The terms used in the digital currency world can be confusing. We have assembled many of them here for you. Hopefully, knowing the bitcoin vocabulary will help you get started in your new Bitcoin adventure!
A condition in which more than half the computing power on a cryptocurrency network is controlled by a single miner or group of miners. That amount of power theoretically makes them the authority on the network. This means that every client on the network believes the attacker's hashed a transaction block. This gives them control over the network, including the power to:
- Issue a transaction that conflicts with someone else's.
- Stop someone else's transaction from being confirmed.
- spend the same coins multiple times.
- Prevent other miners from mining valid blocks.
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. An important difference, however, is that each address should only be used for a single transaction.
A bit is a common unit used to designate a sub-unit of a bitcoin - 1,000,000 bit is equal to 1 bitcoin (BTC). This unit is usually more convenient for pricing tips, goods, and services.
Digital currency units are generated and used within the Bitcoin system. Common abbreviations include BTC, XBT or lowercase bitcoin when referring to units of the currency.
Blocks are links in a chain of transaction verification. Outstanding transactions get bundled into a block and are verified roughly every ten minutes on average. Each subsequent block strengthens the verification of previous blocks. Each block contains one or more transactions.
The blockchain is a public record of Bitcoin transactions in chronological order. The blockchain is shared among all Bitcoin users. It is used to verify the permanence of Bitcoin transactions and to prevent double-spending.
Each block includes the difficult-to-produce verification hash of the previous block. This allows each subsequent block to be linked to all previous blocks.
These blocks which are linked together for the purpose of verifying transactions within the block is called the blockchain
when a Bitcoin miner finds a block, it receives newly minted bitcoins known as the "Block Reward". The reward (aka subsidy) is halved every four years and is responsible for bitcoin's controlled supply.
The block at which the blockchain diverges int multiple chain branches
The common decimal unit of a single bitcoin. Equal to 100,000,000 satoshis.
Every once in a while, an old block hash is hardcoded into Bitcoin software. Different implementations choose different checkpoint locations. Checkpoint prevents various DOS attacks from nodes flooding unusable chains and attacks involving isolating nodes and giving them fake chains. Satoshi announced the feature here and it was discussed to death here.
"Coinbase" is another name for a generation transaction. The input of such a transaction contains some arbitrary data where the scriptSig would go in normal transactions -- this data is sometimes called the "Coinbase", as well.
To protect against double-spending, a transaction should not be considered as "confirmed" until a certain number of blocks in the blockchain confirm, or verify that the transaction is "n/unconfirmed" until 6 blocks confirm the transaction.
Cryptography is the branch of mathematics that lets us create mathematical proofs that provide high levels of security. Online commerce and banking already use cryptography. In the case of Bitcoin, cryptography is used to make it impossible for anybody to spend funds from another user's wallet or to corrupt the blockchain. It can also be used to encrypt a wallet so that it cannot be used without a password.
What is your take on this bitcoin vocabulary? Feel free to give your comments.
If you want a bit more work, you can invest in Bitcoin mining, but you have to take in account that the mining-market is well filled out and the electricity costs make it less and less profitable as time goes on. Lucrotrade
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