Frequently Used Blockchain Terms

Wallet: A wallet stores addresses. A wallet can have multiple addresses. Bitcoin can be sent to and from these addresses.

Address: A cryptographic key pair (private and public key) that stores a balance of Bitcoin.

Transaction: Transfer of bitcoin from one wallet to another.

Block:Transactions happening on-chain within a specific time.

Miners: Specialist computers that secure the network and process transactions on it. They create blocks and cryptographically sign each block with a hash.

Hash: A unique encrypted ID of a fixed length derived from a mathematical calculation.

Distributed ledger: A database that records transactions, it is shared and synchronised among all members of the network so that there is no single owner.

UTXO (Unspent Transaction Output): Is the funds unspent from a transaction. Those funds remain in the wallet as they are ‘unspent’ so are useful to understand wallet funds.

Dormancy: A term that refers to the number of time coins have not moved on-chain i.e. they have not been spent. Dormancy increases the more time that passes without them having been spent.

Coin Days Destroyed (CDD): The number of coins in a particular transaction multiplied by the number of days since those coins were last spent. It attempts to separate out newer versus older volume. On-chain analysts can often be interested in older volumes as it shows a change in behaviour among longer-term holders.

Realized Value: Rather than taking the current price of Bitcoin, Realised Value takes the price of each Bitcoin when it was last moved i.e. the last time it was sent from one wallet to another wallet. It then adds up all those individual prices and takes an average of them. It then multiplies that average price by the total number of coins in circulation. In doing so it provides a ‘cost basis’ price for Bitcoin.

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