Understanding Bitcoin can be difficult for a beginner. There are lots of terms and concepts used, which can be confusing. So, to make things easy for you, here are some terms which are regularly used and their brief definitions.
Bitcoin: Bitcoin was instituted in 2009 by an anonymous person or a group of persons under Satoshi Nakamoto. Bitcoin is a digital or virtual currency. Bitcoin is used to make payments through electronic transactions without going through the usual banks and clearinghouses, which charge high fees.
Digital currency: As the name suggests, this currency is entirely virtual and has no physical existence. These currencies are utilized as exchange methods to buy products and services online.
Blockchain: Blockchain is an advanced coding mechanism that disposes of a single code over thousands of different computers. Blockchain uses thousands of computers, so the data is not centralized. Therefore even if one network fails, it does not affect the entire network. Blockchain also employs a public ledger.
Enterprise Blockchain: Enterprise blockchain is a private, permission-based blockchain. You need an invitation or application to join it. The committee decides the rules and regulations of this network and is for the committee's benefit. In addition, corporations are investing in Enterprise blockchains to help them with KYC compliance.
Bitcoin mining: The process used to circulate new Bitcoins in the market is Bitcoin mining. There is no restriction on anyone mining Bitcoin as it is entirely decentralized. Anyone with an aptitude to solve complex mathematical riddles to find the correct hash which reserves the block can mine Bitcoins.
Hash rate: The rate at which a network can convert a data set into a hash is the hash rate. Hash the series of letters and numbers. For example, Bitcoin uses the Secure Hash Algorithm 256 function.
Miner: Miner is anyone who contributes processing power to secure blocks in the blockchain's public ledger's validated history of all transactions. They are comprehended as node operators or transaction processors. Miners compete to add new data blocks to the chain. Miners are compensated with new stamped Bitcoins and the fees from the successfully mined blocks.
Node: A node is any machine or participant in the Bitcoin network responsible for validating transactions. There are three types of nodes:
a. Listening nodes: They have no hash rate functions and cannot generate blocks. They are referred to as block explorers.
b. Pruned nodes- They store hashes of all blockchain data but do not include the entire blockchain's contents.
c. Full node: they keep an entire reproduction of the blockchain for preservation and data conforming intentions and have a significant hash rate at their quick availability.
Protocol: It is a set of predetermined rules that define different aspects of blockchain management, such as block size cap, total coins supply, etc. The protocol describes how to avoid double-spending (i.e., using the same Bitcoin twice) by validating critical criteria and obtaining the required network confirmations. Protocols are rules that are to be followed every time. They are also called Bitcoin rules.
Private Key: Private Key is a cryptographically produced string of letters and numbers that enables wallet addresses to be created and transactions we broadcast between wallets. It is practically impossible to recover a Private Key, and it can only be regenerated if a significant fraction of the hash rate agrees to mine the key. It is improbable on a high-value network like Bitcoin.
Public key: A public is produced from your private key. It is utilized to ascertain that you own a bitcoin address that may dispatch and acquire funds.
Block size cap: Most blockchains are not actively used, so their infrastructure is not intended to handle a lot of traffic. As a result, networks become vulnerable to malicious transactions that crash due to infrastructure weaknesses. This phenomenon is known as a "denial of service" attack, and it is similar to how websites crash due to access traffic. Therefore, most blockchains set a software limit on the amount of activity allowed in each block to compensate for the absence of stable infrastructure. The network is restricted to not more than seven trades per second.
