BASIC TERMINOLOGIES OF CRYPTO-CURRENCY

 

In the world of crypto-currency, as in any other field of study, there are basic terminologies that define various operations. I will enumerate a few which are used in daily e-currency transactions with Bitcoins in simple language.  

Mining
Mining virtual currency is a unique concept and one that can be somewhat challenging to understand. Mining crypto-currency isn't the same as "mining" for gold or coal, but is done with the power of computers. Crypto-currency is digital or virtual currency that can be used to purchase goods from anyone that accepts it. Bitcoin was the first crypto-currency to be produced and it has set the standard for the industry. Mining Bitcoin was started with software that solves a mathematical problem to produce this currency. You can mine as an individual or you can mine in a pool with other individuals. If you mine solo, it could take you a lot longer to get through these mathematical equations. However, if you choose to mine in a pool of people, more equations are being solved because there is greater mining power in numbers. The more currency that you can mine the more money can be generated with it. When mining in a pool, the end rewards are split among the members. This is why mining in a pool is suggested, especially if you are just getting started!GRCcoin is an example of mining in a pool.  

Block
Blocks are found in the block chain of all the e-currencies. Blocks connect all transactions together. Transactions are combined into single blocks and are verified every ten minutes through mining. Each subsequent block strengthens the verification of the previous blocks, making it impossible to double spend bitcoin transactions (see double spend below).  A block can also be defined as a record in the block chain that contains and confirms many waiting transactions. Roughly every 10 minutes, on average, a new block including transactions is appended to the block chain through mining.

 

Block Chain
The Bitcoin block chain is a public record of all Bitcoin transactions. You might also hear the term used as a “public ledger.” The block chain shows every single record of Bitcoin transactions in order, dating back to the very first one. The entire block chain can be downloaded and openly reviewed by anyone, or you can use a block explorer to review the block chain online.  Alternatively, the block chain is a public record of Bitcoin transactions in chronological order. The block chain is shared between all Bitcoin users. It is used to verify the permanence of Bitcoin transactions and to prevent double spending.

Block Height
The block height is just the number of blocks connected together in the block chain. Height 0 for example refers to the very first block, called the “genesis block.” - See more at: http://blog.blockchain.com/2014/12/23/10-commonly-used-bitcoin-terms-explained/#sthash.QNEqfu2B.dpuf  

Change
 Let’s say you are spending $1.90 in your local super market, and you give the cashier $2.00. You will get back .10 cents in change. The same logic applies to Bitcoin transactions. Bitcoin transactions are made up of inputs and outputs. When you send bitcoins, you can only send them in a whole “output.” The change is then sent back to the sender.
 

Confirmation
 A confirmation means that the Bitcoin transaction has been verified by the network, through Bitcoin mining. Once a transaction is confirmed, it cannot be reversed or double spent. Transactions are included in blocks.  

Difficulty
Difficulty is directly related to Bitcoin mining (see mining below), and how hard it is to verify blocks in the Bitcoin network. Bitcoin adjusts the mining difficulty of verifying blocks every 2016 blocks. Difficulty is automatically adjusted to keep block verification times at ten minutes.  

Double Spend
If someone tries to send a Bitcoin transaction to two different recipients at the same time, this is double spending. Once a Bitcoin transaction is confirmed, it makes it nearly impossible to double spend it. The more confirmations that a transaction has, the harder it is to double spend the bitcoins.

Halving Bitcoins have a finite supply, which makes them scarce. The total amount of bitcoins that will ever be issued is 21 million. The number of bitcoins generated per block is decreased 50% every four years. This is called “halving.” The final halving will take place in the year 2140.

Private Key 
A private key is a string of data that shows you have access to bitcoins in a specific wallet. Think of a private key like a password; private keys must never be revealed to anyone but you, as they allow you to spend the bitcoins from your bitcoin wallet through a cryptographic signature. - See more at: http://blog.blockchain.com/2014/12/23/10-commonly-used-bitcoin-terms-explained/#sthash.QNEqfu2B.dpuf

AddressA Bitcoin address is similar to a physical address or an email. It is the only information you need to provide for someone to pay you with Bitcoin. An important difference, however, is that each address should only be used for a single transaction.

Bit
Bit is a common unit used to designate a sub-unit of a bitcoin - 1,000,000 bits is equal to 1 bitcoin (BTC or B⃦). This unit is usually more convenient for pricing tips, goods and services.

Bitcoin
Bitcoin - with capitalization, is used when describing the concept of Bitcoin, or the entire network itself. e.g. "I was learning about the Bitcoin protocol today."
bitcoin - without capitalization, is used to describe bitcoins as a unit of account. e.g. "I sent ten bitcoins today."; it is also often abbreviated BTC or XBT.

BTC
BTC is a common unit used to designate one bitcoin (B⃦).

Confirmation
Confirmation means that a transaction has been processed by the network and is highly unlikely to be reversed. Transactions receive a confirmation when they are included in a block and for each subsequent block. Even a single confirmation can be considered secure for low value transactions, although for larger amounts like 1000 US$, it makes sense to wait for 6 confirmations or more. Each confirmation exponentially decreases the risk of a reversed transaction.

Cryptography
It is the branch of mathematics that lets us create mathematical proofs that provide high levels of security. Online commerce and banking already uses cryptography. In the case of Bitcoin, cryptography is used to make it impossible for anybody to spend funds from another user's wallet or to corrupt the block chain. It can also be used to encrypt a wallet, so that it cannot be used without a password.

Double Spend
If a malicious user tries to spend their bitcoins to two different recipients at the same time, this is double spending. Bitcoin mining and the block chain are there to create a consensus on the network about which of the two transactions will confirm and be considered valid.

Hash Rate
The hash rate is the measuring unit of the processing power of the Bitcoin network. The Bitcoin network must make intensive mathematical operations for security purposes. When the network reached a hash rate of 10 Th/s, it meant it could make 10 trillion calculations per second.
The following terms are used for mining hash rate measurement:

KH/s: Kilohashes per second, or one thousand hash computations per second
MH/s: Megahashes per second, or one million hash computations per second
GH/s: Gigahashes per second, or one billion hash computations per second
TH/s: Terrahashes per second, or one trillion hash computations per second
PH/s: Petahashes per second, or one quadrillion hash computations per second

P2P
Peer-to-peer refers to systems that work like an organized collective by allowing each individual to interact directly with the others. In the case of Bitcoin, the network is built in such a way that each user is broadcasting the transactions of other users. And, crucially, no bank is required as a third party.

Private Key
A private key is a secret piece of data that proves your right to spend bitcoins from a specific wallet through a cryptographic signature. Your private key(s) are stored in your computer if you use a software wallet; they are stored on some remote servers if you use a web wallet. Private keys must never be revealed as they allow you to spend bitcoins for their respective Bitcoin wallet.

Signature
A cryptographic signature is a mathematical mechanism that allows someone to prove ownership. In the case of Bitcoin, a Bitcoin wallet and its private key(s) are linked by some mathematical magic. When your Bitcoin software signs a transaction with the appropriate private key, the whole network can see that the signature matches the bitcoins being spent. However, there is no way for the world to guess your private key to steal your hard-earned bitcoins.

Wallet
A Bitcoin wallet is loosely the equivalent of a physical wallet on the Bitcoin network. The wallet actually contains your private key(s) which allow you to spend the bitcoins allocated to it in the block chain. Each Bitcoin wallet can show you the total balance of all bitcoins it controls and lets you pay a specific amount to a specific person, just like a real wallet. This is different to credit cards where you are charged by the merchant.

References
http://blog.blockchain.com/2014/12/23/10-commonly-used-bitcoin-terms-explained/
https://bitcoin.org/en/vocabulary