It’s no secret that bitcoin mining can be incredibly lucrative. But it’s not something you can just dive into in the hopes of becoming an overnight crypto millionaire. If you want to monetize your talent at solving complicated equations, then here are the top bitcoin terms you need to know before making another move.
Blockchain: A digital ledger and massive information file that forms the heart of the bitcoin network, listing every transaction ever made.
Block Reward: Compensation paid to miners for succeeding at validating and recording new transactions on the blockchain.
Centralized: Referring to an entity that maintains control over operations.
Centralized Crypto Exchange: An online platform for trading crypto and FIAT.
DAO: Short for Decentralized Autonomous Organization, a DAO is an organization that operates free from one central government, while following a set of rules that are transparent and encoded within a computer program.
dApps: Decentralized Applications built using blockchain technology, free from a centralized operational authority.
DeFi: Short for Decentralized Finance, DeFi refers to a novel monetary system built on public blockchains. Again, no centralized institution is involved. Seeing a pattern here?
Decentralized: An activity, organization, or platform controlled by multiple parties instead of one centralized entity. In blockchain, all control and decision-making processes all occur on a distributed network.
Digital Address: All unique digital addresses comprise anywhere from 27 to 34 letters and numbers which, collectively, represent a crypto wallet. Crypto recipients must be able to share a digital address if they want to receive the funds they’re owed.
Digital Wallet: Installed on a computer, mobile app, or remote server, a digital wallet is an app specifically built to store crypto – mostly for Bitcoin. Digital wallets use public addresses and private keys to hold funds, and the most secure in the world are hardware wallets or cold storage paper wallets. Ledger and Trezor are examples.
FIAT: Currency backed by the nation or state, like USD, Euro, etc. In other words, money you likely use on a daily basis.
FOMO: You might be familiar with this one already. Short for “Fear Of Missing Out”, FOMO means exactly what it sounds like. But in the bitcoin realm, that fear is of not entering a winning trading position.
HODL: If you misread that as “hold”, that’s the point. Hodlers are determined to hold their bitcoin no matter how much the price fluctuations, because they truly believe in the cryptocurrency.
Halving: The process of cutting bitcoin mining rewards in half every four years in order to delay the day upon which we reach the predetermined bitcoin cap of 21 million. This way, supply will stagnate and demand will rise.
ICO: Short for Initial Coin Offering, an ICO is a fundraising method to earn public-funded capital and bring a new cryptocurrency to life.
Proof-of-Work (PoW): The original blockchain algorithm used to add new blocks and verify transactions on the blockchain.
Proof-of-Stake (PoS): A consensus algorithm that lets uses choose who will validate the next block, depending on how many coins they have. Tokens are locked by holders to secure the network and earn rewards.
Satoshi: Bitcoin’s cent unit, named after the developer of bitcoin, Satoshi Nakamoto.
While there are plenty more top bitcoin terms where these came from, this should be enough to get you started as a beginner bitcoin miner.