7 Confusing Crypto Terms (Almost No One) Understands

Dealing with cryptocurrency is not easy. Once you get your head around Bitcoin and Ethereum, and the difference between Proof of Work and Proof of Stake, there's still a whole new world of terminology to learn and understand.

But there are words that are difficult to understand even among the most hardened Kryptonians. Here are seven terms in blockchain that no one understands as fully or as deeply as they would like.

Blobs

In the year In the 1958 film starring Steve McQueen and the 1988 remake, the Blob is an amoeba-like jello monster that terrorizes the residents of a small town, turning red as it consumes them.

In crypto, especially Ethereum, blobs (binary large objects) are significant blocks of data that are not required by the Ethereum Electronic Virtual Machine (EVM). Blob data is stored on-chain for 20-90 days and then deleted.

The result is a more cost-effective and scalable blockchain. As part of Ethereum's Denkum update, blobs are often discussed in parallel with the next term in this list.

Blobs can refer to data held on decentralized storage systems such as IPFS or Filecoin. These dots are encrypted and stored on multiple nodes.

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Finally, blobs can refer to transaction blobs on Monero, which are binary data before a transaction is transmitted to the network. Since Monero is a privacy chain, these blobs are structured in a way that preserves anonymity.

And that's a lot of fluff in general.

Rolls

Wrappers are a way to process transactions over Layer-2 protocols, freeing up valuable space at the base layer. A packet wraps the transaction at the Layer-2 level, sometimes dozens of times, and then rolls the data back together before sending it to Layer-1.

There are two main types of packages, optimistic and zero-knowledge (ZK) proofs.

Optimistic conclusions are a fairly clear term. It means that the transfer will be processed in a “bright” manner, assuming that the transaction is valid unless proven wrong by the authenticator. They will only validate the transaction if there is a dispute.

The ZK package verifies the transaction without revealing the transaction data. Hence it means “zero-knowledge”.

ZK-rollups provide faster completion because the encryption ensures that the data is valid.

In many ways, the package is to your standard blockchain transaction what a calzone is to a standard slice of pizza. By rolling, you can insert more.

Byzantine fault tolerance

It's one of the most common blockchain terms and a key feature of the technology, but for most people, it's something they don't take the time to think about.

The Byzantine Generals' Problem was a theoretical exercise that described the difficulty of decentralized bodies reaching consensus without a trusted central body. That is, it combats the possibility of bad actors producing false information to produce bad results in a situation.

In particular, generals who are not directly related must attack Byzantium at the same time to be victorious. If one of the generals retreats or indicates that they will attack, but then retreats, the battle is won. Worse than a concerted retreat between all the generals.

Satoshi Nakamoto solved the Byzantine generals problem by using proof of work consensus mechanism. The considerable time and effort required to create a block is costly to the creator, thus giving them an incentive to produce accurate information.

A Byzantine fault is a fault in a decentralized computer system, such as the Byzantine generals' problem, which indicates a different fault or outcome for different actors.

Therefore, Byzantine fault tolerance is the strength of that computer system to produce such a fault.

Hopefully this isn't too Byzantine of an explanation.

Proto-Danksharding

Sharding is the process of dividing a ledger into smaller pieces called shards.

But proto-danksharding is one of the more obscure terms to enter the lexicon of the crypto world. The word is not particularly instructive. Is proto short for prototype? Is this the same dank as your favorite meme folder? Both may be reasonable assumptions, but both are wrong.

Originally proposed by Protolamda and Dankrad Fest, the creators who lent their names to the idea, proto-danksharding is a form of marketing that embraces the aforementioned dots. The Blob usage solution is designed to overcome Ethereum's long-standing issues of high gas fees and low transaction flow.

The layers use layer-2 coils to wrap transactions and not inject them into the Ethereum base layer.

But if proto-danksharding sounds like a confusing and cryptic turn of phrase, you might choose to use a more instructive name for the process instead. EIP-4844.

On second thoughts, the term proto-danksharding isn't that bad.

DVT – distributed verification technology

Most people in cryptocurrency are familiar with the validators that approve transactions in proof-of-stake agreement models.

DVT takes that concept and decentralizes the process across multiple validators. According to Lido, DVT “works as a system that works similarly to a multi-signature (multisig) setup to run an authenticator.”

They call this “simple DVT,” although what's so simple about it remains a mystery.

Finally, DVT uses multiple operators rather than relying on a single operator, enhancing resilience and mitigating single points of failure.

Dynamic re-sharing.

Dynamic resharing isn't your grandma's old trick. Dynamic resharing is a relatively new term that the marketing group Near Protocol has dubbed the “holy grail of sharding,” but it creates a new vocabulary that isn't immediately understandable.

Building on the concept of blockchain shards, re-sharing occurs when the network adjusts the number of shards according to the load.

An overloaded sled can be two pieces, two unused sleds can be one.

nothing else

It's one of those words that most people come across in the beginning of their cryptocurrency discovery and then completely forget, like a bunch of people they meet at a party.

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In the Bitcoin blockchain, the nonce number is the number used in the block header, which is then encrypted. It is a number that is guessed by trial and error to determine which miner will produce the next blockchain.

A generation will make the mining process fairer and more transparent. It takes a lot of computing power and energy to operate and in some cases miners have to fix a block multiple times before solving it.