Bitcoin Glossaries - Altcoin: Short for “alternative cryptocurrency”; another cryptocurrency similar to Bitcoin. There are more than a thousand altcoins currently in existence; most are nearly exact copies of more successful cryptocurrencies, but some very innovative ones have been produced as well.
ASIC: Application-specific integrated circuit. A piece of hardware designed to do one thing and one thing only. In the cryptocurrency world, it mines for a specific algorithm (SHA256, Scrypt, etc.).
BFGMiner: The second most-popular Bitcoin-mining software. Bitcoin/bitcoin: Bitcoin with a capital B refers to Bitcoin the system, the network or the currency as a whole; bitcoin with a lowercase b refers to individual bitcoins, as in, “I have five bitcoins.”
Bitcoin-Qt: Also called Bitcoin Core, it is the primary implementation of Bitcoin and what all other wallets and services are based on.
Bitcoin XT: An alternative implementation of the Bitcoin code, compatible with the current main implementation of Bitcoin, that was pushed primarily by Gavin Andresen and Mike Hearn. It is used to test new features and entered the public consciousness as a possible replacement for Bitcoin-Qt if the various factions in the block size debate could not reach a compromise. It offered 20MB-sized blocks as a primary feature.
block: Transactions on the blockchain are grouped into blocks, confirmed by miners roughly every 10 minutes. They are currently limited to 1MB in size but that is likely to change in the near future.
blockchain: The decentralized public ledger that makes Bitcoin work. Every transaction and account is kept track of here. Not to be confused with Blockchain.info the website or its parent company, Blockchain. Also used to refer to any upcoming technology that uses a public ledger to keep track of digital value; i.e., “They are developing their own blockchain technology.”
block explorer: A website or piece of software that allows users to observe and follow Bitcoin transactions through the blockchain. Can also be used to describe similar systems for altcoins’ blockchains.
CGMiner: The most popular Bitcoin-mining software.
cold wallet: A wallet on a computer or storage disk that is not connected to the Internet and must be momentarily connected to the Internet and turned into a hot wallet in order to sign transactions. Can then be turned back into a cold wallet.
core developer: Developer of a cryptocurrency who has access to git commits in the site’s GitHubpage.
cryptocurrency: Any digital currency that uses cryptography to secure its system or users’ identities and account holdings.
Dark Web: The part of the Deep Web that is built from specific services. Including but not limited to drug activities but also where journalists can meet sources anonymously and securely, anonymous meetup groups and any other activity that might require the protection of anonymity.
decentralization: The idea that a network, service or company ownership could be distributed among a large group of people without a central point of failure, e.g., “The Internet is a global, decentralized communication network.”
Deep Web: All data on the Internet not visible by regular web browsers, from banking information to illegal drug markets.
ecash/emoney: Any kind of digital money separated from the fiat world; typically used to refer to pre-Bitcoin digital currencies.
faucet: Services on the web that will give users a small amount of Bitcoin for free for completing small tasks such as viewing ads. When Bitcoin was inexpensive, they gave out full bitcoins. Today they give tiny fractions of bitcoins that, like full bitcoins previously, are worth fractions of a cent.
51% attack: Proof-of-work is used in Bitcoin to validate the blockchain. It takes computational power to validate and confirm transactions. Changing one transaction will change the verifiable data in all subsequent transactions. Therefore, if there are two competing blockchains with different transaction histories, the one that is longer will be considered the “true” blockchain because it has the most computational power behind it. Since malicious actors usually work alone, it is unlikely that any one group could put more computational power behind its modified blockchain compared to the real blockchain. However, if someone did control a higher hashrate than the combined hashrate of all of the miners working on the true blockchain, that group would be able to outwork the valid chain and get its blockchain confirmed as valid. This is called a 51% attack.
fork: Copying an open-source code and making modifications to it. In the context of cryptocurrencies, it can also mean when miners either accidentally or maliciously start mining a false blockchain.
full node: A local Bitcoin wallet that stores the entire blockchain and helps validate and spread confirmed transactions from miners. Unlike miners, full nodes do not require any specialized hardware and do not receive any reward.
git commit: A possible change to the open-source code on the website GitHub.
GitHub: A website that hosts open-source code for collaborative work on that code.
GUIMiner: The most popular Bitcoin-mining software with a graphical user interface.
hard fork: Changes to a cryptocurrency’s code that requires participants to upgrade their software in order to be able to continue functioning with the upgraded clients. If the majority of users do not upgrade, the older software will continue mining on its own blockchain; since that blockchain will be longer with a higher hashrate, the coin’s network will split in two and potentially be disastrous. However, successful hard forks are often the only way to make significant changes to a cryptocurrency’s code.
hash: A unit of measurement for how much computational power is being put toward a network.
hashing power: Another way to say hashrate.
hashrate: The total number of hashes being put toward a network. The total number of hashes equals the number of computational equations taking place on the Bitcoin (or other cryptocurrency) network. 1/THs hashrate means the network is capable of one trillion calculations per second.
hot wallet: A wallet connected to the Internet. Bitcoins are at risk of being stolen if the computer or password for the wallet is insecure. Suitable for spending money and short-term storage. All web wallets are hot wallets.
lead developer: Developer who decides which developers have git commit access.
local wallet: A wallet, either hot or cold, that is stored on your computer.
miner: A participant of the Bitcoin network who does the complex mathematical computations that secure the Bitcoin network while also confirming every transaction through cryptography. Can refer to either the actual computer hardware doing the work or the individuals or companies that own the hardware.
mining: The process of confirming Bitcoin transactions in groups called blocks by solving complex mathematical computations and then sending the transactions to the rest of the network. For doing this, miners are rewarded with a small amount of Bitcoin, which is how new bitcoins are made. Miners also receive the small fees attached to each transaction, which is what they will have to subsist off of when all 21 million bitcoins are mined, estimated to occur around the year 2140. Miners are in constant competition with each other.
Mt. Gox: An online site that was originally intended to trade Magic: The Gathering cards but eventually became the first and largest Bitcoin exchange, creating the first centralized open marketplace. After a multitude of security failures and accusations of fraud, it collapsed in early 2014, tanking the price of Bitcoin, which had been higher than it ever had been before. Bitcoin’s price still has not recovered completely.
node runner: A participant in the Bitcoin network who downloads the entire blockchain and doublechecks the miner’s work but does not compete in the mining race and does not receive any reward but is nevertheless an important part of securing the Bitcoin network. Developing incentives for node runners has been considered as the blockchain grows in size and fewer people want to download the entire thing.
open source: Any code that is open and can be modified by the public.
paper wallet: Your private or public key, printed out or written on a piece of paper.
pre-mine: When some altcoins are created for the first time, the creators will sometimes generate a number of coins before the network is turned on and people are able to mine them in a fair way. Generally indicative of a scam, it can be a part of an honest coin’s program if it is a small number of coins and is done in a transparent way or if the coin requires it because of its type.
proof-of-burn (PoB): Using the blockchain to prove that Bitcoin or another cryptocurrency has been sent to an unspendable address, effectively removing it from the system.
proof-of-stake (PoS): The type of cryptographic proof that secures a coin’s blockchain that weighs votes based on coin holdings rather than computational power.
proof-of-work (PoW): The type of cryptographic proof that secures the blockchain that measures votes based on computational power.
public-key encryption: A method where information can be verified by an outside party without revealing that information through the use of a publicly identifiable key. That key can be used to confirm that a message came from someone holding its related private key without revealing the specifics of that private key.
Scrypt: The computer algorithm used by Litecoin and many other alternative cryptocurrencies to secure their networks. It was designed to be more resistant to ASICs.
SHA256: The computer algorithm that Bitcoin and many other cryptocurrencies use to secure their networks.
sidechain: A possible solution to scaling Bitcoin. Blockchain-like ledgers that will keep track of a large number of transactions that will be added to the final blockchain in a compressed form.
soft fork: A significant change to a cryptocurrency’s code that, while perhaps “requiring” an upgrade to wallet software for security or another reason, older software will be able to send, receive, and validate transactions and won’t accidentally start validating an alternative blockchain.
wallet: General term for the software that communicates with the Bitcoin network to sign transactions using your Bitcoin address.
web wallet: A wallet controlled and held on a website hosted by another company. It is only as secure and trustworthy as the company hosting it. Generally suitable for spending money only, but some services pride themselves on extra security and have multisig technology with off-line key generation that is suitable for short- to medium-term storage.
X11: The algorithm used by Dash and several other currencies. It utilizes 11 different algorithms, hence the name.
