Bitcoin Terminology
Common Bitcoin terms that are useful to know:
| Term | Definition |
|---|---|
| Address | A string of letters and numbers indicating the destination for a Bitcoin transaction. |
| Air Gap | A security measure ensuring data isolation by physically separating a device from networks. |
| Altcoin | Stands for 'Alternative Coin' to Bitcoin, referring to cryptocurrencies other than Bitcoin. |
| Austrian School of Economics | An economic school of thought emphasizing individualism and limited government intervention. |
| Bag Holder | An investor holding a large quantity of cryptocurrency that has depreciated in value and not yet sold. |
| Batching | The process of grouping multiple Bitcoin transactions together in a single block to increase efficiency. |
| Bitcoin | A decentralized digital currency created in 2009, operating without a central bank or single administrator. |
| Bitcoin Address | A unique string of characters used to receive Bitcoin, functioning like a digital address. |
| Bitcoin Cash | A cryptocurrency that originated from a hard fork of Bitcoin in August 2017. It was created to address scalability issues by increasing the block size limit. This is NOT Bitcoin!! |
| Bitcoin Carnivore | A subgroup within the Bitcoin community advocating a meat-only diet, often linked to libertarian values. |
| Bitcoin Core | The primary software implementation of Bitcoin, serving as a reference for the Bitcoin protocol. |
| Bitcoin Dominance | A metric indicating the market cap share of Bitcoin compared to other cryptocurrencies. |
| Bitcoin Improvement Proposal (BIP) | Formal documents proposing changes, enhancements, or additions to the Bitcoin protocol. |
| Blockchain | A digital ledger recording Bitcoin transactions in a chronological order, visible publicly. |
| Block | A file storing a segment of Bitcoin transactions, which is permanently recorded on the blockchain. |
| Block Explorer | A tool that allows users to view and analyse the contents of blocks on the blockchain. |
| Block Height | The position of a block in the blockchain, measured by counting the number of blocks preceding it. |
| Block Reward | The new bitcoins awarded to miners for successfully validating and adding a block to the blockchain. |
| Block Size | The amount of data a single block in the blockchain can hold, crucial for transaction speed and scalability. |
| Block Subsidy | The part of the block reward given by the Bitcoin network, consisting of newly created bitcoins. |
| CoinJoin | A method used in Bitcoin transactions to enhance privacy by combining multiple transactions. |
| Confirmation | The process of a transaction being included in a block and subsequently added to the blockchain, making it irreversible. |
| Consensus | The process used by Bitcoin nodes to agree on the state of the blockchain, including which transactions are valid. |
| Cryptography | Techniques for secure communication, used in Bitcoin to control creation of new units and verify transactions. |
| Custodial | A service or wallet where the private keys—and therefore control over the funds—are held by a third party, rather than the owner of the Bitcoin. |
| Decentralization | The distribution of control away from a central authority in Bitcoin's network structure. |
| Deflation | A decrease in the general price level of goods and services, often associated with increased purchasing power of money. |
| Deterministic Wallet | A type of wallet that generates all its addresses from a single seed, providing easier backup and restoration. |
| Difficulty | A measure of how hard it is to find a new block compared to the easiest it can ever be. It adjusts to keep the block generation time consistent. |
| Difficulty Adjustment | The automatic process of adjusting the difficulty of mining a new Bitcoin block, ensuring a consistent block time based on the network's total mining power. |
| Don't Trust, Verify | A principle in the Bitcoin community emphasizing the importance of verifying transactions independently rather than relying on trust. |
| Double Spend | The act of trying to spend the same digital currency more than once, a risk mitigated by blockchain technology. |
| Dust | Tiny amounts of Bitcoin or other cryptocurrencies that are too small to be transacted due to their low value. |
| DYOR (Do Your Own Research) | A common phrase emphasizing the importance of personal research before making investment decisions in cryptocurrencies. |
| Epoch | A period in Bitcoin mining, typically referring to the time between difficulty changes, around 2016 blocks or approximately two weeks. |
| Faucet | A website or application that dispenses small amounts of cryptocurrencies, either for free or for completing simple tasks. |
| Fiat Currency | Government-issued currency not backed by a physical commodity, but rather by the government that issued it. |
| Fork | A change in the blockchain's protocol creating two divergent paths, either temporarily (soft fork) or permanently (hard fork). |
| FUD (Fear, Uncertainty, Doubt) | A strategy of psychological manipulation aimed at spreading negative, misleading, or false information to create fear and doubt. |
| Full Node | A computer that maintains a complete copy of the blockchain and contributes to the network by validating transactions. |
| Halving | An event that reduces the reward for mining new blocks by half, occurring approximately every four years. |
| Hardware Wallet | A physical device designed to securely store Bitcoin private keys offline, protecting them from online hacking risks. |
| Hash Rate | A measure of the processing power used in Bitcoin mining. |
| Inscription | A term referring to the practice of embedding or adding extra data into a Bitcoin transaction or block. |
| Lightning | Refers to the Lightning Network, a second-layer technology on Bitcoin enabling faster and cheaper transactions than the main network. |
| Liquid | A Bitcoin sidechain developed by Blockstream, offering faster settlements, increased transaction confidentiality, and tokenisation capabilities. |
| Litecoin | A peer-to-peer cryptocurrency created by Charlie Lee in 2011. It's based on the Bitcoin protocol but differs in terms of the hashing algorithm used, block transaction times, and a few other factors. Litecoin aims for faster transaction confirmation times and improved storage efficiency compared to Bitcoin. This is NOT Bitcoin! |
| Mempool (Memory Pool) | A holding area for Bitcoin transactions waiting to be confirmed. |
| Mining | The process of using computational power to secure transactions on the network and create new Bitcoin. |
| Mining Pool | A collective of miners who combine their computational resources to increase their chances of mining Bitcoin blocks. |
| Mixer (Bitcoin Mixer) | A service designed to increase the anonymity of Bitcoin transactions by mixing coins from multiple parties. |
| Moscow Time | Informal term referring to the number of satoshis that can be bought for one US Dollar. |
| NGU (Number Go Up) | A term referring to the general long-term upward trend in Bitcoin's price. |
| Node | A computer connected to the Bitcoin network, validating and relaying transactions. |
| Nocoiner | A term for individuals who do not own or invest in cryptocurrencies, often critical of Bitcoin and similar assets. |
| Non-Custodial | A service or wallet where the private keys—and thus full control of the funds—are held exclusively by the owner of the Bitcoin, not a third party. |
| Not Your Keys, Not Your Coins | A phrase emphasising that control over the private keys of a wallet equals control over the coins it contains; used to advocate for non-custodial wallet usage. |
| Precoiner | An individual on the verge of buying Bitcoin but has not yet made the purchase, often hesitant or skeptical. |
| Private Key | A secret code known only to the wallet's owner, used to sign transactions and prove ownership of a Bitcoin address. |
| Public Key | A number that corresponds to a private key, shared with others to receive Bitcoin transactions. |
| Satoshi | The smallest unit of Bitcoin, one hundred millionth of a single Bitcoin. |
| Satoshi Nakamoto | The pseudonym used by the person or group who developed Bitcoin. |
| SegWit (Segregated Witness) | A protocol upgrade that changed the way data is stored, increasing the block size limit and improving scalability. |
| Seed Phrase | A sequence of 12 to 24 words generated by a cryptocurrency wallet, used to access or recover blockchain assets. |
| SegWit2x | A proposed Bitcoin upgrade aiming to increase the block size limit to 2MB, addressing high transaction fees. |
| Software Wallet | A program or application storing Bitcoin private keys on a computer or mobile device, allowing easy management and transactions of digital assets. |
| Stablecoin | Cryptocurrencies pegged to stable assets like fiat currencies, designed to minimize price volatility. |
| Stacking Sats | The practice of regularly accumulating small amounts of Bitcoin (satoshis). |
| UTXO (Unspent Transaction Output) | Represents the amount of Bitcoin someone has left after executing transactions, essentially the "change" awaiting to be spent. |
| Virgin Bitcoin | Bitcoins that have been freshly mined and have not yet been used in any transactions. |
| Wallet | A digital or physical medium storing digital credentials for Bitcoin transactions. |