The blockchain and digital assets industry is constantly growing and evolving, and nowhere is this more evident than in the rapidly changing lexicon of words used to describe the many activities, products, services, and technology associated with it. As our industry has evolved, so has the language used to define it.
We at TAAL anticipate a continued shift from “miners” to “transaction processors”, where businesses earn revenue by supporting organizations building solutions and applications on the Bitcoin SV blockchain. This growing shift has resulted in new terms that encompass this evolved era of blockchain.
In order to clearly define the latest industry terminology, our team has put together the following glossary of terms.
A general term for hashing equipment, which run hashing operations on a SHA (secure hash algorithm)-256 based blockchain network for the purpose of earning block rewards.
The rewards on the Bitcoin network obtained for proof-of-work, which are comprised of: (i) transaction fees; and (ii) a block subsidy.
A block subsidy refers to the newly minted digital assets that are one of the two parts of a block reward, that result from successfully building a block in the process of hashing.
Digital assets, formerly called crypto-currency refer to the digital coins or tokens that form the block subsidy in the process of hashing. Bitcoin SV (BSV) is an example of a digital asset.
Digital Asset Mining
Digital asset mining refers to hashing operators whose business activity is primarily focused on acquiring block subsidies, as distinct from businesses that are focused on earning transaction fees and providing value-added services on the blockchain.
Digital Asset Mining Pool
To reduce payout variance of block rewards, digital asset mining operators can organize themselves into integrated digital asset mining pools to combine their hashrate over a network, in an effort to build blocks collectively. When successful, the hashrate contributors to the “pool” split the block subsidies, and pay a pooling fee, proportionate to each hashrate contributor’s share of hashrate. As such, instead of infrequent larger, single payouts for solving a single block on their own, pooling hashrates provides participating hashrate contributors with smaller, more frequent payouts, resulting in a higher and more stable income stream.
An event built into the source code of the Bitcoin SV (BSV) blockchain, and other bitcoin derived systems. Each halving divides the rewarding of block subsidies in newly minted digital assets in half, and is programmed to occur at the creation of every 210,000th new block, or approximately every four years. The third halving event occurred on April 10, 2020 for the Blockchain SV (BSV) blockchain, and occurred on April 8, 2020 and May 11, 2020 for the Bitcoin Cash and Bitcoin Core blockchains, respectively.
We use this term to refer to the computational processing power measured in hash/second when running SHA-256 operations, which is analogous to FLOPS (floating point operations per second) and is indicative of the amount of capital expended on blockchain infrastructure to support the blockchain network.
Formerly referred to as “mining”, hashing is a general term we use to refer to the cryptographic computing operation of hashing equipment on SHA-256 based blockchains, for which proof-of-work block rewards are earned in the form of block subsidies and transaction fees.
Hashing rigs are specialized ASIC (application-specific integrated circuit) computers that are optimized for hashrate capacity to execute secure hashing algorithms that result in block rewards. Other commonly used terms for hashing rigs are “mining rigs,” “mining servers,” “transaction processing equipment,” and sometimes “cloud computers”.
Hashing equipment includes hashing rigs and their associated infrastructure such as network switching equipment.
Network nodes in bitcoin blockchains refers to nodes that contribute to building blocks or extending the blockchain. This should be distinguished from what is commonly called “full nodes,” which are simply validating nodes, and do not participate in the activity of building blocks.
Proof-of-work is the consensus algorithm used in the bitcoin blockchain networks, and is an attestation of the amount of energy spent in the production of hash. This algorithm confirms transactions and results in the creation of a new block to add to the blockchain.
Mempool is the queue of transactions that have been validated and are candidates to be entered into the next block. Depending on the fee that the transaction generator proposes to pay and the fee policy of the transaction processor, these transactions may be entered into the next block. Inclusion in the mempool, however, does not guarantee that a transaction will be entered into a block, only that it will be considered for entry into a block.
Transaction fees refer to the fees generated from processing and verifying transactions and are claimed by the transaction processing entity that created the block. They can be earned as part of the transactions themselves or directly via processing contracts.
Transaction Generators refers to the organizations that build applications that create data to be written to the Bitcoin SV (BSV) blockchain. Transaction generators can send their transactions to the open market, applying the default network fee for any transaction processor to process. Alternatively, they can send their transactions directly to the transaction processors M/API server endpoints at a negotiated rate.
M/API or Miner API
Direct endpoint connections for Transaction Processors open for the public to pass transactions to be written to the blockchain.
API = Application Programming interface, which are the backbone of internet services. Transaction processors will share their server endpoints (URLs) to application developers, who will embed this data into the transaction.
Formerly referred to as “cryptocurrency mining”, transaction processing refers to the process of validating transactions and time stamping them by sequencing them into blocks, which are then published and added to (thereby extending) the associated blockchain. As remuneration, the transaction processing operator is paid a transaction fee as described above. TAAL is graduating to this term to describe our hashing activity, as we are no longer focused solely on block subsidies.
Also sometimes referred to as zero-conf or expressed as 0-conf, these are transactions that have yet to be confirmed and verified in a block. Such 0-conf transactions expose the counterparties to possible double spend risk.