Reference
50+ Bitcoin terms explained in plain English. Click any letter to jump to that section.
A Bitcoin address is a string of characters that represents a destination for a Bitcoin payment. Think of it like an email address, but for receiving bitcoin. Addresses are derived from public keys using cryptographic hash functions and come in several formats including Legacy (starting with 1), SegWit (starting with 3 or bc1q), and Taproot (starting with bc1p). Learn more in Cryptography & Bitcoin →
Application-Specific Integrated Circuit. A specialized piece of hardware designed solely for mining Bitcoin by computing SHA-256 hashes at extremely high speeds. ASICs are orders of magnitude more efficient at mining than general-purpose CPUs or GPUs, and they dominate Bitcoin mining today. Learn more in Mining & Consensus →
Short for "alternative coin," referring to any cryptocurrency other than Bitcoin. The term encompasses thousands of tokens and coins that launched after Bitcoin. Bitcoiners generally view altcoins with skepticism, as none have replicated Bitcoin's decentralization, security, or monetary properties.
A decentralized digital currency that operates on a peer-to-peer network without any central authority. Created in 2009 by the pseudonymous Satoshi Nakamoto, Bitcoin uses cryptographic proof instead of trust, allowing any two parties to transact directly. Its supply is permanently capped at 21 million coins. Learn more in What Is Bitcoin? →
A bundle of Bitcoin transactions that has been validated and added to the blockchain. Each block contains a header (with metadata like the previous block's hash, a timestamp, and a nonce) and a body (the list of transactions). On average, a new block is found approximately every 10 minutes. Learn more in How Bitcoin Works →
A distributed, append-only ledger that records every Bitcoin transaction in chronological blocks. Each block is cryptographically linked to the previous one by including its hash, forming an unbroken chain back to the genesis block. This structure makes the transaction history tamper-evident and verifiable by anyone running a node. Learn more in How Bitcoin Works →
The sequential number assigned to each block in the blockchain, starting from zero for the genesis block. Block height serves as a universal reference point for identifying when events occurred on the Bitcoin network. For example, the first halving happened at block height 210,000.
The amount of newly created bitcoin that a miner receives for successfully mining a block. The reward started at 50 BTC in 2009 and halves approximately every four years. As of 2024, the block reward is 3.125 BTC. This reward, combined with transaction fees, is the economic incentive that secures the network. Learn more in Bitcoin Economics →
A formal document used to propose changes, improvements, or new features to the Bitcoin protocol. BIPs follow a standardized process for peer review and community discussion. Notable BIPs include BIP 32 (HD wallets), BIP 39 (mnemonic seed phrases), BIP 141 (SegWit), and BIP 340-342 (Taproot/Schnorr). Learn more in Bitcoin Development →
A method of keeping Bitcoin private keys entirely offline, disconnected from the internet. Cold storage options include hardware wallets, air-gapped computers, and paper wallets. Because the keys never touch an internet-connected device, cold storage is considered the most secure way to hold bitcoin long-term. Learn more in Storing Bitcoin Safely →
The first transaction in every block, created by the miner who found the block. Unlike regular transactions, a coinbase transaction has no inputs — it creates new bitcoin out of thin air as the block reward plus collected transaction fees. This is the only mechanism by which new bitcoin enters circulation. Learn more in Mining & Consensus →
A privacy technique where multiple users combine their Bitcoin transactions into a single transaction, making it difficult for outside observers to determine which inputs correspond to which outputs. CoinJoin does not require trust between participants and preserves self-custody throughout the process. Learn more in Bitcoin Privacy →
A count of how many blocks have been added to the blockchain since a transaction was included in a block. One confirmation means the transaction is in the latest block; six confirmations (approximately one hour) is widely considered sufficient for high-value payments to be practically irreversible. Learn more in Using Bitcoin →
The process by which all nodes on the Bitcoin network agree on the current state of the blockchain. Bitcoin achieves consensus through its Proof of Work mechanism and a set of rules that every node independently enforces. No single entity can change these rules without broad agreement from the network. Learn more in Mining & Consensus →
A service or wallet where a third party holds and controls your private keys on your behalf. Exchanges and some web wallets are custodial — you are trusting them with your bitcoin. The Bitcoin community saying "not your keys, not your coins" warns against the risks of custodial solutions. Learn more in Storing Bitcoin Safely →
A system with no single point of control or failure. Bitcoin is decentralized because thousands of independent nodes around the world each enforce the same rules and validate every transaction. No company, government, or individual can unilaterally alter the protocol or censor transactions. Learn more in Why Bitcoin Matters →
An automatic recalibration of mining difficulty that occurs every 2,016 blocks (approximately every two weeks). If blocks are being found faster than the 10-minute target, difficulty increases; if slower, it decreases. This self-regulating mechanism ensures a predictable and steady issuance schedule regardless of how much hash power joins or leaves the network. Learn more in Mining & Consensus →
The attempt to spend the same bitcoin twice. In traditional digital systems, this is the fundamental problem of digital money — files can be copied endlessly. Bitcoin solves the double-spend problem through Proof of Work and the blockchain, which provides a single, agreed-upon transaction history. Learn more in How Bitcoin Works →
Elliptic Curve Digital Signature Algorithm. The original cryptographic signature scheme used in Bitcoin to prove ownership of funds without revealing the private key. ECDSA allows anyone to verify that a transaction was authorized by the rightful owner. Bitcoin uses the secp256k1 elliptic curve for ECDSA signatures. Learn more in Cryptography & Bitcoin →
A platform where users can buy, sell, or trade bitcoin for fiat currency or other assets. Exchanges can be centralized (custodial, requiring KYC) or decentralized / peer-to-peer (non-custodial). Always withdraw your bitcoin to your own wallet after purchasing. Learn more in How to Get Started →
A small amount of bitcoin paid by the sender to incentivize miners to include their transaction in a block. Fees are measured in satoshis per virtual byte (sat/vB) and fluctuate based on network demand. Higher fees result in faster confirmation times because miners prioritize higher-paying transactions. Learn more in Using Bitcoin →
Government-issued currency that is not backed by a physical commodity like gold. Examples include the US dollar, euro, and yen. The word "fiat" comes from Latin, meaning "let it be done" — fiat money has value because a government decrees it. Unlike bitcoin, fiat currencies have no fixed supply and can be printed without limit. Learn more in Bitcoin Economics →
A change to the Bitcoin protocol rules. A soft fork is a backward-compatible change where old nodes still accept new blocks (e.g., SegWit). A hard fork is a non-backward-compatible change that creates a permanent chain split if not universally adopted. Bitcoin has successfully activated several soft forks while avoiding contentious hard forks. Learn more in Protocol Improvements →
A computer running Bitcoin software that independently validates every transaction and block against the full set of consensus rules. Full nodes do not trust anyone — they verify everything themselves. Running a full node is the most sovereign way to use Bitcoin and strengthens the network's decentralization. Learn more in Running a Bitcoin Node →
The very first block in the Bitcoin blockchain (block height 0), mined by Satoshi Nakamoto on January 3, 2009. The genesis block famously contains the embedded text: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks" — a reference to the financial crisis that motivated Bitcoin's creation. Learn more in Bitcoin History →
An event that occurs every 210,000 blocks (approximately every four years) where the block reward paid to miners is cut in half. Halvings enforce Bitcoin's disinflationary monetary policy and ensure that the total supply will never exceed 21 million coins. The most recent halving occurred in April 2024, reducing the reward to 3.125 BTC. Learn more in Bitcoin Economics →
The output of a cryptographic hash function — a fixed-length string of characters that acts as a unique digital fingerprint of any input data. Bitcoin primarily uses SHA-256. A hash is deterministic (same input always produces the same output), but it is computationally infeasible to reverse-engineer the input from the output. Learn more in Cryptography & Bitcoin →
The total computational power being used to mine and secure the Bitcoin network, measured in hashes per second (H/s). A higher hash rate means more energy is being expended to protect the network, making it more expensive for any attacker to attempt a 51% attack. The network hash rate is commonly expressed in exahashes per second (EH/s). Learn more in Mining & Consensus →
Hierarchical Deterministic wallet. A wallet that generates all of its key pairs from a single master seed. This means backing up the seed phrase once is enough to recover all past and future addresses. HD wallets follow BIP 32 and are the standard for modern Bitcoin wallets. Learn more in Storing Bitcoin Safely →
A term originating from a misspelled "hold" in a 2013 Bitcoin forum post, now a widely used acronym meaning "Hold On for Dear Life." It describes the strategy of buying bitcoin and holding it long-term regardless of price volatility, based on the conviction that bitcoin's value will appreciate over time.
A Bitcoin wallet that is connected to the internet, such as a mobile wallet app or a browser extension. Hot wallets are convenient for everyday transactions but are more vulnerable to hacking than cold storage. Best practice is to keep only small amounts in a hot wallet — treat it like a physical wallet in your pocket. Learn more in Storing Bitcoin Safely →
Regulatory requirements that force financial service providers to verify the identity of their customers. In the Bitcoin context, KYC typically means submitting government-issued ID, proof of address, and sometimes a selfie to use a centralized exchange. KYC creates privacy risks because it permanently links your identity to your Bitcoin purchases. Learn more in Bitcoin and the Law →
A Layer 2 payment protocol built on top of Bitcoin that enables near-instant, low-fee transactions. Lightning works by opening payment channels between parties, allowing thousands of off-chain transactions that are later settled on the main blockchain. It is Bitcoin's primary scaling solution for everyday payments. Learn more in Lightning Network →
The ease with which bitcoin can be bought or sold without significantly affecting its price. High liquidity means there are many buyers and sellers, resulting in tighter spreads and more efficient markets. On the Lightning Network, liquidity refers to the amount of bitcoin available in payment channels for routing transactions.
Short for "memory pool." Each Bitcoin node maintains its own mempool — a waiting area for valid transactions that have been broadcast to the network but not yet confirmed in a block. Miners select transactions from the mempool to include in the next block, generally prioritizing those with the highest fees. Learn more in How Bitcoin Works →
The process of using computational power to solve a cryptographic puzzle (finding a hash below a target value) in order to add a new block of transactions to the blockchain. Mining secures the network, processes transactions, and introduces new bitcoin into circulation via the block reward. Learn more in Mining & Consensus →
Short for multi-signature. A Bitcoin script configuration that requires more than one private key to authorize a transaction (e.g., 2-of-3 multisig requires two out of three keyholders to sign). Multisig dramatically improves security by eliminating single points of failure and is commonly used for cold storage, business treasuries, and collaborative custody. Learn more in Advanced Security →
Any computer running Bitcoin software that participates in the network by relaying and validating transactions and blocks. Nodes enforce the consensus rules and share blockchain data with peers. The more nodes on the network, the more resilient and decentralized Bitcoin becomes. Learn more in Running a Bitcoin Node →
"Number used once." A 32-bit field in a block header that miners increment to produce different hash outputs while trying to find a hash below the target difficulty. The nonce is the variable that miners adjust billions of times per second during the Proof of Work process. Learn more in Mining & Consensus →
A wallet or service where only you control your private keys. No third party can access, freeze, or confiscate your funds. Non-custodial wallets embody the core principle of Bitcoin: financial sovereignty. "Not your keys, not your coins" is the guiding ethos. Learn more in Storing Bitcoin Safely →
A valid block that was successfully mined but not included in the longest chain because another block at the same height was accepted first. Also called a "stale block." Orphan blocks occur naturally when two miners find a block at nearly the same time; the network eventually converges on one chain and discards the other.
The destination portion of a Bitcoin transaction that specifies an amount and the conditions (script) under which those funds can be spent. Each transaction can have multiple outputs — typically one paying the recipient and one returning change to the sender. Unspent outputs (UTXOs) represent available bitcoin. Learn more in How Bitcoin Works →
A network architecture where participants interact directly with each other without a central intermediary. Bitcoin is a peer-to-peer electronic cash system — transactions flow directly between users, and every node is an equal participant in relaying and validating data. Learn more in What Is Bitcoin? →
A secret 256-bit number that allows the holder to spend bitcoin associated with the corresponding public key. A private key must be kept absolutely secret — anyone who knows it can move the funds. Private keys are typically stored within wallet software or on hardware devices and are backed up via seed phrases. Learn more in Cryptography & Bitcoin →
The consensus mechanism Bitcoin uses to validate transactions and produce new blocks. Miners expend real-world computational energy to find a hash that meets a target difficulty, proving they did the work. This makes it extremely costly to attack the network while keeping it trivially easy for anyone to verify the result. Learn more in Mining & Consensus →
A cryptographic key derived from a private key that can be shared openly. Public keys are used to generate Bitcoin addresses and to verify digital signatures. While a public key can be freely distributed, it is computationally infeasible to derive the private key from it. Learn more in Cryptography & Bitcoin →
Partially Signed Bitcoin Transaction. A standardized format (BIP 174) that allows a Bitcoin transaction to be created and passed between multiple parties for signing before it is broadcast. PSBTs are essential for multisig setups, hardware wallets, and air-gapped signing workflows where no single device holds all the keys. Learn more in Advanced Security →
The smallest unit of bitcoin, equal to 0.00000001 BTC (one hundred-millionth of a bitcoin). Named after Bitcoin's creator, Satoshi Nakamoto. Because one bitcoin is highly divisible, even small amounts can be transacted. The common abbreviation is "sat" or "sats." Learn more in Using Bitcoin →
The pseudonymous person (or group) who created Bitcoin, authored the whitepaper in 2008, and developed the original software. Satoshi mined the genesis block on January 3, 2009, and disappeared from public communication in 2011. Their true identity remains unknown, which many consider a feature — Bitcoin has no leader. Learn more in Bitcoin History →
A digital signature scheme activated in Bitcoin as part of the Taproot upgrade (BIP 340). Schnorr signatures are more efficient than ECDSA, enable key aggregation (combining multiple public keys into one), and improve privacy by making multisig transactions indistinguishable from single-sig on-chain. Learn more in Cryptography & Bitcoin →
Bitcoin's simple, stack-based programming language used to define the conditions under which a transaction output can be spent. Script is intentionally not Turing-complete to minimize attack surface. Common script types include Pay-to-Public-Key-Hash (P2PKH), Pay-to-Script-Hash (P2SH), and Pay-to-Witness-Public-Key-Hash (P2WPKH). Learn more in Bitcoin Scripting →
A set of 12 or 24 English words (defined by BIP 39) that encodes your wallet's master private key. The seed phrase is the ultimate backup for your entire wallet — anyone who has it can restore all associated keys and funds. It must be stored securely offline, never digitally or in a cloud service. Learn more in Storing Bitcoin Safely →
Segregated Witness. A soft fork activated in August 2017 (BIP 141) that separates ("segregates") signature data ("witness") from transaction data. SegWit fixed the transaction malleability bug, effectively increased block capacity, and paved the way for the Lightning Network. SegWit addresses start with "bc1q." Learn more in Protocol Improvements →
A separate blockchain that is pegged to the Bitcoin mainchain, allowing bitcoin to be transferred between the two via a two-way peg mechanism. Sidechains enable experimentation with new features (like confidential transactions) without changing the Bitcoin base layer. Liquid by Blockstream is the most well-known Bitcoin sidechain. Learn more in Advanced Topics & Research →
A backward-compatible change to the Bitcoin protocol where old nodes still accept blocks produced under the new rules. Soft forks tighten the rules rather than loosening them, so they do not cause a permanent chain split. Notable soft forks include SegWit (2017) and Taproot (2021). Learn more in Protocol Improvements →
Simplified Payment Verification. A method described in the Bitcoin whitepaper that allows a lightweight client to verify transactions without downloading the entire blockchain. SPV clients only download block headers and use Merkle proofs to confirm that a transaction was included in a block. Most mobile wallets use SPV or similar lightweight techniques. Learn more in How Bitcoin Works →
A soft fork activated in November 2021 (BIPs 340, 341, 342) that introduced Schnorr signatures, Merkleized Abstract Syntax Trees (MAST), and Tapscript. Taproot improves privacy by making complex spending conditions look identical to simple payments on-chain, and it enables more flexible smart contracts. Taproot addresses start with "bc1p." Learn more in Protocol Improvements →
A signed data structure that transfers bitcoin from one or more inputs to one or more outputs. Every Bitcoin transaction references previous UTXOs as inputs, provides a cryptographic signature proving authorization, and creates new outputs. Transactions are broadcast to the network, collected in the mempool, and eventually confirmed in a block. Learn more in Using Bitcoin →
Transaction Identifier. A unique 64-character hexadecimal hash that identifies a specific Bitcoin transaction. The TXID is generated by double-SHA-256 hashing the serialized transaction data. You can use a TXID to look up any transaction on a block explorer to verify its status and details.
Unspent Transaction Output. The fundamental unit of Bitcoin accounting. Rather than tracking account balances, Bitcoin tracks individual unspent outputs. Each UTXO is a discrete chunk of bitcoin locked by a script that specifies the conditions for spending it. When you "spend" bitcoin, you consume existing UTXOs as inputs and create new ones as outputs. Learn more in How Bitcoin Works →
Software or hardware that manages your Bitcoin private keys and allows you to send, receive, and monitor your bitcoin. A wallet does not actually "store" bitcoin — the bitcoin exists on the blockchain. The wallet stores the keys that prove your right to spend it. Wallets come in many forms: mobile apps, desktop software, hardware devices, and paper backups. Learn more in Storing Bitcoin Safely →
The foundational document titled "Bitcoin: A Peer-to-Peer Electronic Cash System," published by Satoshi Nakamoto on October 31, 2008. In just nine pages, it describes the complete design of Bitcoin — the blockchain, Proof of Work, the peer-to-peer network, and the incentive structure. It remains the definitive starting point for understanding Bitcoin's design. Learn more in Bitcoin History →
This content is written and approved by Marius, AI-assisted using Claude (Anthropic), with references curated from: Jameson Lopp (lopp.net, PD) · bitcoin.org (MIT) · Bitcoin Wiki (CC-BY) · Mastering Bitcoin by A. Antonopoulos & D. Harding (CC BY-SA 4.0).