Bitcoin and crypto terms, slang, lingo and decoding the blockchain terminology
One of the best ways to learn about bitcoin and cryptocurrency in general if you are just starting out is to learn the terminology associated with this industry. There are very specific words and phrases that are used to discuss coins, transactions and the technology behind it. Knowing these words will help you to not only find more info about cryptocurrency in general, but also help to explain it to others and how to use it properly. Let’s get started with some of the most commonly used words and phrases when it comes to blockchain terminology.
What the heck in mining? Doesn’t that involve a big hole in the ground with a lot of heavy machinery?This term is actually pretty simple to understand because it is a lot like mining for gold. Even though it means finding digitally finding and getting rewarded bitcoins using specialized software and code, Gold is a finite resource much like bitcoin, so the idea fits and just kinda stuck. You see, each bitcoin “miner” gets a transaction fee for each transaction on the blockchain that they confirm, and they are also rewarded bitcoins for each verified block as well (more on that part below).
#2 Private Key
This will probably age me a little bit but remember back in the day when you signed up for AOL to get on that new fangled internet thing? This was mostly likely your first experience with having to come up with a username/handle/screen name. Your private key is much like that but it’s a string of numbers (up to 78 of them, yikes!) and this gives you access to a wallet that contains the bitcoins, ether, Dash, Litecoin or Doge. It’s more like a password than a username if you think of it, and this is tied to a wallet via your alias.
There are many different types of wallets but we will say that most people use an online wallet. This is a cloud scenario that enables you to collect private keys and manage those said keys in order to let you make transactions using the blockchain network. It contains and lets you access the bitcoins that you have. You can have more than one wallet for more than one coin as well. But, you can never use a wallet intended for Bitcoin as an example, and use it to send or receive Litecoin.
What are blocks you ask? Well, blocks are pieces of information that connect every transaction made all together, forming block chains. These block chains that are then computed and verified about every ten minutes via a process called mining see above). This mining process ensures that you avoid things like double spending. This is because technically, a coin can easily be copied on your own computer inside your wallet. Using this mining method for verification makes it impossible to spend copies.
#5 Block Chain
We just finished scratching the surface of this one. The block chain is the public record of the coin transactions to and from every wallet that has made a transaction by either sending or receiving. This process is honestly just a very orderly ledger of blocks, maintaining a chronologically ordered chain of all the transactions to take place. Anyone on the web has access to download and view this block chain with a free block explorer.
#6 Block Explorer
This should be somewhat self explanatory after reading the last definition. This is like a web browser (think Google Chrome) that lets you see all the contents of the blocks so that you can view the transactions and the history of all the balances and addresses of any and all transactions that have taken place so far.
If you have done any research at all or have been following my other work, you should know by now that there are only 21 million bitcoins total. Because there will never be more than 21 million bitcoins in circulation at any time in the future, they are actually halved every four years with the last halving happening in 2140. What this essentially means is that the number of bitcoins it will take to form a block is decreased by half or exactly 50%.
Ya know how when you send certified mail, and when the recipient signs for it, you get a confirmation sent back to you that they got it? That’s kind of how this is. When a transaction is verified by the mining network, it is then considered a confirmation. The process that does this is what is known as the mining process (see above). Once transaction have been confirmed, at that point, they cannot be reversed or changed.
This is your wallet address. Think of it like an email address for your cryptocurrency. When you use bitcoin, you provide a wallet address for that particular unit or transaction. If I want to send you a bitcoin, (or multiple bitcoins or even a fraction of a bitcoin) I would need the wallet address that you want me to send it to. At that point, I can then send the amount I wish from my wallet to your wallet address.
OK, last one. A signature seems pretty easy, right? What could be different about this? Well, this signature is not like a John Handcock because refers to a cryptographic signature. This is really a mathematical formula that lets someone prove that they own the bitcoin trying to be sent. Just for an example, the wallet you are using for your coin and the private keys associated to that wallet, enable you, the user, to provide a signature so that no one else can steal your bitcoins in your wallet.
The more you learn about bitcoin and cryptocurrencies in general, the more you are going to come across even more new terminology that you may not have heard before but still means something important. Some of these terms seem pretty obvious (like mining), but others can be a little harder to grasp and fully understand. Do yourself a favor and take the time to learn all that you can so that you can make good choices when it comes to using cryptocurrency in the future!.