Bitcoin has changed the way people think about money and also confused many with its technicalities. Whether or not you choose to invest in it, you cannot ignore it.
To help you get a basic understanding of terms related to Bitcoin that you might have repeated heard of, continue reading!
A person used this pseudonym to publish the paper: Bitcoin Whitepaper in 2008 and this is how the invention of Bitcoin came to be. The world now considers Nakamoto as the founder of Bitcoin.
Satoshi to Bitcoin is what atom is to a chemical element. It is the smallest part of Bitcoin that can be. 100 million satoshis (8 decimal places) form one bitcoin. 1 satoshi = 0.0000001 bitcoins.
Just like an email address, Bitcoin users have 'addresses' with alphabets and numbers in them. If you want to send bitcoins to someone, you need to know their address that sends it to their wallet. Similarly, you need to share your address to receive them.
BCH and BTC
Just like stock exchanges using a trading name for companies instead of their full name, for example, INFY for Infosys on NSE, cryptocurrency exchanges use BTC for Bitcoin and BCH for Bitcoin Cash.
Also Read: What is the difference Bitcoin and Bitcoin Cash?
A group of Bitcoin transactions that have taken place in a specified period is a block. These transactions are processed by miners in groups (blocks) and not one after the other.
Storing the cryptocurrency offline without a connection to the internet. These can be stored in specialized devices that are similar to a USB drive, or a computer disconnected from the internet.
A centralized system is where a single group or authority will oversee the control, just like banks in India have a central authority- Reserve Bank of India.
Decentralization is the contrast of this system. Bitcoin is a decentralized currency as no government, company or individual is of control of its rules or its production. It relies on its codes and community for governance.
Hash is an algorithm that is used by miners to reduce large sized data into a fixed length. The Hash code then created becomes a unique code to identify a Bitcoin transaction.
SHA-256 is the name of the hash function used in Bitcoin.
It is the opposite of cold storage. Bitcoins or cryptocurrency stored in wallets that are connected to an active internet connection. These are exposed to external risk like in the case of Coincheck hack.
A blockchain is like a ledger or a record book that has records of every transaction that has ever taken place. This ledger is decentralized and open for public view online.
A miner is a specialized user of Bitcoin network that completes the transactions for other users and verifies blocks created by other miners.
Any computer that is connected to the Bitcoin network is a node. The Bitcoin network connected different computer devices.
It is a freely distributed software with codes that are available to the public to edit, use, and share. The Bitcoin code is open source.
Peer to Peer
It is a network were the two people involved in the transaction can directly communicate instead of a centralized server. Bitcoin is a peer-to-peer network.
It is a string of numbers and letters that is used as a password to spend bitcoins held in a specific address.
It is a type of cold storage where the private key is printed on a piece of paper.