FAQ

What is Bitcoin?

Bitcoin is a digital, decentralized currency which does not require third parties to operate. This means that you do not depend on banks, large corporations or governments to move your money.

Satoshi Nakamoto

Satoshi Nakamoto is the pseudonym of the person or group who invented Bitcoin. Nobody knows who that person or group is.

Satoshi

A Satoshi is the smallest amount of Bitcoin which can be sent 0.00000001.

Altcoin

Altcoins are the alternative currencies released after the success of Bitcoin.

“Altcoin” is a combination of two words: “alt” and “coin”; alt means “alternative” and “coin” basically means “cryptocurrency”.

AML and KYC

Anti Money Laundering and Know Your Customer is a group of laws in the United States that require Bitcoin sellers to know who their customers are. Some vendors will ask for your identification to meet the law requirements. Other countries may have similar laws and requirements.

Exchanges

Exchanges is a platform or service where users are allowed to exchange one type of currency for another.

Financial Derivative

A financial derivative is a security whose profitability depends on the value or performance of another asset (known as an underlying asset), and this can be shares, currencies, market indices, commodities, bonds or interest rates.

Blockchain

Blockchain is the technology that supports Bitcoins. It’s what makes the network work. Transactions in Bitcoins are sent to the blockchain so that the miners can place them in the blocks they extract. Once a block that contains the transaction is mined, it is added to the blockchain and the same transaction is then confirmed.

Blockchain.info

Not to be confused with blockchain, blockchain.info is one of several sites that work as blockchain explorers. These sites allow the user to see all transactions already made on the network, and you can also check on them how many transactions are not yet confirmed, the more you have, longer it will take for your transaction to be confirmed.

txid

Transaction ID. This is a long sequence of numbers and letters that work as the identification of a single transaction. It’s useful to know it, since you can paste it into a blockchain explorer and see what took place in that transaction. It’s mainly used to see how many confirmations a transaction already has.

Peer-to-Peer/P2P

It’s the way the network is structured, in which clients and servers are connected without the need for a middleman, such as a bank. Peer-to-Peer is immutable and is already widely used, the torrents are an example of this.

Address

A Bitcoin address is a long sequence of random letters and numbers. Addresses are used when the user wants to send or receive Bitcoins. Each wallet has at least one shipping address and one receiving address. Whenever you want to add Bitcoins to your wallet, you need to give your Bitcoin wallet address to the sender.

Bitcoin Blocks

A Bitcoin Block is a “link” in the blockchain. A block contains a group of Bitcoin transactions that have been confirmed.

Confirmation

To complete a transaction with Bitcoins, it needs to be confirmed. It’s recommended to wait at least 3-6 confirmations before you can deem a transaction completed. Confirmation takes place when a new transaction block is added over the same block.

Payments with 0 confirmations can be reversed, wait for at least one confirmation.

Cold storage/Cold wallet

It refers to store Bitcoins more securely and reliably offline. The best way to store your Bitcoin is in a wallet paper, which is a paper with a private key and a public key or a seed phase written on it, it’s considered the best practice to keep your private key secure.

Seed Phase

The seed phrase, seed recovery phrase or backup seed phrase is the word list that contains all the information needed to recover the Bitcoin portfolio. Bitcoin wallets often generate a seed phase and ask the user to write it on a paper. If your computer or smartphone stops working, they can nonetheless download the same wallet to another device and have access to the funds.

Seed phase is a great method to back up and store your Bitcoin. The seed phase can also be generated from the public and private key, keeping the same level of security.

Hot wallet

It’s the opposite of cold storage/cold wallet. An online wallet that happens to be located on a computer or smartphone connected to the internet. These can be easily hacked.

Multisig

The term "multisig" means multiple signatures. A wallet with multisignature is a wallet with several cryptographic keys related to it. For instance, imagine that you have a company and don’t want only one employee to have access to the wallet, with multisig any transaction has to be approved by more than one employee.

Double-spending

Double-spending is when a user can spend the same funds more than once. Nevertheless, Bitcoin has a mechanism based on transaction logs to verify the authenticity of each transaction.

SEPA

Single Euro Payment Area, SEPA transfers are a special type of bank transfer within the EU.