P2P refers to interactions that happen directly between two parties, usually two separate individuals, and have been present in Internet technology in different ways for some time. These interactions are often coordinated through some sort of app or network, which can consist of any number of individuals. Public blockchains can be considered to have a high degree of P2P functionality, as individuals are able to transact or interact with each other without relying on an intermediary or single point of failure.
In a general sense, to say that something ‘has parity’ with another thing means ‘equal in features or other important quality’, and is a phrase often used by software developers and computer scientists.
Parity Technologies is the name of a blockchain technology company that is developing a number of significant projects in the blockchain space. One of its first projects was an Ethereum client, known as Parity; its name was changed to Parity Ethereum, and then was spun out as a DAO-owned and operated project called Open Ethereum, which has also been deprecated. See also ‘client’.
A blockchain network in which access to ledger or network requires permission from an individual or group of individuals, as opposed to a public blockchain. Permissioned ledgers may have one or many owners. Consensus on a permissioned ledger is conducted by the trusted actors, such as government departments, banks, or other known entities. Permissioned blockchains or ledgers contain highly-verifiable data sets because the consensus process creates a digital signature, which can be seen by all parties. A permissioned ledger is much easier to maintain and considerably faster than a public blockchain. For example, Quorum or Hyperledger Besu are permissioned ledgers that can be more easily set up for large enterprises. In contrast, the public Ethereum blockchain is a permissionless ledger which anyone can access.
‘Plasma’ is a term that is used to refer to one of the solutions being built and deployed in order to securely scale the Ethereum network. A Plasma network functions similarly to an optimistic rollup, inasmuch as it relies on Ethereum Mainnet to maintain the record of transactions, and as the source for arbitration or fraud resolution. However, a Plasma network differs in other important technical ways from rollups, and is currently limited to simple operations, such as swaps and token transfers. More technical information is available here.
PoA, PoS, PoW
Acronyms standing for Proof of X consensus mechanisms: Authority, Stake, Work. The “o” is lowercase since you wouldn’t capitalize “of” when writing out the phrase. See also ‘consensus’, ‘Proof of Authority’, ‘Proof of Stake’, ‘Proof of Work’.
A hybrid consensus model that utilizes a combination of Proof of Stake (PoS) and Proof of Work (PoW) consensus. Using this Hybrid consensus mechanism, blocks are validated from not only miners, but also voters (stakeholders) to form a balanced network governance.
A blockchain or distributed ledger that has a closed network wherein participants are controlled by a single entity. A private blockchain requires a verification process for new participants. A private blockchain may also limit which individuals are able to participate in consensus of the blockchain network. See also ‘permissioned ledger’.
A currency or token issued by a private individual or firm. Typically, the token or currency is limited to use within the network of that particular firm or individual. This is not to be confused with a “privacy cryptocurrency”, which are cryptocurrencies with specific privacy features, such as hidden user identities.
A private key is an alphanumeric string of data that, in MetaMask, corresponds to a single specific account in a wallet. Private keys can be thought of as a password that enables an individual to control a specific crypto account. Never reveal your private key to anyone, as whoever controls the private key controls the account funds. If you lose your private key, then you lose access to, and control over, that account.
Proof of Authority (PoA)
A consensus mechanism used in private blockchains, granting a single private key the authority to generate all of the blocks or validate transactions.
Proof of Stake (PoS)
A consensus mechanism in which an individual node, or “validator”, validates transactions or blocks. Validators lock up a certain amount of cryptocurrency, such as ether, into a ‘stake’, in order to be able to participate in consensus. If the node validates a block (group of transactions) correctly, then the validator receives a reward. Conversely, if the validator behaves poorly by validating incorrect transactions or by not maintaining sufficient network connectivity, the cryptocurrency they staked can be ‘slashed’, or taken from them and put out of circulation (‘burned’). PoS requires a negligible amount of computing power compared to Proof of Work consensus.
Proof of Work (PoW)
A consensus mechanism in which each block is ‘mined’ by one of the nodes, or a group of nodes, on the network. The computational process involved in committing a series of transactions into a block on the network, known as ‘hashing a block’, is technically quite simple, and therefore subject to attack. Under PoW, each miner must solve a math problem to find a set, difficult variable in order to be able to propose their block to the network as the next to be ‘mined’. In effect, the process of hashing each block becomes a competition. This addition of solving for a target increases the difficulty of successfully hashing each block, and consequently the security of the network.
For each hashed block, the overall process of hashing will have taken some time and computational effort. Thus, a hashed block is considered Proof of Work, and the miner that successfully hashes the block first receives a reward, in the form of cryptocurrency. PoW is singificantly more energy-intensive than other consensus mechanisms, such as Proof of Stake.
Formally speaking, a ‘protocol’ is a set of rules governing how a process is carried out. This concept is used throughout public blockchain networks and web3 to refer to the way smart contracts execute their functionality in the same way regardless of the user. The products or services built on top of smart contracts are often referred to as ‘protocols’ by extension.
A globally open network wherein anyone can participate in transactions, participate in the consensus protocol to help determine which blocks get added to the chain, maintain and examine the contents of the chain.
Public blockchain networks are just that: public. Their data is accessible and readable by anyone. In order to have any degree of usability when it comes to allowing users to do some things, like send transactions, but not others, like steal other peoples’ tokens, cryptographic technology is used. In particular, a design paradigm known as ‘public/private key pairs’ is employed to ensure users can interact with others on the network as they wish, while keeping their own account secure.
These key pairs consist of two long strings of alphanumeric characters. A public key can be derived mathematically from its corresponding private key, but the inverse is not true: it is mathematically impossible to derive a private key from its corresponding public key. This allows, for example, users to have a public wallet address that anyone can use to send them tokens, with the peace of mind that as long as they properly keep the corresponding private key safe, those tokens cannot be stolen. See also ‘private key’.