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This quick glossary contains many of the terms used in relation to bitcoin. These terms are used throughout the book, so bookmark this for a quick reference and clarification.
address (aka public key)::
((("bitcoin address")))
((("address", see="bitcoin address")))
((("public key", see="bitcoin address")))
A bitcoin address looks like +1DSrfJdB2AnWaFNgSbv3MZC2m74996JafV+, they always start with a one. You can have as many as you like, share them so people can send you coins.
bitcoin::
((("bitcoin")))
The name of the currency unit (the coin), the network and the software
block::
((("block")))
A grouping of transactions, marked with a timestamp, and a fingerprint of the previous block. The block header is hashed to find a proof-of-work, thereby validating the transactions. Valid blocks are added to the main blockchain by network consensus.
blockchain::
((("blockchain")))
A list of validated blocks, each linking to its predecessor all the way to the genesis block.
confirmations::
((("confirmations")))
Once a transaction is included in a block, it has "one confirmation". As soon as _another_ block is mined on the same blockchain, the transaction has two confirmations etc. Six or more confirmations is considered final.
difficulty::
((("difficulty")))
A network-wide setting that controls how much computation is required to find a proof-of-work.
difficulty target::
((("target difficulty")))
A difficulty at which all the computation in the network will find blocks approximately every 10 minutes.
difficulty re-targetting::
((("difficulty re-targetting")))
A network-wide re-calculation of the difficulty which occurs once every 2106 blocks and considers the hashing power of the previous 2106 blocks.
fees::
((("fees")))
An excess amount included in each transaction as a network fee or additional reward to the miner who finds the proof-of-work for the new block. Currently 0.5 mBTC minimum.
hash::
((("hash")))
A digital fingerprint of some binary input.
genesis block::
((("genesis block")))
The first block in the blockchain, used to initialize the crypto-currency
miner::
((("miner")))
A network node that finds valid proof-of-work for new blocks, by repeated hashing
network::
((("network")))
A peer-to-peer network that propagates transactions and blocks to every bitcoin node on the network.
proof-of-work::
((("proof-of-work")))
A piece of data that requires significant computation to find. In bitcoin, miners must find a numeric solution to the SHA256 algorithm that meets a network wide target, the difficulty target.
reward::
((("reward")))
An amount included in each new block as a reward by the network to the miner who found the proof-of-work solution. It is currently 25BTC per block.
secret key (aka private key)::
((("secret key")))
((("private key", see="secret key")))
The secret number that unlocks bitcoins sent to the corresponding address.
transaction::
((("transaction")))
In simple terms, a transfer of bitcoins from one address to another. More precisely, a transaction is a signed data structure expressing a transfer of value. Transactions are transmitted over the bitcoin network, collected by miners and included into blocks, made permanent on the blockchain.
wallet::
((("wallet")))
Software that holds all your addresses. Use it to send bitcoin and manage your keys.
