Bitcoin Glossary
A lot of terms get thrown around in Bitcoin. A few have been repurposed from traditional finance and programming, but many are brand new. This glossary of terms will help you get on your way to learning about Bitcoin!
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A
Airdrop: A distribution of a crypto token to a number of users, often those who have interacted with services associated with the airdrop’s sponsor.
Altcoin: The term used for all cryptocurrencies other than Bitcoin.
ASIC (Application-Specific Integrated Circuit): A computer specially designed to perform the function of Bitcoin mining, and nothing else.
ATH (All-Time High): The highest value ever reached by Bitcoin in its history.
B
Bagholder: A crypto investor who continues to hold large amounts of a specific coin, even when it performs poorly.
Bearish: The belief that market progress and prices are trending downwards.
Bearwhale: An individual who holds a large enough amount of a cryptocurrency to be able to profit from driving the price down.
Bitcoin: The first and most well-known of cryptocurrencies running on a blockchain, having begun in 2008.
Bitcoin Mining: The process of guessing a random number before all other participants on the Bitcoin blockchain in order to propose a block of transactions for confirmation.
Block: A group of transactions broadcast to the network and then written to the Bitcoin blockchain.
Blockchain: A ledger of Bitcoin transactions maintained across a network of computers.
BTD (Buy The Dip): The act of purchasing Bitcoin when the price has dropped significantly in a short time period.
Bullish: The belief that market progress and prices are trending upwards.
C
Centralized: A system or organization that is controlled by a person, group, corporation, or government.
CEX (Centralized Exchange): A cryptocurrency exchange that uses traditional market making methodologies and is operated by a centralized entity.
Cold Storage: The act of keeping one’s Bitcoin private key in a secure, offline environment.
Confirmation: The successful inclusion of a block of Bitcoin transactions within the blockchain.
“Crypto”: A term generally used in the community to describe blockchain and blockchain-adjacent technologies and protocols, other than Bitcoin.
Cryptocurrency: A digital asset designed to work as a medium of exchange, store of value, unit of account, or, in the case of Bitcoin, all three.
Cryptocurrency Exchange: A platform that allows users to exchange cryptocurrencies and fiat currencies.
Cryptocurrency Mixer: A service that mixes different streams of potentially identifiable cryptocurrency in order to improve anonymity.
Cryptocurrency Wallet: A device or program that stores the private and public keys that together grant access to stored cryptocurrencies.
D
DAO: A DAO, or decentralized autonomous organization, is a blockchain-based community, the purest form of which has no elite class of members.
dApp: A dApp, or decentralized application, is a software application running on top of a quasi-decentralized protocol and commonly incorporates a smart contract.
Decentralized: Globally distributed, peer-to-peer, and not reliant on any person, group, corporation, or government.
Decentralized in Name Only (DINO): A term that refers to centralized or quasi-centralized blockchains, protocols, and groups that self-identify as “decentralized” without achieving real decentralization.
Decentralized Ledger: A system of independent computers that are simultaneously recording data, while also maintaining identical copies of the data.
DeFi (Decentralized Finance): Blockchain-based financial services that claim to be used without the need for an intermediary.
DEX (Decentralized Exchange): A cryptocurrency exchange that, to some degree, may not be totally centralized and in some regards operates on top of blockchains through use of smart contracts and liquidity pools.
Diamond Hands: A term used to describe an investor who has a high tolerance for risk and volatility and refuses to sell their holdings.
Double Spend: The act of spending the same Bitcoin UTXO in more than one transaction.
Dox: The act of publishing identifying information about a formerly anonymous or pseudonymous individual on the internet, typically with malicious intent.
DYOR (Do Your Own Research): The process of researching one’s investments rather than turning to a third party who supports a particular asset.
E
Ethereum: The second-largest cryptocurrency by market cap, Ethereum’s claimed primary focus is on enabling blockchain-based services through the use of smart contracts.
F
Fiat: A government-issued currency that is not backed by a physical commodity, but rather by the government that issued it.
Flippening: The hypothetical growth of another cryptocurrency to exceed the size, value, and importance of Bitcoin.
FUD (Fear, Uncertainty, Doubt): Negative, misleading, or false information that influences the perception of Bitcoin or the market as a whole.
Fungible: A quality in which two or more of the same thing, such as Bitcoin, have identical value and are a perfect substitute for one another.
G
Gas: Gas is the fee paid to execute transactions on the Ethereum blockchain, and is denominated in gwei, a sub-unit of the Ether cryptocurrency.
Genesis Block: A term to describe the very first block mined on the Bitcoin blockchain.
H
Halvening: The periodic halving of the issuance rate for Bitcoin, or the rate at which new Bitcoin are released into circulation through mining.
Hard Fork: A radical change to Bitcoin’s software that makes previously valid blocks and transactions invalid.
Hardware Wallet: A device specially designed to lock away the private key used to access one’s Bitcoin.
Hashing: The act of using a computer program to transform information into a string of letters and numbers of a predetermined length.
Hash Rate: The unit of measurement for the amount of processing power on the Bitcoin blockchain.
HODL: The act of buying Bitcoin with the intent to not sell it for an extended period of time.
Hot Storage: The act of keeping a private key connected to the internet to increase accessibility.
Hyperbitcoinization: The rapid and irreversible process of adopting Bitcoin as the world’s primary reserve currency as fiat currencies collapse.
I
ICO: An ICO, or initial coin offering, is a funding method used by crypto-based companies and protocols in which a native token is exchanged for fiat currencies or other digital assets.
Inflation: An increase in the supply, or total available amount, of a currency. Inflation directly leads to the decline in value and purchasing power of the currency.
J
K
KYC (Know Your Customer): Requirements imposed by centralized service providers, often at the demand of governments, that collect personal and identifying information from users.
L
Layer-2: A protocol or platform built on top of the Bitcoin blockchain that typically adds additional functionality or efficiency to the network.
Lightning Network: A Bitcoin Layer-2 application designed for economical, fast, and private payments.
M
Market Capitalization: The size of Bitcoin denominated in fiat terms, calculated by multiplying the amount of coins in circulation by the current fiat-based price.
Medium of Exchange: A tool, such as a currency, that’s used to facilitate sales, purchases, and trades of goods and services between parties.
Metaverse: A network of 3D virtual worlds focused on social connection, often intersecting with cryptocurrencies and other crypto assets.
Mooning: A term used to describe a cryptocurrency that is experiencing a strong upward market trend.
N
NFT: An NFT, or non-fungible token, is a cryptographically unique representation of a digital or physical asset on a blockchain.
Node: A computer that participates in validating transactions on the global peer-to-peer Bitcoin network.
Nonce: A random number that is used to generate a hash for a block on the blockchain. The hash must meet a certain criteria, such as being below a certain value, in order for the block to be considered valid.
O
Orphan Block: A block on the Bitcoin blockchain that has been abandoned in favor of a different block and will not be built upon.
P
Paper Wallet: A piece of paper on which the private key used to access one’s Bitcoin is written.
Peer-to-Peer (P2P): A connection between two computers or people that allows information, files, goods, etc., to be shared without an intermediary.
Permissionless: A quality in which anyone is allowed to join and participate in a blockchain network.
Private Key: A cryptographic key that can be used to decrypt messages or transactions meant for a specific recipient.
Proof-of-Stake (POS): A blockchain algorithm in which a participant’s likelihood of being selected to confirm a block on a blockchain is probabilistically tied to the percentage of the blockchain’s token supply the participant controls.
Proof-of-Work (POW): The algorithm upon which the Bitcoin blockchain operates. Proof-of-work is defined by the conversion of electricity into processing power.
Protocol: An established set of rules dictating how nodes on the Bitcoin blockchain interact with one another and the code base.
Public Key: A cryptographic key that can be used to encrypt messages or transactions meant for a specific recipient.
Pump and Dump: A market manipulation in which an entity accumulates a large amount of an asset to inflate the price before dumping it.
Q
QR Code: A digital version of a Bitcoin address (i.e., public key) that can be scanned by a QR reader.
R
Rug pull: A rug pull is the theft of digital assets entrusted to developers, real or fake, of a crypto-based project, before or soon after the project launches.
S
Satoshi Nakamoto: The person or people responsible for releasing the Bitcoin whitepaper and original software code.
Satoshis (Sats): The smallest on-chain unit of Bitcoin, equal to .00000001 BTC.
Seed Phrase: A list of words that, when spelled correctly and entered in the proper order, allow recovery of Bitcoin on its blockchain.
SHA-256: A cryptographic hash function used to secure transactions and information on the Bitcoin blockchain.
Sharding: The process of breaking ups large quantity of data and distributing it among multiple computers.
Shill: The act of promoting a cryptocurrency in order to make money, even and especially when the cryptocurrency’s fundamental value is low.
Sh*tcoin: Any cryptocurrency that has little or no value and no discernible purpose.
Sidechain: A separate chain built on top of the Bitcoin blockchain in order to upgrade the technology with additional features.
Signature: A mathematical mechanism that allows for the proof of ownership by the individual holding a cryptographic key.
Smart Contract: A smart contract is a set of instructions written in code on a blockchain that execute when specified conditions are met.
Soft Fork: A change to Bitcoin’s software where only previously valid transaction blocks are invalidated.
Software Wallet: A computer program designed to secure the private key used to access one’s Bitcoin.
Stablecoin: Any blockchain token that is designed to maintain a price peg with another financial or real-world asset.
Staking: Staking occurs on Proof of Stake blockchains and entails locking up one’s holdings of the blockchain’s native cryptocurrency to earn additional units of the cryptocurrency.
T
Target: The difficulty that must be met for a block to be considered valid.
Timestamp: The time at which the block was created.
Token: A unit of value on the blockchain that can incorporate a variety of use cases, such as governance or a rewards program.
TPS (Transactions Per Second): A measure of a payment network’s, whether centralized or decentralized, average transaction throughput.
Transaction: A blockchain entry that records the transfer of value or information from one entity to another.
Transaction Fee: The cost paid to incentivize processors (e.g., miners, stakers, etc.) to confirm a transaction on the blockchain.
Trustless: A quality in which two transacting parties are not required to trust one another in order to conduct a transaction.
TVL (Total Value Locked): A measure of the total value locked within a smart contract.
U
UTXO (Unspent Transaction Output): The output of a previous Bitcoin transaction that has not yet been spent (i.e., used in a subsequent transaction).
Unconfirmed Transaction: A transaction that has not yet been added to a block on the Bitcoin blockchain.
V
W
Weak Hands: A term that describes an investor whose confidence is tested during market downturns to the point of selling their Bitcoin.
Web3: An idea for a new version of the internet supposedly based on decentralized and pseudo-decentralized blockchain technology.
Whale: An individual who holds a large enough amount of a certain cryptocurrency to be able to move the market.
X
xPub (Extended Public Key): A set of public keys (i.e., addresses) corresponding to one private key or set of related private keys (e.g., multisig wallet).
Y
Z
Zero Confirmation Transaction: A transaction that has been broadcasted to the network, but not yet recorded on the Bitcoin blockchain.