Glossary
Algorithm:
Precise sequence of operations to be performed in order to achieve a certain objective using mathematical process of numerical calculation.
Off-line archive:
Off-line database which allows access to the third key of your wallet; it is used to recover your wallet funds in case of forgetting the login credentials.
Bitcoin:
First decentralized digital currency, invented and developed by Satoshi Nakamoto in 2009, to have solved the problem of double spending.
Block:
Collection of Bitcoin transactions that need to be verified and recorded on the network. A block is created by the miners, approximately every 10 minutes, and is tied to the previous block, creating a chain of blocks called the Blockchain. Transactions included in the block and linked to the blockchain are considered permanently registered.
Blockchain:
Historical accounting ledger of all transactions in Bitcoin.
Block Reward:
Reward in Bitcoin awarded to miners for each block generated. The block reward is the only way to obtain new issued Bitcoins within the system. Thanks to the Block Reward, miners can contributing to the functioning and maintenance of the Blockchain.
BTC:
Abbreviation for Bitcoin currency.
Private key:
Alphanumeric code needed to access your Bitcoins and to authorize transactions through a digital signature.
Public key:
Alphanumeric code that allows you to receive Bitcoins; unilaterally derivate from the private key. The private key that generated the public key cannot be determined. The Bitcoin addresses are obtained from the public key through a hash function.
Confirmations:
Confirmations guarantee that a transaction has been verified and recorded correctly within the Blockchain. Transactions are confirmed when they are included in a block and at each subsequent block. Generally, after about 3-4 confirmations, the payment is considered valid, and the user can dispose of his Bitcoins.
Cryptocurrency:
Digital currency that uses cryptography to ensure security and verify transactions.
Encryption:
Use of secret mathematical codes to secure information; codes are used both to protect the wallet and to sign transactions.
Decentralized:
System that run without a central authority or intermediary to control it.
Distributed:
System in which all network participants are connected to each other and have the same powers and follow the same rules; anyone can access the network and each node can own a copy of the Blockchain.
Signature:
Mathematical procedure used to verify the authenticity of a private key connected to a public key. It is used to create the signature that authorizes the user to spend his Bitcoins.
Halving:
A Bitcoin halving event is when the reward for mining Bitcoin transactions is cut in half. It happens every 210.000 bitcoin blocks.
This event also cuts in half Bitcoin’s inflation rate and the rate at which new bitcoins enter circulation, so that there can never be more than 21million units
Hash:
Cryptographic function used by Bitcoin for address generation, transaction and block construction, and in the mining process.
Bitcoin address:
Alphanumeric string (hash) that identifies a Bitcoin wallet. It’s generated from the public key, which is generated from the private key. It is used to receive Bitcoins.
Miner:
User that verify transactions within the network, collecting them in blocks and recording those blocks in the Blockchain. They contribute to the maintenance and security of the network. Their economic incentive is twofold: Mining fee and Block reward.
Mining Fee:
Commission paid in Bitcoin by network users to Miners to record each transaction in the Blockchain.
Node:
Users who download and keep custody of a copy of the Blockchain and transmit information on new transactions to all other nodes. Not all nodes are miners while all miners must be connected to the network via nodes.
Open Source:
Software based on publicly available code, free and modifiable by anyone.
Peer to peer:
Network through which the participants of the Bitcoin network communicate directly with each other participant, without the need for a central authority. Each peer is equal to the others and therefore shares the same rules and powers.
Wallet:
Software used to generate private, public keys and related Bitcoin addresses. It represents the user's interface with the Blockchain and the network. It is necessary to store and spend Bitcoin.
Proof of Work:
Algorithm that regulates the way in which the nodes of the network reach a consensus on the state of the Blockchain, therefore of the transactions. It allows miners to agree on which block to add to the Blockchain and to the nodes to understand what the legitimate blockchain is, without placing trust in an authority.
Bitcoin Protocol:
System that contains and defines the set of rules of the Bitcoin network. It defines node behavior, transaction format, mining operation and information verification processes.
Glossary
Algorithm:
Precise sequence of operations to be performed in order to achieve a certain objective using mathematical process of numerical calculation.
Off-line archive:
Off-line database which allows access to the third key of your wallet; it is used to recover your wallet funds in case of forgetting the login credentials.
Bitcoin:
First decentralized digital currency, invented and developed by Satoshi Nakamoto in 2009, to have solved the problem of double spending.
Block:
Collection of Bitcoin transactions that need to be verified and recorded on the network. A block is created by the miners, approximately every 10 minutes, and is tied to the previous block, creating a chain of blocks called the Blockchain. Transactions included in the block and linked to the blockchain are considered permanently registered.
Blockchain:
Historical accounting ledger of all transactions in Bitcoin.
Block Reward:
Reward in Bitcoin awarded to miners for each block generated. The block reward is the only way to obtain new issued Bitcoins within the system. Thanks to the Block Reward, miners can contributing to the functioning and maintenance of the Blockchain.
BTC:
Abbreviation for Bitcoin currency.
Private key:
Alphanumeric code needed to access your Bitcoins and to authorize transactions through a digital signature.
Public key:
Alphanumeric code that allows you to receive Bitcoins; unilaterally derivate from the private key. The private key that generated the public key cannot be determined. The Bitcoin addresses are obtained from the public key through a hash function.
Confirmations:
Confirmations guarantee that a transaction has been verified and recorded correctly within the Blockchain. Transactions are confirmed when they are included in a block and at each subsequent block. Generally, after about 3-4 confirmations, the payment is considered valid, and the user can dispose of his Bitcoins.
Cryptocurrency:
Digital currency that uses cryptography to ensure security and verify transactions.
Encryption:
Use of secret mathematical codes to secure information; codes are used both to protect the wallet and to sign transactions.
Decentralized:
System that run without a central authority or intermediary to control it.
Distributed:
System in which all network participants are connected to each other and have the same powers and follow the same rules; anyone can access the network and each node can own a copy of the Blockchain.
Signature:
Mathematical procedure used to verify the authenticity of a private key connected to a public key. It is used to create the signature that authorizes the user to spend his Bitcoins.
Halving:
A Bitcoin halving event is when the reward for mining Bitcoin transactions is cut in half. It happens every 210.000 bitcoin blocks.
This event also cuts in half Bitcoin’s inflation rate and the rate at which new bitcoins enter circulation, so that there can never be more than 21million units
Hash:
Cryptographic function used by Bitcoin for address generation, transaction and block construction, and in the mining process.
Bitcoin address:
Alphanumeric string (hash) that identifies a Bitcoin wallet. It’s generated from the public key, which is generated from the private key. It is used to receive Bitcoins.
Miner:
User that verify transactions within the network, collecting them in blocks and recording those blocks in the Blockchain. They contribute to the maintenance and security of the network. Their economic incentive is twofold: Mining fee and Block reward.
Mining Fee:
Commission paid in Bitcoin by network users to Miners to record each transaction in the Blockchain.
Node:
Users who download and keep custody of a copy of the Blockchain and transmit information on new transactions to all other nodes. Not all nodes are miners while all miners must be connected to the network via nodes.
Open Source:
Software based on publicly available code, free and modifiable by anyone.
Peer to peer:
Network through which the participants of the Bitcoin network communicate directly with each other participant, without the need for a central authority. Each peer is equal to the others and therefore shares the same rules and powers.
Wallet:
Software used to generate private, public keys and related Bitcoin addresses. It represents the user's interface with the Blockchain and the network. It is necessary to store and spend Bitcoin.
Proof of Work:
Algorithm that regulates the way in which the nodes of the network reach a consensus on the state of the Blockchain, therefore of the transactions. It allows miners to agree on which block to add to the Blockchain and to the nodes to understand what the legitimate blockchain is, without placing trust in an authority.
Bitcoin Protocol:
System that contains and defines the set of rules of the Bitcoin network. It defines node behavior, transaction format, mining operation and information verification processes.