Bitcoin terms in the glossary

A 51% attack is a scenario where one party holds the majority of network hashrate and could theoretically reverse transactions or censor blocks.

An ASIC is a chip designed for one specific task — in Bitcoin: computing SHA-256 hashes for mining.

Bech32 is the modern encoding format for Bitcoin addresses (SegWit and Taproot), designed for error detection and readability.

Bitcoin is the world's first decentralised digital currency, launched in 2009 by an anonymous developer under the pseudonym Satoshi Nakamoto.

A Bitcoin address is a 26-62 character string acting as destination for a Bitcoin transaction, derived from a public key or script.

Bitcoin maximalism is the belief that Bitcoin is the only crypto project with a long-term future and that all other 'altcoins' trend to zero in value.

A block is a bundle of verified Bitcoin transactions cryptographically chained to the previous block, forming the blockchain.

The block reward is the sum of newly issued BTC plus all transaction fees a miner receives for finding a valid block.

A blockchain is a decentralised ledger where transactions are stored in chronological, cryptographically linked blocks — the underlying structure of Bitcoin.

BRC-20 is an experimental token standard on Bitcoin using Ordinals inscriptions to create fungible tokens, analogous to ERC-20 on Ethereum.

CPFP is a Bitcoin technique where a high-fee follow-up transaction (child) is created that speeds confirmation of a low-fee parent transaction, because miners bundle both.

The coinbase transaction is the first transaction in every Bitcoin block, creating new BTC out of thin air as the miner's reward.

CoinJoin is a Bitcoin privacy technique where multiple users combine their transactions to break UTXO linkability for outside observers.

Cold storage is keeping Bitcoin private keys offline on devices never connected to the internet, for maximum theft protection.

A custodial wallet is a wallet where a third party (usually an exchange) manages the private keys on behalf of the user.

The difficulty adjustment is the automatic recalibration of mining difficulty every 2,016 blocks, keeping the 10-minute block interval stable regardless of network hashrate.

DCA is an investment strategy where you buy a fixed amount of BTC at regular intervals regardless of price, spreading timing risk.

A double-spend is the attempt to spend the same bitcoins twice — the core problem Bitcoin first solved for digital money without a central authority.

A full node is a Bitcoin client that downloads the entire blockchain, independently verifies all consensus rules and doesn't have to trust any third party.

The genesis block is the very first block in a blockchain — for Bitcoin mined by Satoshi Nakamoto on 3 January 2009, with the famous bank-bailout headline embedded inside.

Halvening is an informal variant of 'halving' — the four-yearly halving of the Bitcoin block reward.

The halving is the programmed event where the Bitcoin block reward is halved every 210,000 blocks, roughly every four years.

A hard fork is a non-backwards-compatible protocol change where new rules invalidate old, forcing all nodes to upgrade or stay on a split chain.

A hardware wallet is a physical device (USB-stick-like) that generates and stores private keys offline, with an air-gapped signing process.

Hashrate is the total computing power contributed to the Bitcoin network, expressed in hashes per second — a measure of network security.

A Hierarchical Deterministic (HD) wallet deterministically generates all addresses and private keys from one seed, as specified in BIP32.

HODL is an informal strategy and cultural expression for long-term Bitcoin holding, originally a typo of 'hold' in a 2013 forum post.

A hot wallet is a Bitcoin wallet actively connected to the internet that can send transactions immediately — suitable for daily spending, not large amounts.

Inscriptions are pieces of arbitrary data (text, image, video) stored permanently on the Bitcoin blockchain via the Ordinals protocol.

Lightning Network is a Layer-2 protocol atop Bitcoin enabling instant, near-free payments via a network of bidirectional payment channels.

Liquid Network is a federated sidechain on Bitcoin, developed by Blockstream, offering fast (2-minute finality) and confidential transactions for exchanges, traders and digital asset issuers.

The mempool is the waiting room for Bitcoin transactions: all pending transactions awaiting inclusion in a block.

A Merkle tree is a hierarchical hash structure where each leaf is a data hash and each parent is the hash of its children, allowing a large dataset's integrity to be verified with a single root hash.

Mining is the process where specialised computers consume energy to find new Bitcoin blocks, verify transactions, and secure the network.

A mining pool is a group of miners combining their hashrate and distributing block rewards proportionally to stabilise income.

Miniscript is a structured representation of Bitcoin Script that makes complex spending conditions readable, analysable and safe to compose.

Multisig (multisignature) requires multiple private keys to sign a transaction, typically used for enterprise custody, family vaults, or extra security.

A nonce is a 32-bit number in the Bitcoin block header that miners vary to find the right hash during mining.

Ordinals is a protocol from January 2023 that uniquely identifies individual satoshis and allows content (text, image, video) to be inscribed on them.

PayJoin is a privacy technique where both sender and receiver contribute inputs to one transaction, breaking chain-analysis heuristics.

A payment channel is a 2-party Bitcoin construct via multisig enabling direct, off-chain transactions without involving the blockchain.

A private key is a secret number that lets you sign transactions and spend the corresponding Bitcoin — whoever owns the key owns the bitcoin.

Proof of Work (PoW) is Bitcoin's consensus mechanism: miners prove they spent energy by solving a cryptographic puzzle.

A public key is a cryptographic key derived from the private key, used to verify transactions and generate Bitcoin addresses.

Replace-By-Fee is a Bitcoin protocol feature that replaces an unconfirmed transaction with a new version carrying a higher fee, so it confirms faster.

Runes is a fungible token standard on Bitcoin launched by Casey Rodarmor at the April 2024 halving as an efficient alternative to BRC-20.

A satoshi (sat) is the smallest divisible unit of Bitcoin: 1 BTC = 100,000,000 satoshis.

Sats per vbyte is the unit for Bitcoin transaction fees: how many satoshis you pay per virtual byte of block space.

Schnorr signatures are a digital signature scheme added to Bitcoin via the Taproot upgrade (2021), making multisig transactions more compact, efficient and private.

A seed phrase is a sequence of 12, 18 or 24 English words forming a master seed from which all private keys of an HD wallet are derived.

Segregated Witness (SegWit) is a Bitcoin upgrade from August 2017 that separated signature data from transaction hashes, enabling lower fees and solving malleability.

Self-custody is managing your Bitcoin private keys yourself without an intermediary — Bitcoin's original peer-to-peer money vision.

A soft fork is a backwards-compatible update to Bitcoin's consensus rules, where new rules are stricter than old ones, letting non-upgraded nodes continue following the chain.

A stealth address is a public key that anyone can pay via one-time, untraceable addresses, without outside observers seeing the links.

A submarine swap is an atomic exchange between on-chain Bitcoin and Lightning without intermediaries, enabling direct movement from one to the other.

Taproot is a Bitcoin protocol upgrade from November 2021 that introduced Schnorr signatures, MAST scripts and privacy benefits.

A Bitcoin transaction fee is the voluntary payment to the miner for including your transaction in a block, usually expressed in sats per vbyte.

UTXO stands for Unspent Transaction Output — Bitcoin's 'coins': unspent outputs from earlier transactions available to be spent.