51% Attack
A situation in which a single miner or group of miners controls more than half of the network’s total hash rate, allowing them to reorganize recent blocks and potentially double spend transactions.
Bitcoin Lexicon
Address Reuse
The practice of using the same Bitcoin address multiple times. It is discouraged because it reduces privacy.
Atomic Swap
A peer to peer exchange mechanism that allows bitcoin to be exchanged directly for another asset without an intermediary.
Bitcoin (BTC, XBT)
A decentralized digital form of money that allows people to send value directly to one another without banks or intermediaries. The network has a fixed supply of 21 million bitcoin.
Bitcoin Address
A string of letters and numbers used to receive bitcoin. It functions like an inbox for payments, not like a bank account.
Bitcoin Improvement Proposal (BIP)
A formal process used to propose, discuss, and implement changes or improvements to the Bitcoin protocol.
Bitcoin Improvement Proposal 39 (BIP39)
A standard that defines how a random cryptographic seed can be represented as a list of human readable words, typically 12 or 24. These words, commonly known as a seed phrase or recovery phrase, can be used to deterministically generate and restore a Bitcoin wallet’s private keys.
Block
A batch of verified Bitcoin transactions grouped together and added to the blockchain approximately every 10 minutes.
Block Explorer
A public tool that allows anyone to view transactions, addresses, and blocks on the Bitcoin blockchain.
Block Height
The number of blocks that precede a given block in the blockchain, indicating its position in the chain.
Block Reward
The bitcoin earned by miners for successfully adding a new block to the blockchain. It consists of the block subsidy and the transaction fees included in that block.
Block Space
The limited capacity available in each block for transactions. Users compete for block space by attaching transaction fees.
Block Subsidy
The portion of the block reward that consists of newly created bitcoin. It decreases every halving until issuance reaches zero.
Blockchain
A public, distributed ledger that records all Bitcoin transactions in chronological order. Once data is added and confirmed, it becomes extremely difficult to change.
Censorship Resistance
The ability of the Bitcoin network to allow transactions without being blocked or controlled by governments, banks, or corporations.
Cold Storage
Keeping private keys offline to reduce the risk of theft or hacking.
Consensus
The process by which Bitcoin nodes agree on the valid state of the blockchain by following the same set of rules.
Cryptography
The use of mathematics to secure information. Bitcoin uses cryptography to secure transactions and ownership.
Decentralization
The absence of a central authority. No single person, company, or government controls Bitcoin.
Difficulty Adjustment
An automatic adjustment to mining difficulty that occurs every 2016 blocks, approximately every two weeks, to maintain an average block time of 10 minutes.
Double Spend
An attempt to spend the same bitcoin more than once. Bitcoin prevents this through proof of work and network consensus.
Final Settlement
The point at which a transaction becomes practically irreversible after multiple confirmations.
Full Node
A computer running Bitcoin software that independently verifies all transactions and blocks according to the consensus rules.
Fungibility
The property of money in which each unit is interchangeable with any other unit of equal value.
Genesis Block
The first block of the Bitcoin blockchain, mined in January 2009 by Satoshi Nakamoto.
Halving
An event that occurs every 210,000 blocks, approximately every four years, cutting the block subsidy in half and reducing the rate of new bitcoin issuance.
Hard Cap
The maximum number of bitcoin that will ever exist: 21 million.
Hash
The output of a cryptographic hash function that converts data into a fixed length string of characters.
Hash Function
A mathematical function that transforms input data into a fixed length output. It is fundamental to Bitcoin mining and security.
Hash Rate
The total computational power being used to secure the Bitcoin network.
Hot Wallet
A Bitcoin wallet connected to the internet, typically used for frequent transactions.
Immutability
The property of the blockchain that makes confirmed transactions extremely difficult to alter.
Key Pair
A pair consisting of a private key and a corresponding public key used to control bitcoin.
Layer 1
The base Bitcoin protocol responsible for transaction validation, consensus, and block production.
Layer 2
Technologies built on top of Bitcoin that improve scalability and transaction speed without modifying the base layer.
Lightning Network (LN)
A Layer 2 payment system that enables fast, low cost Bitcoin transactions through off chain payment channels.
Mempool
The collection of valid but unconfirmed transactions waiting to be included in a block.
Mining
The process by which miners use computational power and energy to validate transactions and add new blocks to the blockchain.
Multisignature (Multisig)
A wallet setup that requires more than one private key to authorize a Bitcoin transaction.
Node
A computer running Bitcoin software that verifies and relays transactions and blocks.
Nonce
A number that miners repeatedly change in the block header to produce a hash that meets the required difficulty target.
This word stems from a number, used only once.
Open Source
Software whose source code is publicly available for anyone to inspect, use, and improve. Bitcoin is open source.
Peer to Peer (P2P)
A system in which participants interact directly without intermediaries.
Permissionless
A system that anyone can access and use without needing approval.
Private Key
A secret piece of information that allows a user to sign transactions and control their bitcoin.
Proof of Work (PoW)
The consensus mechanism used by Bitcoin that requires miners to expend real world energy to secure the network and produce blocks.
Public Key
A cryptographic key derived from a private key and used to generate Bitcoin addresses.
Recovery Phrase (Seed Phrase)
A list of 12 or 24 words that can restore access to a Bitcoin wallet. It must be kept private and secure.
The terms “seed phrase” and “recovery phrase” are commonly used interchangeably. In most wallets, they refer to the same list of 12 or 24 words. Technically, the “seed” is the underlying cryptographic number from which all private keys are derived. The list of words is simply a human readable representation of that seed. The words themselves are not random dictionary words. They are selected from a standardized word list defined by Bitcoin Improvement Proposal 39 (BIP39), which ensures compatibility between many wallets. A common misconception is that the recovery phrase stores bitcoin. It does not. It allows you to regenerate the private keys that control your bitcoin on the blockchain. Another misconception is that the recovery phrase is tied to a specific wallet app. In reality, the same seed phrase can often be imported into different compatible wallets, because it follows an open standard.
Satoshi (sat)
The smallest unit of bitcoin, equal to one hundred millionth of a bitcoin.
Satoshi Nakamoto
The pseudonym used by the creator or creators of Bitcoin.
Scarcity
Limited supply. Bitcoin’s scarcity is enforced by code and capped at 21 million.
Self Custody
Holding and controlling your own private keys rather than relying on a third party.
Sovereignty
The ability of an individual to fully control their money without dependence on intermediaries.
Timestamp
A record embedded in each block that shows when it was created.
Transaction (Tx)
The transfer of bitcoin from one address to another on the Bitcoin network.
Transaction Fee
A small amount of bitcoin paid to miners to include a transaction in a block.
Trust Minimization
Reducing reliance on third parties by enabling independent verification of rules and transactions.
Unspent Transaction Output (UTXO)
A unit of bitcoin that has been received but not yet spent, representing spendable balance within the Bitcoin system.
Verification
The process of independently checking that transactions and blocks follow Bitcoin’s consensus rules.
Wallet
Software or hardware that stores private keys and allows users to send and receive bitcoin.