Glossary of Terms

Factoid

A Factoid is the token used by the Factom blockchain. They are tracked on their own Factom chain and can be used to purchase Entry Credits.

Entry Credit

Entry Credits are required to post entries and chains onto the Factom blockchain. You can purchase entry credits using factoids at a rate that is set by the Federation servers. Entry credit cannot be transferred and thus have no resale value. They can only be used by the address that hold them to create entries on the Factom blockchain. That's it. Once they are used, they cease to exist.

Factom Entries

Hash

A hash is the result of a mathematical equation (a Hash Function) which can accept any size input and convert it into a string of a fixed length. If the hash was created by the correct type of function, each answer will be unique to the input data. Even the smallest change in the initial data will result in a very different hash.

What is a Hash? How is a Hash Different than Encryption

Distributed Ledger

A distributed ledger (commonly called a blockchain) is a database that is co-managed by a peer to peer network of computers. Unlike a standard database, there is no central node. No one "owns" the data in a distributed ledger and this means no one can alter any of the records without following very specific rules. Because all of the data is replicated across the entire network, a distributed ledger is extremely hard to remove or manipulate.

Block

A block is one set of records in a blockchain. In most blockchain protocols, blocks are created at a predetermined rate. On the Factom blockchain that rate is ten minutes. Each block incorporates the hash from the previous block in its dataset. This means that if the previous block changes, every block that follows will no longer have a valid hash. This is what makes a blockchain immutable; change one and you have to change them all.

Private Blockchain

A private blockchain is simply one that is not publicly accessible. You can think of this as the difference between the internet and a private network. Usually, you need to have some sort of access code or key in order to participate in or even view a private blockchain.

Chain

A Factom Chain is an immutable chain of entries. Like a blockchain, each entry of a chain contains the hash of the entry before it. This means you cannot change an entry without changing or invalidating every entry that follows it.

Private Key

A private key in cryptography is the secret that is used prevent unauthorized access to certain data or systems. In blockchain systems, the private key is usually used to control access to cryptocurrency tokens such as bitcoin or factoids. Protecting your private keys is critical, as failing to do so will leave your systems, data, or wallets exposed.

Public Key

A public key is derived from a private key and allows you to "lock" digital systems. An administrator can set rules so that only those who have the private key matching the public key will be allowed access. A public key is safe to share because you it is created using an irreversible mathematical equation.  You can validate a private key using a public key, but you can't determine what the private key is using the public key alone. In cryptocurrency systems, a public key usually refers to your address where tokens (think bitcoin or factoids) can be sent to you.

Paper Wallet

A paper wallet is created when you store your private key (or data needed to create your private key) offline. Usually, this means on a literal piece of paper, but this can also be done with an etching or something similar.

Intro to Your Factom Paper Wallet

Node

A node is a single server on a peer-to-peer network such as a blockchain. Each node is a stand-alone unit. It can validate requests and contains the entire blockchain in case any data needs to be served. Most blockchain have different types of nodes. In the Factom protocol, this includes Federated and Audit servers as well as the standard Factom servers.

Types of Nodes on Factom

(Factom)Chain ID

A Chain ID in the Factom protocol is a string that refers to a single chain of entries. You can easily find the Chain that it represents using API+ or one of our other APIs.

Anchor

All entries in the Factom blockchain are anchored by other blockchains such as Bitcoin. This gives an added degree of permanence to the data and ensures that the Factom Blockchain can never change  or lose its own history, even if every Federated server became compromised or went offline. The data is stored to other blockchains using a merkle tree structure which preserves the underlying data without requiring a massive number of transactions or exceeding the bitcoin size limit.

Consensus

Consensus is a state in which all nodes agree on the history and current status of a blockchain. This is usually reached when a new block is created and all nodes need to agree on whether or not this node is valid.

Smart Contract

A smart contract is a new type of contract that can be enforced using blockchain technology. The original smart contract is, of course, a bitcoin transaction. When a user create a request to send bitcoin to another address that is signed with their private key, they're created a smart contract that will be validated and executed by the bitcoin network at large. Because the execution of the smart contract is handled by the entire network, there is no trusted or controlling part that can intervene. The contract is automatically enforced.

While the bitcoin protocol only allows for very simple contracts, other blockchains allow for much more complex contracts to be enforced.

Proof of Burn

Proof that you've sent a token or digital asset to an address where it cannot be spent, or burned that asset. It is a method sometimes used to bootstrap cryptocurrencies by taking advantage of the proof of work in another cryptocurrency. The simplest form of this would be to create new tokens when bitcoin, for example, is sent to a specified, unspendable address.

Proof of Work

Commonly called mining, Proof of Work requires that  you've done some difficult task in order to generate a token. This was the first system used to create a cryptocurrency, namely bitcoin. Proof of work systems often consume computing power or resources in order to perform some task that signifies participation in the network.

Proof of Stake

Proof that you have a stake in a cryptocurrency, generally signified by holding a number of tokens. Proof of stake systems function similar to interest in a bank account. By setting aside a portion of a cryptocurrency token and making it unavailable for you to spend, you are rewarded with additional tokens by the network. Often, you are still required to perform some sort of 'mining' action, but this is secondary to having a large share of tokens. The idea is that you aren't likely to subvert or damage the cryptocurrency if you personally stand to lose by doing so.

Decentralized

A decentralized system is one that has no single head or group that completely controls it. In other words, there is a more or less even distribution of power among multiple parties rather than centralized control by one or a few parties. This can take place in a computer network, a distribution network, or even a political system.