LittleBit's Guide to Onchain

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An Onchain Glossary ​

Here are some common terms you might hear when in communities talking about blockchains.

Blockchain Technology ​

  • Blockchain: A distributed ledger formed by “blocks” where each one refers to the last while also containing the data of transactions. This self-verifying nature means that blockchains are very tamperproof, requiring tampering with at least 51% of nodes on the network to cause any meaningful damage. (Wikipedia)
  • Node: Used to refer to a device on the Internet that stores the state of a blockchain.
  • Proof of Stake (PoS): A consensus mechanism used by blockchains like Ethereum and Polygon. (Wikipedia)
  • Proof of Work (PoW): A consensus mechanism used by blockchains like Bitcoin and Monero. Bitcoin has been maligned by climate change proponents because of its somewhat inefficient form of PoW consensus (it uses a lot of power). (Wikipedia)
  • Smart Contract: A piece of code on a blockchain that performs some sort of service. Smart contracts are used for all kinds of things on a modern blockchain such as tokens, NFTs, DeFi protocols, and more. (Wikipedia)

Wallets, Assets, & Trading ​

  • Wallet: The place you store your onchain assets.
  • Exchange: A place where you can buy, sell, and trade assets.
    • Centralized Exchange (CEX): Usually the place where you convert offchain money to cryptocurrencies or stablecoins, and can also be used to trade cryptocurrencies between each other. Generally requires an identity verification process to comply with national laws. (Wikipedia)
      • Know Your Customer (KYC): A term used not just in the onchain space, but in offchain finance as well. Refers to an identity verification process enforced by most governments when signing up for a centralized exchange, usually to track criminal activity. KYC is a pain point for some blockchain proponents, especially of privacy-focused currencies like Monero. (Wikipedia)
      • Anti-Money Laundering (AML): A term used to refer to some laws that KYC is needed to comply with. May also in some cases be used interchangeably with KYC, sometimes you'll hear KYC processes referred to as “KYC/AML”. (Wikipedia)
    • Decentralized Exchange (DEX): A place where you trade assets onchain, governed by smart contracts. There's a section about DEXes in Wikipedia's article about DeFi.
  • Token / Coin: Different words to refer to cryptocurrencies. May be used more to refer to alternate cryptocurrencies on a chain (like ERC-20 tokens on Ethereum/EVM chains).
  • Non-Fungible Token (NFT): An onchain asset usually defined by having an image or similar attached to it. May also be used as a key to unlock something. The “non-fungibility” of an NFT comes from being able to see which numbered NFT you have of that collection (effectively they have “serial numbers”), even if the content of the NFT is the same.
  • Decentralized Finance (DeFi): Refers to services that allow you to perform various financial actions onchain, all governed by smart contracts. (Wikipedia)

Specific Services ​

  • Ethereum Name Service (ENS): A system of domain names for the Ethereum ecosystem. Generally seen as “usernames” that can be used within wallets to avoid having to recall long addresses, but can also link to decentralized storage protocols like IPFS or Arweave to host websites.
  • Unstoppable Domains (UD): A hybrid onchain-offchain domain registrar. They host both “web3” domains which are only usable onchain, as well as DNS domains that can be used to host real websites. Sadly support for UD in wallets is few and far between (the only one in my lists that support is is Brave Wallet).