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Due to the Data (Use and Access) Act coming into law on 19 June 2025, this guidance is under review and may be subject to change. The Plans for new and updated guidance page will tell you about which guidance will be updated and when this will happen.
Blocks: chunks of bundled transactions which link cryptographically to its predecessor. Participants in the network agree the block order through a consensus mechanism.
Block header: unique identifier for each block in a blockchain. It contains metadata, such as a creation timestamp and the previous block hash.
Consensus mechanism: a set of protocols that ensures agreement, trust and security in a blockchain. The consensus mechanism is how the nodes agree on the order of blocks in a blockchain. Consensus mechanisms are also meant to safeguard the network from malicious nodes.
Cryptographic hash: hashes or hash values are a fixed-length value corresponding to an input value. The hash value is generated by passing the input value through a cryptographic hash function.
Cryptographic hash function: a mathematical function that takes an input (or 'message') and returns a fixed-size string of bytes. The output, typically a number, is called the hash code or hash value. A given message always gives a hash value and no two different messages can have same hash value.
Hashing: a cryptographic technique or function that takes input data of an arbitrary size and generates a fixed-length output.
Incentive mechanism: a system that rewards participants (miners, validators or stakers) for contributing to the network security, validating transactions and maintaining the blockchain. These incentives ensure honest participation and deter malicious activity.
Merkle-tree: a data structure in the form of a tree with leaf nodes that store data. It is also known as a ‘hash tree’ as it uses hashes to verify the integrity of the stored data.
Merkle-root: a mathematical way to verify the integrity of data on a Merkle tree.
Nodes: each participant in a blockchain that holds a copy of the distributed ledger. Node is often used when referring to the physical representation of the participants of a blockchain network.
Off-chain data: information that is not stored on the blockchain directly, but referred or linked to on-chain data.
On-chain data: information stored on the blockchain network itself. On-chain data is available to all the nodes in the network.
Plaintext: in cryptography usually means unencrypted information. It can also mean information not written in any special code or formatting.
Smart contract: a piece of code that is deployed on blockchain. It executes automatically when certain conditions defined inside the contract are met. The code can store data on-chain and, depending on the design choices made, obtain information from outside the blockchain network. Not all blockchains support smart contracts. Example: Bitcoin network does not have support for smart contracts.
Token: a digital representation of an asset created on blockchain. The network participants can create, transfer and own it. They can transfer ownership of tokens using a blockchain transaction.
Transaction: the transfer of information or assets from one user to another on a blockchain. Transaction data can involve different types of information, including digital assets depending on the specific use-case. Each transaction has a unique identifier.
Validator nodes: a specific group of nodes that participate in the consensus mechanism to validate transactions and generate new blocks, often in return for incentives.
Wallet: a digital interface to interact with the blockchain that allows users to manage, exchange and transact digital assets or tokens on chain. Wallets can be devices or software applications that store the keys for transaction signing and encryption.
Wallet address: a unique value associated with each blockchain wallet.