Blockchain & Web3 Vocabulary

Immutability means that once a block of data is added to the chain, altering it requires recomputing the cryptographic hash of that block and all blocks that follow — computationally infeasible on a large network. This is enforced by linking blocks: each block contains the hash of the previous block, so changing any historical record breaks the chain. The four foundational blockchain properties: Immutability — records cannot be changed retroactively. Decentralisation (option A) — no single entity controls the ledger; thousands of nodes hold copies. Transparency (option C) — on public blockchains (Bitcoin, Ethereum), all transactions are publicly visible (though pseudonymous). Consensus (option D) — a mechanism (PoW, PoS) by which nodes agree on the valid state before committing a block. Together, these properties make blockchain useful for: supply chain provenance, digital ownership (NFTs), financial settlement, and public audit trails. In conversation: "The immutability of the blockchain record is what clients in our supply chain use to verify the authenticity of components."

A smart contract is a self-executing program stored on a blockchain that automatically enforces and executes agreed-upon rules when predefined conditions are met — with no need for a trusted third party. Properties: Deterministic — same inputs always produce same outputs on every node. Immutable once deployed — code cannot be changed (upgradeable patterns exist but are complex). Transparent — source code is publicly auditable on-chain. Trustless — execution is enforced by the network, not a company. Written in Solidity (Ethereum), Rust (Solana, Near), or Vyper (Ethereum alternative). Other terms: dApp (decentralised application) (option A) — a full application whose backend logic runs on smart contracts. The frontend is still a regular web app. Consensus node (option C) — a network participant that validates transactions; not the business logic itself. Oracle (option D) — a service that feeds real-world data (price feeds, event results) to a smart contract, which can't access external data on its own (Chainlink is the most common oracle network). In conversation: "The escrow logic is in a smart contract — funds are released automatically when the delivery condition is confirmed on-chain."

A crypto wallet like MetaMask is software that manages your private key and lets you interact with blockchain networks. It doesn't actually store tokens — tokens exist on-chain; the wallet controls the key that proves ownership. Signing a transaction is the cryptographic act of: (1) taking the transaction data (to: address, value, gas), (2) hashing it, (3) encrypting it with your private key → producing a digital signature. The network verifies this with your public key / wallet address, confirming you authorised the transaction without ever seeing your private key. Key vocabulary: Private key — a 256-bit secret that proves ownership; must never be shared. Public key / address — derived from your private key; can be shared publicly (like an account number). Seed phrase / recovery phrase — 12–24 words that derive all your keys; backing this up is critical. Cold wallet / hardware wallet (Ledger, Trezor) — keys stored on offline hardware for security. Hot wallet — keys online (MetaMask, Coinbase Wallet) — convenient but more vulnerable. In conversation: "We never handle users' private keys — all transaction signing happens client-side in their wallet."

Gas is Ethereum's unit of computational cost. Every operation in the EVM (Ethereum Virtual Machine) — storing data, running arithmetic, emitting events — has a fixed gas cost. The total gas used × the gas price (in gwei, a fraction of ETH) = the transaction fee paid to validators. Why gas exists: it prevents infinite loops and spam — each computation costs real money, making attacks expensive. Gas vocabulary: Gas limit — the maximum gas the sender will pay (set by the user). Gas price / base fee + priority fee — cost per unit of gas (EIP-1559 model). Gas fee — total cost = gas used × price. Gwei — 1 ETH = 10⁹ gwei; gas prices are quoted in gwei. Out-of-gas error — transaction fails if it runs out of gas before completing. Layer 2 scaling solutions (Optimism, Arbitrum, zkSync) reduce gas costs by batching transactions off-chain. DeFi (Decentralised Finance) in the question: protocols that replicate financial services (lending, trading, yield farming) using smart contracts without banks. The gas cost problem is a major DeFi UX challenge. In conversation: "High gas fees make microtransactions impractical on L1 — we're migrating to an L2 rollup."

NFT = Non-Fungible Token. Fungible means interchangeable — one ETH is worth exactly the same as any other ETH. Non-fungible means each token has unique properties and cannot be replaced by another token of the same type. NFT standards: ERC-721 — the original Ethereum NFT standard; each token ID is unique. ERC-1155 — supports both fungible and non-fungible tokens in one contract (gaming items). Use cases beyond art: Digital collectibles / art — CryptoPunks, Bored Apes. Gaming assets — in-game items with verifiable on-chain ownership. Event tickets — counterfeit-proof entry tokens. Domain names — ENS (.eth) names. Real-world asset tokenisation — real estate, certificates, IP rights. Common misconceptions: Owning an NFT proves on-chain ownership of a token ID — not legal copyright to the underlying content (unless the licence explicitly grants it). The image is usually stored off-chain (IPFS, Arweave) — only the ownership record is on-chain. In conversation: "The NFT gives holders provable on-chain ownership of their membership — they can transfer or sell it without our platform's involvement."