Glossary
Essential Bitcoin terminology
A
Address
A string of characters that represents a destination for bitcoin. Like an email address for money.
ASIC
Application-Specific Integrated Circuit. Specialized hardware designed only for mining Bitcoin.
B
Block
A batch of transactions grouped together and added to the blockchain. New blocks are created roughly every 10 minutes.
Block Height
The number of blocks between a given block and the genesis block. A measure of blockchain length.
Block Reward
The new bitcoin awarded to miners for successfully mining a block. Currently 3.125 BTC, halving every 210,000 blocks.
Blockchain
A public, distributed ledger of all Bitcoin transactions. Each block references the previous one, forming a chain.
C
Cold Storage
Keeping private keys offline, disconnected from the internet, for maximum security.
Confirmation
When a transaction is included in a block. More confirmations mean more security. 6 confirmations is standard for large amounts.
D
Difficulty
A measure of how hard it is to find a valid block hash. Adjusts every 2,016 blocks to maintain 10-minute block times.
Double Spend
An attack where the same bitcoin is spent twice. Proof of Work prevents this by making it computationally expensive.
DYOR
Do Your Own Research. A reminder to verify information independently rather than trusting others blindly.
G
Genesis Block
The first block in the Bitcoin blockchain, mined by Satoshi Nakamoto on January 3, 2009.
H
Halving
The event when the block reward is cut in half. Occurs every 210,000 blocks (~4 years). Creates predictable scarcity.
Hash
The output of a hash function. In Bitcoin, SHA-256 produces a 256-bit hash used for block headers and addresses.
Hashrate
The total computational power of the Bitcoin network, measured in hashes per second (H/s, TH/s, EH/s).
HODL
Hold On for Dear Life. Slang for holding bitcoin long-term regardless of price volatility. Origin: a typo in a 2013 forum post.
Hot Wallet
A wallet connected to the internet. Convenient but less secure than cold storage.
L
Lightning Network
A Layer 2 payment protocol on top of Bitcoin. Enables instant, low-fee transactions.
M
Mempool
The waiting area for unconfirmed transactions. Each node maintains its own mempool.
Merkle Tree
A data structure that efficiently summarizes all transactions in a block into a single hash (merkle root).
Mining
The process of using computational power to find valid block hashes and secure the network.
N
Node
A computer running Bitcoin software that validates transactions and blocks. Full nodes store the entire blockchain.
Nonce
A number miners change to try to find a valid block hash. Part of the proof of work process.
P
Private Key
A secret number that allows you to spend bitcoin. Never share your private key. Keep secure backups.
Proof of Work
The consensus mechanism Bitcoin uses. Miners prove they've done computational work to add blocks.
Public Key
Derived from the private key. Used to receive bitcoin. Can be shared safely.
S
Satoshi
The smallest unit of bitcoin. 1 BTC = 100,000,000 satoshis (sats). Named after Satoshi Nakamoto.
Satoshi Nakamoto
The pseudonymous creator of Bitcoin. Published the whitepaper in 2008, mined the genesis block in 2009, and disappeared in 2011.
Seed Phrase
A list of words (usually 12 or 24) that encodes your private keys. Used to backup and restore wallets.
SegWit
Segregated Witness. A 2017 upgrade that increased block capacity and fixed transaction malleability.
SHA-256
The cryptographic hash function Bitcoin uses. Produces a 256-bit output from any input.
Soft Fork
A backwards-compatible protocol upgrade. Old nodes can still validate new blocks.
U
UTXO
Unspent Transaction Output. The fundamental unit of bitcoin ownership. Your balance is the sum of your UTXOs.
W
Wallet
Software or hardware that manages your private keys and allows you to send and receive bitcoin.
Whitepaper
The original 9-page document by Satoshi Nakamoto describing Bitcoin. Published October 31, 2008.