Our Bitcoin glossary provides you with a definitive and concise list of all the Bitcoin terms you need to know.
In this Bitcoin glossary, we have made simple all the complex bitcoin terms to make trading BTC so much easy and fun.
Bitcoin is a decentralized digital currency which means it has no central authority making policies and crafting operational guidelines, policies and rules.
Each Bitcoin is like a computer file which is stored in a digital wallet often referred to as Bitcoin wallet. You can receive Bitcoins and send to others.
The system which this digital currency operates is known as a peer-to-peer network and it has no need for intermediaries of middle men.
Bitcoin for newbies can be a little bit difficult due to the somewhat complex Bitcoin and cryptocurrency terms used.
But we have simplified the process and has compiled this Bitcoin glossary to help to make Bitcoin trading easy for beginners and newbies.
This Bitcoin glossary will be of so much benefit to newbies and professionals alike and if you are a dummy then you will find this glossary very easy to understand.
Without further ado, let’s dive into the waters of Bitcoin terms as we swim through our comprehensive Bitcoin glossary.
Satoshi Nakamoto is the name of the person(s) believed to have presented a white paper which started Bitcoin. He also devised the first Blockchain technology database.
You may come across this name often as you read about Bitcoin.
A Bitcoin Block is a file where all the data pertaining to the Bitcoin network are permanently stored.
Simply put, a block is a ledger or record book where records of Bitcoin transactions are kept.
Each subsequent block strengthens the verification of the previous blocks, making it impossible to double spend bitcoin transactions (see double spend below).
The block height is the number of blocks connected together in the block chain. For example, Height 0 refers to the very first block and it is called the “genesis block.”
After the successful mining of a block on the bitcoin network, there is a reward that helps incentivize miners to secure the network. It is called a block reward. The block rewards halves roughly every four years; see also “halving.”
The Bitcoin blockchain is a public record of all Bitcoin transactions. You might also hear the term used as a “public ledger.”
The blockchain shows every single record of bitcoin transactions in order, dating back to the very first one.
The entire blockchain can be downloaded and openly reviewed by anyone, or you can use a block explorer to review the blockchain online.
BIP stands for Bitcoin Improvement Proposal. It is a standard upheld for proposing changes to the Bitcoin protocol.
It is a design document providing information to be Bitcoin community, or describing a new feature for bitcoin or its processes or environment which affect the Bitcoin protocol
Cold storage refers to every measure taken to keep your Bitcoins safely away from the internet where it is prone to malicious attacks and internet fraudsters.
Confirmation is when a Bitcoin transaction is verified by the network through a process known as mining. Once a Bitcoin transaction is verified it can not be reversed.
Cryptography is mathematical and computer science algorithms used to encrypt and decrypt information It is used to provide security for Bitcoins.
The Bitcoin network used cryptography in bitcoin addresses, hash functions, and the blockchain.
Change in Bitcoin can be explained like this:
Say you want to purchase something of 90 cents and you give the storekeeper $1, you are entitled to a change of 10 cents right?
The same thing applies to Bitcoin transactions. You trade Bitcoins in inputs and outputs. After sending Bitcoins, the change is sent back to the sender
Bitcoin is a peer-to-peer network protocol, where all users within the network work and communicate directly with each other. It does not support nor use intermediaries.
Double spend is when someone tries to send a bitcoin transaction to two different recipients at the same time. Once a bitcoin transaction is confirmed, it makes it nearly impossible to double spend it.
The more confirmations that a transaction has, the harder it is to double spend the bitcoins.
A full node is when you download the entire blockchain using a bitcoin client, and you relay, validate, and secure the data within the blockchain.
Bitcoin halving is when the reward for mining transaction is cut into half. A Bitcoin halving event cuts in half Bitcoin’s inflation rate and the rate at which new Bitcoins enter circulation.
A hash rate is the speed at which a mining machine operates. Crypto mining involves finding blocks through complex computations. The rate with which a mine machine finds Bitcoin block is called a hash rate.
Difficulty is simply the measure of how difficult is to mine a Bitcoin block or find a hash below the target.
A transaction hash (sometimes referred to as a transaction ID or txid) is a unique identifier that can be used on any block explorer to look up all of the public details of a particular transaction. Every on-chain transaction has a unique hash made up of a long string of alphanumeric characters.
Bitcoin mining is the process of using computer hardware to do mathematical calculations for the Bitcoin network in order to confirm transactions.
As part of bitcoin mining, mining “pools” are a network of miners that work together to mine a block, then split the block reward among the pool miners.
A private key is a string of data that shows you have access to bitcoins in a specific wallet. It is a secret number which allows Bitcoin to be spent.
Proof of Work
Proof of work refers to the hash of a block header (blocks of bitcoin transactions). It is a piece of data which is difficult (costly, time-consuming) to produce but easy for others to verify and which satisfies certain requirements
A public bitcoin address is cryptographic hash of a public key. A public address typically starts with the number “1.” It is like an email address which you can share and use to receive Bitcoin.
RBF stands for Replace By Fee, and refers to a method that allows a sender to replace a “stuck” or unconfirmed transaction with a new one that uses a higher fee. This is done to make sure a transaction confirms as quickly as possible.
A transaction is when data is sent to and from one bitcoin address to another. Just like financial transactions where you send money from one person to another, in bitcoin you do the same thing by sending data (bitcoins) to each other.
A Bitcoin wallet is a device, application or software where you can save and store your Bitcoins. You can see it as your physical wallet where you keep your fiat currencies that is paper money.
In the real sense, a Bitcoin wallet is used to safely secure your private keys. Remember what private keys are? Check this post’s body.
It is from your Bitcoin wallet that you send, receive and store Bitcoin .
We are optimistic that with this Bitcoin glossary you can enjoy trading Bitcoin having had a detailed understanding of most of the terms used in trading BTC.
Cheers to your trading success!