Bitcoin Vocabulary- Lesson ii

bitcoin vocabulary

Every 2016 blocks, Bitcoin adjusts the difficulty of verifying blocks based on the time it took to verify the previous 2016 blocks. The difficulty is adjusted so that given the average estimated computing power of the whole bitcoin network, only one block will be verified on average every ten minutes for the next 2016 blocks.

The difficulty is usually expressed as a number, optionally accurate to many decimal places (eg. in block 100,000 it was 14,484.162361. The difficulty is inversely proportional to the hash target, which is expressed as a hex number with around 50 digits and is the number under which a block's generated hash must be to qualify as an officially verified block. The hash target is equal to (65535<< 208)/ difficulty). The difficulty is also often called block difficulty, hash difficulty, verification difficulty or the difficulty of generating bitcoins.

Attempting to spend coins that have already been spent in another transaction.

A currency, conjured out of thin air, which only has value because people say it does. Constantly under close scrutiny by regulators due to its known application in money laundering and terrorist activities. Not to be confused with bitcoin.

The creation of an alternative ongoing version of the blockchain, typically because one set of miners begins hashing a different set of transaction blocks from another. It can be caused maliciously, by a group of miners gaining too much control over the network (see 51% attack), accidentally, thanks to a bug in the system or intentionally, when a core development team decides to introduce substantial new features into a new version of a client. A fork I successful if it becomes the longest version of the blockchain, as defined by difficulty.

The process by which new bitcoins (aka the "Block Reward") are distributed via Mining.

The output of a cryptographic hash function.

A computer algorithm which takes an arbitrary amount of input data and deterministically produces fixed length output, known as the data's "hash", that can be used to easily verify that data has not been altered. If you change any single bit of the original data and run the hash algorithm, the hash will completely change. Because the hash is seemingly random, it is prohibitively difficult to try to produce a specific hash by changing the data which is being hashed.

The hash rate is the measuring unit of the processing power of the Bitcoin network. The Bitcoin network must make intensives mathematical operations for security purposes. When the network reached a hash rate of 10 Th/s, it meant it could make 10 trillion calculations per second.

See Priority.

The longest Block Chain.

Generators store transactions waiting to get into a block in their memory pool after receiving them. Received transactions are stored even if they are invalid to prevent nodes from constantly requesting transactions that they've already seen. The memory pool is cleared when Bitcoin is shut down, causing the network to gradually forget about transactions that haven't been included in a block.

Every transaction has a hash associated with it. In a block, all of the transaction hashes in the block are themselves hashed (sometimes several times-- the exact process is complex), and the result is the Merkle root. In other words, the Merkle root is the hash of all the hashes of all the transactions in the block.
The Merkle root is included in the block header. With this scheme, it is possible to securely verify that a transaction has been accepted by the network (and get the number of confirmations) by downloading just the tiny block headers and Merkle tree-- downloading the entire blockchain is unnecessary. This feature is currently not used in Bitcoin, but it will be in the future.

Computer software which is designed to repeatedly calculate hashes with the intention to create a successful block and earn coins from transaction fees and new coins created with the block itself. The term reference an analogy of gold miners who dig gold out of the ground and thus "discover" new gold that can be used to create new coins with a similar kind of discovery occurring with a successful hash to create new Bitcoins.

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

Each Bitcoin client currently running within the network is referred to as a Node of the system.

A nonce is an otherwise meaningless number which we used to alter the outcome of a hash. Each time Bitcoin hashes a block, it increments a nonce within the block which it is trying verify, If the numeric value of the effectively random hash is below a certain amount determined by the block generation difficulty, the block is accepted by other clients and gets added to the chain

An orphan block is a block which has no known parent in the currently-longest blockchain. Not to be confused with a Stale Block (which has a known parent, but in no longer part of the longest chain).

The root (first) block in an orphan blockchain.

Peer-to-peer refers to systems that work like an organized collective by allowing each individual to interact directly with the others. In the case of Bitcoin, the network is built in such a way that each user is broadcasting the transaction of other users. And, crucially, no bank is required as a third party.

More to come.

Click here for Lesson I........

Spread the news:
Subscribe to our channel