Some Bitcoin words you might hear

　　Bitcoin provides a new approach to payments and, as such, there are some new words that might become a part of your vocabulary.

　　Address

　　similar to a physical address or an email

　　A Bitcoin address is. It is the only information you need to provide for someone to pay you with Bitcoin. An important difference, however, is that each address should only be used for a single transaction.

　　Bit

　　Bit is a common unit used to designate a sub-unit of a bitcoin - 1,000,000 bits is equal to 1 bitcoin (BTC). This unit is usually more convenient for pricing tips, goods and services.

　　Bitcoin

　　Bitcoin - with capitalization, is used when describing the concept of Bitcoin, or the entire network itself. e.g. "I was learning about the Bitcoin protocol today."

　　bitcoin - without capitalization, is used to describe bitcoins as a unit of account. e.g. "I sent ten bitcoins today."; it is also often abbreviated BTC or XBT.

　　Block Chain

　　public record of Bitcoin transactions

　　The block chain is ain chronological order. The block chain is shared between all Bitcoin users. It is used to verify the permanence of Bitcoin transactions and to preventdouble spending.

　　Block

　　record in the block chain that contains and confirms many waiting transactions

　　A block is a. Roughly every 10 minutes, on average, a new block including transactions is appended to theblock chainthroughmining.

　　BTC

　　BTC is a common unit used to designate one bitcoin.

　　Confirmation

　　processed by the network and is highly unlikely to be reversed

　　Confirmation means that a transaction has been. Transactions receive a confirmation when they are included in ablockand for each subsequent block. Even a single confirmation can be considered secure for low value transactions, although for larger amounts like $1000 USD, it makes sense to wait for 6 confirmations or more. Each confirmationexponentiallydecreases the risk of a reversed transaction.

　　Cryptography

　　mathematical proofs that provide high levels of security

　　Cryptography is the branch of mathematics that lets us create. Online commerce and banking already uses cryptography. In the case of Bitcoin, cryptography is used to make it impossible for anybody to spend funds from another user's wallet or to corrupt theblock chain. It can also be used to encrypt a wallet, so that it cannot be used without a password.

　　Double Spend

　　spend their bitcoins to two different recipients at the same time

　　If a malicious user tries to, this is double spending. Bitcoinminingand theblock chainare there to create a consensus on the network about which of the two transactions will confirm and be considered valid.

　　Hash Rate

　　measuring unit of the processing power of the Bitcoin network

　　The hash rate is the. The Bitcoin network must make intensive mathematical operations for security purposes. When the network reached a hash rate of 10 Th/s, it meant it could make 10 trillion calculations per second.

　　Mining

　　making computer hardware do mathematical calculations for the Bitcoin network to confirm transactions

　　Bitcoin mining is the process ofand increase security. As a reward for their services, Bitcoin miners can collect transaction fees for the transactions they confirm, along with newly created bitcoins. Mining is a specialized and competitive market where the rewards are divided up according to how much calculation is done. Not all Bitcoin users do Bitcoin mining, and it is not an easy way to make money.

　　P2P

　　systems that work like an organized collective

　　Peer-to-peer refers toby allowing each individual to interact directly with the others. In the case of Bitcoin, the network is built in such a way that each user is broadcasting the transactions of other users. And, crucially, no bank is required as a third party.

　　Private Key

　　secret piece of data that proves your right to spend bitcoins from a specific wallet

　　A private key is athrough a cryptographicsignature. Your private key(s) are stored in your computer if you use a software wallet; they are stored on some remote servers if you use a web wallet. Private keys must never be revealed as they allow you to spend bitcoins for their respective Bitcoin wallet.

　　Signature

　　a mathematical mechanism that allows someone to prove ownership

　　Acryptographicsignature is. In the case of Bitcoin, aBitcoin walletand itsprivate key(s)are linked by some mathematical magic. When your Bitcoin software signs a transaction with the appropriate private key, the whole network can see that the signature matches the bitcoins being spent. However, there is no way for the world to guess your private key to steal your hard-earned bitcoins.

　　Wallet

　　the equivalent of a physical wallet on the Bitcoin network

　　A Bitcoin wallet is loosely. The wallet actually contains yourprivate key(s)which allow you to spend the bitcoins allocated to it in theblock chain. Each Bitcoin wallet can show you the total balance of all bitcoins it controls and lets you pay a specific amount to a specific person, just like a real wallet. This is different to credit cards where you are charged by the merchant.