Bitcoin provides a new approach to online payments and for this, jargon is used that could become part of your vocabulary.
There is no need to worry, after all we live in times in which neologisms are created almost daily! In this section of BitRss.com we will list and explain the most commonly used terms.
- BITCOIN -
Bitcoin - capitalized, is used when describing the concept of Bitcoin, or the entire network called BlockChain. For example "Today I was studying the Bitcoin protocol." bitcoin - lowercase initial, used to describe bitcoins as a unit of "currency". For example "I sent you ten bitcoins today."; it is often abbreviated to BTC or XBT.
- BLOCK -
The block chain is a public ledger of Bitcoin transactions, in chronological order. The block chain is shared among all Bitcoin users. It is used to verify the permanence of Bitcoin transactions and to prevent double spending.
- BTC -
BTC is the common unit of the Bitcoin currency. It can be used in a similar way to USD per US dollar instead of BC or $.
- PRIVATE KEY -
A private key is a piece of secret data that proves that you are using bitcoin from a certain wallet through a certain encrypted signature.
Your private key (or private keys) is stored on your computer if you use a software wallet; instead it is stored on servers if you use a web wallet.
The private key must not be disclosed to others as it is what allows you to use the funds from your Bitcoin wallet.
- CONFIRMATION -
Confirmation indicates that a transaction has been processed by the network and is highly unlikely to be rejected.
Transactions receive confirmation when they are included in one and for each subsequent block. Even a single confirmation can be considered safe for low value transactions, although for larger amounts such as 1000.00 $, it is advisable to wait at list 3 confirmations or more. Each confirmation exponentially decreases the risk of a rejected transaction.
- ENCRYPTION -
Cryptography is that branch of mathematics that allows us to create mathematical proofs that provide high levels of security. Online trading and banking already uses cryptography. In the case of Bitcoin, cryptography is used to make it impossible for anyone to spend money from another user's wallet or alter the blockchain. It can also be used to encrypt a wallet, so that it cannot be used without a password.
- DOUBLE SPEND -
If a user tries to spend his bitcoins to two different suppliers, double spending occurs at the same time. This is obviously a fraudulent and illegitimate action. Bitcoin exist to create a consensus on the network which then defines which of the two transactions is to be considered valid.
- SIGNATURE -
Cryptographic signature is a mathematical mechanism that allows you to prove ownership of a virtual object. In the case of Bitcoin, a Bitcoin wallet and its private key (s) are linked by means of a magical mathematical constraint. When your Bitcoin software marks a transaction with the appropriate private key, the entire network can see that the signature matches the bitcoins spent. However, there is no way for the world to guess your private key, to steal your bitcoins from you.
- HASH RATE -
By hash rate we mean the unit of measurement of the processing power of the Bitcoin network. For security purposes, the Bitcoin network must perform intensive mathematical operations. For example, then the network reaches a hash rate of 10 Th / s, it means it can do a trillion calculations per second.
- BTC ADDRESS -
A Bitcoin address is equivalent to a hash address or an e-mail address. It is the only information you need to provide to someone so that they can pay you with Bitcoin. One thing to take into account, however, is that it is advisable to use different hash addresses for each type of transaction. It is not an obligation, but it greatly facilitates the management of transactions. For example: use 1 hash address to sell a bicycle and another to receive the donation for your cause.
- MINING -
Mining is the process that makes the computer hardware perform mathematical calculations in order to confirm transactions and increase the security of the Bitcoin network. As a reward for their service, Bitcoin miners can collect transaction fees which they confirm along with the newly created bitcoin. Mining is a specialized and competitive market where rewards are divided, based on how many calculations have been made. Not all Bitcoin users engage in mining and it is not an easy way to make money.
- P2P -
By peer to peer we mean systems that function as an organized collective, allowing each individual to interact directly with others. In the case of Bitcoin, the network is built in such a way that each user transmits transactions directly to other users. And crucially, no bank is required for transactions.
- WALLET -
A Bitcoin wallet is about the equivalent of a physical wallet on the Bitcoin network. Actually your wallet contains the private keys that allow you to use the bitcoins allocated in the blockchain. Each Bitcoin wallet can show you the total balance of all the bitcoins it controls and allows you to pay precise figures to a specific person, like a real wallet. This, for example, is the difference from credit cards or other payment systems where, for example, transaction fees are charged by the companies executing their transactions.