Basic blockchain glossary: 14 terms every entrepreneur should know

At La Lonja de la Innovación, several companies have blockchain as one of their pillars, such as Block-Auth or Blocknitive. And since we know that it can be a difficult technology to understand, so that you can better understand what they do and what all this blockchain stuff is about, we bring you a basic glossary with terms that every entrepreneur should know.

Our blockchain glossary

Understanding all these terms opens the doors to a world of innovation with multiple opportunities to explore and exploit. We tell you some of the key concepts within this technology so that you understand it better:

• Altcoin. It is a simplification of the words "alternative" and "coin", so it means alternative currency. This term refers to cryptocurrencies derived from the source code of Bitcoin or other existing cryptocurrencies.
• Bitcoin. This other term surely sounds familiar to you too. Bitcoin was born in 2009 and, in addition to being a pioneering cryptocurrency, it is also a blockchain network and a protocol. It was the first successful application of blockchain technology, introducing the concept of decentralized digital money without the need for financial intermediaries.
• Blockchain. Consists of a distributed and decentralized digital network that records transactions in a secure and transparent P2P (peer-to-peer) network. In this, each transaction is grouped into a block and linked to the previous block chain, in this way, an immutable record is created. Its objective is to store information securely.
• Smart Contract. It is an executable piece of code stored on a blockchain network. They execute as programmed without the possibility of downtime, censorship, fraud or third-party interference. A smart contract works like an if-then statement: when a pre-programmed condition is triggered, the smart contract executes the corresponding contractual clause. In short, it is a registered code that certifies that the recipient confers unique ownership of an NFT to the buyer when they pay, or any other condition agreed between the parties.
• Cryptography. Another essential term is cryptography, a technique for protecting information or communications through encryption or codes that transform or hide the information to ensure that only the intended recipient can receive it.
• Cryptocurrency. Cryptocurrencies are digital assets that mimic the characteristics of a real currency. They allow transfers to sell, buy or exchange assets digitally. They are decentralized, which means they are not subject to control.
• DAPP. It is a Decentralized Application, meaning an application or website that uses smart contracts to handle data or logic instead of a server. They offer greater transparency, resistance to censorship and security.
• DeFi. Decentralized Finance is an alternative to traditional finance. It makes use of blockchain technology, cryptocurrencies, and tokens to offer financial services in a more accessible way for people.
• Ethereum. It is an open-source, decentralized platform based on the blockchain model where smart contracts can be created and published, and decentralized applications (DAPPS) can be implemented and maintained. The related cryptocurrency is Ether.
• Seed Phrase. It is a phrase of between 12 and 24 random words that gives you access to your wallet if you forget the password or if you want to export it to another device. It is crucial to keep it in a safe place and never share it, as it is the master key to your funds.
• Hash. It is a unidirectional algorithm that converts an input of any size into a fixed-size string of characters. In blockchain, its objective is to create a digital fingerprint of the content to which the function is applied.
• Token. A token is a unit of value, a digital asset on a blockchain. There are different types, but the most important are fungible (like cryptocurrencies, which are interchangeable) and non-fungible (NFTs, which are unique). Tokens can represent anything from cryptocurrencies to asset ownership, voting rights or access to services.
• NFT. It is a non-fungible token, meaning a unique digital asset stored on a blockchain. They have become popular for their use in art, but they are also used to create security validations in blockchain systems.
• Wallet. It is the digital wallet, a software that stores the private and public keys needed to access the cryptocurrencies registered under a public key. If the wallet's private key is lost, the money stored in it is lost. Among the most popular are Backpack, Metamask, and Phantom.

In short, although complex, the blockchain world is a transformative technology that is increasingly being leveraged. For entrepreneurs, understanding its key terms is a strategic need, as blockchain adoption is spreading beyond finance. Therefore, the sooner you position yourself and familiarize yourself with its principles, the easier it will be to identify new business opportunities.