, transmit, observe and record data amongst a series of unrelated servers. The current state of the system, referred to as a block, is validated across the network by the nodes and distributed to all parties. 

The execution, once registered in a block, becomes immutable in so far as its integrity is maintained by the collective. Data asymmetry amongst nodes and on the block would constitute a separation from the main chain. 

Blockchain, utilizing a distributed system to keep records and execute immutable transactions, has a variety of unique applications and is potentially well-suited to serve the growing unbanked population throughout the world - so long as it remains more accessible, affordable and efficient than centralized banking systems.

Byzantine Fault Tolerance (BFT)

BFT is a form of protection for a blockchain against failing or malicious nodes. It is achieved when two-thirds of the blockchain’s network of nodes reaches consensus. A Byzantine failure occurs in distributed computing systems where parts of the system can malfunction in a way that information about their malfunction is uncertain. Named after the "Byzantine generals problem," which illustrates a scenario where actors must agree on a plan to prevent system failure but some actors are untrustworthy. 


Centralized Exchange (CEX)

A CEX is a platform where users can buy, sell, and trade cryptocurrencies and digital currencies. These platforms reflect current market prices and are central to investing in any kind of digital currency. A CEX has a central authority or hub which acts as the intermediary. 

Cold Wallet

Sometimes known as a hardware wallet, a cold wallet is a crypto-storing wallet that is not connected to the internet.

Consensus Mechanism

A consensus mechanism is the fault-tolerant method a blockchain’s validating nodes use to achieve agreement on its state or its transactions. Examples: Proof-of-Work, Proof-of-Stake, Delegated Proof-of-Stake. 

XDC Network uses the Delegated Proof-of-Stake consensus mechanism. It is known as XDPoS.


Cryptocurrency is a digital currency that is maintained by a decentralized (distributed) ledger that records all transactions on a blockchain. The blockchain uses cryptography to permanently record the immutable cryptocurrency transactions.


Cryptography is the secure communication technique utilized in blockchain technology so that only the sender and intended recipient are able to view the message.



Through the lack of a central authority or hub, blockchain transactions are decentralized and globally distributed amongst its nodes for validating and storage purposes. In addition, decentralized processes sometimes accompany a blockchain through a distributed community’s input and voting process.

Decentralized Application (dApp, Dapp)

A dApp is any application built on a blockchain. Using a smart contract, a dApp is decentralized and designed to remove any intermediary in its transactions while creating a peer-to-peer environment.

Decentralized Autonomous Organization (DAO)

A DAO is a legal entity with no central authority or governing body, and its members act in the best interest of the DAO. In blockchain, DAOs are governed by tokenholders’ votes that are recorded on the public blockchain and are, therefore, transparent and publicly viewable.

Decentralized Exchange (DEX)

A DEX is a decentralized marketplace that focuses on peer-to-peer transactions. A DEX has no central authority or hub and does not require the participation of an intermediary, such as a bank or broker.

Decentralized Finance (DeFi)

DeFi is an evolving form of finance that removes the need for centralized institutions or other intermediaries. Through peer-to-peer exchanges, individuals are able to conduct transactions without the need for a central authority — lending, borrowing, yield farming, for example. The benefits of DeFi include accessibility, fee and interest rate negotiations, security, transparency, and autonomy.

Delegated Proof-of-Stake (DPoS)

Delegated Proof of Stake (DPoS) is a democratic and efficient blockchain consensus protocol that features a voting and delegation process. Users can spend their tokens to vote for delegates who will then implement decisions for the whole network. This algorithm was made to address certain limitations within consensus protocols.

Digital Asset

A digital asset is anything that can be created, stored and transmitted electronically. It has value and is discoverable through digital markers. A digital asset can be recorded on the blockchain through a tokenization process that assigns the asset a value and ownership information. It can be traded, such as in the form of an NFT or asset-backed security token.

Distributed Ledger

A distributed ledger is fully synchronized digital data that results from the creation of the blockchain. The data are immutable and replicated across multiple nodes on the blockchain.



Encryption is a process in which information or data is converted from a readable format to an encoded format, preventing unauthorized parties from accessing it. After this process occurs, the secured information can only be accessed by authorized parties with the private key.


Epoch is a set timeframe in which specific events can happen on a blockchain network. The length of time can vary depending on the blockchain, and it is during this time where a specific set of conditions occur, allowing maintenance changes to be made.


Ethereum is a global, decentralized, blockchain-based platform that is designed for the use of smart contracts which set forth guidelines for dApps built on Ethereum and which do not require a central authority. Powered by its native token, ether, all transactions on this network are public, allowing holders to see identical copies of the ledgers.

Ethereum Virtual Machine (EVM)

The EVM is Ethereum’s machine state, and it is the basis for the Ethereum protocol to exist and ensure its continuous and immutable operation. The machine state can change from block to block and does so according to a predefined set of rules. The XDC Network is EVM-compatible, meaning that any smart contract that can be deployed to Ethereum can be deployed to the XDC Network.



Faucets are apps or platforms that distribute small amounts of cryptocurrencies or tokens. Faucets are often used for distributing test tokens to developers building a dApp on the blockchain. They are sometimes used as a reward system for users to complete simple tasks, such as watching product videos, solving puzzles, and viewing advertisements.

Fiat Currency

A central bank government-issued currency. Examples: Dollar, Euro, Rupee.


Finality occurs when a transaction becomes part of a block on the blockchain, and it cannot be altered, canceled or reversed. It is the guarantee that the transaction is final.



Gas refers to the amount of ether that is utilized when users make a transaction or perform a function on a blockchain. Gas fees are what users will pay to the network when making a transaction or performing a function on a blockchain. Gas fees are commonly associated with the Ethereum blockchain and are paid in ether. XDC Network’s gas fees are paid in $XDC.


Gwei is a unit of measurement for gas fees. A Gwei is equivalent to one-billionth of one $XDC and is commonly used to specify gas prices.


Hard Fork

A hard fork is a permanent split in the blockchain in order to change the code. It is commonly used to develop a new project based on the forked project’s code. XDC Network was developed through a hard fork of the Ethereum blockchain.

Hardware Wallet

A hardware wallet is a portable device which acts as a key to an individual’s crypto assets. These private keys are kept offline until a user connects it to the internet to make a transaction, which provides an extra layer of security and privacy.


A hash is a security function in blockchain that cryptographically encodes data. A hash function results in a unique fixed-length output generated from its data input. Hashing is a one-way function, making it almost impossible to see what the original input was.

Hash Rate

The hash rate is the total combined computational power that is being used to mine and process transactions on a PoW platform.

Hot Wallet

A hot wallet is a crypto key that remains connected to the internet, giving an individual easier access to their digital assets. This type of storage allows users to send and receive tokens at a more efficient rate.



An immutable transaction on the blockchain is one that is unable to be changed.


Know Your Customer (KYC)

Know Your Customer (KYC) is a set of procedures in place to confirm and protect the identity of users. KYC is a multi-step process that helps prevent fraud and money-laundering while providing security to a customer’s account.


Layer 1

Layer 1 refers to the base-layer or under-lying foundation of blockchain infrastructure. Its distinct functionalities allow for other networks and applications to build on top of it. XDC is a Layer 1 blockchain which supports a variety of enterprise, trade finance, and many other dApps.

Layer 2

Layer 2 refers to a separate framework that is built upon a Layer 1 blockchain and includes dApps built for many different purposes. Layer 2 projects broaden the scope of the base layer blockchain through their various functionalities and interactions with other Layer 2 projects on that network.


Liquidity is the ability for tokens to be easily transferred into another token or fiat currency. It creates faster transactions and is an important factor in decentralized finance.



Mainnet is a term used to describe an independent blockchain network that is fully operational and deployed. All transactions are being recorded on a ledger, and assets can be moved between sender and receiver.


A Masternode is a full node that functions like a server and is considered a governing hub in blockchain. A Masternode keeps a full copy of the ledger and guarantees a certain level of the network’s performance.


MetaMask is a crypto currency wallet that supports Web3 decentralized applications like blockchain, Ethereum, and non-fungible tokens. This browser extension provides an efficient experience for handling any Ethereum-related products.

Multi Signature (Multisig) Wallet

Multi Signature (Multisig) Wallets are digital wallets that need two or more private keys to gain access to the wallet. The users that have shared authorized access to the wallet are called copayers and all signatures must be used to approve a transaction.



A node is a microprocessor that validates and/or stores the blockchain’s encrypted transactions. Nodes on the XDC Network both validate and store the blockchain’s encrypted transactions.

Non-Fungible Token (NFT)

An NFT is a token that represents ownership of a unique item. Non-fungible means the item is not exchangeable with other items due to its unique properties.


“Number Only Used Once” is the number added to an encrypted block (hash) on the chain that meets the difficulty level restrictions if/when rehashed.


Open Source

Open source is when a program’s original source code is public, free to use, and therefore, able to be experimented with, improved, and shared.


An oracle is a third-party service that provides blockchain projects with external data. The real world data that oracles provide allows these projects to react to external events in near-real time.


Peer-to-Peer (P2P) Transaction

A Peer-to-Peer (P2P) transaction is the action of making a payment to another person without using an intermediary. A primary use case of DeFi, P2P can be a quick and convenient way to transfer funds while keeping all account details private.

Permissioned Blockchain

Also known as private networks, permissioned blockchains are networks that require users to receive approval from the network’s administration before gaining access to the platform. There is a control layer that sits on top of a permissioned blockchain that supervises the actions of its members, therefore maintaining a centralized authority.

Permissionless / Public Blockchain

Permissionless blockchains are networks that do not require authorization to use. Also referred to as public blockchains, they do not participate in censorship and offer transparency and immutability for all transactions recorded on it.

Private Key

A private key is a cryptographic form of security that allows a user to access and protect their digital asset wallet. The private key should always be protected and never shared with other participants on a blockchain platform.

Private Network / Subnet

A private network, or subnet, is an independent network that creates its own rules in regards to membership and tokens. They can provide their own security, networking, and fees as well as a variety of other properties important to the functions of the network.

Proof-of-Stake (PoS)

PoS is a non-mining platform where participants commit a stake of their private or collective capital to the platform in the form of the platform’s native tokens which are locked for a determined amount of time.

Proof-of-Work (PoW)

PoW is the earliest blockchain protocol that involves miners solving complex mathematical problems/algorithms in order to place a block of transactions on the chain. A miner is rewarded if they are the first to solve the problem.

Public Key / Address

A public key is a cryptographic form of communication that is used to create and access information about cryptocurrency transactions. The public key is the wallet address that will be shared in order to conduct transactions.

Public Key Encryption

Public Key Encryption is a method of secure data transmission that uses two different keys, one for encryption (public key) and one for decryption (private key). The public key is used to encrypt the message, and only the holder of the private key can decrypt it.



Scalability in blockchain refers to a network's ability to support a growing number of transactions. Transactions per second, or TPS, is one of the standard measurements used when evaluating how well a blockchain performs related to the speed of their transactions.

Seed Phrase

A seed phrase is a series of randomly generated words that gives a user access to their crypto wallet. This phrase is established when a wallet is first set up and employed when a user needs to regain access.

Self-executing Code

Self-executing codes are actions carried out on the blockchain based on a specific set of instructions written in a smart contract that is deployed on that blockchain. Actions can range from simple tasks to more complex functions, including the transfer of funds when certain conditions are met.


Sharding is the process of splitting a blockchain’s network into smaller partitions. This allows for scalability with parallel transaction throughputs. A shard has its own data and is independent of other shards.


Slashing is a tool built into a blockchain protocol to discourage misbehavior and holds violators accountable for their actions. Repercussions could include removal from the network or freezing assets. Slashing commonly occurs when a validator double signs or is offline when they should be online to confirm a new block.

Smart Contract

A smart contract is a program of code and data that details the terms of a trusted agreement between parties. The smart contract is immutable, deployed to the blockchain, does not require an intermediary, and can be anonymous.

Soft Fork

A soft fork is a change to a blockchain’s software protocol where previous valid blocks are made invalid. A soft fork is backwards-compatible and is commonly used to add transaction types and functionalities.


Solidity is one of the most common languages used to program smart contracts.


A stablecoin is a cryptocurrency in which the value is fixed to another asset in order to regulate the price. Assets that a stablecoin could be tied to include the Euro, the U.S. Dollar, or gold. In addition, there are stablecoins whose values are tied to an algorithmic formula.


Staking is the process of committing and holding funds in a certain cryptocurrency for the purpose of earning rewards and contributing to the security and consensus mechanism of that particular network. The staked cryptocurrency is typically locked up and inaccessible for a predetermined amount of time.

Standby Masternode

A standby node is a type of node that is only called into action when the number of Validators drops below a certain amount. They are identical in form and function to Validators but do not participate in the validation process.


A blockchain’s state refers to the status of recorded data such as balances, smart contracts, and other data on the blockchain at any given time.



A testnet is a blockchain network that is used to test blockchains and blockchain projects before they are released for public use. This reduces risks, saves funds, and minimizes any harm that a regularly functioning network could face. XDC Network’s testnet is called the Apothem Network.


A transaction is the transferring of value from one user to another user on a blockchain. Transactions take place on blockchain networks and are digitally signed using cryptography.


A trustless blockchain platform does not require a third party intermediary in order to function, and it does not require participants to know or trust each other.



A validator helps process and approve transactions on the blockchain which are then recorded in the ledger. Before transactions are approved, they must meet a set of parameters that have been set which assists in securing the blockchain.



A digital storage place for holding cryptocurrencies and digital assets. See also Hot Wallets and Cold Wallets.

Web 3.0 / Web3

Blockchain networks like XDC can be used to support a decentralized Web3 - the next generation of internet. Web3 is most simply described as hosting applications, storing and accessing private data, transferring value, content, and ideas using completely decentralized networks with no single point of failure.

Goodbye centralized, privately owned servers - where trust is required. An open source trustless system, Web3 empowers users by forgoing omnipotent third parties and putting ownership in the hands of the people who use the internet.


XDC Improvement Proposal (XIP)

XIP is a standard utilized by the XDC Network community to keep the protocol interoperable across implementations.

XDC Network

The XDC Network is an enterprise-grade, EVM-compatible Layer 1 network equipped with interoperable smart contracts. A highly optimized, bespoke fork of Ethereum, the XDC Network reaches consensus through a delegated proof-of-stake (XDPoS) mechanism, which allows for two-second transaction time, near zero gas fees, and over 2,000 transactions per second (TPS). Secure, scalable, and highly efficient, the XDC Network powers a wide range of novel blockchain use cases.


XRC-1155 is a standard that facilitates the formation of fungible and non-fungible tokens. It creates a smart contract interface that represents both tokens, going beyond what other standards can do.


XRC-20 is a based token standard from XDC and its functions allow integration with a multitude of wallets, marketplaces, and contracts. The functionality of XRC-20 permits developers to create smart contracts which can then be used to create a token.


XRC-721 is an open standard that supports non-fungible tokens and are more commonly referred to as NFTs. The set of rules within XRC-721 make it easy to support NFTs on EVM compatible blockchains making it the standard interface for these particular tokens.


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