bitcoinbook/glossary.asciidoc

[preface]
=== Quick Glossary

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.

address::
    A bitcoin address looks like +1DSrfJdB2AnWaFNgSbv3MZC2m74996JafV+. It consists of a string of letters and numbers starting with a "1" (number one). Just like you ask others to send an email to your email address, you would ask others to send you bitcoin to your bitcoin address.((("bitcoin address")))((("address", see="bitcoin address")))((("public key", see="bitcoin address")))

bip::
    Bitcoin Improvement Proposals.  A set of proposals that members of the bitcoin community have submitted to improve bitcoin.  For example, BIP0021 is a proposal to improve the bitcoin uniform resource identifier (URI) scheme.((("bip"))) 

bitcoin::
    The name of the currency unit (the coin), the network, and the software.((("bitcoin"))) 

block::
    A grouping of transactions, marked with a timestamp, and a fingerprint of the previous block. The block header is hashed to produce a proof of work, thereby validating the transactions. Valid blocks are added to the main block chain by network consensus.((("block")))

block chain::
	A list of validated blocks, each linking to its predecessor all the way to the genesis block.((("block chain")))
	
confirmations::
	Once a transaction is included in a block, it has one confirmation. As soon as _another_ block is mined on the same block chain, the transaction has two confirmations, and so on. Six or more confirmations is considered sufficient proof that a transaction cannot be reversed.((("confirmations")))

difficulty::
	A network-wide setting that controls how much computation is required to produce a proof of work.((("difficulty")))

difficulty target::
 	A difficulty at which all the computation in the network will find blocks approximately every 10 minutes.((("target difficulty")))

difficulty retargeting::
	A network-wide recalculation of the difficulty that occurs once every 2,106 blocks and considers the hashing power of the previous 2,106 blocks.((("difficulty retargeting")))
	
fees::
	The sender of a transaction often includes a fee to the network for processing the requested transaction.  Most transactions require a minimum fee of 0.5 mBTC.((("fees")))

hash::
	A digital fingerprint of some binary input.((("hash")))

genesis block::
	The first block in the block chain, used to initialize the cryptocurrency.((("genesis block")))
	
miner::
A network node that finds valid proof of work for new blocks, by repeated hashing.((("miner")))

network::
A peer-to-peer network that propagates transactions and blocks to every bitcoin node on the network.((("network")))
	
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. ((("proof-of-work")))

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.((("reward")))

secret key (aka private key)::
	The secret number that unlocks bitcoins sent to the corresponding address.  A secret key looks like +5J76sF8L5jTtzE96r66Sf8cka9y44wdpJjMwCxR3tzLh3ibVPxh+.((("secret key")))((("private key", see="secret key")))
	
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.((("transaction")))

wallet::
Software that holds all your bitcoin addresses and secret keys. Use it to send, receive, and store your bitcoin.((("wallet")))