Bitcoin Glossary
196+ Terms Defined

A string of characters you share so someone can send you Bitcoin. Think of it like a bank account number, except you can generate a fresh one every time. Addresses start with 1, 3, or bc1 depending on the format. See our full guide at /learn/bitcoin-address.

Keeping a device that holds your private keys completely disconnected from any network. Air-gapped devices sign transactions offline and pass them to a connected device via QR code or SD card. No internet means no remote hacks.

Free tokens sent to wallets as a marketing tactic. Common in altcoin-land, but they don't exist for Bitcoin. There's no company behind Bitcoin to hand out freebies.

The highest price Bitcoin has ever hit. Every major cycle since 2009 has produced a new ATH that blew past the previous one. People love to track this number.

The lowest price Bitcoin has ever reached. For the record, that's somewhere around $0.05 on early exchanges in 2010. Fun to look at now. Not a number you'll see again.

Any cryptocurrency that isn't Bitcoin. Short for "alternative coin." There are over 20,000 of them, though most see very little real-world use compared to Bitcoin.

Buying Bitcoin on one exchange where it's cheaper and selling on another where it's pricier, pocketing the difference. Sounds easy, but fees, withdrawal times, and slippage eat into profits fast. Bots handle most of it these days.

A peer-to-peer trade between two different cryptocurrencies with no middleman. Uses hash time-locked contracts (HTLCs) to make sure both sides of the swap either complete or fail together. No exchange account needed.

Application-Specific Integrated Circuit. Custom chips built to do one thing: mine Bitcoin. They're thousands of times faster than regular computers at it. Bitmain, MicroBT, and Canaan make the big ones.

A strategy that profits from the price gap between spot Bitcoin and futures. You buy real Bitcoin and simultaneously sell a futures contract at a premium, pocketing the spread. It's a popular way to earn yield-like returns.

A long stretch of falling prices, usually defined as 20%+ down from recent highs. Bitcoin has been through several brutal bear markets, but every single one has eventually been followed by new all-time highs.

The gap between the highest price a buyer will pay and the lowest price a seller will accept on an exchange. Tight spreads mean good liquidity. Wide spreads mean you're paying extra to get in or out, and that adds up.

A formal proposal for changing or adding to the Bitcoin protocol. Developers review and debate BIPs before anything gets implemented. Famous ones include BIP-39 (seed phrases), BIP-32 (HD wallets), and BIP-141 (SegWit).

Digital money that runs without a bank, government, or company in charge. Created in 2009 by the pseudonymous Satoshi Nakamoto. It's peer-to-peer, secured by proof-of-work mining, and capped at 21 million coins. This is the one that started it all.

A physical kiosk where you can buy Bitcoin with cash or debit card. There are over 30,000 worldwide, mostly in the US. Convenience comes at a cost though: fees typically run 5-15%, way above exchange rates. Fine for small, quick purchases.

The original Bitcoin software, written in C++. It's open-source, and anyone can run it to operate a full node that validates every transaction and block on its own.

A metric that divides Bitcoin's price by the price of one ounce of gold. It tells you how many ounces of gold one Bitcoin can buy. The ratio has trended sharply upward over Bitcoin's lifetime, from near zero to over 30 ounces per BTC. Gold bugs hate this chart.

A proposed mechanism to put conditions on how Bitcoin can be spent in future transactions. Think of it as programmable spending rules baked into the coins themselves. Proposals like OP_CTV and OP_VAULT could enable vaults, congestion control, and safer custody setups without trusting a third party.

Bitcoin's share of the total crypto market cap, shown as a percentage. It's calculated by dividing Bitcoin's market cap by the combined cap of all cryptocurrencies. Dominance tends to rise in bear markets (altcoins bleed harder) and dip in bull market alt-seasons. At time of writing, it sits around 55-60%. A rising dominance usually means Bitcoin is outperforming the rest of the market.

An Exchange-Traded Fund that tracks Bitcoin's price. Spot ETFs (approved by the SEC in January 2024) hold real Bitcoin. Futures ETFs hold contracts instead. Either way, they let people buy Bitcoin exposure through a normal brokerage account.

The act of embedding arbitrary data (images, text, audio, even small apps) onto individual satoshis using the Ordinals protocol. Each inscription is permanently stored on the Bitcoin blockchain. This sparked a heated debate: some see it as creative use of block space, others see it as expensive spam.

Short for Bitcoin maximalist. Someone who believes Bitcoin is the only cryptocurrency with real long-term value and everything else is a distraction (or worse, a scam). Maxis tend to be vocal, opinionated, and allergic to altcoin pitches. The term is sometimes worn as a badge of honor, sometimes used as an insult.

Slang for someone who's been in Bitcoin since the early days, roughly pre-2015. OGs have survived multiple 80%+ crashes without selling. They tend to have strong opinions about self-custody and are generally skeptical of newcomers who only show up during bull runs.

A popular visualization that overlays color-coded bands on Bitcoin's long-term price history. The bands range from "fire sale" (blue) to "maximum bubble territory" (red). It's based on a logarithmic regression curve and it's meant as a rough sentiment guide, not a trading signal. Fun to look at, not financial advice.

Proposed U.S. legislation that would direct the federal government to buy and hold Bitcoin as a strategic national reserve asset, similar to how the U.S. holds gold at Fort Knox. Details vary by proposal, but the core idea is making BTC part of the national balance sheet. Still working its way through Congress as of 2026.

A fungible token standard on Bitcoin created by Casey Rodarmor (same person behind Ordinals). Runes uses OP_RETURN to store token data, which is cleaner than the BRC-20 approach that cluttered the UTXO set. Launched in April 2024 alongside the halving. Whether you think tokens on Bitcoin are cool or annoying, Runes is at least more efficient about it.

Earning yield on your BTC through third-party protocols like Babylon that let you "stake" Bitcoin to secure other networks. This is NOT the same as proof-of-stake. Your Bitcoin stays on the Bitcoin network. The returns come from other chains paying for Bitcoin's security. It's a newer concept with real smart contract risk, so do your homework.

A method of embedding image data directly into Bitcoin transaction outputs using bare multisig. Unlike Ordinals inscriptions that can be "pruned" by nodes, Stamps data lives in the UTXO set and is harder to remove. Think of it as a more permanent (and more controversial) way to put data on Bitcoin.

The idea of governments holding Bitcoin as a reserve asset alongside gold and foreign currencies. El Salvador started buying in 2021. Multiple U.S. states and the federal government have explored similar proposals. The logic: if Bitcoin keeps appreciating against fiat, countries that stack early win big.

A theory that Bitcoin is breaking out of the traditional four-year halving-driven boom-bust cycle and entering a longer, more sustained growth phase. Proponents argue that institutional adoption, ETFs, and sovereign buyers have changed the game. Critics say every cycle feels like "this time is different" until it isn't.

A corporate strategy where companies hold Bitcoin on their balance sheet as a reserve asset. Strategy (formerly MicroStrategy) pioneered this approach starting in 2020, and dozens of public companies have followed. The bet: Bitcoin will outperform cash sitting in a bank account losing value to inflation.

A unit equal to one millionth of a Bitcoin (0.000001 BTC), or 100 satoshis. Some people find it easier to say "500 bits" than "0.0005 BTC." The unit never really caught on the way sats did, but you'll still see it in some wallets and discussions.

A technical analysis tool that plots three lines around Bitcoin's price: a middle moving average and two bands set at standard deviations above and below. When the bands squeeze tight, a big move is coming. When price touches the outer bands, it might be overextended. Traders love them, but they're backward-looking by nature.

Short for Bitcoin Finance. An umbrella term for protocols bringing DeFi-style functionality (lending, borrowing, yield, swaps) directly to the Bitcoin ecosystem. Includes projects on Stacks, Liquid, and newer protocols like Babylon. Still early compared to Ethereum DeFi, but growing fast since 2024.

The nine-page paper that started everything. "Bitcoin: A Peer-to-Peer Electronic Cash System" was published by Satoshi Nakamoto on October 31, 2008. It lays out proof-of-work, the timestamp server, and the incentive design. Remarkably concise for something that changed the world.

A bundle of Bitcoin transactions that gets verified and added to the blockchain roughly every 10 minutes. Each block links back to the one before it, contains transaction data, and includes a proof-of-work solution.

How many blocks exist between the very first block and the current one. It's basically a counter that tells you how far along the chain you are and roughly when a transaction got confirmed.

Fresh Bitcoin created and given to the miner who finds a valid block. Started at 50 BTC in 2009, and it halves roughly every four years. After the 2024 halving, miners earn 3.125 BTC per block.

The maximum data a single block can hold. With SegWit, it's effectively 4 MB (1 MB of non-witness data). This limit exists on purpose: it keeps running a node cheap enough that regular people can do it, which protects decentralization.

The public record of every Bitcoin transaction ever made. Each block is chained to the one before it with cryptographic hashes, so you can't go back and change history. It's been running non-stop since January 3, 2009.

A website where you can look up any Bitcoin transaction, address, or block. Think of it like Google for the blockchain. Popular ones include mempool.space, Blockstream Explorer, and Blockchain.com.

A Bitcoin infrastructure company behind the Liquid sidechain and Blockstream Satellite (which broadcasts the blockchain from space). Founded in 2014 by Adam Back and other well-known Bitcoin developers.

The standard format for Lightning Network payment requests. A Bolt11 invoice encodes the amount, destination, expiry time, and a hash that proves the payment went through. You'll see these as long strings starting with "lnbc".

A sustained run of rising prices. Lots of buying, good vibes, and media hype. Bitcoin's bull runs have historically lasted 1-2 years with returns of 300-2,000%. Everyone's a genius in a bull market.

Central Bank Digital Currency. Government-issued digital money, like a digital dollar or digital euro. Unlike Bitcoin, CBDCs are centrally controlled, programmable by the issuer, and offer zero privacy by design. Many Bitcoiners see them as the exact opposite of what Bitcoin stands for.

Tax you owe on profit when you sell or swap Bitcoin. Most countries tax short-term gains (held under a year) at higher rates than long-term gains (held over a year). Talk to a tax professional before selling.

A company-run platform where you buy and sell Bitcoin. Coinbase, Kraken, and Binance are the big names. The catch: they hold your coins for you, which means if the exchange gets hacked or goes bust, your Bitcoin could be at risk.

The number of Bitcoin that currently exist and are available for trading, as opposed to coins that are lost forever or haven't been mined yet. About 19.8 million BTC are in circulation out of the 21 million max. Estimates suggest 3-4 million coins are permanently lost, making the real circulating supply quite a bit lower.

Tracking the flow of Bitcoin on the blockchain to figure out who owns what. Companies like Chainalysis and Elliptic build tools for this, mostly used by law enforcement and compliance teams.

How much Bitcoin is locked in a Lightning payment channel. This sets the ceiling for how much can flow through that channel in one direction at a time.

A digital cash scheme invented by David Chaum in 1983 for private, untraceable electronic payments. Bitcoin projects like Fedimint and Cashu are bringing this idea back as a privacy layer on top of Bitcoin.

A wallet feature that lets you pick exactly which UTXOs to spend. Why bother? Privacy. It stops you from accidentally linking coins from different sources or spending UTXOs with sketchy history.

The special first transaction in every block that creates brand-new Bitcoin and sends it to the miner. Not the exchange (confusing, we know). It has no inputs because the coins didn't exist before.

A privacy trick where multiple users mix their transactions into one, making it hard to tell which inputs belong to which outputs. Wasabi Wallet and JoinMarket are the main tools for this.

The danger that the other party in a deal fails to hold up their end. In Bitcoin, this applies whenever you trust someone else with your coins: exchanges, lenders, custodians. FTX collapsing in 2022 was counterparty risk in action. Self-custody eliminates it entirely.

Storing your Bitcoin private keys on something that never touches the internet. It's the most secure way to protect against remote hacks. Hardware wallets, paper wallets, and air-gapped computers all count as cold storage.

Your transaction is confirmed once it's included in a block. Every block added after that gives you another confirmation. Six confirmations (about one hour) is the standard threshold for considering a payment final.

How every node on the Bitcoin network agrees on what the blockchain looks like right now. Bitcoin pulls this off through proof-of-work mining and validation rules, with no central authority calling the shots.

What you originally paid for your Bitcoin, including fees. When you sell, the difference between your cost basis and sale price determines whether you owe taxes or can claim a loss.

Digital money secured by cryptography on a decentralized network. Bitcoin was the first, and it's still the biggest by market cap. The term "cryptocurrency" covers Bitcoin and every altcoin.

When someone else holds your Bitcoin keys for you. Exchanges and some wallets work this way. The Bitcoin mantra "not your keys, not your coins" exists because of the risk: if they go down, your coins might go with them.

Buying and selling Bitcoin within the same day to profit from short-term price swings. Studies consistently show that most day traders lose money, especially after fees and taxes. The market runs 24/7, which means it can move against you while you sleep. If you're new, DCA is almost certainly a better strategy.

Buying a fixed amount of Bitcoin on a set schedule, no matter what the price is doing. DCA takes the emotion out of investing and smooths out volatility over time. Most Bitcoiners swear by it.

Spreading power across a network instead of handing it to one company or government. Bitcoin does this through thousands of independent nodes, open-source code, and proof-of-work mining. It's the whole point.

An asset with a supply that decreases (or at least doesn't increase) over time. Bitcoin fits this description: the issuance rate drops every halving, and lost coins are gone forever. Unlike fiat currencies where central banks can always print more, Bitcoin's supply only ever shrinks relative to demand.

A trading platform where you swap crypto directly with other people, no middleman holding your funds. Bisq and HodlHodl are Bitcoin-focused DEXs. More privacy, but usually less liquidity than centralized exchanges.

Financial services running on decentralized protocols instead of banks. Most DeFi lives on other blockchains, but Bitcoin-native options are growing through protocols like Stacks, Liquid, and discrete log contracts.

Slang for someone who holds Bitcoin through severe drops without selling. The opposite of "paper hands" (someone who panic-sells at the first sign of red). The term blew up during the 2021 meme stock era but Bitcoiners were doing it long before it had a name.

The most common analogy for Bitcoin. Like gold, Bitcoin is scarce, durable, divisible, and not controlled by any government. Unlike gold, you can send it anywhere in the world in minutes and verify your supply with a laptop. The "digital gold" framing has stuck because it's the easiest way to explain Bitcoin's value proposition to newcomers.

How hard it is to find a valid block hash. Bitcoin auto-adjusts this every 2,016 blocks (roughly two weeks) to keep blocks coming every 10 minutes, no matter how many miners are online.

Every 2,016 blocks (about two weeks), Bitcoin recalculates how hard mining should be. Blocks coming too fast? Difficulty goes up. Too slow? It drops. This is one of Bitcoin's most elegant design choices, keeping the 10-minute rhythm no matter what.

A database that's spread across many computers in a network with no single entity in charge. Every participant holds a copy, and changes are synchronized through consensus rules. Bitcoin's blockchain is the most famous distributed ledger, though the term is broader and includes non-blockchain systems too.

A digital thing that genuinely can't be copied or inflated. Before Bitcoin, digital scarcity didn't exist. Its 21-million-coin cap is enforced by thousands of nodes running the same rules. This is arguably the most important concept in all of Bitcoin.

Cryptographic proof that the person who holds a private key actually approved a transaction. Bitcoin uses ECDSA (and Schnorr after Taproot) to produce signatures anyone can verify but nobody can fake.

Trying to spend the same Bitcoin twice. This was the big unsolved problem before Bitcoin. Proof-of-work consensus makes sure only one version of a transaction gets accepted, so double-spending is practically impossible.

A sneaky privacy attack: someone sends tiny amounts of Bitcoin to lots of addresses. If you later spend that dust alongside your other UTXOs, the attacker can link them together and figure out what you own.

Elliptic Curve Digital Signature Algorithm. The math behind Bitcoin's digital signatures. ECDSA lets you prove you own Bitcoin without ever exposing your private key.

A crypto launch where nobody gets special early access or pre-mined coins. Bitcoin is the gold standard here: Satoshi announced the software publicly, and anyone could start mining from block one. No insider deals.

A specific type of double-spend where a miner pre-mines a block containing a transaction that sends coins back to themselves, then quickly spends those same coins at a merchant before broadcasting the pre-mined block. Named after Hal Finney, who first described it. Only works against merchants who accept zero-confirmation transactions.

Money printed by governments that isn't backed by anything physical like gold. The dollar, euro, and yen are all fiat. Their value comes from government say-so and public trust, not scarcity.

A rule change to the Bitcoin protocol. Soft forks are backward-compatible so old nodes keep working. Hard forks create a permanent chain split if people disagree. SegWit was a soft fork; Bitcoin Cash was a hard fork.

A computer that downloads and checks the entire Bitcoin blockchain, enforcing every rule on its own. Running your own node means you don't have to trust anyone. It's the most sovereign way to use Bitcoin.

A recurring fee that passes between long and short traders in perpetual swaps. Positive funding means longs pay shorts; negative means the reverse. It's the mechanism that keeps perp prices from drifting too far from spot.

Contracts that lock in a price to buy or sell Bitcoin on a set future date. Bitcoin futures trade on the CME (the traditional finance crowd) and on crypto-native platforms like Deribit and Binance.

Block zero. The very first Bitcoin block, mined by Satoshi on January 3, 2009. Embedded inside it: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." A timestamp and a statement.

Chart patterns formed when short-term and long-term moving averages cross each other. A golden cross (short-term crosses above long-term) is seen as bullish. A death cross (short-term crosses below) is bearish. Bitcoin traders typically watch the 50-day and 200-day moving averages. These signals tend to lag, so by the time you see one, the move is often already underway.

The absolute maximum number of Bitcoin that will ever exist: 21 million. This number is written into the protocol and enforced by every node on the network. It's the foundation of Bitcoin's scarcity. Changing it would require near-unanimous agreement from node operators worldwide, which is about as likely as herding cats across the ocean.

Every four years or so, the Bitcoin block reward gets cut in half. This slows down the creation of new coins. The halvings so far: 2012 (50 to 25), 2016 (25 to 12.5), 2020 (12.5 to 6.25), 2024 (6.25 to 3.125). Next one: around 2028.

A physical gadget that keeps your private keys on a secure chip, away from your internet-connected computer. Ledger, Trezor, and Coldcard are the top brands. If you're holding any serious amount of Bitcoin, you want one of these.

A smart contract that requires the receiver to acknowledge payment with a cryptographic proof within a set time window, or the funds return to the sender. HTLCs are the building blocks that make Lightning Network payments work across multiple hops without trusting any intermediary.

The output of running data through a hash function. Bitcoin uses SHA-256 hashes everywhere: linking blocks, creating addresses, mining. A hash is a fixed-length fingerprint that uniquely represents whatever you feed into it.

A math function that takes any input and spits out a fixed-size output. Feed in a novel or a single word, you get the same length result. Bitcoin uses SHA-256. The key property: you can't work backwards from the output to the input.

The total computing power pointed at Bitcoin mining, measured in hashes per second. More hash rate means more security. Bitcoin crossed 500 exahashes per second in 2025, making it the most powerful computing network on the planet.

A legendary typo from a 2013 Bitcoin forum post where someone meant to write "hold." It stuck. Now it's the war cry of long-term Bitcoiners who refuse to sell during dips. Diamond hands before diamond hands was a thing.

A wallet that's connected to the internet. Handy for daily spending, but riskier than cold storage because hackers can reach it. Most phone wallets and exchange accounts are hot wallets. Rule of thumb: don't keep more here than you'd carry in a real wallet.

Once a Bitcoin transaction is confirmed, it's basically set in stone. The deeper a block gets buried under new blocks, the more energy it would take to rewrite it. In practice, the blockchain is a permanent record.

How much Bitcoin your Lightning node can receive. You can only receive up to whatever the other side of the channel holds. Getting enough inbound liquidity is one of the trickier parts of running a Lightning node.

Your money buying less over time, usually because more of it got printed. Bitcoin's fixed cap of 21 million coins and its halving schedule mean its supply inflation drops over time, which is why people call it a hedge against money printing.

How your wallet creates tons of different keys and addresses from a single seed phrase. HD wallets use standardized math (BIP-32 and BIP-44) to derive billions of addresses from one backup. This is why one seed phrase covers everything.

Malware that silently records every keystroke you type and sends it to an attacker. If you type a seed phrase or password on an infected computer, it's game over. This is one of the big reasons hardware wallets exist: your private keys never touch a device that could be running a keylogger.

Identity checks that exchanges are legally required to run: government ID, proof of address, the works. Most exchanges enforce KYC before you can trade. Some Bitcoiners go out of their way to buy non-KYC for privacy reasons.

The Bitcoin blockchain itself. This is the base layer where everything settles with maximum security. Layer 1 transactions are the most secure but also the slowest and priciest.

Systems built on top of Bitcoin for faster, cheaper transactions. The Lightning Network is the big one. Liquid, Stacks, and Ark are others. They trade some decentralization for speed and cost savings.

Using borrowed money to make bigger trades than your account balance allows. If you trade Bitcoin with 10x leverage, a 10% price move doubles your money or wipes you out. WARNING: most leveraged traders lose money. Exchanges offering 50x or 100x leverage are basically casinos. If you don't fully understand liquidation mechanics, don't touch leverage.

Money that businesses are legally required to accept. El Salvador made Bitcoin legal tender in September 2021, the first country to do so. Businesses there must accept it alongside the US dollar.

A Bitcoin node that downloads only block headers instead of the full blockchain. Light nodes (also called SPV nodes) trust that full nodes are being honest about transaction details. They use far less storage and bandwidth, making them practical for mobile devices, but they sacrifice the full verification that makes running a full node so powerful.

A friendly identifier that works like an email address for Lightning payments. Instead of generating a new invoice every time, you just share something like user@domain.com and the payment goes through.

Bitcoin's main Layer 2 for fast payments. It routes transactions through a web of payment channels, settling almost instantly for a fraction of a cent. This is what makes buying coffee with Bitcoin actually work.

A company that handles the messy parts of Lightning for you: opening channels, managing liquidity, routing payments. LSPs make it much easier for regular users and merchants to get on Lightning without becoming network engineers.

The forced closure of a leveraged trading position when the market moves against you past your margin threshold. The exchange sells your position automatically to cover the borrowed funds. You lose your entire collateral. In volatile markets, liquidations cascade: forced selling pushes the price further, triggering more liquidations. This is how billions get wiped out in hours.

An order that only fills at your chosen price or better. Set a buy limit and it won't execute above that price; set a sell limit and it won't go below. You get price control, but there's no guarantee it fills.

How easily you can buy or sell Bitcoin without moving the price. High liquidity means big trades go through smoothly. Bitcoin is the most liquid cryptocurrency by far, with billions in daily volume.

Moving Average Convergence Divergence. A momentum indicator that shows the relationship between two moving averages of Bitcoin's price. Traders watch for the MACD line crossing above or below the signal line as buy/sell signals. Like all technical indicators, it works until it doesn't. Best used alongside other tools, not in isolation.

Trading Bitcoin with borrowed funds to increase your position size beyond what your own capital allows. You put up collateral (margin), and the exchange lends you the rest. If the trade goes your way, profits are amplified. If it goes against you, losses are amplified too, and you risk liquidation. Not for beginners. Seriously.

Current price times total coins in circulation. Bitcoin's market cap passed $1.5 trillion in 2025, putting it in the same league as the world's biggest companies.

An order that executes right now at whatever the current best price is. You're guaranteed a fill but not a specific price. In thin markets, you might get slippage.

A data structure that organizes transactions into a tree of hashes, where each pair of hashes combines into a parent hash until you get a single root hash at the top. Bitcoin includes a Merkle root in every block header, which lets you prove a specific transaction is in a block without downloading all the transactions. It's elegant and efficient.

The waiting room for unconfirmed transactions. When you send Bitcoin, your transaction sits in the mempool until a miner picks it up. Higher-fee transactions get picked first. Check mempool.space to see how busy it is.

Where your transaction sits in the queue, based on its fee rate (sats per virtual byte). Pay more per byte, get confirmed faster. During busy periods, priority is everything.

Executive Chairman of Strategy (formerly MicroStrategy) and the person who kicked off the corporate Bitcoin treasury trend. Starting in August 2020, he converted billions of his company's cash reserves into Bitcoin. Love him or hate him, Saylor did more to legitimize institutional Bitcoin ownership than almost anyone else. His company holds over 500,000 BTC.

When Bitcoin's price drops low enough that mining becomes unprofitable, forcing miners to shut down rigs or sell their BTC reserves to cover costs. This usually happens after halvings or during deep bear markets. Capitulation events can create intense selling pressure short-term, but they also shake out weak miners and leave the network healthier long-term.

A structured language for writing and analyzing Bitcoin Scripts that makes complex spending conditions much easier to reason about. Instead of wrestling with raw opcodes, developers can compose spending policies (like "2-of-3 keys OR 1 key after 6 months") and Miniscript compiles them into safe, optimized Bitcoin Script. It's a big deal for multi-party custody setups.

Using specialized hardware to race for valid block hashes and add new blocks to the chain. Miners earn fresh Bitcoin plus transaction fees as a reward. This process is what keeps the whole network secure.

A number that tells you exactly how hard it is to mine a block right now. It's gone up by orders of magnitude since 2009 as more and more hash power has come online.

Miners teaming up to combine hash power and split rewards proportionally. Solo mining is like a lottery; pools give you smaller but steadier payouts. The big names: Foundry USA, AntPool, and F2Pool.

Everything a miner gets for finding a block: the block subsidy (new coins) plus all the transaction fees inside it. As halvings shrink the subsidy, fees matter more and more.

Multi-signature. Requires multiple keys to approve a transaction. A 2-of-3 setup means any 2 out of 3 keys must sign. Used by exchanges, funds, and anyone serious about not having a single point of failure.

Long-term Bitcoin storage using multisig with keys spread across different locations and devices. A typical vault runs 2-of-3 or 3-of-5, so losing one key or one location doesn't mean losing your coins.

A network gets more valuable as more people join. Bitcoin has massive network effects: more users bring more merchants and developers, which bring even more users. It's a flywheel that's very hard to compete with.

A computer running Bitcoin software that keeps its own copy of the blockchain and checks every transaction against the rules. Over 60,000 publicly reachable nodes keep the network honest.

You hold the keys. Non-custodial wallets give you total control over your Bitcoin, but that also means you're responsible for keeping your keys safe. Lose them, and nobody can help you recover your funds.

Short for "number used once." Miners keep changing the nonce trying to find a hash that meets the difficulty target. That's literally what mining is: guessing nonces really, really fast.

A Bitcoin script opcode that lets you embed up to 80 bytes of arbitrary data in a transaction output. The output is provably unspendable, so it doesn't bloat the UTXO set. People use OP_RETURN for timestamping documents, anchoring data, and token protocols like Runes. It's the "official" way to put small bits of data on Bitcoin.

A proposed Bitcoin opcode (BIP-345) that would enable time-delayed spending vaults with a built-in recovery path. You'd set a waiting period for withdrawals, and if someone steals your keys, you can claw funds back to a recovery address before the timer runs out. It's one of the most promising covenant proposals for everyday Bitcoin security.

Private Bitcoin trades that happen off-exchange, usually for large amounts. Whales and institutions use OTC desks to buy or sell millions of dollars worth of Bitcoin without moving the market price on public exchanges. The main players include Cumberland, Circle Trade, and the OTC desks run by major exchanges.

Transactions recorded directly on the Bitcoin blockchain. On-chain transactions are the most secure but also the slowest and most expensive. Distinguished from off-chain transactions (like Lightning Network payments).

Transactions that occur outside the main Bitcoin blockchain, such as Lightning Network payments or Liquid transfers. Off-chain transactions are faster and cheaper but may involve different security trade-offs.

Lightning (and Tor) wrap payment data in layers of encryption, like an onion. Each node along the route only sees one hop back and one hop forward. Nobody sees the full picture, which protects sender and receiver privacy.

Contracts that give you the right, but not the obligation, to buy (call) or sell (put) Bitcoin at a set price before a certain date. Options let you bet on price direction or hedge existing positions with capped downside.

A perfectly valid block that didn't make it into the main chain because another miner found a block at the same height first. This happens naturally when two miners solve a block at nearly the same time.

A protocol created by Casey Rodarmor in 2023 that assigns unique identifiers to individual satoshis based on the order they were mined. This numbering system lets people attach data (images, text, code) to specific sats, creating Bitcoin-native digital artifacts. Ordinals sparked a wave of activity on Bitcoin, driving up fees and block space demand. Opinions range from "this is amazing innovation" to "this is blockchain spam."

A network where everyone talks directly to everyone else, no central server needed. Bitcoin is peer-to-peer at its core: nodes swap transactions and blocks straight between each other.

A private key printed on a piece of paper. It was popular years ago, but hardware wallets are much better now. Paper can burn, get wet, or fade. If you're using one, consider upgrading.

An extra secret word (or phrase) you add to your 24-word seed to create a totally separate wallet. Even if someone steals your seed words, they can't reach your funds without the passphrase. Like two-factor auth for your seed.

A privacy technique where both sender and receiver contribute inputs to the same transaction. This breaks the main assumption chain analysis firms rely on (that all inputs belong to one person), making transactions much harder to trace.

Two parties lock Bitcoin in a shared multisig address, then make unlimited payments back and forth without touching the blockchain. String enough of these together, and you've got the Lightning Network.

Everyone on the network is equal. Any node can talk to any other node directly. There's no master server. Bitcoin's peer-to-peer design is what makes it resistant to censorship and shutdown.

A type of futures contract with no expiration date, allowing traders to hold positions indefinitely. Perpetual swaps use a funding rate mechanism to keep the contract price close to the underlying spot price.

A secret 256-bit number that gives you the ability to spend Bitcoin associated with the corresponding public key. Your private key must be kept secret. Anyone who knows your private key can spend your Bitcoin.

A consensus mechanism where block producers are selected based on the amount of cryptocurrency they stake as collateral. Used by Ethereum, Cardano, and others. Bitcoin deliberately uses proof-of-work instead for stronger security guarantees.

Bitcoin's consensus mechanism where miners must solve computationally intensive puzzles to add blocks to the blockchain. PoW converts energy expenditure into network security, creating an unforgeable physical cost to attacking the network.

A set of rules that govern how data is transmitted and validated on a network. The Bitcoin protocol defines block structure, transaction format, consensus rules, and network communication standards that all participants must follow.

A cryptographic key derived from a private key that can be shared publicly. Bitcoin addresses are derived from public keys. Others can send Bitcoin to your public key/address, but only you can spend it using the corresponding private key.

A type of computing that uses quantum mechanical effects to solve certain problems exponentially faster than classical computers. In theory, a powerful enough quantum computer could break the ECDSA signatures Bitcoin uses. In practice, we're still decades away from that level of quantum capability, and Bitcoin can upgrade its cryptography when the threat gets real.

The effort to develop and deploy cryptographic algorithms that can withstand attacks from quantum computers. Bitcoin's current signature scheme (ECDSA) is theoretically vulnerable to a sufficiently powerful quantum computer. Post-quantum cryptography research is active, and Bitcoin could adopt quantum-resistant signatures through a soft fork well before any real threat materializes.

A small fee charged by Lightning Network nodes for forwarding payments through their channels. Routing fees are typically a fraction of a satoshi and are set by individual node operators based on their liquidity costs.

Satoshis considered more valuable or collectible because of when they were mined. The first sat of each block, the first sat after a halving, or sats from Satoshi's early blocks all have special status in the Ordinals system. Rarity tiers range from "common" to "mythic." Whether you think this is clever or silly, people pay real premiums for them.

Relative Strength Index. A momentum indicator that measures how fast and how much Bitcoin's price has changed recently, scored from 0 to 100. Above 70 is considered overbought (price might drop). Below 30 is oversold (price might bounce). RSI is one of the most popular technical analysis tools, but it can stay overbought or oversold for a long time in strong trends.

The smallest unit of Bitcoin, equal to 0.00000001 BTC (one hundred millionth of a Bitcoin). Named after Bitcoin's creator, Satoshi Nakamoto. Lightning Network fees are typically measured in satoshis.

The pseudonymous creator of Bitcoin who published the whitepaper in 2008 and launched the network in 2009. Satoshi's true identity remains unknown. They gradually withdrew from public involvement around 2011, leaving Bitcoin as a truly leaderless protocol.

A digital signature scheme activated with the Taproot upgrade in November 2021. Schnorr signatures are more efficient than ECDSA, enable signature aggregation (making multisig transactions smaller), and improve privacy.

The U.S. Securities and Exchange Commission, the federal agency responsible for regulating securities markets. The SEC approved spot Bitcoin ETFs in January 2024, a landmark decision for institutional Bitcoin adoption.

A sequence of 12 or 24 words that serves as a human-readable backup of all your Bitcoin private keys. Generated when creating a new wallet. If you lose your hardware wallet, you can restore your Bitcoin using your seed phrase on any compatible device.

Segregated Witness. A soft fork activated in August 2017 that separated signature data from transaction data, effectively increasing block capacity and fixing transaction malleability. SegWit was a prerequisite for the Lightning Network.

Holding your own Bitcoin private keys rather than trusting a third party (like an exchange). Self-custody eliminates counterparty risk and gives you full control over your Bitcoin. The phrase "be your own bank" refers to self-custody.

Secure Hash Algorithm 256-bit. The specific hash function Bitcoin mining runs on. Give it any input, it spits out a 256-bit output. You can't reverse-engineer the input from the output, which is the whole point.

A cryptographic method for splitting a secret (such as a seed phrase) into multiple parts, where a minimum threshold of parts is required to reconstruct the original. For example, a 3-of-5 split means any three of five shares can recover the secret.

A separate blockchain that's pegged to Bitcoin. You move BTC onto the sidechain, use it with different rules (faster blocks, privacy, smart contracts), then move it back. Liquid is the most well-known Bitcoin sidechain.

A manipulation technique where attackers trick individuals into revealing sensitive information such as seed phrases or passwords. Common vectors include phishing emails, fake support calls, and impersonation of trusted entities.

A protocol upgrade that's backward-compatible. Nodes that haven't updated keep working, they just can't use the new features. SegWit and Taproot both went live as soft forks.

Money that holds its value, can't be printed on a whim, and isn't controlled by anyone. A lot of Bitcoiners think Bitcoin is the soundest money humanity has ever produced, thanks to its fixed supply and decentralized issuance.

A Lightning Network operation that adds or removes funds from an existing payment channel without closing it. Splicing allows users to resize channels on the fly, improving capital efficiency and reducing on-chain transaction costs.

A market where Bitcoin is bought and sold for immediate delivery at the current market price. Unlike futures or options, spot transactions settle instantly. The spot price is the baseline reference for all other Bitcoin derivatives.

The current market price of Bitcoin for immediate delivery. The spot price is determined by supply and demand on exchanges worldwide and varies slightly between exchanges.

Accumulating small amounts of Bitcoin (satoshis) over time, typically through dollar-cost averaging. The term reflects the community philosophy of steadily building a Bitcoin position regardless of short-term price movements.

Energy that can't be shipped to where people need it: remote gas flares, excess wind or solar in the middle of nowhere. Bitcoin mining turns this wasted energy into money by converting it to hash rate on-site.

21 million. That's it. That's the maximum number of Bitcoin that will ever exist. The cap is baked into the protocol and changing it would require convincing almost the entire network to agree. Good luck with that.

A Bitcoin soft fork activated in November 2021 that introduced Schnorr signatures, MAST (Merkelized Abstract Syntax Trees), and Tapscript. Taproot improves privacy, efficiency, and the flexibility of Bitcoin scripting.

The number of transactions a network can process per unit of time. Bitcoin's base layer processes approximately 7 transactions per second. Layer 2 solutions like the Lightning Network increase effective throughput to millions of transactions per second.

Another name for the Bitcoin blockchain, highlighting that it's fundamentally a time-ordered record of events. Satoshi actually used this term in early writings. Some Bitcoiners prefer it.

A piece of data in each Bitcoin block header recording when the block was mined. Timestamps must fall within certain bounds relative to the network median time. The timestamp server concept is central to Satoshi's whitepaper design.

The Onion Router. Free software that anonymizes internet traffic by routing it through multiple encrypted relays. Many Bitcoin and Lightning nodes run over Tor to hide their IP address, reducing the risk of targeted attacks.

A fee paid to miners for including your transaction in a block. Fees are based on the size of the transaction in bytes (not the amount of Bitcoin sent). Higher fees result in faster confirmation. Lightning transactions have negligible fees.

Transaction ID. A unique identifier for every Bitcoin transaction, created by hashing the transaction data. TXIDs can be used to look up any transaction on block explorers like mempool.space.

Unspent Transaction Output. The fundamental unit of Bitcoin ownership. When you receive Bitcoin, you receive UTXOs. When you spend Bitcoin, you consume UTXOs as inputs and create new UTXOs as outputs. Your Bitcoin "balance" is the sum of all your UTXOs.

The degree of price fluctuation over time. Bitcoin is more volatile than traditional assets like stocks or bonds but has shown a trend toward decreasing volatility as market capitalization and adoption grow.

Software or hardware that manages your Bitcoin keys. Here's the thing people miss: your wallet doesn't actually hold Bitcoin. The coins live on the blockchain. Your wallet just holds the keys that let you move them.

Selling at a loss and immediately buying back to claim a tax deduction. Wash sale rules block this for securities, but as of 2026, Bitcoin isn't classified as a security so it may not apply. Don't count on this lasting forever.

A wallet that shows your balances and generates addresses but can't spend anything. Great for checking on your stack from your phone without putting your private keys at risk.

A service that monitors the Bitcoin blockchain on behalf of Lightning Network users, watching for channel breach attempts. If a counterparty tries to broadcast an outdated channel state, the watchtower submits a penalty transaction to protect funds.

An entity holding a very large amount of Bitcoin, typically thousands of BTC. Whale movements are tracked by on-chain analysts because large transactions can signal upcoming buying or selling pressure.

An ERC-20 token on Ethereum that represents Bitcoin at a 1:1 ratio. WBTC allows Bitcoin to be used in Ethereum DeFi applications. It requires trusting a custodian to hold the underlying Bitcoin.

Extended Public Key. A key that can derive all public keys (and therefore all addresses) in a hierarchical deterministic wallet. Sharing an xpub allows someone to see all your addresses and balances but not spend your Bitcoin.

Earning a return on your Bitcoin through lending, routing Lightning payments, or similar services. Important: Bitcoin doesn't generate yield on its own. Any yield means you're trusting someone else with your coins.

A transaction that's been broadcast but hasn't made it into a block yet. It exists in the mempool but isn't confirmed. Don't treat zero-conf transactions as final for anything you can't afford to lose.