Bitcoin

Hash Pointers and Blockchains

Pointer: A reference telling where to find data, without checking its contents.
Hash pointer: A reference to data stored together with a hash of that data.
Blockchain: A linked list in which each block holds a hash pointer to its predecessor.
Head: The pointer identifying the newest block in a blockchain.
Genesis block: The first block in a blockchain.
Tamper-evident log: A record in which any change to past entries can be detected.

Merkle tree: A binary tree of hashes whose leaves are hashes of data items.
Merkle root: The single hash at the top of a Merkle tree.
Sibling hash: The other child of a node’s parent in a Merkle tree.
Merkle proof: The sequence of sibling hashes along the path from a leaf up to the root. Also called a proof of inclusion.

Bitcoin: A decentralized payment system with a public, replicated transaction history.
Pseudonymity: Using identifiers that carry no name but can still be linked to a person.
Double spending: Signing two transactions that spend the same funds.
Trusted third party: An organization relied on to keep records and transfer money correctly.
Account balance: A stored amount that a bank adjusts with each payment.
Ledger: The complete history of all Bitcoin transactions.
Unspent transaction output (UTXO): A transaction output that has not yet been spent.

Public/private key pair: Elliptic curve keys where the private key signs and the public key verifies.
Elliptic Curve Digital Signature Algorithm (ECDSA): The signature algorithm used in traditional Bitcoin transactions.
Wallet: Software that generates and stores a user’s keys and creates transactions.
Address: Encoded data telling a sender how to create an output a recipient can spend.
Pay-to-public-key-hash (P2PKH): The traditional address format containing a hash of the recipient’s public key.
Base58Check: The text encoding, with a checksum, used for traditional Bitcoin addresses.
Checksum: Extra data added to an address to detect typing errors.
Script-hash address: An address containing the hash of a program that states spending conditions.
Taproot: A newer output type whose spending uses Schnorr signatures.
Schnorr signature: An elliptic curve signature scheme that lets several signatures be combined into one.

Transaction: A signed record that consumes existing outputs and creates new ones.
Input: A reference to an earlier output being spent, with its authorization.
Output: An amount together with the condition required to spend it.
Transaction identifier (txid): A hash of a transaction’s data used to refer to it.
Change: An output returning unused value to the sender.
Transaction fee: Input value minus output value, collected by the miner.
Full node: A node that independently verifies the entire blockchain and tracks unspent outputs.
Confirmed UTXO set: The unspent outputs implied by the blocks in a node’s active chain.
Mempool: A node’s collection of verified transactions not yet in a block.

Miner: A participant who assembles candidate blocks and searches for valid proof of work.
Block: A header plus an ordered list of transactions.
Block header: The 80-byte summary of a block that is hashed for mining.
Previous block hash: The header field linking a block to its predecessor.
Block hash: The double SHA-256 hash of a block header.
nBits: The compact encoding of the mining target stored in the header.
Nonce: A 32-bit header field changed by the miner between hash attempts.
Lightweight client: A client that checks transaction inclusion with Merkle proofs rather than full validation.
Simplified payment verification (SPV): Checking a transaction’s inclusion using block headers and a Merkle proof.
Archival full node: A full node that keeps the complete block history.
Pruned full node: A full node that discards old block data after validating it.

Hashcash: A 1997 scheme requiring a costly hash search to deter spam.
Proof of work: An input whose hash meets a requirement, expensive to find but cheap to verify.
Target: The largest acceptable block hash value, interpreted as an integer.
Mining: Searching for a block header whose hash is at most the target.
Extra nonce: Variable data in the coinbase transaction that extends the mining search.
Difficulty Adjustment Algorithm (DAA): Recomputing the target every 2,016 blocks to keep ten-minute average block times.
Hash rate: The number of hash attempts a miner or network makes per second.
Application-specific integrated circuit (ASIC): A chip designed solely to compute one hash function quickly.
Mining pool: A group of miners who combine their hashing and share rewards.

Accumulated work: The total expected hashing effort represented by a chain’s blocks. Also called chainwork.
Competing branches: Two or more chains that extend the same previous block.
Chain reorganization: Switching a node’s active chain to a branch with more accumulated work.
51% attack: Using a majority of the hash rate to rewrite or censor recent history.
Confirmation: One count for the transaction’s block plus one for each later block.

Coinbase transaction: The first transaction in a block, creating new bitcoin for the miner.
Block subsidy: Newly created bitcoin a miner may claim in a block.
Block reward: The subsidy plus the fees of a block’s transactions.
Halving: Cutting the subsidy in half every 210,000 blocks.
Coinbase maturity: The rule that a block reward cannot be spent until 100 more blocks are added.