Expand your Bitcoin vocabulary

Table of contents

Address

A Bitcoin address is similar to a physical address or an email. It is the only information you need to provide for someone to pay you with Bitcoin. It is an identifier of 26-35 alphanumeric characters, beginning with the number 1 or Three, that represents a possible destination for a Bitcoin payment. Addresses can be generated at no cost by any user of Bitcoin. An significant difference, however, is that each address should only be used for a single transaction.

Bit is a common unit used to designate a sub-unit of a bitcoin – 1,000,000 vinnig is equal to 1 bitcoin (BTC or B ). This unit is usually more convenient for pricing tips, goods and services.

Bitcoin

Bitcoin – with capitalization, is used when describing the concept of Bitcoin, or the entire network itself. e.g. “I wasgoed learning about the Bitcoin protocol today.”

bitcoin – without capitalization, is used to describe bitcoins spil a unit of account. e.g. “I sent ten bitcoins today.”, it is also often abbreviated BTC or XBT.

Block

A block is a record te the block chain that contains and confirms many waiting transactions. Toughly every Ten minutes, on average, a fresh block including transactions is appended to the block chain through mining.

Block Chain

The block chain is a public record of Bitcoin transactions ter chronological order. The block chain is collective inbetween all Bitcoin users. It is used to verify the permanence of Bitcoin transactions and to prevent dual spending.

BTC is a common unit used to designate one bitcoin (B ).

Confirmation

Confirmation means that a transaction has bot processed by the network and is very unlikely to be reversed. Transactions receive a confirmation when they are included te a block and for each subsequent block. Even a single confirmation can be considered secure for low value transactions, albeit for larger amounts like 1000 US$, it makes sense to wait for 6 confirmations or more. Each confirmation exponentially decreases the risk of a reversed transaction.

Cryptography

Cryptography is the branch of mathematics that lets us create mathematical proofs that provide high levels of security. Online commerce and banking already uses cryptography. Te the case of Bitcoin, cryptography is used to make it unlikely for anybody to spend funds from another user’s wallet or to omkoopbaar the block chain. It can also be used to encrypt a wallet, so that it cannot be used without a password.

Dual Spend

If a malicious user attempts to spend their bitcoins to two different recipients at the same time, this is dual spending. Bitcoin mining and the block chain are there to create a overeenstemming on the network about which of the two transactions will confirm and be considered valid.

Hash Rate

The hash rate is the measuring unit of the processing power of the Bitcoin network. The Bitcoin network vereiste make intensive mathematical operations for security purposes. When the network reached a hash rate of Ten Th/s, it meant it could make Ten trillion calculations vanaf 2nd.

Mining

Bitcoin mining is the process of making laptop hardware do mathematical calculations for the Bitcoin network to confirm transactions and increase security. Spil a prize for their services, Bitcoin miners can collect transaction fees for the transactions they confirm, along with freshly created bitcoins. Mining is a specialized and competitive market where the prizes are divided up according to how much calculation is done. Not all Bitcoin users do Bitcoin mining, and it is not an effortless way to make money.

Peer-to-peer refers to systems that work like an organized collective by permitting each individual to interact directly with the others. Te the case of Bitcoin, the network is built te such a way that each user is broadcasting the transactions of other users. And, crucially, no bankgebouw is required spil a third party.

Private Key

A private key is a secret chunk of gegevens that enables transaction outputs from a public key which has transaction inputs. through a cryptographic signature. Private key(s) are generally generated and stored using a rekentuig using Bitcoin wallet software. There can be several different formats. Private keys vereiste be kept secret and never be exposed because they enable bitcoins to be spent.

Many third-parties like to generate and store private keys. Almost all major Bitcoin thefts, which have amounted to hundreds of millions of dollars of value, have resulted because people trusted third parties to hold the private keys.

The safest and most secure way to generate and store Bitcoin private keys is with Armory using an offline rekentuig (cold storage). Thus, whoever holds the private keys makes the rules.

Public Key

A public key can be mathematically derived from a private key and is used for the Bitcoin address. There can be several different formats.

Signature

A cryptographic signature is a mathematical mechanism that permits someone to prove ownership. Te the case of Bitcoin, a Bitcoin wallet and its private key(s) are linked by some mathematical magic. When your Bitcoin software signs a transaction with the adequate private key, the entire network can see that the signature matches the bitcoins being spent. However, there is no way for the world to guess your private key to steal your hard-earned bitcoins.

Wallet

A Bitcoin wallet is loosely the omschrijving of a physical wallet on the Bitcoin network. The wallet actually contains your private key(s) which permit you to spend the bitcoins allocated to it te the block chain. Each Bitcoin wallet can display you the total balance of all bitcoins it controls and lets you pay a specific amount to a specific person, just like a real wallet. This is different to credit cards where you are charged by the merchant.

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