Glossary
Essential Bitcoin Terms Explained
A
Address
A string of letters and numbers where you receive Bitcoin
Like an email address for money
Example: bc1qxy2kgdygjrsqtzq2n0yrf2493p83kkfjhx0wlh
Altcoin
Any cryptocurrency that isn't Bitcoin
"Alternative coin"
Examples: Ethereum, Litecoin
ASIC
Application-Specific Integrated Circuit
Specialized hardware for Bitcoin mining
Much more efficient than regular computers
B
Bitcoin (BTC)
The first and largest cryptocurrency
Digital money with fixed supply
Created by Satoshi Nakamoto in 2009
Blockchain
A chain of blocks containing transactions
Public ledger of all Bitcoin transactions
Immutable and transparent
Block
A group of transactions bundled together
Added to blockchain every ~10 minutes
Contains reference to previous block
Block Height
The number of blocks in the blockchain
Increases by 1 with each new block
Shows how "deep" a transaction is
Block Reward
New Bitcoin given to miners
Currently 6.25 BTC per block
Halves every 4 years
C
Cold Storage
Keeping Bitcoin offline for security
Hardware wallets, paper wallets
Not connected to internet
Confirmation
When transaction is included in a block
More confirmations = more secure
6 confirmations considered irreversible
Consensus
Agreement on blockchain state
No central authority needed
Achieved through mining
Cryptocurrency
Digital currency using cryptography
Bitcoin was the first
Thousands now exist
Custodial
Someone else controls your private keys
Like a bank holding your money
"Not your keys, not your coins"
D
DCA (Dollar Cost Averaging)
Buying fixed dollar amount regularly
Reduces impact of volatility
Popular investment strategy
Decentralized
No single point of control
Distributed across many computers
Core principle of Bitcoin
Double Spend
Attempting to spend same Bitcoin twice
Prevented by blockchain
The problem Bitcoin solved
E
Exchange
Platform to buy/sell Bitcoin
Centralized vs decentralized
Examples: Coinbase, Kraken
F
Fiat Currency
Government-issued money
USD, EUR, CNY, etc.
Not backed by physical commodity
Fork
Split in blockchain rules
Soft fork: backwards compatible
Hard fork: creates new chain
FUD
Fear, Uncertainty, and Doubt
Negative news to affect price
Often misleading
G
Genesis Block
First block in Bitcoin blockchain
Created January 3, 2009
Contains message about bank bailouts
H
Halving
Block reward cuts in half
Happens every 210,000 blocks (~4 years)
Controls Bitcoin supply
Hardware Wallet
Physical device storing private keys
Most secure storage method
Examples: Ledger, Trezor
Hash
Unique fingerprint of data
One-way mathematical function
Used throughout Bitcoin
Hash Rate
Total mining power on network
Measured in hashes per second
Higher = more secure
HODL
Hold On for Dear Life
Long-term investment strategy
Originally a typo for "hold"
Hot Wallet
Wallet connected to internet
Convenient but less secure
For daily spending
K
KYC (Know Your Customer)
Identity verification requirements
Used by exchanges
Privacy consideration
L
Lightning Network
Layer 2 scaling solution
Instant, cheap transactions
Built on top of Bitcoin
Liquidity
How easily asset can be bought/sold
Bitcoin has high liquidity
Important for large trades
M
Market Cap
Total value of all Bitcoin
Price × circulating supply
Largest crypto by market cap
Mempool
Waiting area for transactions
Before confirmation in block
Size indicates network congestion
Mining
Process of creating new blocks
Secures the network
Rewarded with new Bitcoin
Multisig
Multiple signatures required
Enhanced security
Good for shared funds
N
Node
Computer running Bitcoin software
Validates transactions and blocks
Anyone can run one
Non-custodial
You control private keys
True ownership
Recommended approach
O
Orphan Block
Valid block not in main chain
Happens during temporary forks
Resolves automatically
P
Paper Wallet
Private keys printed on paper
Form of cold storage
Handle with care
Peer-to-Peer (P2P)
Direct transfer between users
No intermediary needed
Core Bitcoin principle
Private Key
Secret number controlling Bitcoin
Like password to your funds
Never share with anyone
Proof of Work
Mining consensus mechanism
Requires computational work
Secures the network
Public Key
Derived from private key
Used to verify signatures
Can be shared safely
Q
QR Code
Quick Response code
Square barcode for addresses
Easy scanning with camera
R
Replace-by-Fee (RBF)
Increase fee after sending
Speeds up transactions
Not all wallets support
S
Satoshi (sat)
Smallest Bitcoin unit
0.00000001 BTC
100 million sats = 1 BTC
Satoshi Nakamoto
Bitcoin's pseudonymous creator
Identity unknown
Disappeared in 2011
Seed Phrase
12-24 words to restore wallet
Master backup
Keep secret and safe
SegWit
Segregated Witness
Upgrade reducing fees
Addresses start with 3 or bc1
SHA-256
Cryptographic hash function
Used in Bitcoin mining
Secure Hash Algorithm
Signature
Proof you own private key
Authorizes transactions
Created mathematically
Smart Contract
Self-executing code
Limited in Bitcoin
More common in other chains
T
Transaction
Transfer of Bitcoin
Recorded on blockchain
Requires fee
Transaction ID (TXID)
Unique identifier
Can track on explorer
Proof of payment
U
Unconfirmed
Transaction not yet in block
Still in mempool
Usually confirms soon
UTXO
Unspent Transaction Output
How Bitcoin tracks balances
Like cash bills
V
Volatility
Price fluctuation
Bitcoin known for this
Decreasing over time
W
Wallet
Software/hardware managing keys
Doesn't actually "store" Bitcoin
Interface to blockchain
Whale
Someone holding lots of Bitcoin
Can influence markets
Often early adopters
Whitepaper
Original Bitcoin document
By Satoshi Nakamoto
Founded everything
Common Phrases
"Not your keys, not your coins"
Importance of self-custody
Control your private keys
Don't trust exchanges
"Don't trust, verify"
Bitcoin philosophy
Check everything yourself
Run your own node
"Number go up"
Bitcoin price appreciation
Long-term trend
Meme in community
"Stack sats"
Accumulate satoshis
Save in Bitcoin
Building wealth
"Diamond hands"
Holding through volatility
Not panic selling
Long-term conviction
"To the moon"
Price going very high
Optimistic prediction
Community rallying cry
Acronyms
ATH: All-Time High
BTD: Buy The Dip
DYOR: Do Your Own Research
FOMO: Fear Of Missing Out
FUD: Fear, Uncertainty, Doubt
HODL: Hold On for Dear Life
NGMI: Not Gonna Make It
WAGMI: We're All Gonna Make It
📚 Learning Tip: Don't try to memorize everything at once. Refer back to this glossary as you encounter new terms in your Bitcoin journey!
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