Airdrop

An “airdrop” is a distribution of crypto tokens for free. It can be targeted (such as to specific key influencers) or distributed to all existing addresses on a given blockchain network.

Airdrops are like coupons or free samples that you might receive in the mail from a local merchant. Just like a coupon incentivizes you as a customer to shop at a specific store, so a free token might encourage you to try a new decentralized application or dApp. In other words, it is a bootstrapping mechanism to encourage initial adoption.

Multi-Signature (multi-sig)

A special type of digital signature scheme where there can be multiple signers for a single digital signature. A multi-signature or “multi-sig” transaction is only valid if it is signed by a set threshold of participants, just like some legal documents require a co-signer.

Multi-signature schemes enable more advanced smart contracts and Layer 2 scalability solutions. They are also particularly important for digital asset custody.

Sidechains

A sidechain is an external secondary blockchain protocol that is connected to a primary blockchain network (mainchain). Sidechains are typically designed to allow for the transfer of data and value between themselves and the mainchain, and oftentimes use a different consensus mechanism than the mainchain.

• As a result, sidechains can allow for a higher degree of flexibility and scalability, given that systems with a significant sidechain interoperability component are often designed to cater to a broader range of enterprise and individual users

Virtual Machine (VM)

The actual code that is ran by computers to carry out the blockchain’s smart contracts. EVM (Ethereum Virtual Machine) is a popular blockchain VM.

A Bridge

A bridge allows independent blockchains to communicate with each other.

• Ex. On the Polkadot network, a bridge is used to attach parachains and the main Relay Chain to other external blockchain networks such as Bitcoin and Ethereum. Polkadot data transmits from its main Relay Chain to parachains, attached to which collator nodes assemble all the transactions

A Fork

Fork is a broad term, which mostly stems from software development. Creating a ‘fork’ of software means to take an existing copy of something, and modifying it. Below we define how ‘fork’ can be used in context.

A fork happens whenever a community makes a change to the blockchain’s protocol, or basic set of rules. When this happens, the chain splits — producing a second blockchain that shares all of its history with the original, but is headed off in a new direction.

Most digital currencies have independent development teams responsible for changes and improvements to the network (much in the same way that changes to internet protocols allow web browsing to become better over time), so sometimes a fork happens to make a cryptocurrency more secure, add functionality, or to resolve a disagreement within the community about the cryptocurrency’s direction.

• Soft fork: Think of a soft fork as a software upgrade for the blockchain. As long as it’s adopted by all users, it becomes a currency’s new set of standards. Because the end result is a single blockchain, the changes are backward-compatible with the pre-fork blocks.
• Hard fork: A hard fork happens when the code changes so much the new version is no longer backward-compatible with earlier blocks. In this scenario, the blockchain splits in two: the original blockchain and new version that follows the new set of rules. This creates an entirely new cryptocurrency – and is the source of many well-known coins.