Cryptocurrency has woven its way into the fabric of modern finance, and Bitcoin stands as its flagbearer. Yet, for many, the language surrounding Bitcoin remains as enigmatic as the digital currency itself. We’re here to demystify the jargon, decode the acronyms, and navigate the intricate landscape of Bitcoin terminology. From 51% attack to Halving, let’s embark on a journey through the Bitcoin glossary.
Unraveling the Bitcoin Terminology
21
Symbolic number, as there can only ever be 21 million Bitcoin in existence. Nobody knows why Satoshi Nakamoto choose this exact number.
100x
Referring either to the expected growth in a coin or the amount of leverage used in a margin trade. Either a sign of extreme bullishness on a cryptocurrency’s price or willingness to take risks trading.
51% Attack
A majority of Bitcoin miners could collude in proof of work blockchains to attack the chain. Such an attack would not allow miners to steal any funds, but they could reverse recently confirmed transactions and block specific or general transactions, for example, by freezing funds. A successful 51% attack can bring the system to a halt.
Address
To send somebody Bitcoin, you need their Bitcoin Address; to send Ethereum, you need their Ethereum address, and so on for whichever cryptocurrency you’re dealing with. An address is technically the SHA-256 hash of a public key or script. It can either be encode with base58 or bech32.
Airdrop
The process of awarding newly created altcoins or tokens to existing holders of a cryptocurrency or users of a blockchain.
Altcoin
Any cryptocurrency or token that is not Bitcoin. Bitcoin purists may regard altcoins as shitcoins, but they’re now an accepted part of the cryptocurrency landscape.
ASIC
Application-specific integrated circuit. Specialized chips optimized to perform the SHA-256 hash function used in Bitcoin mining.
Atomic Swap
Swapping a Bitcoin for an altcoin in a way that doesn’t require escrow is call an atomic swap. It is a transaction made under the condition of another transaction and enforced with cryptography, which makes it impossible for any of the two parties to cheat.
Base58
Used to make large numbers shorter and easier to parse than binary or the commonly used base10. Base58 is the encoding scheme used for P2SH and P2PKH Bitcoin addresses.
Batching
Usually, a Bitcoin transaction contains one destination output and one change output. Services that make multiple transactions, however, have an incentive to ‘batch’ transactions. A single transaction with multiple outputs instead of multiple transactions saves blockspace and fees.
Bear
A person pessimistic about Bitcoin.
Bearwhale
A heavy trader who is pessimistic or selling large amounts of coins.
Bech32
Bech32 is a new encoding scheme that makes addresses more secure, especially in the context of multisignature schemes.
BIP
Bitcoin Improvement Proposal is a commonly accepted procedure to propose changes and additions to the Bitcoin code.
Bitcoin ATM
A Bitcoin Automatic Teller Machine sells Bitcoin in exchange for paper currency. Some machines can also dispense altcoins and fiat.
Bitcoin Cash
In August 2017, a group of Bitcoin enthusiasts changed the consensus rules of Bitcoin, particularly those governing the block size. As only a few miners and participants joined them, the network permanently forked. Everybody who held Bitcoin before the fork received an equal amount of Bitcoin Cash.
Bitcoin Core
Bitcoin Core is the most popular Bitcoin client and node.
Bitcoind
Bitcoind, short for Bitcoin Daemon, is the command-line version of Bitcoin Core.
Bitcoin-qt
Bitcoin-qt (pronounced cute) is the graphical interface of Bitcoin Code, the most popular Bitcoin client.
Bitcoiner
A person that uses Bitcoin. Transacting, verifying, saving, and mining are all uses of Bitcoin.
Block
A block contains transactions. Each block references its predecessor, forming a long chain back to the genesis block.
Block Subsidy
Also called the block reward. For each block that a miner finds, they are allowed to ‘create’ Bitcoin out of nowhere.
Blockchain
Blocks always reference the previous block, which creates a chain of data. This chain is called the blockchain or ledger.
Blockexplorer
An explorer, or block explorer, is a tool or website that allows you to conveniently navigate the data stored on a blockchain.
Block Size
The allowed size of a block in the Bitcoin blockchain. Since 2010, the limit is 1MB.
Blockspace
Bitcoin blocks are limited in size, and the amount of available space is called blockspace.
Broadcast
When signing a transaction or mining a block, the data in question is broadcast to the entire network.
BTC
The most commonly used ticker for Bitcoin.
BTM
Alternative name for a Bitcoin ATM.
Bull
A person optimistic about Bitcoin.
Capacity
Usually measured in transactions per second, or TPS, the capacity of a cryptocurrency network varies greatly.
Chain Split
When all participants no longer agree on the state of the network, it has forked.
Change
When spending Bitcoin, you will have to reference a previous incoming transaction.
Civil War
The Bitcoin Civil War of 2017 mostly revolved around the question of block size.
Client
A Bitcoin client is software that interacts with the network.
Coinbase
The transaction containing the Block reward has no input.
Coinjoin
A technique that mixes the transactions of multiple people to obfuscate which inputs belong to which outputs.
Cold Storage
Bitcoins stored on a medium that is not connected to the internet.
Colored Coin
A transaction can be attributed (colored) with a special meaning.
Confirmation
When a transaction is included in a block by a miner, it is considered to have one confirmation.
Cryptocurrency
Money secured by cryptography on a public blockchain.
Cryptography
The technique of hiding information, securing, and authenticating communications.
Cyberpunk
An art and literature genre in which advance technology is pinned against a dystopian society.
Cypherpunk
A social movement that aims to empower the individual through the spread of technology.
Dark Wallet
An experimental Bitcoin wallet using stealth payments and coinjoin.
Days Destroyed
A measurement of when coins that have been stored for a long time are suddenly spent.
Difficulty
Blocks are supposed to be found by miners, on average, every 10 minutes on the Bitcoin network.
Double Spend
The fundamental problem solved by the Nakamoto Consensus.
ECDSA
Elliptic Curve Digital Signature Algorithm is the algorithm use by Bitcoin to generate private and public key pairs.
Escrow
A contract between two trading partners and a third-party broker.
Exchange
A platform where fiat or other tokens can be bought and sold for Bitcoin and other cryptocurrencies.
Explorer
An explorer, or block explorer, is a tool or website that allows you to conveniently navigate the data stored on a blockchain.
Fee
Due to limited blockspace, a transaction has to pay a fee to be include in a block.
Fee Market
Due to limited blockspace, a transaction has to pay a fee to be included in a block.
Fiat
Fiat money is currency issue by a government.
Flood Attack
Similar to a DDoS attack, a flood attack ‘floods’ the mempool with transactions.
Fork
When all participants no longer agree on the state of the network, it has forked.
Genesis Block
All blockchains have a genesis block, which is the first block in the blockchain.
Halving
For the Bitcoin network, every 210,000 blocks, the block reward is halved.
Hardfork
Any change that widens the existing ruleset is consider a hardfork.
Hardware Wallet
A specialized chip that contains a secure enclave which stores your private key.
Hash
A hash is the output of a hash function.
FAQs
1. What is the significance of the number 21 in Bitcoin?
The number 21 represents the symbolic limit of 21 million Bitcoins that can ever exist, a decision attributed to Bitcoin’s enigmatic creator, Satoshi Nakamoto.
2. What is a 51% attack?
A 51% attack occurs when a majority of Bitcoin miners collude to control over 50% of the network’s mining power, enabling them to manipulate transactions and potentially disrupt the blockchain.
3. What is the purpose of a Bitcoin ATM?
A Bitcoin ATM allows users to exchange paper currency for Bitcoin, providing a physical gateway into the world of cryptocurrency.
4. What is the significance of the Bitcoin halving?
The Bitcoin halving is a pivotal event in the cryptocurrency’s lifecycle, reducing the block reward by half approximately every four years, ultimately limiting the total supply of Bitcoin to 21 million.
5. How does a hardware wallet enhance security in Bitcoin transactions?
A hardware wallet stores private keys offline, offering an extra layer of security by safeguarding against potential online threats and hacking attempts.
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