Bitcoin Glossary

(Work in progress)…

Social Terms

Bitcoin maximalist – a pejorative coined by Vitalik in a blog post – a person who blindly believes bitcoin to be the best in all things related to cryptocurrency. In a less derogatory sense, it can mean a person that believes they know bitcoin’s position is unassailable by nature of technology adoption curves and economic incentives.

Bitcoin minimalist – a person who believes that bitcoin’s consensus protocol level should be kept robust and simple to minimize vulnerabilities. This is done by moving most processes, features and functions up the stack, to other layers, in the very same way the internet itself has scaled and improved.

Bitcoiner –  a term of endearment, a label for a person heavily involved in bitcoin, similar to bitcoin maximalist but not derogatory.

Buttcoin – a famous skeptical subreddit r/buttcoin. They always make fun of bitcoiners, but sometimes have good skeptical takes. They have been wrong 90% of the time on the anti-bitcoin FUD.

Casascius coin – (ca-say-tious) – an early physical bitcoin coins made by Mike Caldwell, there are large runs and limited editions, more of the story here.

Fiatsplaining – A very new term coined by a patron of the show @WahWhoWah – it means that a person uses simple outdated mainstream financial arguments in a discussion with a bitcoiner.

FOMO – Fear of missing out – An emotional reaction to a price increase that makes you chase and be more likely to buy the top of a rally. The opposite of panic reaction to a price decrease.

FUD – Fear Uncertainty and Doubt – FUD is found in any community and usually consists of unfounded rumors or claims aimed at causing an emotional reaction from other members or even outsiders. It can be targeted at different demographics within or without the community. For example, certain types of rumors can scare new traders or owners of bitcoin, but don’t affect more experienced bitcoiners. To protect against FUD you must learn as much about bitcoin as possible (technicals and history), and find sources of information you can trust.

Hodl – variant of hold – first used in a bitcointalk.org forum post. The author was drunk and furious at his poor trading performance during the December 2013 rally. He misspelled the word hold and it quickly became a viral meme in the community. Today, it has morphed into an ideology, where hodlers are people that will never sell their coins. It’s a very important concept in bootstrapping a store of value for bitcoin.

Hodler – a person who hoards bitcoin and will not sell is massive dips in price, because they are in it until the end as it were.

Nocoiner – a recent term, even has made it into the urban dictionary now – a person who has no Bitcoin. Nocoiners (usually Socialists, Lawyers or MBA Economists ) are people who missed their opportunity to buy Bitcoin at a low price because they thought it was a scam, and who is now bitter at having missed out. The nocoiner takes out his or her bitterness on Bitcoin Hodlers, by constantly claiming that Bitcoin will crash, is a scam, is a bubble, or other types of easily refuted FUD.

The Flippening – the much anticipated event where Ethereum would overtake Bitcoin in market cap, it never came – the term was adapted to all sorts of similar events in the 2017 scaling conflict, like hashpower on rival chains, node count, etc.

The Halvening – the reduction in block reward that happens roughly every four years – funny form of halving – this term appeared in 2015 as the block reward reduction was approaching. The bitcoin community likes to come up with little in group sayings and this one caught on. The ending of “ening” has been adopted in other terms like “The Flippening.”

Rekt – intentional misspelling of wrecked – used to describe losing all your bitcoin, or losing an argument badly.

Technical Terms

ASIC – Application Specific Integrated Circuit – These are computer chips specifically designed to work on one or one family of algorithms. The introduction of ASICs to bitcoin caused the difficulty of mining to skyrocket, making it nearly impossible to basement miners to get a ROI. ASICs are a hotly debated issue today, because of the relative centralized manufacturing process. One major company has come to dominate Bitcoin ASIC manufacturing, Bitmain.

(move the following to another discussion)

Prior to 2016 there were four or more manufacturers on the markets, Spondoolies in Israel, KnC Miners in Scandinavia, Bitfury in the Republic of Georgia (I think), and Bitmain in China. Slowly, Bitmain’s competitors went out of business. When KnC Miners shut their doors, the CEO seemed to accuse Bitmain in somehow cheating. This is relevant later in 2017. Spondoolies also went bankrupt, but returning a year later as Canaan made China. That left only two manufacturers at the hottest time of the bitcoin scaling conflict, with Bitmain probably 4 times larger than Bitfury, who didn’t sell miners, they mined with them.

As you can see the situation was dire, especially when you include the political positioning of Bitmain against smart scaling and for dumb on chain only scaling. Since that time we have seen Canaan come back, along with Bitfury starting to sell large container sized mining rigs, Japanese multinational GMO starting their manufacturing process, rumored Russian chip manufacturing taking place, and most recently Halong Mining joining the game with cutting edge chips. On top of that, Bitmain’s lead chip design engineer has left to form his own company, and is being sued by Bitmain for control of his designs. All in all, the ASIC landscape is much more decentralized at the end of 2017 than the beginning.

Block – a file containing transactions and a block header, primarily to order transaction and requires proof of work, analogous to a page in a ledger – Blocks are “found” in the process of mining. In Satoshi’s words from a comment in the original software:

a bitcoin block definition by Satoshi
Fig. 1 – Satoshi on blocks and the block chain.

Block chain – The decentralized ledger of transactions in bitcoin, one piece of the whole system balanced by incentives, a chain of blocks. Block chains require proof of work and are append only. They provide a censorship resistant database at the cost of efficiency. Centralized databases are much more efficient. – also written later as blockchain, some say blockchain and block chain (“block space chain”) are different. “Blockchain” has come to mean a friendlier more palatable to suits version of bitcoin. While block chain is a decentralized ledger created through proof of work. It did not appear in the whitepaper, but did make its first appearance written by Satoshi in the original software, see Fig. 1 and Fig. 2:

definition of a bitcoin block chain by Satoshi
Fig. 2 – Satoshi on the block chain.

Block reward – also known as block subsidy – the reward of bitcoin for finding a block, incentive for miners to mine. When a miner finds a block they create a special transaction called a coinbase transaction where they create virgin coins at their own address. There is a decreasing maximum amount of reward. The block reward started at 50 coins, halved to 25 in 2012, and halved again in 2016 to the current 12.5 coins. In 2020, the reward will be halved again to 6.25 coins.

The block reward is a very important part of the incentive structure of bitcoin. It provides an incentive to miners to maintain the blockchain and order transactions into a block to prevent double spending.

Cold wallet – or offline wallet, also cold storage – this is a wallet create and maintained offline making it impossible to hack. In the past, many people printed private/public key pairs on paper from an offline computer and kept them in a safe. Hardware wallets are a derivative of a cold wallet.

Difficulty adjustment – or difficulty retarget – bitcoin is a self-adjusting system. When more hashpower starts mining the difficulty to find a block can adjust to retarget the 10 minute goal for new blocks. Bitcoin’s difficulty is retargeted every 2016 blocks or about 2 weeks.

Double spending – this is the main problem that a block chain solves. Prior to bitcoin it was impossible to solve the double spending problem without a central authority. Specifically, double spending is sending the same coin to multiple recipients. When transactions go through a central clearing house, they’d throw out the second tx, but in a decentralized system it was impossible. Bitcoin solves this through proof of work and ordering transactions into blocks.

Fork –

Soft Fork –

Hard Fork –

Full node – also known as a fully validating node – Created by running the bitcoin software on a computer. Includes a copy of the block chain, mempool and UTXOs. Validates transactions and blocks, can broadcast transactions and act as a wallet. A full node is your vote on the network, your tool to individual sovereignty over your money. No one can tell you what software to run on your node. In the scaling conflict the winning side promoted running your own, and even kept the protocol light to make running a full node easier. Full nodes are the backbone of a decentralized network. If a node receives an invalid block (doesn’t conform to the rules of the network) it rejects it and disconnects from th

Genesis block – The very first block on the bitcoin block chain, mined by Satoshi on Jan 6th, 2009. There was a message contained in the genesis block from a Times, “Chancellor on Brink of Second Bailout for Banks.” Another less known fact is that there was a period of time before the second block ending on the 10th. Also the coins in the genesis block are unspendable.

Halving – the reduction in block reward that happens roughly every four years – serious form of halvening.

Hot wallet – a wallet that holds your private keys and with access to the internet, most commonly on a smartphone. In the early days of bitcoin these wallets were very unsafe, but have come a long way over the last couple of years. They now have encrypted keys in isolated environments. It’s very important that you are careful where you download your wallet. Never keep more than spending money on a hot wallet.

MASF – Miner Activated Soft Fork – When miners signal for readiness for a new feature, this signaling activates the use of new features. This was the subject of BIP9 activation that was how Segwit was originally designed to take advantage of. The major problem with MASF is that it changes the incentive structure of bitcoin itself and invites politics into the process. It also, wrongly gives the miners a feeling that they are more important than they are.

MAHF – Miner Activated Hard Hork –

Mempool – the group of transactions in a node’s memory waiting to be confirmed. In Bitcoin transactions are broadcast so the entire network can hear them, until they show up in a block they sit in the mempool. Miners take txs from the mempool and order them into blocks.

Each node may have a slightly different mempool, because they hear a slightly different set of txs than other nodes. Nodes can set an individual mempool max size for their node, ie 50MB, so anything more than that, the node will drop older txs. A reason for restricting the size of the mempool could be performance. Another option for limiting your mempool is by transaction fee. You can set it to not retain txs with fees lower than a set limit, ie 5 sats/byte.

The mempool is “cleared” by miners ordering transactions into blocks. With a maximum block weight now of 4MB and 6 blocks/hour, the mempool can theoretically be cleared at a rate of 24MB/hour. However, if people refuse to use segwit type txs, the block size is more limited.

Mining –

Private key –

Proof of work –

Proof of stake –

Public key –

Seed –

UASF –

UAHF –

Whitepaper –