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We’ll be the first to admit it – the world of Bitcoin can be a bit overwhelming at times. That’s why we’ve put together this handy dictionary to the most important Bitcoin terms and words – some of which may be familiar to you, while you also might learn a thing or two. If there are any major Bitcoin terms you think we should add to our list – let us know! Enjoy.

 

  • Address – a Bitcoin address is used to send and receive Bitcoin transactions. The address is made up of sequence of letters (both upper and lower case) and numbers, but can also be represented as a QR Code [see below].
  • Altcoin – the name for cryptocurrencies that are alternatives to Bitcoin. An example of altcoins is Litecoin.
  • ASIC – the acronym for Application Specific Integrated Circuit, which is a chip meant to do one thing. In Bitcoin’s case – they are used to process hashing problems to mine Bitcoins.
  • Bitcoin – a decentralized, peer-to-peer online currency with open source software.
  • Bitcoin ATM – like a regular ATM, Bitcoin ATMs provide people with Bitcoins after depositing regular currencies.
  • Bitcoin Whitepaper – written by Satoshi Nakamoto in 2008, it describes the original plan and protocol for Bitcoin.
  • Blockchain – this is a list of every block that has been mined since Bitcoin began. All Bitcoin transactions are displayed within the Blockchain in order to provide transparency for the currency.
  • BPI – the Bitcoin Price Index, showing the price of Bitcoin against a number of other crypto and fiat currencies.
  • BTC – the shorthand name for Bitcoin, and also the unit for 1 Bitcoin.
  • Cold Storage – a security measure for Bitcoin that is disconnected from the internet. Could be a paper wallet [see below], USB stick or hardware wallet.
  • Confirmation – hashing a Bitcoin transaction successfully and its being added into the Blockchain.
  • Cryptocurrency – a currency based on mathematics and cryptography.
  • Difficulty – a number defining how difficult it is to hash a new block. As computing power for hashing increases, the difficulty level increases.
  • Dogecoin – a cryptocurrency featuring a Shiba Inu dog from the famous “Doge” internet meme. This is one of the top altcoins.
  • Exchange – a resource for exchanging currencies. Bitcoin exchanges are used to convert fiat currencies into Bitcoin and vice versa, or to exchange Bitcoin with other cryptocurrencies.
  • Faucet – a resource that provides free Bitcoins, usually in the form of hourly or daily deposits of several Satoshis [see below].
  • Fiat Currency – “regular” currencies such as Dollars or Pounds that are given value based on people giving them a value.
  • Genesis Block – the very first block in the Blockchain.
  • Gigahashes/sec – the amount of hashes possible every second, measured in billions of hashes.
  • Hash – hashing is an action of performing a hash function to output data. Used in order to confirm and process Bitcoin transactions.
  • Hashrate – the level of performance of mining computer hardware expressed in hashes/second.
  • Input – the input side of a given Bitcoin transaction is the side where the Bitcoin payment is coming from. Usually, this is expressed with a Bitcoin address.
  • Liberty Reserve – a digital currency processors located in Costa Rica that was shut down and seized by the United States government after it was found to be laundering money.
  • Litecoin – another top altcoin.
  • mBTC – 1 thousandth of a Bitcoin (0.001 BTC)
  • Microtransaction – the ability to pay for things in very small sums thanks to the fact that Bitcoin may be extended to 8 decimal places. Microtransactions are especially important to Bitcoin casinos by providing players the ability to deposit and gamble fractions of Bitcoins.
  • Mining – the act of creating new Bitcoins using computer hardware.
  • Mixing Service – the act of combining Bitcoins from different people by switching their addresses. This can help improve privacy and anonymity, but also can be used for money laundering.
  • Mt. Gox – one of the first Bitcoin exchanges that began liquidating after more than 850,000 of its users’ Bitcoins were lost or stolen – an amount equal to more than $450,000,000 at the time.
  • Namecoin – an altcoin allowing people to use the currency to purchase domain names.
  • Node – a computer connected to the Bitcoin network in order to input and process transactions.
  • Output – the output side of a given Bitcoin transaction is the side where the Bitcoin payment is being sent to. Usually, this is expressed with a Bitcoin address.
  • Paper Wallet – paper versions of Bitcoins that are meant to be more secure due to being offline.
  • Pre-mining – mining of a cryptocurrency before it is actually public and live, generally performed by its creator.
  • Private Key – an alphanumeric string of characters that is meant to be kept private. This, in connection with the public key, is used for digital communication and completing Bitcoin transactions.
  • Public Key – used in connection with the private key, and also known as the Bitcoin address.
  • QR Code – like a barcode on products, the QR Code contains a pattern that is meant to be scanned by cameras and can be used to directly connect to a Bitcoin address.
  • Reward – when mining for new Bitcoins, the miner may claim new coins in a new block as a reward for helping to add new Bitcoins into circulation.
  • Satoshi – a Bitcoin “cent”, the smallest form of Bitcoins. One Bitcoin is equal to 1 million Satoshis.
  • Satoshi Nakamoto – the creator of Bitcoin and the author of the original Bitcoin whitepaper and code. His real identity is unknown to the world.
  • Signature – a series of bytes that is a digital signature to connect someone to their public key in performing Bitcoin transactions.
  • Silk Road – an underground website, as part of the “dark web”, that was essentially the black market online. One could purchase illegal drugs, organs or hire assassins online. The site used cryptocurrencies such as Bitcoin and was shut down in 2013 by the FBI.
  • Stale – when a Bitcoin clock is successfully hashed, the act of hashing it becomes ‘stale’, which means that no other miner may attempt to hash it.
  • Testnet – an alternative to the Blockchain, used for testing, as the name suggests.
  • TOR – a program used by internet users for anonymity online. Also used many times by those attempting to access Silk Road.
  • uBTC – the unit for a microbitcoin (0.000001 BTC).
  • Vanity Address – a Bitcoin address that is personalized, like a vanity license plate.
  • Wallet – a method for storing Bitcoins, and is generally the first step for anyone looking to buy or own Bitcoins. There are various forms of wallets – online, offline (software), hardware and paper – with varying levels of security.
  • Zero-Confirmation Transaction – during a Bitcoin transaction, the seller may choose to send the product before the transaction has received confirmations. This is generally a show of good faith but also runs the risk of using the Bitcoins twice.

 

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