The Language of Bitcoin - a glossary
Hold on for dear life! This term was given birth because of bitcoins price volatility, and requires its investors to hold on for dear life as it roars up and down.
The smallest unit of measurement within bitcoin. Each bitcoin is divisible 100 million times, and each one is called a satoshi, or sats, in honour of Satoshi Nakamoto. You’ll often hear bitcoiners say, “Keep stacking sats”.
A term used for someone who is strictly into bitcoin and not other cryptocurrencies, aka “shitcoins” in their world. To a bitcoin maximalist, there is no alternative/other.
The Bitcoin protocols creator. He is anonymous to this day, no one knows his identity. Some conspiracy theorists argue that they are a government, or the CIA or FBI, but no identity has ever been proven and this is with good intention. Due to the disruptive nature of Bitcoin, if there was a CEO that needed to answer to a government or congress, Bitcoins impact would’ve died a long time ago. It is the fact that a user can remain anonymous (with great care to as this is not normally the case), the network is censorship resistant, and cannot be shutdown, that makes Bitcoin truly anti fragile. To be anti fragile means that not only does it not break, it gets better with each attack.
A crypto wallet that has connection to the internet or Bitcoin network. These are great if you regularly interact with bitcoin for purchases or trading. However, a hot wallet is susceptible to hacking or fraud. So it isn’t recommended for long term holding.
A crypto wallet that is not connected to the internet. It is impermeable to hacking or theft as it is offline. A cold wallet comes with a recovery seed phrase that allows the holder to reprogram a new wallet should anything happen to the initial wallet, or they had to flee without the physical wallet. This allows cross border movement without any devices.
Any entity that runs huge ASIC computers to mine bitcoin. They also help run and secure the network by performing the mass complex computations that are needed to add block transactions to the ledger (or can be called the blockchain).
This is anyone who runs the Bitcoin protocol on their personal computer. Anyone can do this. Whereas mass amounts of expensive energy and highly specialized equipment are needed to mine bitcoin, running a node can be done with any computer by anyone. It is an active copy of the ledger. As long as one node remains running, the ledger will be maintained.
Proof of Work
The current legacy system uses Proof of Stake (PoS), which is, “I have more of it, so you need to trust and follow me”. Whereas Proof of Work (PoW) is, “I have put in the work to secure this, followed the protocol, so follow me”. This ensures no one entity has control over the network.
Next to Max Keiser, arguably Bitcoins most famous advocate for many years, Michael Saylor is the next in line for the title. At the beginning of Covid, the CEO of the publicly traded Microstrategy saw a major problem with his cash reserves as governments globally were inflating the monetary supply in ways never before seen; he even went on to argue that the unadmitted inflation rate was more like 20%, than the laughable 1.5%. He went on a mass learning frenzy about Bitcoin and proceeded to transfer the company’s balance sheet into bitcoin. He has now amassed just over 100,000 bitcoin. Michael Saylor debated Frank Guistra on bitcoin vs. Gold, and won by a total landslide. The MIT alumni has paved the way for other corporations to follow in his company’s footsteps, and has provided free education to anyone with an internet connection via Saylor Academy. There is even a course on Bitcoin offered.
A technology that uses a concept of public and private keys, making identity and trust a non needed part of monetary transactions. Cryptography is backed by math and computer science.
Decentralized finance - “Defi”
A new form of finance that banks the unbanked, removing permission from third party entities to those who want to participate. Right now, the current system is highly centralized, with permission and access granted based on who and where you are.
Stock to Flow
Initially introduced by the anonymous trader “@100TrillionUSD” aka PlanB, they use a model showcasing that eventually all the worlds financial energy will be absorbed and taken over by Bitcoin. The market cap of silver, gold, bonds, and real estate will collapse in fiat terms, and be represented by the value in bitcoin as the apex predator of financial assets. Money goes where it’s treated best.
A chain of minted blocks of transactions, strung together using the hash of the previous block to confirm each transactions legitimacy.
One is added roughly every 10 minutes, with confirmed transactions inside.
A recent development in bitcoin wallet security, it is a list of 24-32 words. All randomly generated, but can back up or initialize a new wallet using those words. They are written down, never put on a laptop or phone with internet connection, and are literally the keys to your bitcoin wealth. Never share them with anyone you don’t trust with your life. They should be stored in a fireproof safe. Or with a family member you trust should anything happen to you. Without this seed phrase, no one can access your wealth, not even family members via a court document.
This is the key to your public mailbox essentially. Everyone has public bitcoin addresses, but in order to open that address, you need the private key, which is derived mathematically from the public key. If you think it’s easy to derive a private key from the public key, let me leave you with this: guessing the entire key would be similar to guessing a specific atom from the entire universe, or winning the Powerball Lottery 9 times in a row. (Inventing Bitcoin by Yan Pritzker, emphasis added)