Bitcoin may be a hot topic in the world of finance, but it’s still pretty difficult to understand for many people outside of the industry. With new terms being created every day, there’s no way you can know all of them without doing your own research and familiarizing yourself with this revolutionary technology. Luckily, we have you covered with our Bitcoin Glossary! Here, you’ll find easy definitions of all the terms and lingo you should know as you dip your toes into this exciting new market!
ALSO READ: How to Buy and Trade Cryptocurrency like Bitcoin, Ethereum, and others on chipper cash
Contents
Bitcoin security
Bitcoins are secured by public and private keys, which are long strings of numbers and letters that give each user a certain degree of control over their bitcoins. In all bitcoin transactions, users send their bitcoins from one address to another. Each address is associated with a pair of public and private keys that are held in place by cryptography.
The users’ coins can only be released by presenting both public keys. If someone steals your wallet, they could steal your coins if they have access to your private key. However, because you also have access to your private key through a password, you can always transfer those stolen coins into a new wallet.
It’s why many people say bitcoin wallets aren’t really hacked, but rather just compromised. If you lose your password, however, it’s as good as lost because there’s no way back into your account without it. There are ways to work around these issues, though. For example, most bitcoin exchanges offer insurance policies on customer accounts in case something happens to your digital money, you’re covered up to a certain amount.
Some companies allow for multi-signature addresses that require more than one person to sign off on a transaction before it can go through. There’s still risk involved but it makes it much harder for thieves to get away with stealing funds from an exchange or individual user’s wallet.
ALSO READ: How to Receive and Send Bitcoin Uganda using the Chipper Cash App
Wallets and Keys
If you’re going to be using Bitcoin, you will have a wallet. It is essential that you keep your private key safe and never share it with anyone. This is your security if someone gets access to your key, they can access all of your Bitcoins. Private keys are long strings of characters that are unique for every wallet and can be generated by any computer or mobile device that runs on software implementing a cryptographic algorithm.
Wallet addresses, however, are shorter strings of numbers and letters that identify your specific wallet within a broader blockchain network. There are different types of wallets, including desktop wallets, mobile wallets, web wallets, and hardware wallets. Each has its own advantages and disadvantages.
Desktop wallets store your public address and private key locally on your hard drive while mobile wallets store them online in an app installed on your phone. Web wallets store them online in an account controlled by a third party while hardware wallets store them offline on devices like USB drives or external hard drives.
The choice between these options depends on your level of technical knowledge and comfort level as well as how much money you want to invest in protecting your Bitcoin. No matter which type of wallet you choose, make sure that it offers two-factor authentication so that even if someone does get hold of your private key, they won’t be able to do anything with it without also having access to another piece of information from you like a password or PIN number.
ALSO READ: How to Receive Bitcoin via the Yellow Card App in Uganda
Bitcoin transactions
Transactions are how you send money using bitcoin. Each transaction is a transfer of value between one or more addresses. Transactions can be generated online, and are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.
The data from these transactions cannot be changed without modifying all subsequent blocks, which requires the consensus of a majority of participants in the network. This makes double-spending very difficult if not impossible, it’s fraud-resistant.
Conclusion
Whether you’re a noob or a veteran, bitcoin is always changing. Learn as much as you can about it so that you don’t get lost in its terminology and technological aspects. Being familiar with all of these terms will surely help, but if not then feel free to ask someone who knows better. Good luck! and remember to stay safe out there. The crypto world has its fair share of scammers, con artists, and malicious hackers lurking around every corner.