Bitcoin Glossary

A

Address

A string of letters and numbers that represents a destination for a Bitcoin payment. Similar to an email address, but for receiving bitcoin. Bitcoin addresses are derived from public keys and typically start with "1", "3", or "bc1". Read more →

ATH (All-Time High)

The highest price Bitcoin has ever reached. New ATHs are powerful psychological events — they mean every buyer in history is in profit, driving media coverage, euphoria, and fresh FOMO. Historically, periods near ATHs are followed by sharp corrections. Read more →

B

BIP (Bitcoin Improvement Proposal)

A design document for introducing new features or improvements to Bitcoin. Anyone can submit a BIP, but it must be reviewed, discussed, and accepted by the community before being implemented. BIPs are how Bitcoin evolves without a central authority. Read more →

Block

A collection of Bitcoin transactions that are grouped together and added to the blockchain. A new block is created approximately every 10 minutes. Each block contains a cryptographic reference to the previous block, creating an unbreakable chain of transaction history.

Blockchain

The public ledger that records every Bitcoin transaction ever made. It's called a blockchain because transactions are grouped into blocks, which are then linked together in chronological order. Once added to the blockchain, transactions cannot be altered or deleted. Read more →

Block Height

The number of blocks that exist between a given block and the Genesis Block (the first block ever created). As of early 2026, Bitcoin's block height is over 936,000. Block height is used to measure time and progress on the Bitcoin network. Read more →

Bear Market / Bull Market

A bear market is a sustained period of falling prices, typically defined as a 20% or greater decline from recent highs. A bull market is the opposite: a sustained period of rising prices. Bitcoin has historically moved through dramatic bear and bull cycles roughly every four years, loosely tied to the halving event. Bitcoin has experienced four major bear markets, each with drawdowns of 70–85%, and has reached new all-time highs after every one. Read more →

Bitcoin

A decentralized digital currency created in 2009 by the pseudonymous Satoshi Nakamoto. Bitcoin enables peer-to-peer payments without banks, governments, or intermediaries. Its supply is capped at 21 million coins, enforced by code rather than policy. Read more →

Bitcoin ETF

An exchange-traded fund that tracks the price of Bitcoin, allowing investors to get exposure through a traditional brokerage account without holding bitcoin directly. Spot Bitcoin ETFs, which hold actual bitcoin, were approved in the United States in January 2024, marking a major milestone for institutional adoption. ETFs from firms like BlackRock and Fidelity have attracted billions in investment, making Bitcoin accessible to a much broader range of investors. Read more →

C

Cold Storage

A method of storing bitcoin offline, disconnected from the internet. This includes hardware wallets, paper wallets, or other offline storage methods. Cold storage is considered the most secure way to hold bitcoin long-term because it's protected from online hacking attempts. Read more →

Confirmation

The process by which a Bitcoin transaction is verified and added to the blockchain. Each new block that's added after your transaction counts as an additional confirmation. Most exchanges and services consider a transaction secure after 6 confirmations (about 60 minutes). Read more →

Custodial vs. Non-Custodial

A custodial service holds your bitcoin on your behalf, like a bank holding your money. Exchanges like Coinbase are custodial: they control the private keys. A non-custodial setup means you hold your own keys and are solely responsible for them. The Bitcoin principle of self-sovereignty is closely tied to non-custodial ownership: "not your keys, not your coins." Read more →

D

DCA (Dollar-Cost Averaging)

An investment strategy where you invest a fixed amount of money at regular intervals (weekly, bi-weekly, or monthly) regardless of the asset's current price. Rather than trying to time the market, DCA spreads your purchases over time, automatically buying more bitcoin when prices are low and less when prices are high. It's one of the most widely recommended approaches for long-term Bitcoin accumulation. See our Bitcoin DCA Calculator to model historical returns. Read more →

Decentralization

The property of a system that has no single point of control or failure. Bitcoin is decentralized because no government, company, or individual controls it. Thousands of nodes around the world independently validate transactions according to the same rules. This means no one can shut Bitcoin down, reverse transactions, or change the rules unilaterally. Read more →

Difficulty Adjustment

An automatic recalibration of Bitcoin's mining difficulty that occurs every 2,016 blocks (approximately every two weeks). This ensures that blocks continue to be mined every 10 minutes on average, regardless of how much mining power is on the network. Read more →

E

Exchange

A platform where you can buy, sell, or trade Bitcoin using traditional currency or other cryptocurrencies. Centralized exchanges (CEX) like Coinbase or Kraken are companies that hold your funds on your behalf. Decentralized exchanges (DEX) operate without a central authority, letting users trade directly. Most beginners start with a centralized exchange for simplicity, but using one means you don't truly hold your own bitcoin until you withdraw to a private wallet. Read more →

F

Fiat Currency

Government-issued money that isn't backed by a physical commodity like gold. The US dollar, euro, and yen are all fiat currencies. Their supply can be expanded at will by central banks — the fundamental problem Bitcoin was designed to solve. Read more →

Fear & Greed Index

A market sentiment indicator that measures whether investors are feeling fearful (pessimistic, selling) or greedy (optimistic, buying). It's scored from 0 (Extreme Fear) to 100 (Extreme Greed). Historically, extreme fear readings have often preceded Bitcoin price recoveries, while extreme greed has preceded corrections. It's a useful tool for context, not prediction. It's a helpful gut-check when emotions are running high. Read more →

FOMO (Fear of Missing Out)

The anxiety of missing a rapidly rising price, which can drive impulsive buying near market tops. FOMO is one of the most common and costly emotional traps in Bitcoin investing. It causes people to buy after a big run-up, often right before a correction. A consistent DCA strategy is one of the most effective ways to remove FOMO from the equation entirely. Read more →

Fork

A change to Bitcoin's protocol rules. A soft fork is backward-compatible (old nodes can still validate new blocks). A hard fork is not backward-compatible and creates a permanent split in the blockchain, resulting in two separate cryptocurrencies (like Bitcoin and Bitcoin Cash in 2017). Read more →

G

Genesis Block

The first block ever mined on the Bitcoin blockchain, created by Satoshi Nakamoto on January 3, 2009. It's also called Block 0. The Genesis Block contains a message referencing a newspaper headline about bank bailouts, hinting at Bitcoin's purpose as an alternative to traditional finance. Read more →

H

Halving

An event that occurs every 210,000 blocks (approximately every four years) where the reward for mining a new block is cut in half. This is how Bitcoin enforces its fixed supply cap of 21 million coins. The next halving is expected in 2028. Read more →

Hash

The output of a cryptographic function that turns any input into a fixed-length string of characters. In Bitcoin, hashing is used to secure transactions, create addresses, and validate blocks. A hash is like a digital fingerprint. Even a tiny change in input creates a completely different hash.

Hash Rate

A measure of the total computational power being used to mine Bitcoin and process transactions. Expressed in hashes per second (e.g., exahashes per second, or EH/s). A higher hash rate means the network is more secure against attacks. Read more →

HODL

Bitcoin slang for holding long-term instead of selling. Originally a typo for "hold" in a 2013 forum post, it became a rallying cry and core philosophy. Later backronymed to "Hold On for Dear Life." Arguably the single most effective Bitcoin strategy for the average person. Read more →

Hot Wallet

A Bitcoin wallet that's connected to the internet. Hot wallets are convenient for daily transactions but less secure than cold storage because they're vulnerable to online attacks. Examples include mobile wallet apps and exchange accounts. Read more →

K

KYC (Know Your Customer)

Identity verification requirements that regulated financial services, including most Bitcoin exchanges, must collect from their users. This typically includes a government-issued ID, proof of address, and sometimes a selfie. KYC is required by law in most countries as an anti-money laundering measure. Some Bitcoiners prefer to use non-KYC methods of acquiring bitcoin (like peer-to-peer platforms) to preserve privacy, though these come with their own trade-offs. Read more →

L

Lightning Network

A "layer 2" payment protocol built on top of Bitcoin that enables fast, low-cost transactions. Instead of recording every transaction on the blockchain, Lightning creates payment channels between users, settling the final balance on the main chain later. This allows Bitcoin to scale for everyday payments. Read our full Lightning Network explainer → Read more →

M

Mempool

Short for "memory pool." The waiting area where unconfirmed transactions sit before being included in a block. When the mempool is full, transactions with higher fees get priority. You can check mempool status at sites like mempool.space to estimate transaction times. Read more →

Mining

The process of validating transactions and adding them to the blockchain by solving complex mathematical puzzles. Miners compete to find a valid hash for a new block, and the first to succeed receives newly minted bitcoin as a reward plus transaction fees. Read more →

Multisig (Multisignature)

A security feature that requires multiple private keys to authorize a Bitcoin transaction. For example, a 2-of-3 multisig wallet requires any 2 out of 3 designated keys to sign a transaction. This is useful for companies, shared accounts, or enhanced personal security. Read more →

N

Node

A computer running Bitcoin software that maintains a full or partial copy of the blockchain. Full nodes download and validate every transaction and block according to Bitcoin's rules. Running a node helps decentralize the network and gives you full verification of your own transactions. Read more →

O

On-chain

Any transaction or activity that is recorded directly on the Bitcoin blockchain. On-chain transactions are permanent, publicly visible, and secured by the full network. They're the most trustworthy form of Bitcoin settlement but can be slower and more expensive than off-chain solutions like the Lightning Network during periods of high demand. Read more →

Ordinals

A protocol that assigns a unique serial number to each individual satoshi (the smallest unit of bitcoin), enabling them to be tracked and associated with arbitrary data, including images, text, or other files inscribed directly onto the Bitcoin blockchain. Launched in early 2023, Ordinals sparked significant debate in the Bitcoin community about whether storing non-financial data on the blockchain was appropriate. Supporters call it an expansion of Bitcoin's utility; critics argue it adds unnecessary bloat to the chain. Read more →

P

Private Key

A secret number that allows you to spend bitcoin from a specific address. Think of it like a password that proves ownership. If someone gains access to your private key, they control your bitcoin. This is why the phrase "not your keys, not your coins" is fundamental to Bitcoin. Read more →

Proof of Work

The consensus mechanism Bitcoin uses to validate transactions and secure the network. Miners must expend computational energy (work) to find a valid hash for a new block. This makes attacking the network prohibitively expensive, as an attacker would need to redo all that work faster than the honest network. Read more →

Public Key

A cryptographic key derived from your private key that can be shared publicly. Your Bitcoin address is generated from your public key. Others can use your public key to send you bitcoin or verify your digital signature, but they cannot use it to spend your funds. Read more →

R

Replace-by-Fee (RBF)

A feature that allows a sender to replace an unconfirmed transaction with a new version that includes a higher fee. This is useful when a transaction is stuck in the mempool due to low fees during a period of high network congestion. RBF lets you "bump" the fee on a pending transaction to get it confirmed faster, without having to wait for it to time out. Read more →

S

Satoshi (sat)

The smallest unit of bitcoin, equal to 0.00000001 BTC. Named after Bitcoin's creator, Satoshi Nakamoto. One bitcoin equals 100 million satoshis. As bitcoin's price increases, people increasingly denominate prices in sats rather than full bitcoin. Read more →

Satoshi Nakamoto

The pseudonymous creator (or creators) of Bitcoin. Satoshi published the Bitcoin whitepaper in 2008, launched the network in 2009, and disappeared in 2011. Their true identity remains unknown, and they're estimated to own around 1 million bitcoin that have never been moved. Read more →

Seed Phrase (Recovery Phrase)

A list of 12 or 24 words that represents your wallet's private keys in a human-readable format. If you lose access to your wallet, you can restore it using your seed phrase. This is the ultimate backup. Anyone who has your seed phrase controls your bitcoin. Read more →

SegWit (Segregated Witness)

A major Bitcoin protocol upgrade activated in 2017 that changed how transaction data is stored. SegWit separates (segregates) the transaction signature data (witness) from the main transaction block, which increased capacity on the blockchain and fixed a bug called transaction malleability. It also laid the groundwork for the Lightning Network. Most modern Bitcoin wallets use SegWit addresses by default. Read more →

Self-Custody

The practice of holding your own Bitcoin private keys rather than trusting a third party like an exchange. When you self-custody, you have complete control over your funds, but you're also fully responsible for securing them. This is the intended way to use Bitcoin. Read more →

Stacking Sats

The informal term for the practice of regularly accumulating small amounts of bitcoin over time, essentially DCA expressed as a lifestyle habit. "Sats" refers to satoshis, the smallest unit of bitcoin. "Stacking sats" reflects the long-term mindset of many Bitcoin holders: focus on accumulating bitcoin consistently rather than trading or timing the market. Read more →

Strategic Bitcoin Reserve

A government-held stockpile of Bitcoin, similar to gold reserves or foreign currency reserves held by central banks. The United States established a Strategic Bitcoin Reserve by executive order in early 2025, primarily composed of bitcoin seized in criminal proceedings. Several other nations and U.S. states have proposed or adopted similar policies, reflecting a growing view of Bitcoin as a strategic national asset. Read more →

T

Timechain

An alternative term for "blockchain" that emphasizes Bitcoin's function as a timestamped, chronological ledger. Some Bitcoiners prefer this term because it more accurately describes what Bitcoin actually is: a chain of time-stamped records secured by proof of work. Read more →

Taproot

A significant Bitcoin protocol upgrade activated in November 2021 that improved privacy, efficiency, and smart contract flexibility. Taproot makes complex transactions (like multisig) look identical to simple ones on the blockchain, improving privacy. It also introduced Schnorr signatures, which are more efficient and allow multiple signatures to be combined into one, reducing transaction size and cost. Taproot was Bitcoin's most significant upgrade since SegWit. Read more →

Transaction Fee

The amount paid to miners for including your transaction in a block. Fees are determined by supply and demand. When the network is busy, fees increase. You can choose your fee level: higher fees mean faster confirmation, lower fees might take longer but cost less. Read more →

U

UTXO (Unspent Transaction Output)

The technical term for "pieces" of bitcoin that can be spent. Bitcoin doesn't use account balances. Instead, your wallet balance is the sum of all UTXOs you control. When you send bitcoin, you're spending UTXOs and creating new ones. Think of them like bills in a physical wallet. Read more →

V

Volatility

The degree to which an asset's price fluctuates over time. Bitcoin is considered a highly volatile asset. It has experienced multiple drawdowns of 70–85% from its peak, and also multiple rallies of 10x or more. Volatility cuts both ways: it's what makes Bitcoin risky in the short term and what has made it one of the best-performing assets of the last decade over longer timeframes. A consistent DCA strategy is one of the most effective tools for managing exposure to Bitcoin's volatility. Read more →

W

Whale

An individual or entity that holds a very large amount of bitcoin — typically 1,000 BTC or more. Whale movements can influence market price and are closely tracked by analysts. The largest known holder is Satoshi Nakamoto, with an estimated ~1.1 million BTC that has never moved. Read more →

Wallet

Software or hardware that manages your Bitcoin private keys and allows you to send and receive bitcoin. A wallet doesn't actually store your bitcoin (those exist on the blockchain). It stores the keys that prove you own specific bitcoin. Wallets can be hardware devices, mobile apps, desktop software, or even paper. Read more →

Whitepaper

The original document published by Satoshi Nakamoto in 2008 titled "Bitcoin: A Peer-to-Peer Electronic Cash System." It's only 9 pages long and outlines how Bitcoin works. The whitepaper is considered one of the most important technical documents in modern finance and cryptography. Read more →