Bitcoin Terms Beginning with D


A decentralized exchange or DEX is meant to facilitate the exchange of bitcoin without forcing users to sacrifice privacy or custody to an exchange.

A decentralized ledger is a record of all transactions on a network. This ledger is maintained and updated by many independent nodes, who collaborate based on a ruleset established by the protocol. Bitcoin uses a blockchain and Proof-of-Work to organize the network and maintain its decentralized ledger.

Deflation is a general decrease in the price of goods and services in an economy over time. This results in higher purchasing power for the relevant currency.

A depth chart is the graph of all the pending orders for a particular asset. Depth charts help traders understand market activity.

The Distinguished Encoding Rules (DER) format is a defined standard which Bitcoin uses to encode ECDSA signatures. A typical Bitcoin signature is 71 bytes long, as a one byte sighash flag is appended to the DER signature.

A derivation path is a piece of data which tells a Hierarchical Deterministic (HD) wallet how to derive a specific key within a tree of keys. Derivation paths are used as a Bitcoin standard and were introduced with HD wallets as a part of BIP 32.

A derivative is a contract that derives its value from the value of the underlying asset.

The difficulty is a measure of how hard it is to produce a Proof-of-Work, required to publish a block to the blockchain. Bitcoin's difficulty updates periodically so that Bitcoin blocks arrive every 10 minutes, probabilistically.

A Discreet Log Contract (DLC) is a form of Bitcoin transaction which uses an oracle to execute a smart contract. Essentially, DLCs allow parties to place bets using the Bitcoin blockchain.

The Discrete Log Problem (DLP) describes the fact that there is currently no known method for calculating point division on an elliptic curve. This unique property gives elliptic curve cryptography and Bitcoin security.

Diversification is an investment strategy that aims to minimize the overall risk of a portfolio. This is achieved by allocating a portfolio to several different assets that are not highly correlated.

A dividend is a payout by a company to its shareholders. This payout is proportional to each shareholders stake in the company.

Currency must be divisible into different denominations to account for transactions of different values, without suffering any loss of the currency value.

A double spend occurs when someone is able to spend the same money twice, fooling one or both parties into believing they have been paid. Bitcoin solves the double spend problem through the use of a decentralized ledger and a timestamped blockchain.

Durability is a property of money, in which the currency can maintain its original state overtime and withstand repeated use. A durable currency must be able to survive potential damage.

If a piece of bitcoin, a UTXO, is small enough, it may cost more in fees to spend it than it is worth. What constitutes dust is determined by the size of the UTXO and the current fee market.

Occasionally, attackers will send tiny fractions of bitcoin (around 500 sats) to random wallets. This is done in order to breach the privacy of those users and drive up the fees they pay.