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Bitcoin terms

Bitcoin terms

Address

The bitcoin address is similar to the physical address or to an e-mail. It is the only information which you need to provide someone that he has paid you by means of Bitcoin. The only difference is that each address should be used only for one transaction.

Bit

The bit is a widely used fractional nomination of bitcoin. 1 000 000 (one million) bits it is equal to one bitcoin (BTC). It is much more convenient to specify the prices of goods and services in bits and to leave a tip.

Bitcoin

The bitcoin — from a capital letter, is used for the description of the concept of Bitcoin, or all network in general. For example: «I studied the protocol of Bitcoin today».
For designation of currency or unit of account the word from a capital letter is used: bitcoin, bitcoins. For example: «I have sent 10 bitcoins today.»; the abbreviation of BTC or XBT is also often used.

Block

The block is a record in a chain of blocks which comprises a set of the transactions expecting confirmation and confirms them. Roughly speaking, each 10 minutes thanks to a mining the new block of transactions is added to a chain.

Purse

Bitcoin purse if on simple, then it is an equivalent of a physical purse in the Bitcoin network. The purse actually contains your private key (keys) that allows you to spend the bitcoins placed in a chain of blocks. Each bitcoin purse shows balance of all bitcoins which he controls, and allows you to pay the concrete sum to the specific person, as well as a physical purse. He differs from credit cards where from you the seller charges off money.

Cryptography

The cryptography is the field of knowledge studying methods of ensuring privacy of the message which reliability is proved mathematically. In Internet commerce and banking cryptographic methods are used for a long time. In Bitcoin the cryptography is used for prevention of an opportunity to spend means from others purse or to damage a chain of blocks. In addition, she is used for enciphering of a purse that he couldn’t be used without password.

Mining

The Mining of bitcoins is the process meaning use of hardware resources of the computer for the purpose of performance of mathematical calculations for confirmation of transactions and safety of the Bitcoin network. As remuneration for the services mayner receive means for the confirmed transactions — newly created bitcoins. The Mining is a specific and competitive market in which the reward to be shared according to the number of the executed calculations. Not all bitcoin users use a mining, it is not an easy way to earn.

Repeated expenditure

If the malefactor tries to spend the bitcoins for two different transactions, in one and too time, it is called double expenditure. Bitcoin-mayningi a chain of blocks exist that the network could coordinate unambiguously which of these transactions to confirm and to consider respectively valid.

Signature

The cryptographic signature is the mathematical mechanism allowing someone to prove the property right. In a case with Bitcoin, the bitcoin purse and the confidential key (keys) which is contained in him have indissoluble mathematical communication. When your program purse signs transaction with the correct private key, all network sees that keys coincide, and bitcoins are transferred. However, there is no way to guess your private key to steal your hardly earned bitcoins.

Confirmation

Confirmation means that transaction has been processed by network and almost for certain won’t be cancelled. Transactions receive confirmations when they are included in the block and in all subsequent blocks. Even the only confirmation can be considered safe for transaction of small volume, nevertheless, for large sums, such as 1000 US dollars and more, it will be reasonable to wait for not less than 6 confirmations. Each confirmation exponential reduces risk of cancellation of transaction.

Private key

The private key is the classified information which confirms your right to spend bitcoins by means of a special purse by means of the cryptographic signature. Your private key (keys) is stored on your computer if you use a program purse; they are stored on remote servers if you use the Internet a purse. It isn’t necessary to disclose publicly the keys because they allow to spend bitcoins from the purse relating to them.

Hashing power

Hashing power is a unit of measure of computing power of the Bitcoin network. The Bitcoin network has to make difficult mathematical calculations for safety. When the network reaches the Hashing power 10  in a second, it means that she can carry out 10 trillion calculations in 1 second.

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