Bitcoin

WORDS ASSOCIATED WITH BITCOIN (GLOSSARY)

WORDS ASSOCIATED WITH BITCOIN What is bitcoin and how does it work , how does bitcoin work , is bitcoin legal , what can you buy with bitcoin , what is the current price of bitcoin today

WORDS ASSOCIATED WITH BITCOIN What is bitcoin and how does it work , how does bitcoin work , is bitcoin legal , what can you buy with bitcoin , what is the current price of bitcoin today

We discussed about Bitcoin in our previous post. You may refer to it here incase you missed it. Today we will be talking about “Words associated with Bitcoin”.

ADDRESS: Your Bitcoin wallet address works just like your email address. It contains a string of alphanumeric characters. It can be represented as a scannable QR code. Your Bitcoin address is what will be sent to someone that wants to transfer bitcoin to you. For you to transfer bitcoin to someone, you will require the person’s wallet address.

ALTCOINS: These are alternative cryptocurrencies to Bitcoin (Alternative coins). They include Ethereum, Monero, Ripple, etc.

Bit : Bit is a unit used to represent a sub-unit of a bitcoin.

Bitcoin : When the first letter is capitalized, it refers to the concept of Bitcoin. For example, “I read about investing bitcoin with TradeVilley on their website”. If the first letter is not capitalized, then it refers to a unit or amount. For example, “I invested 2 bitcoins with TradeVilley”. It can be abbreviated as BTC or XBT. There are no differences between the two.  1 bitcoin (BTC) = 1,000,000 bits. This means there are 1,000,000 bits in one bitcoin.                                                                                                                                                              Click here to learn more about Bitcoin (How it works and others).

BITCOIN CLIENT: A Bitcoin client is a software that does the receiving and transfer of bitcoins. The most popular among several of them is the standard Bitcoin client which can be downloaded from from bitcoin.org.

BITCOIN NETWORK: This is the connection of computers (network) through which transactions are made and also controls the public ledger (block chain).

BIP: This represents Bitcoin Improvement Proposal.  It is a document containing information about improvements, suggestions of a new feature for bitcoin. The document is sent to the Bitcoin community.

BLOCK :  A block is a record found in the Bitcoin block chain that connects all transactions together. Blocks of transactions are added to the block chain every ten minutes (on average) via mining. Miners process transactions in groups called “blocks”.

BLOCK CHAIN: Blockchain is a distributed public ledger that contains records of all confirmed transactions in chronological order (in units of time). The block chain is open to all Bitcoin users and can be reviewed by anyone. Since the block chain is thought of as a ledger book, a block is like a page from the book.

BLOCK HEIGHT: This refers to the number of blocks that’s between a block and the Genesis block. Then the height is the length between the block and the Genesis block in the chain.

BLOCK REWARD: This refers to the transaction fees and incentives miners gain for successfully mining a Bitcoin block.

Read Also: WHAT IS CRYPTO MINING – HOW IT WORKS ?

 

COLD STORAGE: This refers to storing/securing your bitcoins offline (without connection to the internet). It is the safest means of saving your cryptocurrency as it minimizes the chances of your wallet from been hijacked by hackers. It is mostly used for larger amount of bitcoins. Cold storage includes offline computers, USB Drives, Paper Wallets.

COLD WALLET: This is a Bitcoin wallet that is in cold storage i.e not connected to the internet.

CONFIRMATION: A confirmation means that the bitcoin transaction has been verified by the network through the process known as mining. Bitcoin transactions work with confirmation. A transaction that is unconfirmed is considered to be pending and can be forged. When the transaction is confirmed, then it is considered a successful transaction. It can no longer be forged, neither can it be reversed.

CRYPTOGRAPHY: It is the use of mathematics to secure information. E-commerce and Internet banking do make use of cryptography. In the case of Bitcoin, cryptography is used to secure the Bitcoin network, encrypt/secure wallets (cannot be used without a password) and verify the block chain.

DECENTRALIZED: Bitcoin is without a central authority or government authority. Bitcoin can be described as a decentralized network since no company, government, or individual is in control of it. Bitcoin’s governance relies on it’s community and its code is open-source.

DOUBLE SPEND: This is a situation whereby a malicious user attempts to send the same bitcoins twice. Bitcoin miners and the block chain curbs such activity. Such activity can be possible when a user accepts unconfirmed transactions.

HALVING: Bitcoins have a limited supply which makes them scarce. The total amount that can be issued is 21 million. The number of bitcoins generated per block is decreased by 50% every four years. This is called “halving.” The final halving will take place in the year 2140.                                                                                  A preprogrammed halving of the Bitcoin block subsidy, which occurs every 210,000 blocks.

HASH RATE: This refers to the measurement of the processing power of the Bitcoin network. In order for miners to verify transactions and secure the blockchain, the hardware they use must perform intensive computational operations which are output in hashes per second.

MINING: Mining is a course of action in which bitcoin is being generated via the use of computing power. Mining of bitcoin ensures the release and existence of new bitcoins in the already existing and circulating supply of bitcoins.                                                                                                                                          Bitcoin mining occurs in a “Mining Pool”. The people who do the job are called Miners. Bitcoin miners receive bitcoin as an incentive for carrying out “blocks” of confirmed transactions which are added to the blockchain. In the process of  mining, you can earn bitcoins without having to put down money for it.

PEER TO PEER (P2P):  Is a type of network that allows participants communicate directly with each other rather than through a centralized server. The Bitcoin network is peer to peer.

POOL : Mining takes place in a Mining Pool. Miners contribute their computing power to a mining pool and gain a percentage of the yield. The percentage depends on how much computing power is contributed to the pool. The mining pools are created to solve this problem. It means sharing of resources by miners who contribute their computing power over a network, to split the reward/incentive equally between everyone in the pool, according to the amount of power they contribute.

Read Also: WHAT IS CRYPTOCURRENCY (WHAT YOU DON’T KNOW)

PRIVATE KEY: Every wallet comes with a private and public key. The private key should be secured and kept privately. It is what will be used to confirm you own the public key. If you lose the private key, you will lose the money in your wallet.

SIGNATURE: Is a portion of a bitcoin transaction that proves that the owner of the private key has approved the transaction.

TRANSACTION: When data is sent to or from one bitcoin address to another, the process is called a transaction. In bank/Atm transactions, you send money from one person to another. In bitcoin, you do the same thing by sending bitcoins to each other. 

TRANSACTION FEE: The transaction fee is an amount of bitcoin included in each transaction and is collected by miners. These fees are used to incentivize miners to add the transaction to a block. Bitcoin Cash (BCH) fees are considerably lower than Bitcoin (BTC) fees.

WALLET: Bitcoins are stored in a “Wallet. The wallet is just like your bank account. It is responsible for making all transactions like sending and receiving bitcoins, paying bills. Every wallet has an address which is what will be given to one who wants to transfer bitcoin. Your wallet can exist either online or on your device. The wallet address comes in this format, “1A1nQ1eS5QGefi2DMPTfTL5MLmv7DivfNa” and has to be reviewed properly before making transfer to it. Every letter or figure found there is very important and should not be cancelled.

 

Now that you know the common words associated with Bitcoin, let me know what you think about this post by leaving a comment in the comment box below. Thank you.

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