Bitcoin Vocabulary

A field in the block header which contains the SHA256(SHA256()) hash of the previous block’s header. The sequentially-numbered index of outputs in a single transaction starting from 0. A strategy for selecting which outputs to spend that avoids merging outputs with different histories that could leak private information.

Bitcoin Vocabulary

A transaction can be sent from as little as a single address and sent to a single address or multiple addresses. A Payment Channel is a type of smart contract that takes place between two parties on the lightning network. You need to be running a lightning node in order to use the lightning network and open/close payment channels. A Mining Contract is a term in bitcoin cloud mining that states the terms or renting or leasing the use of a bitcoin miner. If you do not want to run your own bitcoin miners, you can sign a mining contract to earn all of the bitcoin mined by a particular miner for a predetermined amount of time. A Hot Wallet is any wallet that stores your private keys online.

Bitcoin Glossary

Testnet — A testnet is a test network to be able to test new functions for the → mainnet in a secure environment. Support — Denotes a price level that has not fallen below several times. Solidity — Solidity is a contract-oriented programming language used to write smart contracts. Sharding — Sharding means dividing a chain into several separate chains. Sell ​​wall — A “sale wall” means that many sales orders have been placed at a specific price.

  • Synchronizing the block chain by downloading block headers before downloading the full blocks.
  • The amount of bitcoins which is collected from the bitcoin transaction.
  • When you have the private key you are responsible for and have complete control over the crypto contained in your wallet.
  • In computer science, a bit is the smallest unit of data in a computer.
  • The number of confirmations for transactions may change after a reorg, and transactions that are not in the new chain will become “0/unconfirmed” again.
  • Coinmarketcap — Usually refers to the crypto currency website
  • Tether — Tether (USDT) is a cryptocurrency whose value tries to mirror that of the US dollar.

Mining refers to the process of validating Bitcoin transactions by checking that the rules of the network were followed and then building blocks which reinforce those rules. Building blocks through “mining” is achieved by solving computational puzzles to find the proper hash which secures the block. Transactions are verified through cryptography and recorded on a blockchain – a kind of digital public ledger. Bitcoins can be exchanged for services, products and other currencies.

Double Spending

A Double Spend takes places whenever the same unit of money is spent more than once. Double spends take place every day on Bitcoin Vocabulary legacy payment networks such a VISA and PayPal. Bitcoin and all other cryptocurrencies are often called digital assets.

All on-chain transactions are publicly recorded and visible on the blockchain. Mt. Gox was one of the first bitcoin exchanges and one of the only places that you could trade bitcoin in the early days of Bitcoin. One of the famous days in bitcoin was when Mt. Gox was hacked resulting in the loss of 850,000 bitcoins. To this day, it remains one of the largest hacks in Bitcoin history. Mixing is the generic term for CoinJoin which is the act of joining your bitcoin with others to increase privacy by making it difficult to follow ownership of bitcoin on the blockchain. A Hard Fork is a permanent change to the blockchain software that is no backwards compatible and creates an entirely new blockchain.

Bull Market

If you sent a bitcoin transaction and it is not yet confirmed, then it is waiting in the MemPool. A Lightning Node is a bitcoin node that has an entire copy of the blockchain downloaded on a local hard drive and processing lightning network transactions. In order to use the lightning network, you need to run your own lightning node. A Block is a file where a group of bitcoin transactions are permanently recorded on the blockchain.

Bitcoin Vocabulary

The root node of a merkle tree, a descendant of all the hashed pairs in the tree. Block headers must include a valid merkle root descended from all transactions in that block. A data type identifier and a hash; used to identify transactions and blocks available for download through the Bitcoin P2P network. When several nodes (usually most nodes on the network) all have the same blocks in their locally-validated best block chain. One or more transactions prefaced by a block header and protected by proof of work. A 20-byte hash formatted using base58check to produce either a P2PKH or P2SH Bitcoin address.