Bitcoin: a new journey – Glossary
Bitcoin Glossary
For a couple of years now I have been interested in bitcoin and cryptocurrencies and have embarked on a road of educating myself with it. On of the first stumbling blocks is to get used to terms used and Bitcoin speak. I am currently reading Mastering Bitcoin from Andreas Antonopoulos and found exactly what I need and are reporducing[1] it here for easy reference.
address
A bitcoin address looks like 1DSrfJdB2AnWaFNgSbv3MZC2m74996JafV. It consists of
a string of letters and numbers starting with a “1” (number one). Just like you ask
others to send an email to your email address, you would ask others to send you
bitcoin to your bitcoin address.
bip
Bitcoin Improvement Proposals. A set of proposals that members of the bitcoin
community have submitted to improve bitcoin. For example, BIP0021 is a proposal
to improve the bitcoin uniform resource identifier (URI) scheme.
bitcoin
The name of the currency unit (the coin), the network, and the software.
block
A grouping of transactions, marked with a timestamp, and a fingerprint of the
previous block. The block header is hashed to produce a proof of work, thereby
validating the transactions. Valid blocks are added to the main blockchain by network
consensus.
blockchain
A list of validated blocks, each linking to its predecessor all the way to the genesis block.
confirmations
Once 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,
and so on. Six or more confirmations is considered sufficient proof that a
transaction cannot be reversed.
difficulty
A network-wide setting that controls how much computation is required to produce
a proof of work.
difficulty target
A difficulty at which all the computation in the network will find blocks approximately
every 10 minutes.
difficulty retargeting
A network-wide recalculation of the difficulty that occurs once every 2,106 blocks
and considers the hashing power of the previous 2,106 blocks.
fees
The sender of a transaction often includes a fee to the network for processing the
requested transaction. Most transactions require a minimum fee of 0.5 mBTC.
hash
A digital fingerprint of some binary input.
genesis block
The first block in the blockchain, used to initialize the cryptocurrency.
miner
A network node that finds valid proof of work for new blocks, by repeated hashing.
network
A peer-to-peer network that propagates transactions and blocks to every bitcoin
node on the network.
Proof-Of-Work
A piece of data that requires significant computation to find. In bitcoin, miners
must find a numeric solution to the SHA256 algorithm that meets a network-wide
target, the difficulty target.
reward
An amount included in each new block as a reward by the network to the miner
who found the Proof-Of-Work solution. It is currently 25BTC per block.
secret key (aka private key)
The secret number that unlocks bitcoins sent to the corresponding address. A secret
key looks like 5J76sF8L5jTtzE96r66Sf8cka9y44wdpJjMwCxR3tzLh3ibVPxh.
transaction
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.
wallet
Software that holds all your bitcoin addresses and secret keys. Use it to send, receive,
and store your bitcoin.