Cardano Terminology

Don't worry, everyone is confused initially.


Blockchain is a type of database. A normal database is centralized (controlled by one or a few people), and data is released in a read-only way. The users cannot see directly into the database - they only see what is released to them in a controlled way. This power over information can have negative implications, because the users don't know what the database owner is doing with the information. Changing it, selling it, sharing it etc. Blockchain is an alternative database design that is in the public space. It's designed to be difficult or impossible to change, hack, or cheat the system.


The term blockchain refers to how the data is stored in ”blocks” of information and then linked together in a permanent “chain”. Once the block is filled with data it is chained onto the previous block, which makes the data chained together in chronological order.


Using consensus algorithms each node reaches a common agreement on the authenticity of any transaction and once the authenticity is verified the entry for the transaction is added to the blockchain ledger.


The blockchain is held across many computers instead of just one. See 'node' below.

Decentralized Apps (DAPPS)

Applications (Apps) that run on the blockchain.


An abbreviation for 'Decentralized Finance'. So it's financial applications on the blockchain.


Ecosystem refers to the collection of groups, individuals, companies, and organisations that contribute to the blockchain. To name a few components: Wallets, Security, Marketplaces, Exchanges, Crypocurrencies, Miners, Application developers, and much more...


An epoch is an era of time within a blockchain network. That era of time is defined differently on every blockchain protocol. It is usually defined as the period of time it takes for a specific number of blocks to be finalized on the chain.


A bitcoin exchange is a digital marketplace where traders can buy and sell bitcoins using different fiat currencies or altcoins. A bitcoin currency exchange is an online platform that acts as an intermediary between buyers and sellers of the cryptocurrency.


The blockchain is held across many computers instead of just one. These computers are called nodes. In a blockchain, each node has a full record of the data that has been stored on the blockchain since its inception. If one node has an error in its data it can use the thousands of other nodes as a reference point to correct itself. This way, no one node within the network can alter information held within it. Because of this, the history of transactions in each block that make up Bitcoin’s blockchain is irreversible.


Protocols are basic sets of rules that allow data to be shared between computers. For cryptocurrencies, they establish the structure of the blockchain — the distributed database that allows digital money to be securely exchanged on the internet.

Proof-of-Stake (PoS)

The proof of stake (POS) is another common consensus algorithm that evolved as a low-cost, low-energy consuming alternative to POW algorithm. It involves allocation of responsibility in maintaining the public ledger to a participant node in proportion to the number of virtual currency tokens held by it. However, this comes with a drawback that it promotes cryptocoin saving, instead of spending.

Proof-of-Work (PoW)

The proof of work (POW) is a common consensus algorithm used by the most popular cryptocurrency networks like bitcoin and litecoin. It requires a participant node to prove that the work done and submitted by them qualifies them to receive the right to add new transactions to the blockchain. However, this whole mining mechanism of bitcoin needs high energy consumption and longer processing time.

Smart Contracts

A smart contract is a computer code that can be built into the blockchain to facilitate, verify, or negotiate a contract agreement. Smart contracts operate under a set of conditions that users agree to. When those conditions are met, the terms of the agreement are automatically carried out.

Staking and Stake pools

Staking is the process of actively participating in transaction validation (similar to mining) on a proof-of-stake (PoS) blockchain. On these blockchains, anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn Staking rewards.


Token is a unit of value issued by a tech or crypto start-up, intended to be a piece in the ecosystem of their technology platform or project. They can be used in applications as an internal currency to pay for goods and services within the blockchain. They're also used in lending, where the token represents the ownership of something.


Transactions refer to transactions that are recorded and verified on the blockchain.