Bitcoin Glossary: Block

Bitcoin Glossary
Block
Blocks are found in the Bitcoin blockchain. 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).
BIP
Bitcoin Improvement Proposal or BIP, is a technical design document providing

information to the bitcoin community, or describing a new feature for bitcoin or its
processes or environment which affect the Bitcoin protocol. New features, suggestions,
and design changes to the protocol should be submitted as a BIP. The BIP author is
responsible for building consensus within the community and documenting dissenting
opinions.
Blockchain
The Bitcoin blockchain is a public record of all Bitcoin transactions. You might also hear
the term used as a “public ledger.” The blockchain shows every single record of bitcoin
transactions in order, dating back to the very first one. The entire blockchain can be
downloaded and openly reviewed by anyone, or you can use a block explorer to review
the blockchain online.
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.”
Block Reward
When a block is successfully mined on the bitcoin network, there is a block reward that
helps incentivize miners to secure the network. The block reward is part of a “coinbase”
transaction which may also include transaction fees. The block rewards halves roughly
every four years; see also “halving.”
Change
Let’s say you are spending $1.90 in your local supermarket, 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.
Cold Storage
The term cold storage is a general term for different ways of securing your bitcoins
offline (disconnected from the internet). This would be the opposite of a hot wallet or
hosted wallet, which is connected to the web for day-to-day transactions. The purpose
of using cold storage is to minimize the chances of your bitcoins being stolen from a
malicious hacker and is commonly used for larger sums of bitcoins.
Confirmation
A confirmation means that the bitcoin transaction has been verified by the network,
through the process known as mining. Once a transaction is confirmed, it cannot be
reversed or double spent. Transactions are included in blocks.
Cryptography
Cryptography is used in multiple places to provide security for the Bitcoin network.
Cryptography, which is essentially mathematical and computer science algorithms used
to encrypt and decrypt information, is used in bitcoin addresses, hash functions, and the
blockchain.
Decentralized
Having a decentralized bitcoin network is a critical aspect. The network is

“decentralized,” meaning that it’s void of a centralized company or entity that governs
the network. Bitcoin is a peer-to-peer protocol, where all users within the network work
and communicate directly with each other, instead of having their funds handled by a
middleman, such as a bank or credit card company.
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.
Full Node
A full node is when you download the entire blockchain using a bitcoin client, and you
relay, validate, and secure the data within the blockchain. The data is bitcoin
transactions and blocks, which is validated across the entire network of users.
Halving
Bitcoins have a finite supply, which makes them scarce. The total amount 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.
Hash Rate
The hash rate is how the Bitcoin mining network processing power is measured. In
order for miners to confirm transactions and secure the blockchain, the hardware they
use must perform intensive computational operations which is output in hashes per
second.
Hash (txid)
A transaction hash (sometimes referred to as a transaction ID or txid) is a unique

identifier that can be used on any block explorer to look up all of the public details of a
particular transaction. Every on-chain transaction has a unique hash made up of a long
string of alphanumeric characters.
Mining
Bitcoin mining is the process of using computer hardware to do mathematical

calculations for the Bitcoin network in order to confirm transactions. Miners collect
transaction fees for the transactions they confirm and are awarded bitcoins for each
block they verify.
Pool
As part of bitcoin mining, mining “pools” are a network of miners that work together to
mine a block, then split the block reward among the pool miners. Mining pools are a
good way for miners to combine their resources to increase the probability of mining a
block, and also contribute to the overall health and decentralization of the bitcoin
network.
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.
Proof of Work
Proof of work refers to the hash of a block header (blocks of bitcoin transactions). A
block is considered valid only if its hash is lower than the current target. Each block
refers to a previous block adding to previous proofs of work, which forms a chain of
blocks, known as a blockchain. Once a chain is formed, it confirms all previous Bitcoin
transactions and secures the network.
Public Address
A public bitcoin address is cryptographic hash of a public key. A public address typically
starts with the number “1.” Think of a public address like an email address. It can be
published anywhere and bitcoins can be sent to it, just like an email can be sent to an
email address. Learn how to receive bitcoin in your bitcoin wallet here.
RBF
RBF stands for Replace By Fee, and refers to a method that allows a sender to replace
a “stuck” or unconfirmed transaction with a new one that uses a higher fee. This is done
to make sure a transaction confirms as quickly as possible. The “replacement”
transaction uses the same inputs as the original one. This is not considered a double
spend, as the receiving address(es) typically remain the same.
Satoshi Nakamoto
Bitcoin’s existence began with an academic paper written in 2008 by a developer under
the name of Satoshi Nakamoto. Satoshi is the name used as the original inventor of
Bitcoin. You can learn more about Satoshi here.
Transaction
A transaction is when data is sent to and from one bitcoin address to another. Just like
financial transactions where you send money from one person to another, in bitcoin you
do the same thing by sending data (bitcoins) to each other. Bitcoins have value because
it’s based on the properties of mathematics, rather than relying on physical properties
(like gold and silver) or trust in central authorities, like fiat currencies.
Wallet
Just like with paper dollars you hold in your physical wallet, a bitcoin wallet is a digital
wallet where you can store, send, and receive bitcoins securely. There are many
varieties of wallets available, whether you’re looking for a web or mobile solution.
Ideally, a bitcoin wallet will give you access to your public and private keys. This means
that only you have rightful access to spend these bitcoins, whenever you choose to.

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Bitcoin Glossary

Bitcoin Improvement Proposal or BIP, is a technical design document providing

Having a decentralized bitcoin network is a critical aspect. The network is

A transaction hash (sometimes referred to as a transaction ID or txid) is a unique

Bitcoin mining is the process of using computer hardware to do mathematical

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