Bitcoin Glossary

Bitcoin Glossary

 

Altcoin

 

The term altcoin is given to describe any digital currencies that don’t have as big a market capitalisation or the recognition of the current main currencies like bitcoin, dogecoin and litecoin.

 

ASIC

 

The abbreviation ASIC means Application Specific Integrated Circuit, which is a silicon chip tBhat specialises in performing just a single task. In order to mine bitcoins and validate transactions efficiently these chips process SHA-256 in the digital currency space.

 

ASIC Miner

 

The hardware that houses the ASIC chip is given the name ASIC Miner. This works separately from your home computer and is connected to the internet with the sole purpose of mining bitcoin.

 

Bitcoin Index

 

The Bitcoin Index is a lives weighted average index that shows the value of a bitcoin against the value of a single unit of currency of each of the main Fiat currencies that are used in Forex, which are GBD, EUR, USD, JPY and AUD.

 

BitPay

 

BitPay is a company that provides payment processing and software to enable the accepting of bitcoin for payment for services and goods by merchants like Amazon, eBay and other online shopping sites.

 

Blockchain

 

The digital currency space refers to the blockchain as the total number of blocks (transactions) that miners have created hashes for since the very beginning of that digital currency.

 

Block Reward

 

The term block reward refers to the “reward” that miners receive when they successfully hash a block of transactions.

 

BTC

 

In the same way that a British pound is abbreviated to GBP in the financial world so too is bitcoin reduced to BTC.

 

Crypto Currency

 

This is a general term given to currencies like the bitcoin or the litecoin where the currency is based purely on mathematics.

 

Difficulty

 

The word difficulty is used by bitcoin miners in reference to how hard they find it to hash any new block in the bitcoin blockchain.

 

ECDSA

 

The lightweight algorithm that is used by bitcoin software to sign transactions within the protocol is called the political curve digital signature algorithm but this has been abbreviated to ECDSA.

 

Exchange

 

A place where users are able to exchange one form of digital currency for either another or for a Fiat currency is unsurprising called an exchange

 

Faucet

 

When a digital currency is developed by an individual or a team there is a good change that some of this currency may be pre-mined and then given away using what is known as a Faucet

 

Fiat Currency

 

Any paperback currency that regulated by a government or organisation like a central bank is referred to as a Fiat currency. Currencies like the British pound, the Euro or the US Dollar are examples of a Fiat currency.

 

Genesis block

 

The very first block in a block chain of any digital currency is given the title of the Genesis block.

 

Hash

 

An algorithm that takes a set of data of any composition or length and the converts it into a piece of data with a fixed composition and a fixed length is called a hash in mathematical terms.

 

Hash rate

 

The amount of hashes that a bitcoin miner can perform over a set period of time is referred to as the hash rate.

 

Megahashes/sec

 

Using a set period of time, usually a second, the term Megahashes/sec refers to the number of hashing attempts that processor would be capable of processing during this time.

 

Mining

 

The process that is used to complete transactions in a blockchain and create new bitcoin is called mining. The “Mining for Bitcoins” educational article will be able to show you how to do this.

 

Output

 

The destination address used in any given transaction when a bitcoin transaction take place is referred to as the output.

 

Paper Wallet

 

In an effort to increase security many people have chosen to use a paper wallet, which is a form of cold bitcoin storage or offline storage, to store their bitcoins. Paper wallet simply refers to a sheet of paper that has been printed out with a number of public bitcoin addresses and the private keys to match them.

 

Proof of work

 

The output of any efforts that have been made to mine bitcoin is referred to simply as proof of work. A lot of time and effort can go into hashing a block and therefore it is usually this hash block that is used as proof of work in the bitcoin blockchain.

 

Public Key

 

The string of letters and digits that form you bitcoin address is known as your public key. When a corresponding string known as a private key is hashed with your public key then digitally signs any online communication

 

SHA-256

 

There must be a cryptographic function that dictates how a hash is constructed with every digital currency. The function for bitcoin and the thing that is used as a basis for hash creation (or the bitcoin’s proof of work) is called SHA-256

 

Transaction fee

 

Transaction fees can sometimes occur with certain transaction in the bitcoin blockchain and the miners that mine the hashes containing these transaction fee are paid them.

 

Wallet

 

To hold the public bitcoin addresses and the private keys that are associated with them users of bitcoin or other forms of digital currency use a wallet. These wallet can either be used to store digital currency online (hot wallets) or offline (cold storage wallets).

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