Bitcoin

The Bitcoin address is like an email or physical address you have to provide for a transaction. You can provide your Bitcoin address to someone if you want to send Bitcoin payments. One of the distinctive highlights of the Bitcoin address is that you can use only one address for one transaction. It appears as a unique string of characters that helps in sending or receiving Bitcoin. Crypto wallets generate the Bitcoin address and are generally accessible as QR codes.

Atomic swap is a peer-to-peer approach that allows you to directly exchange one cryptocurrency for another without the involvement of third-party intermediaries, like CEX. The process relies on hash time-locked contracts or HTLCs, which ensure that both parties complete the swap; failing means the transaction is canceled. Atomic swap enables truly decentralized cryptocurrency conversion, so traders and safeguards reach the primary goal of decentralization. The distinctive approach in atomic swap ensures that the involved parties cannot cheat each other.  

Bitcoin or BTC is the first decentralized digital currency that was created in 2009 by an anonymous entity, Satoshi Nakamoto. It uses a peer-to-peer model for executing financial transactions without involving any central intermediaries like banks or other financial institutions. Bitcoin not only provided the first peer-to-peer digital cash system but also created the foundations of blockchain technology. The Bitcoin blockchain is a public ledger distributed across multiple computers in the network that maintains a record of all transactions.

Bitcoin Improvement Proposal, or BIP, is a formal suggestion for introducing modifications in the Bitcoin protocol. Every BIP has to go through community review before integration into the Bitcoin protocol, thereby safeguarding decentralization. BIPs enable the community to propose, discuss, and implement improvements in the Bitcoin protocol in an organized manner. You can find different types of BIPs with distinct goals, such as changes in the general guidelines, the protocol, or the BIP process.  

Bitcoin Core is the open-source reference implementation for Bitcoin. You can think of it as the original software that helps you run the Bitcoin protocol on a full node. Bitcoin Core ensures that your computer can download a copy of the complete Bitcoin blockchain and verify every transaction and block. The significance of Bitcoin Core is evident in the fact that it is the most commonly used implementation tool of the Bitcoin protocol and helps in maintaining the network’s integrity.

A Bitcoin ETF, or exchange-traded fund, is a financial instrument that allows you to gain exposure to Bitcoin price movements without the responsibilities of direct ownership and management. The two common types of Bitcoin ETFs are spot Bitcoin ETFs and Bitcoin futures ETFs. Spot Bitcoin ETFs work with Bitcoin holdings as the underlying asset, while futures ETFs leverage future contracts for speculation on future prices. The notable advantages of ETFs include convenience, easier integration into existing portfolios, and regulatory oversight.

A block represents the collection of Bitcoin transactions that is verified through the Proof of Work consensus mechanism. You can think of blocks as the basic components required for creating a blockchain. Each block includes the confirmed transactions, the hash of the previous block, and the nonce that miners must find to solve the cryptographic puzzle for Bitcoin mining. Blocks are not only the building units of any blockchain but also help in safeguarding against double-spending and unwarranted modification.  

BRC-20 tokens can be considered as the counterparts of ERC-20 tokens. The special highlight of BRC-20 tokens is that they are experimental in nature and have been developed with the help of ordinal inscriptions. The BRC-20 token standard allows users to create and transfer fungible tokens on the Bitcoin blockchain. With this innovative approach, Bitcoin can become more than just a payment system. However, BRC-20 is an experimental standard and has limited functionality as compared to other token standards.  

Covenants refer to a specific type of smart contract that helps users define conditions on how to spend Bitcoin after the initial transactions. The covenants embed specific rules, such as limits on the type of transactions, enforcing delays, or locking funds on specific addresses in smart contracts. As a result, they help in adding more layers of control to future transactions. Covenants serve as the ideal pick for applications that require additional security, such as multi-stage payments or vaults. 

Bitcoin blockchain leverages cryptography to safeguard the network and ensure that it upholds the principle of decentralization. Bitcoin leverages two notable cryptographic techniques, hash functions and public-key cryptography, to maintain a trustless network. Hash functions can convert data of any size into a string of characters with a fixed length and play a major role in ensuring the immutability of Bitcoin transactions. Public-key cryptography helps in managing Bitcoin transactions and ownership with the combination of public and private keys.  

Mining is a crucial process in the design of the Bitcoin blockchain as it helps in verifying transactions and creating new Bitcoins. The process involves using powerful computers to solve complex mathematical puzzles that will allow users to add new transaction blocks to the blockchain. Miners receive their reward in the form of newly created Bitcoin tokens and a share of transaction fees. The mining process helps in safeguarding the security and decentralization of the Bitcoin blockchain. 

The private key is an integral element of the public-key cryptography approach as it uses an alphanumeric code to prove ownership and control over cryptocurrencies. You can think of it as the password for your Bitcoin holdings. Anyone with your private key can gain access to your Bitcoin tokens. Therefore, it is important to keep your private key a secret with secure storage. The private key can be mathematically linked to the public key or the wallet address. 

P2P or peer-to-peer represents a special approach that allows two or more people to interact directly with each other. The P2P approach does not involve any central intermediary, thereby making it more transparent and efficient. Bitcoin is the most popular example of a peer-to-peer electronic cash system that helps in conducting transactions directly between the receiver and sender. P2P transactions don’t require intermediaries like banks to facilitate and approve the transactions, thereby ensuring decentralization and censorship resistance. 

Double spending is one of the biggest issues in digital currency systems, which involves spending a single currency unit multiple times. The design of the Bitcoin blockchain prevents this problem as it calls for verification of all transactions by a network of miners. After confirmation and the process of adding a transaction to a block, it becomes immutable, which means that the transaction is irreversible. The virtual assurance of safeguards against double-spending in the Bitcoin blockchain design serves as a prominent security feature.  

Hash rate is one of the integral aspects in the design of the Bitcoin blockchain and helps in measuring the total computing power used for mining and processing transactions. The hash rate is measured in number of hashes per second, and a higher hash rate denotes that the network is more secure. With a higher hash rate, it is difficult for malicious actors to gain control over a blockchain. Bitcoin has the highest hash rate among all blockchain protocols.

Bitcoin halving is a pre-defined event in the Bitcoin roadmap that must happen approximately every four years. The halving event calls for cutting the reward for mining new blocks by half and is responsible for inducing massive changes in the crypto market. The halving event focuses on reducing the rate at which new Bitcoins are created, thereby enhancing scarcity. Bitcoin halving aims to achieve more control over inflation alongside ensuring that the total supply stays within 21 million BTC.   

Genesis block, as the name implies, is the block that established the foundation of the Bitcoin blockchain. It is the first ever block in the Bitcoin blockchain that was published by Satoshi Nakamoto. The genesis block includes a unique text phrase that highlights a headline from The Times newspaper. Many people believe that the text phrase highlighted in the Genesis block is a timestamp, while some assume that it is a political statement against the oppression of traditional banking.  

A fork represents a change in the rules of the Bitcoin protocol or any other blockchain protocol, thereby creating two different versions of the blockchain. You can find two different types of forks, such as soft and hard forks. Soft forks are backward-compatible, thereby ensuring that older nodes can recognize new blocks. On the other hand, hard forks are not backward-compatible and lead to the creation of a separate blockchain. Bitcoin Cash is one of the examples of a hard fork.

The Lightning Network is a layer 2 solution to address the problem of limitations in the scalability of Bitcoin. It runs on top of the Bitcoin blockchain and aims to facilitate faster transactions at lower costs with the help of payment channels. Lightning Network reduces the number of transactions recorded on the main Bitcoin blockchain, thereby reducing congestion and improving scalability. The Lightning Network has been designed to make Bitcoin more useful for small and frequent payments in everyday life. 

Segregated Witness, or SegWit, is an upgrade to the Bitcoin blockchain protocol that was introduced in 2017. The primary goal of the SegWit upgrade revolved around solving the problem of transaction malleability by increasing the number of transactions that can be accommodated in one block. The SegWit upgrade separates witness data or digital signatures from the transaction data, thereby opening the doors for more transactions in each block without any changes in the block size limit.  

Unspent Transaction Output or UTXO represents the amount of cryptocurrency that has been received and not spent. It is a type of output from past transactions that you can use as input for new transactions. Bitcoin relies on the UTXO model for tracking ownership. Assume that you have 1 BTC and spend half of it. The transaction will send an output of 0.5 BTC, and a new UTXO amounting to 0.5 BTC is sent back to the sender.

Confirmation represents the event when a transaction is added to a newly mined block and subsequently to the Bitcoin blockchain. All the other blocks added to the chain over the block that contains your transaction will qualify as another confirmation. The number of confirmations of a transaction provides a clear impression of its security. Transactions with more confirmations are more secure. In the case of Bitcoin, six confirmations are required to ensure that a transaction is irreversible. 

Satoshi represents the smallest unit of Bitcoin and has been named after the anonymous creator of Bitcoin. The value of 100 million Satoshis is equal to one Bitcoin. The small denomination opens new opportunities for using Bitcoin in microtransactions. On top of it, Satoshi allows the expression of the value of Bitcoin with more granularity. The primary utility of Satoshi revolves around expanding the utility of Bitcoin in services that rely on microtransactions or more frequent small payments. 

Bitcoin Cash is a hard fork of the Bitcoin blockchain that was created in 2017. It is a cryptocurrency that works separately from the original Bitcoin blockchain. The primary goal of the Bitcoin Cash fork was to expand the block size limit. Proponents of the hard fork stated that increasing the block size limit will enable faster and more cost-effective transactions. Bitcoin Cash demonstrates some similarities to Bitcoin, albeit with a completely different market and its independent community.