A Bitcoin Glossary
Published in
3 min readJul 1, 2019
- FedCoin: A hypothetical cryptocurrency or other fully digital currency backed by the government(s) or supergovernmental organization (ie. the UN) .
- Bitcoin (BTC): A peer-to-peer cryptocurrency based on Proof-of-Work and a decentralized ledger called a blockchain. Satoshi Nakamoto developed Bitcoin in late 2008 and the Network launched on January 3, 2009. Bitcoin is an open-source project with multiple implementations. It has a limited supply of 21 million BTC and no central controller or server. It has experienced 99.9837% uptime since then, with 100% uptime since 2013.
- Blockchain: A type of database which uses cryptographic functions to ensure that every update
- Node: As with any network, a node is a discreet member of a network which interacts with other nodes to form the network. In Bitcoin, a full-node is any computer or person that runs a Bitcoin implementation and stores the entire blockchain. Nodes validate, then broadcast and request new blocks and the mempool to and from peers in the network. If nodes run compatible software, consensus is achieved. Node count is vital to protecting the network from malicious or haphazard source code changes, reorganizations, and other protocol changes.
- Mempool: The Mempool (memory pool) is a smaller database of unconfirmed transactions which every node keeps. When a transaction is confirmed by being included in a block, it is removed from the mempool. Nodes share mempool data by relaying signed transactions to each other, but there is no single mempool and few if any nodes keep the entire mempool. Miners draw transactions from the mempool to include in their blocks.
- Proof-of-Work (PoW): A method of proving the validity of data, usually in the form of blocks to be propagated to a blockchain, wherein large amounts of otherwise useless computation is required to validate data by imposing a cost on data publication.
- Proof-of-Stake (PoS): A different method of proving the validity of data wherein funds or tokens are staked to buy proportional control of mining ability and control over the network in exchange for sacrificing the use of those funds temporarily.
- Proof-of-Authority (PoA): A third system of determining who can publish blocks to a blockchain network. In a PoA system, specific nodes or entities are granted special permission to publish blocks. This forms a closed, permissioned system that does not resemble Bitcoin or most other cryptocurrencies.
- Hardcap: Bitcoin total supply will never exceed 21 Million bitcoin or 2.1 Quadrillion Satoshis (AKA sats, the atomic unit of Bitcoin, 100 million Satoshis = 1 bitcoin). Due to several factors, Bitcoin supply will never actually reach 21 Million: the first 50 bitcoin
- Decentralized Ledger: Traditional banks use centralized ledgers to track balances. All participants in the Bitcoin protocol keep and validate identical copies of the ledger so that there exists no central point of failure or fraud.
- Negative Interest Rate Policy (NIRP): Negative Interest Rate Policies mostly concern negative nominal interest rates on savings accounts. Keynesian economics teaches that lowering interest rates will force individuals to spend faster (because their savings are being inflated away) and that this will stimulate the economy. During recessions and depressions, governments usually lower interest rates by 4–6%, but since most rates now sit at or below 2%, another recession and the predictable government response would send interest rates below zero, meaning individuals would pay a “fine” every year for holding money in a bank account. The IMF and ECB have already proposed plans to implement such policies.
- Cypherpunk: Cypherpunks are an unofficial and loosely connected group of individuals focused on building hardware and software to protect privacy and individual sovereignty. Most are concerned about governments’ race towards a surveillance state as well as corporate domination of technology and intellectual property. Satoshi and nearly all of the original developers such as Hal Finney were cypherpunks.
- Monero (XMR): An alternative cryptocurrency focused on strong privacy. Transaction amounts and other data can be hidden.
- UASF: A User-Activated Soft Fork is an update or change to the Bitcoin network’s protocol initiated by users (node-runners), who integrate new code into their Bitcoin implementations and demonstrate their acceptance of the change so that miners and other users can implement the same changes knowing they have consensus. Since the update is a Soft Fork, it does not split the chain or take the updated node out of consensus. Soft forks are optional and backwards compatible.
- MASF: Like a UASF, a Miner-Activated Soft Fork occurs when miners signal support for and then implement an update to the protocol. Before the UASF of 2017, which implemented Segregated Witness (SegWit), most changes to the Bitcoin protocol were MASFs or Miner-Activated Hard Forks (changes which split the bitcoin chain and were not interoperable).
