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Basic Bitcoins General Terminology

Basic Bitcoins General Terminology

What is Bitcoin

Each Bitcoin is essentially a computer file that is stored on a smartphone or computer in a ‘digital wallet’ app. 

People can send Bitcoins (or portions of Bitcoins) to your digital wallet, and you can send Bitcoins to others. Every transaction is recorded in a public ledger known as the blockchain.

Bitcoin is a digital currency that is not controlled by any bank, company, or individual. Satoshi Nakamoto, a pseudonymous programmer, invented Bitcoin in 2008. 

Since the launch of the volunteer network in 2009, people from all over the world have been contributing to this open-source project.

In the meantime, here are the basic terms you’ll need to understand Bitcoin.

1.Hot Wallet

The most convenient way to send and receive small amounts of bitcoin is to download a bitcoin wallet to your device. 

However, there are significant drawbacks to carrying your funds on a device that is connected to the internet, such as a mobile phone.

2.Open Source

The Bitcoin network is made up of individual participants who have chosen to run specific software that is publicly accessible and collaboratively maintained. 

Because the network is not owned, hosted, or managed by a single person or company, it is highly resistant to threats.

3.Decentralization

Bitcoin users, miners, and full nodes can be found all over the globe. The network is made up of these groups in aggregate. 

There is no central point of failure because there is no headquarters, CEO, or employees.

4.Peer To Peer (P2P)

When two people exchange money and goods in person, they are acting in a decentralized manner. 

However, because we lack a way to enforce honesty, online transactions have continued to rely on trusted third parties. Bitcoin’s transparent and auditable design incentivizes honesty.

5.Full Node

Full nodes are pieces of hardware that keep a complete copy of the Bitcoin blockchain while enforcing the network’s rules. 

They can validate, broadcast, and relay transactions independently, without relying on a third party. Decentralization is the result of this arrangement. (You can buy plug-and-play hardware or follow this guide to build your own full node at home.)

6.Block Explorers

The ability to view all historical transactions as well as real-time transactions that settle on Bitcoin’s main layer is one of the features of bitcoin’s open and public blockchain. 

Block explorers are tools that capture a live feed of the Bitcoin network’s transaction data.

7.Timestamps

Satoshi Nakamoto, the pseudonymous creator of Bitcoin, referred to their creation as a “timechain,” because each block includes an approximate timestamp. 

This allows us to determine the order of all transactions and ensure that no bitcoin is double-spent. The Bitcoin blockchain, when combined with digital signatures, functions as a de facto global public store of record.

8.Self Custody

Securing your SATs is not a passive activity. The strength and resilience of your security measures and backup procedures should grow in tandem with the value of your bitcoin holdings. 

The reality of being a bitcoiner is that you must constantly update your knowledge of best practices and test your setup on a regular basis. There are numerous wallet options available to you.

9.Private Key 

In the context of Bitcoin, a private key is a key associated with an address (technically, the address is the hash of the public key corresponding to the private key) that is stored behind the scenes and allows you to send bitcoin to that address that have previously been sent to that address. 

It’s worth noting that, due to the way Bitcoin’s encryption algorithm (ECDSA) works, it’s possible to generate both the public key and the address from just the private key. It is critical to keep your private key secure.

Basic Bitcoins General Terminology

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