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Bitcoin Glossary

A comprehensive reference for Bitcoin and self-custody terminology. Click any term to jump to its definition.

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A​

Address​

A string of characters representing a destination for Bitcoin payments. Similar to an email address, but for receiving Bitcoin. Modern addresses typically start with bc1q (SegWit) or bc1p (Taproot). See Address Types.

Air-Gapped​

A security measure where a device is completely isolated from the internet and other networks. Air-gapped computers communicate only through QR codes, SD cards, or manual data entry. See Air-Gapped Computer Guide.

Altcoin​

Any cryptocurrency other than Bitcoin. Examples include Ethereum, Litecoin, and thousands of others.

B​

Bech32​

The encoding format for Native SegWit addresses (starting with bc1q). Uses only lowercase letters and numbers, avoiding confusing characters like 0/O and 1/l.

Bech32m​

An updated version of Bech32 used for Taproot addresses (starting with bc1p).

BIP (Bitcoin Improvement Proposal)​

A design document for introducing new features or information to Bitcoin. Important BIPs include BIP39 (seed phrases), BIP32 (HD wallets), and BIP44/49/84/86 (derivation paths).

BIP39​

The standard for mnemonic seed phrases. Defines the 2048-word list used to encode wallet seeds as human-readable words. See Seed Phrases.

Bitcoin Core​

The reference implementation of the Bitcoin protocol. A full node software that validates all transactions and blocks. See Bitcoin Node Guide.

Block​

A collection of Bitcoin transactions bundled together and added to the blockchain. New blocks are created approximately every 10 minutes.

Blockchain​

A distributed ledger containing all Bitcoin transactions ever made. Each block links to the previous one, forming a chain.

Block Explorer​

A web tool that lets you view transactions, addresses, and blocks on the blockchain. Examples: Mempool.space, Blockstream.info.

Block Height​

The number of blocks in the blockchain since the genesis block (block 0). Used to identify specific points in Bitcoin's history.

Block Reward​

The amount of new bitcoin created with each block, paid to the miner who finds the block. Currently 3.125 BTC, halving approximately every 4 years.

C​

Change Address​

When you spend a UTXO but don't use the full amount, the remainder is sent to a change address in your own wallet. Like getting change when you pay with a $20 bill.

Change Output​

The transaction output that returns excess funds to the sender's wallet after a payment.

Checksum​

A small piece of data used to verify integrity. In seed phrases, the final word(s) include checksum data to detect errors.

Coinjoin​

A privacy technique that combines multiple users' transactions into a single transaction, making it difficult to trace which inputs correspond to which outputs. See CoinJoin Guide.

Cold Storage​

Keeping Bitcoin private keys on a device that never connects to the internet. The most secure form of storage.

Cold Wallet​

A wallet that stores private keys offline. Hardware wallets and air-gapped computers are cold wallets.

Confirmation​

Each new block added after a transaction is included counts as one confirmation. More confirmations = higher certainty the transaction is permanent. 6 confirmations is traditionally considered final.

Consensus​

The agreement among Bitcoin nodes about the current state of the blockchain. Bitcoin's proof-of-work consensus ensures all honest nodes agree.

CPFP (Child Pays for Parent)​

A technique to speed up an unconfirmed transaction by creating a new transaction that spends its output with a higher fee.

Custodial​

A service where a third party holds your private keys (and thus your Bitcoin) on your behalf. Exchanges are custodial. Opposite of self-custody.

D​

Derivation Path​

The hierarchical path used to derive specific keys from a master seed. Example: m/84'/0'/0'/0/0. Different paths generate different addresses. See Derivation Paths.

Descriptor​

A standardized way to describe how addresses are generated from keys. Used for wallet backup and recovery, especially in multisig setups.

Difficulty​

A measure of how hard it is to mine a new block. Adjusts every 2016 blocks (~2 weeks) to maintain the 10-minute block target.

Dusting Attack​

A privacy attack where tiny amounts of Bitcoin are sent to many addresses to track their future spending patterns.

E​

Electrum Server​

Software that indexes the Bitcoin blockchain to allow lightweight wallets to query transaction data efficiently. Examples: Electrs, Fulcrum.

Entropy​

Randomness used to generate private keys and seed phrases. High-quality entropy is essential for security. See Why Randomness Matters.

F​

Fee​

The amount paid to miners to include a transaction in a block. Measured in satoshis per virtual byte (sat/vB).

Fee Rate​

The fee density of a transaction, typically measured in sat/vB. Higher fee rates result in faster confirmation.

Full Node​

Software that independently validates all Bitcoin transactions and blocks against consensus rules. See What is a Bitcoin Node.

G​

Genesis Block​

The first block in the Bitcoin blockchain, mined by Satoshi Nakamoto on January 3, 2009.

H​

Halving​

The event where the block reward is cut in half, occurring approximately every 4 years (210,000 blocks). Reduces Bitcoin's inflation rate.

Hardware Wallet​

A dedicated physical device designed to securely store Bitcoin private keys offline. Examples: Coldcard, Trezor, Ledger. See Hardware Wallets.

Hash​

A fixed-length output produced by running data through a cryptographic hash function. Used extensively in Bitcoin for security and verification.

Hash Rate​

The total computational power being used to mine Bitcoin, measured in hashes per second.

HD Wallet (Hierarchical Deterministic)​

A wallet that generates all addresses from a single seed phrase, allowing complete wallet recovery from just the seed words.

Hot Wallet​

A wallet connected to the internet. More convenient but less secure than cold storage. See Software Wallets.

I​

Input​

A reference to a previous transaction output being spent in a new transaction. Transactions consume inputs and create outputs.

Intel ME (Management Engine)​

A subsystem in Intel processors that operates independently and can pose security risks. See Libreboot Guide.

J​

JSON-RPC​

A protocol used to communicate with Bitcoin Core. Many wallet applications use JSON-RPC to interact with a node.

K​

KYC (Know Your Customer)​

Identity verification requirements imposed by exchanges and financial services. Links your identity to your Bitcoin purchases, reducing privacy.

L​

Legacy Address​

The original Bitcoin address format, starting with 1. Higher transaction fees than newer formats. See Address Types.

Lightning Network​

A "Layer 2" payment network built on top of Bitcoin, enabling fast, low-fee transactions.

Libreboot​

Open-source firmware replacement for computer BIOS that removes proprietary code and potential backdoors. See Libreboot Guide.

M​

Mempool​

The collection of unconfirmed transactions waiting to be included in a block. Each node maintains its own mempool.

Mining​

The process of using computational power to validate transactions and create new blocks. Miners compete to solve a proof-of-work puzzle.

Mnemonic​

The human-readable word sequence (seed phrase) used to encode a wallet's seed. See Seed Phrases.

Multisig (Multisignature)​

A security setup requiring multiple private keys to authorize a transaction. Example: 2-of-3 multisig needs any 2 of 3 keys to spend. See Multisig Setup.

N​

Native SegWit​

The most efficient address format for standard transactions, starting with bc1q. Lower fees than Legacy or Nested SegWit. See Address Types.

Nested SegWit​

A backwards-compatible SegWit format using addresses starting with 3. A bridge between Legacy and Native SegWit.

Node​

A computer running Bitcoin software that validates and relays transactions. See Bitcoin Node Guide.

Non-Custodial​

A wallet or service where you control your own private keys. Self-custody is non-custodial.

O​

OP_RETURN​

A Bitcoin script opcode that allows storing small amounts of data in a transaction without creating spendable outputs.

Orphan Block​

A valid block that is not part of the main chain, usually because another block at the same height was propagated first.

Output​

The destination(s) of a Bitcoin transaction. Each output specifies an amount and the conditions for spending it.

P​

P2PKH (Pay to Public Key Hash)​

The technical name for Legacy addresses (starting with 1).

P2SH (Pay to Script Hash)​

The technical name for Script addresses (starting with 3). Used for complex scripts including Nested SegWit.

P2TR (Pay to Taproot)​

The technical name for Taproot addresses (starting with bc1p).

P2WPKH (Pay to Witness Public Key Hash)​

The technical name for Native SegWit addresses (starting with bc1q).

Passphrase​

An optional additional word added to a seed phrase to create a separate wallet. Sometimes called the "25th word." See Passphrases.

PayJoin​

A privacy-enhancing transaction where both sender and receiver contribute inputs, breaking blockchain analysis heuristics.

PBST​

See PSBT.

Private Key​

A secret number that controls Bitcoin at a specific address. Must be kept secret. See Private Keys.

Proof of Work (PoW)​

The consensus mechanism Bitcoin uses to secure the network. Miners must perform computational work to create new blocks.

PSBT (Partially Signed Bitcoin Transaction)​

A format for passing unsigned or partially signed transactions between devices or parties. Essential for hardware wallets and multisig.

Public Key​

A number derived from a private key that can be shared publicly. Used to generate addresses and verify signatures.

Q​

QR Code​

A two-dimensional barcode often used to encode Bitcoin addresses for easy scanning.

R​

RBF (Replace-By-Fee)​

A feature allowing an unconfirmed transaction to be replaced with a new version paying a higher fee.

Recovery Phrase​

See Seed Phrase.

RPC (Remote Procedure Call)​

A protocol for applications to communicate with Bitcoin Core. See JSON-RPC.

S​

Satoshi (sat)​

The smallest unit of Bitcoin: 0.00000001 BTC. Named after Bitcoin's creator, Satoshi Nakamoto.

Satoshi Nakamoto​

The pseudonymous creator of Bitcoin who published the whitepaper in 2008 and launched the network in 2009.

Script​

Bitcoin's programming language used to define spending conditions for transactions.

Secure Element​

A tamper-resistant hardware chip that protects sensitive data (like private keys) from physical attacks.

Seed Phrase​

A sequence of 12 or 24 words that encodes your wallet's master seed. The backup that can restore your entire wallet. See Seed Phrases.

SegWit (Segregated Witness)​

A 2017 Bitcoin upgrade that separates transaction signatures ("witness" data) from transaction data, enabling more efficient transactions and fixing transaction malleability.

Self-Custody​

Holding your own Bitcoin private keys, rather than trusting a third party. See What is Self-Custody.

Signature​

Cryptographic proof that a transaction was authorized by the private key owner.

Signing Device​

A hardware wallet or other device used to sign Bitcoin transactions. See Hardware Wallet Setup.

Single-Sig​

A standard wallet where one private key controls the funds. Contrast with multisig.

SOIC8​

A type of chip package commonly used for BIOS flash chips. Relevant for Libreboot flashing.

Software Wallet​

An application (mobile or desktop) that manages Bitcoin keys on a general-purpose device. See Software Wallets.

SPV (Simplified Payment Verification)​

A method for lightweight wallets to verify transactions without downloading the full blockchain.

T​

Taproot​

A 2021 Bitcoin upgrade enabling more efficient and private complex transactions using Schnorr signatures. Addresses start with bc1p.

Testnet​

A separate Bitcoin network for testing, using worthless coins. Developers use testnet to experiment without risking real Bitcoin.

Timelock​

A restriction that prevents Bitcoin from being spent until a certain time or block height.

Tor (The Onion Router)​

Privacy network that anonymizes internet traffic. Can be used with Bitcoin nodes and wallets for enhanced privacy.

Transaction​

A signed message that transfers Bitcoin from one or more inputs to one or more outputs.

Transaction ID (TXID)​

A unique identifier for a Bitcoin transaction, generated by hashing the transaction data.

U​

UTXO (Unspent Transaction Output)​

A Bitcoin amount that has been received but not yet spent. Your wallet balance is the sum of your UTXOs. See UTXOs Explained.

UTXO Set​

The collection of all unspent transaction outputs in the Bitcoin network. What every Bitcoin node tracks.

V​

Vanity Address​

A Bitcoin address containing a custom pattern (like 1Love...). Generated by repeatedly creating addresses until a match is found.

vByte (Virtual Byte)​

The unit used to measure transaction size for fee calculation. Accounts for SegWit's different weighting of witness data.

Verification​

The process of independently confirming that data (like a transaction or software download) is valid and unmodified.

W​

Wallet​

Software or hardware that manages Bitcoin private keys and enables sending/receiving Bitcoin.

Wallet Descriptor​

See Descriptor.

Watch-Only Wallet​

A wallet that can monitor addresses and create unsigned transactions but cannot sign (spend) because it doesn't have the private keys.

Whitepaper​

The original Bitcoin paper published by Satoshi Nakamoto in 2008: "Bitcoin: A Peer-to-Peer Electronic Cash System."

Witness​

In SegWit transactions, the signature data that proves ownership. Separated from the main transaction for efficiency.

X​

xprv (Extended Private Key)​

A master private key that can derive all other private keys and addresses in an HD wallet. Must be kept secret like a seed phrase. See Extended Private Keys.

xpub (Extended Public Key)​

A master public key that can derive all public keys and addresses in an HD wallet. Can be shared to generate receive addresses without exposing private keys. See Extended Public Keys.

Numbers & Symbols​

2-of-3​

A common multisig configuration requiring any 2 of 3 keys to spend funds. See Multisig.

21 Million​

The maximum supply of Bitcoin that will ever exist, enforced by Bitcoin's consensus rules.

51% Attack​

A theoretical attack where an entity controlling more than half the network's hash rate could double-spend or censor transactions.

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