Bitcoin Vocabulary Words
A new approach to making payments online is using Bitcoins to do so. This means that new words will be used when discussing transactions made using Bitcoins.
Each Bitcoin has an address just as each website on the Internet has its own address. When paying with Bitcoins the recipient of the payment will need to know the address of the Bitcoin. An email address can be used for a Bitcoin in place of an address but there can only be one email address for each Bitcoin.
When describing this new word, Bitcoin needs to be capitalized always. Even describing the Bitcoin network in which transactions take place requires the word to be written with a capital B. When it is used without capitalization Bitcoin must be mentioned in conjunction with a specific amount. In this case Bitcoin is allowed to be shortened to XBT or BTC.
The presence of a block is required when a block chain is needed. The block is used to confirm that transactions are waiting to go through concerning a particular Bitcoin. On an average of once every 10 minutes a new block will appear that will contain new Bitcoin transactions. Mining is used to manage transactions within a particular block.
A block chain works much like the serial number on paper money does. It serves to track the progression of any Bitcoin used in a transaction. Alphabetical order is used for transactions to keep track of each of them. All Bitcoin users share the same block chain. The block chain prevents any Bitcoin from being used twice and ensures each Bitcoin is used in its intended transaction.
Bitcoin currency is measured in BTC and appears after the number amount.
Confirmation involves the processing of a Bitcoin transaction. When a Bitcoin user receives a transaction confirmation it means that the transaction cannot be reversed at this point. For every block of transactions made a confirmation is generated. Depending on the size of the transaction one confirmation may be enough. Large transactions involve at least six confirmations if not more. Each time a confirmation is generated it makes it less and less likely the transaction can be reversed later on.
One branch of math is called Cryptography. High levels of security are provided through mathematical proofs. Cryptographs are already used in the banking and online commerce world. When it comes to Bitcoins, Cryptography ensures that an individual cannot spend Bitcoins found in someone else’s wallet. This means that a password must be used to protect each online wallet.
Double spending is when a dishonest Bitcoin users attempts to use the same Bitcoin for two separate transactions. Both the block chain and Bitcoin mining are used to determine which transaction the Bitcoins in question are applied to.
Hash Rate is a measuring unit that gives power to the network of Bitcoins. For security reasons very complicated mathematics must be performed in Bitcoin transactions. A 10TH/S hash rate indicates that 10 trillion calculations can be made in one second.
Mining is a process used in conjunction with Bitcoins. It is the process of using computers to determine transactions. Bitcoin miners receive a transaction fee every time one transaction is confirmed. This is very competitive market that is very specialized. Rewards among Bitcoin miners are divided through precise calculations. Some Bitcoin users make money as a miner but this is not easy to do.
P2P stands for peer-to-peer systems and these systems work together to allow Bitcoin users to interact with each other. Bitcoin users broadcast each other’s transactions, and as a result, banks do not need to be involved in these transactions.
A private key is a piece of information that connects a Bitcoin to a specific online wallet so the Bitcoin can be used. These keys must not be known by anyone other than the owner of a specific Bitcoin account.
Cryptographic signatures help a Bitcoin owner prove their ownership. Since every Bitcoin wallet and private key is connected the Bitcoin network can determine that a transaction is being made by the owner of the Bitcoins being used. As long as Bitcoin owners keep their key private no one else can find it.
A Bitcoin wallet is a virtual version of the wallet each individual carries in their pocket or purse. A users’ private key is always stored in their wallet.