Glossary
​Bitcoin has its own language full of weird words. The more you dive deeper into the workings of Bitcoin, the weirder the terms get. Here are some popular and important Bitcoin definitions and terms that are worth knowing.​​
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51% Attack:
A theoretical attack (that occurred on smaller networks in 2014) where one miner controls over half the Bitcoin network’s power, enabling them to censor transactions or double-spend coins. Bitcoin’s size today makes this extremely unlikely and expensive to execute.
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Altcoin:
Any cryptocurrency other than Bitcoin (ethereum, ripple, solana).
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ASIC (Application-Specific Integrated Circuit):
Specialized computers designed solely for Bitcoin mining. They are up to 100x faster than GPUs but useless for any other tasks, making mining an industrial-scale operation.
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Block:
Forms Bitcoin’s unbreakable transaction chain. One block is mined every ~10 minutes, containing 2,000-3,000 transactions and occupying ~2MB-4MB of data.
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Blockchain:
A public ledger where every Bitcoin transaction is permanently recorded and publicly visible. It ensures transparency and prevents fraud.
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Block Height:
The number of blocks mined since the Genesis block. Used to measure the age of Bitcoin.
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Cold Wallet:
A wallet kept offline for maximum security, protecting Bitcoin from hackers. Ideal for long-term storage (Ledger, Trezor).
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Custodial:
Someone else holds your private keys. Exchanges like Coinbase and Kraken do this.
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Difficulty:
A self-adjusting value that controls how hard it is for miners to solve cryptographic puzzles and add new blocks. Increases when miners join and decreases when they leave, ensuring blocks are mined every ~10 minutes.
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Fiat:
Government-issued currency like USD or EUR. Unlike Bitcoin, central banks can print unlimited fiat, causing inflation over time.
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Fork:
When changes to Bitcoin’s code create two competing blockchains. A hard fork is a permanent split, while a soft fork is a backward-compatible upgrade (Taproot).
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Genesis Block (Block 0):
The first block of the Bitcoin blockchain, mined by Satoshi Nakamoto on January 3, 2009. It includes a hidden message critiquing traditional finance.
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Hash Rate:
The total computing power securing the Bitcoin network. Higher hash rate = more security.
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HODL:
Slang for "Hold On for Dear Life," meaning to hold Bitcoin long-term despite price volatility. Originated from a 2013 typo on a forum.
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Hot Wallet:
A wallet connected to the internet for fast transactions. More convenient but less secure than cold wallets.
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Lightning Network:
A "Layer 2" solution enabling instant, low-fee Bitcoin payments by handling transactions off-chain before settling on the main blockchain.
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Memepool:
The waiting area where unconfirmed transactions sit before being included in a block by miners.
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Mining:
The process of using powerful computers (ASICs) to secure the Bitcoin network, verify transactions, and earn new Bitcoin as rewards.
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Multisig (Multi-Signature Wallet):
A wallet requiring multiple private keys to authorize transactions, adding extra security for families or businesses.
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Node:
A computer that enforces Bitcoin’s rules by validating transactions and blocks. Running one supports decentralization.
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PoW (Proof of Work):
Bitcoin’s security system where miners compete to solve the cryptographic problems and earn Bitcoin as a reward.
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Private Key:
A secret code that proves ownership of Bitcoin and authorizes spending. Losing it means losing access to your funds.
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Public Key:
Your Bitcoin wallet address, which others use to send you BTC. Safe to share openly.
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Replace-by-Fee (RBF):
A wallet feature allowing users to resend a stuck transaction with a higher fee. This can be useful during network congestion.
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Satoshi (sat):
The smallest unit of Bitcoin. 100 million satoshis = 1 Bitcoin. Named after Bitcoin’s creator.
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Satoshi Nakamoto:
The anonymous creator of Bitcoin who published the Bitcoin Whitepaper in 2008 and launched the network in 2009. Their ~1 million bitcoin remains untouched in their wallet since 2010.
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Seed Phrase:
12-24 randomly generated words that act as a master password for your Bitcoin wallet. Losing it means losing your funds forever.
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SegWit (Segregated Witness):
A 2017 upgrade that increased block capacity by separating signature data, lowering fees and enabling the Lightning Network.
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Smart Contract:
Self-executing code on the blockchain.
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Taproot:
A 2021 upgrade improving Bitcoin’s privacy and efficiency by making complex transactions (like multisig) appear identical to regular ones.
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Timelock:
A smart contract feature that restricts spending until a set date or block height. This is useful for inheritance planning.
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Transaction Fees:
Payments to miners for prioritizing your transaction. Fees rise when the network is congested.
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Whale/Whale Wallet:
Individuals or entities holding massive amounts of Bitcoin (typically 1,000+). Their trades can sometimes significantly impact prices.
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Whitepaper:
Satoshi Nakamoto’s 9 page manifesto that he published in 2008. The paper laid out Bitcoin’s blueprint as a “peer to peer electronic cash system.” The constitution for Bitcoin.