Topic: Bitcoin terminologies and their challenges for newbies. (Read 373 times)

OP can also go to https://learnmeabitcoin.com and work his way through the beginners and more expert pages. I like this site very much and regularly revisit it if I have to brush up my BTC knowledge or look for details I forgot after some time where I didn't need them.

I truly agree, blockcain surpasses centralised bank accounts and it's statements, because it is decentralized in it's nature. It's also worth to note that you can make use of it anywhere in the world, without restrictions or barriers of fiat currencies. I really look forward to the day when blockchain, will eliminate centralised bank accounts and bitcoin will be used to purchase commodities in every corner of the world.

Buying low and selling high are the fundamentals of trading, and staying up-to-date with market trends, volatility, and conducting analysis are important aspects for making informed decisions. While the core strategy revolves around timing and capitalizing on price movements, a deeper understanding of Bitcoin's underlying technology, market ecosystem, and related terms can provide additional insights. details and help you make more informed decisions. It allows you to assess Bitcoin's long-term potential, assess the impact of key events or developments, and navigate the evolving landscape of cryptocurrencies. By expanding your knowledge and continuously learning about Bitcoin, you will be better equipped to understand and interpret market dynamics, assess risk, identify investment opportunities, and participate in meaningful discussions one-on-one in communities like the BitcoinTalk forum.

The blockchain is a public record that one individual can't compromise. All nodes verify that the information being added to the blockchain is correct. Its decentralized nature means that the data it shows is correct no matter where you are. Your bank statements and bank accounts for that matter, are only worth something to one particular bank and its branches. Walk across the street to a different brand, and they will have no idea who you are and what you own.

Thanks so much, infact bitcoin terminologies needs to be studied as a course. I really feel privileged to be learning so much about bitcoin for free in this forum. From everything that you have enlightened me about addresses, it was only segwit that I was familiar with, I'm glad that I'm able to add to my bitcoin knowledge from your educative post. I look forward to when I can master every technicalities that surrounds mastering bitcoin, so I can also give back like experienced members are doing now.

Familiarity.
Such struggle exists in every field not only in this industry. Ofcourse you are a new one which means you are still unfamiliar with terminologies which are not being used on a daily basis. But on the other hand, sources of information is everywhere. Once you encounter aanything you're not familiar with, try to atleast search for its definition in order to not be shocked once you again encounter that particular thing or word.Indeed, things won't be learned in an instant and it will take time. It is not a bad thing to not know something right after the first glance. It will be a bad thing if you will still be unfamiliar of something even if you are being exposed into it for a period of time 'coz that would mean you are not doing your part as a learner.

You have abilities above the average beginner and this is good for pushing you to achieve whatever you want, both for developing on forums and in bitcoin itself. But there is one thing you may need to understand, that theory will only be useful when you can implement it directly in practice, I'm not saying that theory isn't important, but if we take one example, for example, trading, in partek it doesn't always go according to theory or ideas that people convey, sometimes you will find something that is not conveyed in theory, but you will get it when you go straight into the practice.

This forum is full of the information you need, it's just that you need to use the search button for whatever you need and to be honest I love to see some newbies asking questions that can provoke positive discussion and you have that resource. Knowledge and insight you will gain when you want to learn and if you are serious it will be easier, I hope that in the next few months you will grow and achieve what you want.

Private key is technically a number, that is used as a multiplier on the gigantic elliptic curve to create your public key & address, but you can encode it into many different textual formats like hexadecimal and Base58 for more compact distributing.


It's not really a password, in fact it's more like a "tree of private keys" because using the seed phrase you can take any sequence of random numbers, and generate a private key with the seed. It has a big advantage over private keys in that you only need to carry around 12 or 24 words, as opposed to dozens of private keys.

Literally plus the my first impression is there's a lot of numbers that makes me confused. Having no background is like you're a toddler in this industry that's why when you grow up it takes time for you to attain some knowledge. Because you wouldn't master this in just a short time you have to be familiarize and be knowledageable in different things in Bitcoin. But trust me when you understand everything is just easy.

Here are some common Bitcoin terminologies and their challenges for newcomers:

• Blockchain - The distributed public ledger that records all Bitcoin transactions. The concept of a distributed ledger can be difficult to grasp for newcomers.

• Mining - The process of adding transaction records to the blockchain through solving complex mathematical problems. The technical details of mining can be hard to understand.

• Nodes - Computers that make up the Bitcoin network and maintain a copy of the blockchain. Understanding the role of nodes in the network is not intuitive.

• Private keys - Long strings of numbers and letters that allow users to access and spend their Bitcoin. Managing private keys securely is very important but also challenging for new users.

• Public keys - Addresses that people send Bitcoin to. New users often struggle to differentiate between public and private keys.

• Wallet - Stores the private keys that control the Bitcoin addresses and allows users to send and receive payments. Different wallet types add to the complexity for newcomers.

• Fees - Small amounts paid to miners to include transactions in the next block. Fee levels and dynamics can be difficult for new users to grasp.

• Forks - Changes to the Bitcoin protocol that result in two different blockchains. Understanding forks and their implications requires technical knowledge.

In summary, while the basic concepts behind Bitcoin seem simple on the surface, many of the technical details and nuances can pose challenges for newcomers. securely managing keys, understanding the role of nodes, appropriate fee levels, and different wallet types are common pain points for new users.

I remember when I first dived into the world of Bitcoin, it felt like deciphering ancient hieroglyphics. But hey, it's all part of the crypto journey. Soon you'll be dropping terms like 'hash rate' and 'smart contracts' like a pro!

You have a great plan mate, but it's not easy as normal study because Bitcoin and blockchain is new science where less than 15 years old, and you must hard study to get more references because research and journals are still a little bit out there, we only find a few on google scholar and e-journal site out there. What you can do now is only learn how to save and how to hold your Bitcoin. Besides that, we must not just learn and read, but also practice. The blockchain is exact knowledge and math, we have to know basic knowledge like code, and how to implement it when creating new innovations.

So, in Bitcoin technology, you don't know anything if only read without practice. you will stagnate if only reading the substance.

I think it is also important to know the different address protocols of Bitcoin.  Aside from learning the stated list of @OP, I believe it is important for newbies to learn and differentiate the difference between Bitcoin address protocols.

Legacy address = P2PKH (Pay to Public key hash) = 1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2

Script address = P2SH (Pay to Script Has) = 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy

Segwit address =P2WSH (pay to witness) = bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq

Taproot Address = P2TR (Pay to Taproot) = bc1p5d7rjq7g6rdk2yhzks9smlaqtedr4dekq08ge8ztwac72sfr9rusxg3297

Source

Here's some additional information to expand your knowledge a bit...

In the beginning, when you're first trying to understand, it's probably fine for you to think of it as a bank statement of account.  As you learn more, you'll discover that what it stores and how it stores it is nothing at all like a bank statement of account. Don't let this initial understanding confuse you when you start to dig deeper. You'll need to unlearn some of the assumptions you've made.

This is one of several terms that seems to have multiple meanings depending on who you ask, as well as when and where they learned it. In many cases, "the first transaction in each block" is called a "generation transaction" (because it generates the new bitcoins that are entering the system) or a "block reward transaction" (because it is the transaction that pays the solo miner or mining pool their block reward).  In those cases, "coinbase" is the only a small portion of that transaction. Specifically, the portion that would be called "inputs" in the other standard transactions.

Cryptography is the study of techniques for secure communication in the presence of adversarial behavior. There are many types of cryptography. Only some of them rely on mathematical concepts. Bitcoin relies on a few clever mathematical algorithms such as those commonly known as "hashing" and "digital signatures".

That risk can be reduced (but not eliminated) by removing your funds from the CEX whenever you are not actively engaged in making an exchange of currencies.

Correct.  It is a piece of data (essentially, a number) that is calculated by using the original message in a digital data form and the private key and a specific mathematical process.  Then providing a public key to anybody that might want to verify the signature.  Another mathematical process (a verification process) can be performed using the signature, the message, and the public key. That verification process can prove beyond any doubt that the only way that the signature could be created is with the specific private key that is associated with the given public key.

The "alphabets and numbers" are just a convenient way (for computer programmers) to represent really big numbers.  In the case of Bitcoin's signature algorithm, the private key is actually just an integer. A really, really big integer. you don't "produce" the key to claim bitcoin. Instead, you use the key to generate a digital signature when you create a transaction.  That digital signature is then provided to demonstrate to every node on the bitcoin network that you are authorized to spend the specific bitcoins that you are attempting to spend.

Just like a private key, this is also just a clever way to store a very big integer.  Really, really big numbers are difficult for humans to remember, and are prone to mistakes when humans attempt to write them down or type them.  The "seed phrase" is a way to convert a really big number into a set of words, and to convert that set of words back into the original really big number.  Once the seed phrase is converted back into the original number that it represents, there is a standardized process for generating a HUGE quantity of private keys from that one number.  So, as long as you have the phrase, and you have software that knows the standardized process for converting it back into a number and knows the standardized process for generating private keys from that starting number, you can always regenerate the exact same set of private keys.

You may start to see a pattern in what I'm saying here...  That set of letters is just a convenient way to represent a very big integer.  In that very big number is all the information that a wallet software would need to be able to create a bitcoin transaction output script. It includes things like the public key (a pair of very large integers), a checksum (a number that software can use to determine if you mistyped the address), and a script type (a number that tells the wallet software what type of transaction to create).

Specifically, there are 100,000,000 satoshi units in 1 bitcoin unit. Some other units you might hear used are millibitcoin and microbitcoin. Here are some other conversions:
1,000 millibitcoin = 1 bitcoin
1,000 microbitcoin = 1 millibitcoin
1,000,000 microbitcoin = 1 bitcoin
100 satoshi = 1 microbitcoin
100,000 satoshi = 1 millibitcoin

Bitcoin transactions have a certain minimum amount of bitcoins that are typically required to be paid per unit of size (vbytes) of the transaction. Dust is often used as a term to describe transaction amounts that would cost more in transaction fees to spend than they are worth.

So, for example, if the average cost in transaction fees to spend some received bitcoin is about 800 satoshis, and you receive a transaction with only 700 satoshis, then any attempt to spend those 700 satoshis will require you to pay ALL 700 of them to the transaction fees AND still come up with an extra 100 satoshis from somewhere else. This means that including those 700 satoshis in a transaction will not result in the recipient receiving any extra funds, and will just cost you even more money.  You come out ahead financially by just NEVER spending the 700 satoshis.

It'd be a bit like if I gave you a special coin worth $1, but the ONLY way you could ever spend that coin would be to pay an appraiser at the time of your transaction $100 to verify that the special coin is not counterfeit and is actually worth $1.  You'd be better off just tossing the coin in the trash than ever trying to spend it.

So, you are correct that "dust" is an output with little value. Specifically, many people use the term to describe outputs that effectively have negative value.

It's a word that's used to differentiate modern currencies which get their value from their relationship to the government that issues them from the older currencies which were backed by a physical quantity of something valuable such as gold.

Cryptocurrencies are neither.  They don't have a government that issues them, nor are they backed by anything physical that a holder can dependably exchange the currency for.

Since blocks happen on average approximately every 10 minutes, 210,000 blocks mathematically works out to be just about 4 years. 210,000 blocks takes an average of about 2,100,000 minutes. There are 60 minutes in an hour, so that's 35,000 hours. There ar 24 hours in a day, so that's 1458 (and a third) days. There are 365 (and a fourth) days per year, so that's 3.99 years (or just about 4 years).

Feel free to ask about any terms you see that aren't clear. There are many people here that are willing to help. Be careful though about who you rely on for information. There's a lot of misinformation and people that will confidently state things that are entirely untrue.

Funny to believe you can master every technicalities or even the terms used in bitcoin or cryptocurrency. It may not be possible to do but you have to understand the simplest of them all like bull or bear, FOMO (Fear of Missing Out) FUD ( Fear, Uncertainty, and Doubt) etc. Every aspect of life has a way or terms that they use.

You just need some to be handy with you in your head so that you can easily get the drift of what it is that you are reading, then you can search others using google when you come across them. What you need to do is type the word or abbreviation and including crypto or cryptocurrency, you will get a meaning to it relating to cryptocurrency.

Knowledge is the cornerstone to all achievement, and an informed individual cannot be easily fooled due to ignorance.

It's always a good idea to set aside time to continue learning because giving up is never an option.

This forum will be the perfect place to acquire all of the help you need, but I want you to be calm and take all of the advise that has been offered to you because everyone here interprets things differently.

fiat came from a latin word meaning "let it be done" which refers to a government order/rule
however i prefer to make it refer to Federally Insured And Taxed as a laymans way to explain it..
my way is not the official reason for the term. but its the easy way to remember it

.. as for other names..
many people for years hated the buzzword "wallet"..
real world "wallets" store banknotes and coins and ID. but the bitcoin network wallet does not store coins in the wallet. it stores keys. (the coins never leave the blockchain)
people have preferred to think of the buzzword "wallet" to actually be a "keyring"(where keys are secured).. but it never caught on.

I appreciate the corrections that you made. I'm all about learning at this stage in my bitcoin journey, and I welcome any advice, teachings, encouragements or criticism directed at me by members. They will surely energise me to became more focused in understanding bitcoin better. My goal is to master every technicalities and terminologies associated with bitcoin, as soon as possible, so I can have a smooth sailing in the trading of bitcoin.

This is a good basis to get started in BTC world. It's really useful for a beginner. The only problem with btc now is very small number of people using it. However, the more people using btc - the more load for mining facilities... Anyway, decentralised blockchain system is a rapidly developing technology.

Thanks for your understanding, the journey to mastering bitcoin terminologies and techniques is not easy. If not for the fact that I've made up my mind and determined that I will do bitcoin business, I would have given up. I've come to understand that bitcoin discussions and trading requires a high level of intelligence, and new persons must study very well about it if they plans to succeed in it. Every encouragement and criticism makes me stronger and more determined to master bitcoin better.

OP i never undermined your efforts to making a good contribution to the forum but i don't think these words are considered enough terminologies newbie aren't familiar with already, when you're talking about terminologies, i expects words not common that newbies aren't familiar with them like:

Markle Tree
Cypherpunk
Mempool
Soft fork
Reorganization
BIPs
Halving
Malicious scam
Physhing attack
Censorship
Layer 2 protocols
Off-chain transaction

These and many other grammatical terminologies i expect to see you talk more about unlike the words we are so used to and are common, but just as I've said, you can always put in more effort the next time in bringing fresh ideas that could be more impactful in the areas of bitcoin learning and informations.

Even though you need to learn more about Bitcoin knowledge, I quite appreciate it because it's always interesting to see new people learning about Bitcoin and trying to discuss it with people on forums to increase their understanding. And moreover, you can position yourself as someone who wants to learn, and that's very good about you. Hopefully your Bitcoin journey will be good and I hope that you can get profit as soon as possible.

When starting to invest or trade in the crypto market, especially bitcoin. Understanding these terms is indeed very important, especially if you have entered and joined this BTT forum. If you don't understand these terms, you will definitely feel confused when one of the forum members writes these terms in a thread or in a post. So I think these terms will indeed be very useful when participating in discussions on this forum and will certainly make it easier when trading on bitcoins. But if in my view, if you trade or invest in bitcoin, if you outline it, it's actually about buying at low prices and selling at high prices. Staying up to date with market trends, volatility, and sentimental or fundamental analysis is also necessary in trading on bitcoins.
This is the main point in trading or investing in bitcoin.
But having more knowledge about bitcoin would be very good. So continuing to learn about bitcoin and all its systems is very good and will be very useful for your bitcoin trading.

That's a bit harsh, coming from you to someone who should be getting more encouragement from a more experienced member like you. We should show these new users kindness and direction especially when they're showing signs and efforts they're making to increase their crypto knowledge. For me, your comment there didn't sound supportive. Again, you may have mastered how to search stuff here but OP is just a noob who may not even know there's a search engine here. It took me over two years being here before I realized I could search stuff on this forum. Please, let's find a way of encouraging these new ones who are showing genuine interest to learn.

A signature is proof of ownership of a private key, but the purpose of a digital signature really depends on the context, much like the hand-written signature on a contract or on a letter. For example, the purpose of me signing a message saying "I own the account odolvlobo" with the private key of a previously posted address would be to prove that I own the account, and not that I own the private key.

A private key in Bitcoin is a 256-bit number. It allows you to send bitcoins at the address associated with it. It can be encoded in the WIF format as a set of letters and numbers, but that is not what it is as that is just one way to write it.

A seed phrase (also called a recovery phrase) is not a password. It is the value used to generate all of the addresses and private keys used by a wallet. It should be kept secret like a private key, but it is not "like a private key" because it is not used like a private key.

When someone writes "wallet address", it make me wonder. Perhaps they mean an address in a wallet, but is there such thing as a non-wallet address? A wallet is not an address nor does it have an address. A wallet contains addresses (and their private keys). A wallet can contain one address or it can contain thousands of addresses. So, I would suggest avoiding the term "wallet address" and just using "wallet" or "address", depending on what it is.

Starting with trading (buying & selling) in Bitcoin is not good and very risky actually.

A newbie should start with investment in Bitcoin. It does not require too many knowledge, experience, skills like trading. You only need to understand basics of Bitcoin, have a belief in Bitcoin, buy and hold your bitcoins.

With trading, you must learn too many technical indicators, trading strategies, terms of trading on exchanges, and practice a lot of time, spend a lot of months in this market to master it and gain profit. Not many traders can gain profit on all market, not only on Bitcoin market. So don't believe that you can get profit with trading.

Anyway if you like trading, Awesome Crypto Trading

• Private keys are used to sign transactions and not provided to claim bitcoins. Nodes verify that the bitcoins being spent are valid with that private key before validating the transaction.

• Seedphrases are not passwords.

One thing is you can never hold on to this terminologies all at once as a starter, it will simply be more of memorizing them. But sticking around bitcoin and getting involved will make them stick because experience sometimes makes it easier to remember them since you would have be accustomed with them.

Although this are terminologies that could make your journey easier but if you’re venturing into trading then I will advise you take up reading of lesson on fundamentals and technical analysis.

This subject is so enlightening for a newbie that you said, there is no business or investment you are in that you will know 100 percent of what it entails. so the person who introduced you cannot teach you all like it is been said you learn on the job.

Are we supposed to grade this?? You already have the resources of the forum and the endless possibilities of the internet at your disposal, what more do you need? Everything you listed and tried to explain are well explained in the link you provided, I really don’t see the need to repeat them. If you use the forum engine, you will find this thread has been extensively discussed.

Terminlogy
Crypto acronyms and their meanings for beginners (CHECK OUT)
Important terms that are frequently confused.
Cryptocurrency lingo/slang

Other sources include;
Coinmarketcap Cryptocurrency Glossary: https://coinmarketcap.com/alexandria/glossary
Coingecko Cryptocurrency Glossary: https://www.coingecko.com/en/glossary

Before venturing into the learning of bitcoin, I used to think that it was just all about buying and selling bitcoin when the market is favorable. With my experience in buying and selling of physical goods, I thought that there was nothing that difficult to learn about bitcoin, that all I needed to do was just buy it and sell to make profit. Basically that is what it is, but joining bitcointalk has opened my eyes to see that there is more to trading bitcoin than just buying and selling.

The term "Newbie' in this forum has really humbled me to know that I have to do research, learn technicalities and terminologies of bitcoin first before I can start trading it. Otherwise the reality of failing and loosing my hard earned money is imminent.

I feel like I'm in an online course now studying about bitcoin. I see myself getting forced to learn the terminologies and complex nature of bitcoin if I have to succeed and I'm prepared to do so. Without understanding the terminologies of bitcoin, it will be very difficult for a newbie to contribute meaningfully in threads that discuss about bitcoin trading, because the newbie might continue to make a fool of himself in trying to contribute.

My first contact with Bitcoin here, terms like blockchain, cryptography, Coinbase, Dex, Cex, Fiat, Halving, Wallet, Private keys, Dust, Satoshi, etc used to confuse me. The person who introduced me to bitcoin told me something about the founder of bitcoin and gave a strange name that I almost immediately forgot until I came here and remembered what he mentioned was Satoshi Nakamoto. It is here that I started reading about Bitcoin anniversary and how someone bought pizzas with so much bitcoin that made my head swell.

I have been reading and learning online from  https://bitcoinmagazine.com/bitcoin-glossary and that is where most of my bitcoin knowledge come from in addition to this forum. I'm putting more time to staying online which is not my usual habit. Some of those confusing terms I can put now in my understanding of what they mean. I'm still learning.

1: Blockchain - This is a list of all blocks that have ever been listed. I see this as a bank statement of account.

2: Coinbase - The first transaction in each bitcoin block. I learnt also of Genesis block which is the ever first block by Satoshi.

3: Cryptography - Secured techniques based on mathematical concepts. This is still not too clear to me completely.

4: DEX (decentralized exchange) - A cryptocurrency exchange where people can trade cryptocurrency without a central company or middleman. The term middleman is popular in my type of business.

5: CEX (Centralized exchange) - A cryptocurrency exchange where people  trade cryptocurrency with middlemen involved. It is the opposite of Dex and those who trade there are exposed to loosing their coins if the Cex shuts down because they don't own keys to their bitcoin on the exchange.

6: Digital signature - This is something that can be attached to a message to show that the sender is the owner of the private key.

7: Private Key - This is a set of alphabets and numbers associated with wallets to show you are the right owner if you can produce them to claim the bitcoin in it.

8: Seedphrase - This is a set of words like a password to a wallet. I see it is also like a private key.

9: Wallet address - This is a set of letters associated to a wallet that we give out to people to send Bitcoin to.

10: Satoshi - Units of Bitcoin, just the way we have units of our local currencies in denominations.

11: Dust - Bitcoin transaction output with little value, like tiny Satoshis.

12: Fiat - This is the one that shocked me most. Until now I never knew the traditional currency I used in buying and selling is also called a fiat. This humbled me.

13: Bitcoin Halving - A preprogrammed of the bitcoin block subsidy, which occurs every 210,000 blocks. Some say it happens every four years also. A lot of people are talking about it here with excitement that it will happen in 2024.

There are many more of these confusing terms and I'm ready to acquire more of them with belief that they will become easier the more I read about bitcoin.