Bitcoiner.Guide
A collection of Bitcoin resources by BitcoinQnA
Bitcoin Glossary
Simple explanations of common Bitcoin terms
| Term | Explanation |
|---|---|
| Address | A bitcoin address is a string of letters and numbers. Your wallet can generate an infinite amount of them and every one is unique |
| Bip | ‘Bitcoin Improvement Proposal’ and is how changes to the protocol are submitted, approved and labelled |
| bitcoin (small ‘b’) | When expressed using a small ‘b’, the word bitcoin refers to the unit of currency |
| Block | A set of transactions grouped together and mined successfully by a miner |
| Blockchain | A chain of successful blocks that are built on top of one-another. Each one linked to its predecessor |
| Cold Storage | A method of storing bitcoin private keys in an environment that is not connected to the internet |
| Confirmation | When a transaction is mined part of a block is one confirmation. Every subsequent block is an additional confirmation |
| Consensus Rules | The set of rules that anyone wanting to participate in the network must follow |
| Difficulty | An adjustable value that dictates how much computational power is required for miners to mine new blocks. |
| Fees | The value paid to a miner to include a transaction into a block |
| Hardware Wallet | A dedicated secure device for storing bitcoin private keys in an offline environment |
| Hash | The term given to the action of converting data. Hashing is used by miners to process transactions |
| Hash Rate | The total number of hashes performed by a miner or mining pool expressed in hashes/second |
| KYC | ‘Know Your Customer’ is a regulation that requires businesses selling bitcoin to collect identify info on the purchaser |
| Lightning Network | An additional layer built on top of Bitcoin that allows users to send/receive small payments with very low fees |
| Mempool | The group of transactions waiting to be included into a block by a miner |
| Miner | A network participant who contributes computational power to process transactions in a bid to earn fees and the block reward |
| Multisig | Multi-Signature is a wallet setup that can require more than one private key to authorise a transaction |
| Node | A computer connected to the Bitcoin network running software required to broadcast, relay and verify transactions |
| Paper Wallet | A piece of paper containing the data necessary to store bitcoin offline. This should be kept safe |
| Private Key | A unique string of letters and numbers required to store and transact bitcoin. You should not share this with anyone |
| Proof of Work | The method miners strive to achieve to secure the network and include transactions into blocks |
| Public Key | Derived from the private key, a public key is used when checking signatures in a transactions |
| Reward | The block reward is given to the first miner to achieve sufficient proof of work. The reward = Block subsidy + all transaction fees for that block. Current block subsidy is 6.25 BTC. |
| Satoshi or ‘sat’ | Named after Bitcoin’s anonymous creator and sometimes abbreviated to ‘sat’, a Satoshi is the smallest unit of a bitcoin. 1 bitcoin = 100 million satoshis |
| Satoshi Nakamoto | The pseudonym that Bitcoin’s creator (or creators) went by before he disappeared from the internet |
| SegWit | Segregated Witness is an improvement made in 2017 to increase the network’s scalability |
| Subsidy | The subsidy is paid to the miner that achieves sufficient proof of work for each block. The current subsidy is 6.25 BTC. This halves every 210,000 blocks (roughly 4 years) |
| Testnet | A separate network with an almost identical design to Bitcoin for developers to test out improvements |
| Tor | The Onion Router is an alternative network used by users that want to preserve their online privacy |
| Txid | Transaction Identifier is a unique string of numbers and letters used to label a transaction |
| UTXO | An Unspent Transaction Output is the piece of bitcoin spent to a new address which can be used as an input in future transactions |