Glossary
Bitcoin
Bitcoin is the first ever peer to peer digital currency based on the Blockchain and invented in 2009 by an anonymous individual (or group of individuals) named Satoshi Nakamoto.
Cryptocurrency
A Cryptocurrency is a type of digital money with no central authority in charge of it, where cryptography-based encryption methods regulate the generation, ownership and verification of transferring this digital currency.
Address
A bitcoin address looks like 1DSrfJdB2AnWaFNgSbv3MZC2m74996JafV – they consist of a string of letters and numbers starting with a “1” (or “3” three, if its a multisignature address). You would share this address with others just like an email address, except Bitcoin would be sent to your bitcoin address.
Block
A grouping of transactions, marked with a timestamp, and a fingerprint of the previous block. Valid blocks are added to the main blockchain by network consensus. Blocks are referred to as having a size. The size is dependent on how many transactions can fit in a block. For example, a single transaction is usually kilobytes of data, and a block made up of several transactions is megabytes of data.
Confirmations
A transaction is included in a block, it has “one confirmation”. As soon as another block is mined on the same blockchain, the transaction has two confirmations etc. 3 or more confirmations is considered sufficient proof that a transaction cannot be reversed.
Decentralized
Unlike a single company who controls its own data, the Bitcoin network uses nodes around the globe to spread across its data. By making every node hold a copy of the Bitcoin ledger, they help increase security by having no single point of failure.
Proof of Work
A piece of data that requires significant computation to find. In bitcoin, miners must find a numeric solution to the SHA256k algorithm that meets a network wide target, the difficulty target.
Double Spend
The ability to create two transactions for the same amount cryptocurrency. Example – Joe has 1 bicoin and tries to send 1 btc to his friend Eric and 1 btc to his friend Roger. The bitcoin solves this problem and only allows one person to receive the 1 btc while the other will never receive any.
BIP
Bitcoin Improvement Proposals. A set of chronologically ordered proposals that members of the bitcoin community have submitted to improve bitcoin. For example, BIP0091 is a proposal to activate Segregated Witness. BIPs are code changes and improvements to add more functionality.
Difficulty
A network-wide setting that controls how much computation is required to find a proof-of-work.
Difficulty Re-Targeting
A network-wide re-calculation of the difficulty which occurs once every 2106 blocks and considers the hashing power of the previous 2106 blocks.
Transaction ID
A transaction ID is the hash of the signed transaction.
UTXO(s)
Unspent Transaction Output(s) – These make up the outgoing transaction. They are the spendable bitcoins.
FOMO
Fear of Missing Out – a terms used in the Industry to recognize when a hype event is taking place.
HODL
A term adopted by the community after a forum post misspelling of the word “Hold” went viral as “Hodl”
Blockchain
The Blockchain is a globally distributed, open-source, peer-to-peer (P2P) based digital ledger where transactions made in a Cryptocurrency are bundled and recorded chronologically and publicly.
Private Key
The secret string of characters that unlocks bitcoins in order to send to the corresponding public address. This is used to sign the transaction. This is what hackers want and what you are trying to secure. If someone has access to your private keys they control your wealth.
Block Explorer
A web based tool to follow transactions through the blockchain. From only an address, you can follow the history of the coins.
Fork
A network fork is like taking a fork in the road except with code. You utilize the same code base, fork it by changing some parameters, then users who start enforcing these new rules enable the new code base to execute, thus forming a new network, based on the old network.
Miner
A network node that finds valid proof-of-work for new blocks, by repeated hashing. Essentially its the work horse of the network checking the validity of transactions and confirming no double spend have occurred.
Wallet
Software or Hardware that holds all your bitcoin addresses and private keys. Use it to send, receive and store your bitcoin.
Hash
A digital fingerprint of some binary input. In Bitcoin’s case, this is the unique identifier that proves the Sender committed to sending a certain amount of bitcoin at a specific date and time. A hash, in general, proves the existence of the state of something at a period in history and can be referenced in the future to see if the state has changed or remained the same.
Exchange
An open market where individuals and institutions congregate online to place orders and make purchases.
Rewards
An amount included in each new block as a reward by the network to the miner who found the proof-of-work solution. The amount of the reward is determined by the rules of the software. A reward occurs every 10 minutes in Bitcoin and every 15 seconds in Ethereum.
Public Key
A bitcoin Public Key is a 256 bit string of letters and numbers and is used to ensure that your are the owner of an address that can receive funds. Your Public Key is different from a Bitcoin address for receiving funds (which is a 160 bit string). Your wallet address is derived from your public key, however. And your public key is derived from your private key.
Transactions
In simple terms, a transfer of bitcoins from one address to another. More precisely, a transaction is a signed data structure expressing a transfer of value. Transactions are transmitted over the bitcoin network, collected by miners and included into blocks, made permanent on the blockchain.
Difficulty Target
A difficulty at which all the computation in the network will find blocks approximately every 10 minutes.
Genesis Block
The first block in the blockchain, used to initialize the crypto-currency
FUD
Fear, Uncertainty and Doubt. Used to spread negative press, can cause a negative hype event, causing a market to crash.
