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
241 terms
Acceptability
The willingness of other people to receive something in exchange.
Account claim
A recorded promise that an institution owes the account holder money or another asset.
Accumulated work
The total proof-of-work effort represented by a chain.
Address Reuse
The practice of using the same Bitcoin address multiple times. It is discouraged because it reduces privacy.
Address type
The format of a Bitcoin address.
Asset
Something a person or institution owns that may provide use, income, or future value.
Atomic Swap
A peer to peer exchange mechanism that allows bitcoin to be exchanged directly for another asset without an intermediary.
Auction
A process by which goods or assets are sold to the highest bidder.
B-money
An early proposal for decentralized digital money.
Bank capital rules
Rules requiring banks to fund risks with capital that can absorb losses.
Bank deposit
Money recorded as a claim on a commercial bank, rather than physical cash held separately for the customer.
Bank money creation
The creation of a matching bank deposit when a commercial bank approves a loan.
Bank profit
Income remaining after a bank’s costs and losses.
Bank regulation
Rules and supervision that govern banks.
Bank run
A rush of many customers trying to withdraw funds because they fear a bank may fail.
Barter
The direct exchange of one good or service for another without using money.
Bartering
The exchange of goods and services without the use of money.
Base-layer settlement
Final settlement directly on Bitcoin’s blockchain.
Basket of Goods
A collection of goods or services used to measure changes in the cost of living.
Bias
A tendency that can influence judgment.
Bit Gold
An early proposal for scarce digital records created through computational work.
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 block
A batch of transactions accepted into Bitcoin’s chain.
Bitcoin circular economy
A community network in which people earn, spend, save, and exchange bitcoin locally.
Bitcoin Core
A widely used Bitcoin software implementation that can run a full node.
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.
Bitcoin network
The independent computers and participants that operate Bitcoin under the same rules.
Bitcoin Pizza Day
The annual remembrance of the 2010 purchase of two pizzas with 10,000 bitcoin.
Bitcoin privacy
Control over information about a person and their Bitcoin activity.
Bitcoin protocol
The shared technical rules that Bitcoin participants use to validate and relay activity.
Bitcoin service
A separate business or tool that uses the Bitcoin network.
Bitcoin wallet
A tool that manages keys and helps receive, authorize, and track Bitcoin transactions; it does not literally contain bitcoin.
Bitcoin whitepaper
The original paper, *Bitcoin: A Peer-to-Peer Electronic Cash System*, which described Bitcoin’s design and purpose.
BitTorrent
A file-sharing system that demonstrated decentralized information sharing.
Block
A batch of verified Bitcoin transactions grouped together and added to the blockchain approximately every 10 minutes.
Block depth
The number of blocks added after the block containing a transaction.
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.
Block-explorer privacy
The privacy implications of using a public tool to inspect addresses or transactions.
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.
Bond
A debt security: the buyer lends money to a government or organization in return for promised repayment, usually with interest.
Bretton Woods
The post-1944 international monetary arrangement that linked currencies to the U.S. dollar and the dollar to gold.
Broadcast
To send transaction or block data to peers across the network.
BTC
The unit used for bitcoin. A digital currency that can be used to make purchases or be traded.
By decree
By an official order from an authority.
Candidate block
A proposed block that has not yet been accepted into the chain.
Capital Controls
Restrictions on the movement of money across borders.
CBDC
A digital form of fiat money issued as a liability of a central bank.
Censorship Resistance
The ability of the Bitcoin network to allow transactions without being blocked or controlled by governments, banks, or corporations.
Central Bank (Fed)
A government-owned institution that manages a country’s monetary policy.
Centralization
The concentration of power or control in a single entity.
Centralized System
A system in which power or control is concentrated in a single entity.
Cold Storage
Keeping private keys offline to reduce the risk of theft or hacking.
Cold wallet
A wallet that keeps signing keys offline.
Commodity money
Objects that have value in and of themselves and are used as a medium of exchange, such as gold or silver.
Community custody
A person or group controls bitcoin for others.
Confirmation
The process of a transaction being processed by the network and highly unlikely to be reversed. The method “miners” verify the authenticity of transactions with their computer hardware and software. It is recommended to wait for at least 6 confirmations to prevent double spending.
Consensus
The process by which Bitcoin nodes agree on the valid state of the blockchain by following the same set of rules.
Convertibility
The ability to exchange one form of money for another asset at a stated rate.
Credit risk
The risk that a borrower will not repay what is owed.
Cryptography
The use of mathematics to secure information. Bitcoin uses cryptography to secure transactions and ownership.
Currency
Money used by a country or within a monetary system.
Custodial wallet
A wallet arrangement in which a service controls the keys.
Custodian
A person or service that controls Bitcoin keys for someone else.
Custody
Control of Bitcoin keys.
Cypherpunk
A person who uses or advocates cryptography and open technology to protect privacy and freedom.
Debasement
The reduction in the value of a currency, often by reducing the amount of precious metal in a coin.
Debt
Money that is owed to someone else.
Decentralization
The absence of a central authority. No single person, company, or government controls Bitcoin.
Decentralized System
A system in which power or control is distributed among multiple entities.
Deposit insurance
A system that protects eligible bank deposits up to stated limits if a bank fails.
Deposit money
Commercial-bank account money.
Developer software proposal
A suggested software change only affects Bitcoin when participants choose software that follows it.
Difficulty
A measure of how hard it is to find a proof-of-work result that satisfies the target.
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.
DigiCash
An early private-digital-payment system that depended on a central company.
Digital Asset
A digital representation of value that can be traded or used as a store of value, such as Bitcoin.
Digital signature
A mathematical proof created with a private key that authorizes a message or transaction.
Distributed Ledger
A database that is spread across a network of computers, rather than being stored in a central location.
Divisibility
The ability to divide money into smaller units for different-sized payments.
Double coincidence of wants
The phenomenon where two parties in a barter economy both have what the other party wants and wants what the other party has.
Double Spend
An attempt to spend the same bitcoin more than once. Bitcoin prevents this through proof of work and network consensus.
Double spending
Trying to use the same digital unit in more than one payment.
Double-spend problem
The challenge of preventing a digital unit from being spent more than once.
Durability
The ability of money to remain usable over time.
Dust Transaction
A transaction that sends a very small amount of Bitcoin that is too small to be economically viable.
Ecash
Digital cash-like value issued by a mint.
Economic node
A node whose operator uses it for real payment activity and can therefore influence which rules have economic support.
Encryption
Transforming information so only an authorized party can read it.
Exchange Rate
The value of one currency in relation to another.
Fedimint
Software for federated community custody and ecash services.
Fee estimation
A wallet’s attempt to choose an appropriate transaction fee.
Fiat money
Money issued under state authority whose value is not fixed to redemption in a scarce commodity.
Final Settlement
The point at which a transaction becomes practically irreversible after multiple confirmations.
First confirmation
The initial inclusion of a transaction in a valid block.
Fractional reserve banking
Banking in which only part of deposit obligations is kept immediately available as reserves.
Full Node
A computer running Bitcoin software that independently verifies all transactions and blocks according to the consensus rules.
Funding cost
What a bank pays to obtain money.
Fungibility
The property of money in which each unit is interchangeable with any other unit of equal value.
GDP
Gross domestic product, the total value of goods and services produced in a country in a given period of time.
Gearing
Using borrowed money or obligations to increase the size of assets or financial exposure.
Genesis Block
The first block of the Bitcoin blockchain, mined in January 2009 by Satoshi Nakamoto.
Gold Standard
A monetary system in which currency can be exchanged for a fixed amount of gold.
Hal Finney
The recipient of the first recorded person-to-person Bitcoin transaction.
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.
Hard Fork
A change to the Bitcoin protocol that creates a new version of the blockchain, which is not compatible with the previous version. (ie. Bitcoin Cash)
Hardware Wallet
A physical device used for storing private keys and managing cryptocurrency, providing enhanced security over software wallets.
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.
Hashcash
An early proof-of-work system designed to make unwanted email computationally costly.
HODL
A term used in the cryptocurrency community to describe holding onto cryptocurrency longterm, rather than selling or trading it.
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.
Imports
Goods and services produced in another country and sold in the domestic market.
Inflation
An increase in the general price level of goods and services in an economy.
Inflation basket
A selected group of goods and services used to measure average price changes.
Intermediary
A middle party, such as a bank, exchange, or payment service, between participants in a transaction.
Issuance schedule
The rules that control how new bitcoin is issued over time.
Issuer
The authority, institution, or system that creates and puts money or claims into circulation.
Key Pair
A pair consisting of a private key and a corresponding public key used to control bitcoin.
KYC
Identity checks required by a financial service.
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.
Ledger
A record of financial transactions.
Liability
Something a person or institution owes; a bank deposit is a liability the bank owes its customer.
Lightning address
A human-readable Lightning receiving identifier.
Lightning invoice
A usually specific Lightning payment request.
Lightning liquidity
Channel capacity available to move a Lightning payment.
Lightning Network (LN)
A Layer 2 payment system that enables fast, low cost Bitcoin transactions through off chain payment channels.
Lightning offer
A reusable Lightning payment request.
Lightning routing
Passing a payment through connected Lightning channels.
Lightweight Node
A Bitcoin client that only stores a limited amount of data from the blockchain, rather than the full chain.
Liquid
A Bitcoin sidechain.
Liquidity
Access to funds that can be used quickly.
Liquidity risk
The danger that funds will not be available when needed.
Maximum supply
The greatest total amount of bitcoin the rules allow.
Medium of exchange
Something people accept in payment for goods and services.
Mediums of exchange
Objects or systems that are widely accepted in exchange for goods and services.
Mempool
The collection of valid but unconfirmed transactions waiting to be included in a block.
Merkle Tree
A tree-like data structure used in the Bitcoin blockchain to efficiently verify the integrity of large sets of data.
Miner
A participant that builds candidate blocks and performs proof-of-work computation.
Mining
The process by which miners use computational power and energy to validate transactions and add new blocks to the blockchain.
Mining Pool
A group of miners who work together to increase their chances of finding new blocks and earning bitcoin.
Monetary and Fiscal Policy
The policies of a central bank and government, respectively, that influence the money supply and interest rates in an economy.
Monetary expansion
An increase in the amount of money or credit in circulation.
Money supply
The total amount of money in circulation in an economy.
Multisignature (Multisig)
A wallet setup that requires more than one private key to authorize a Bitcoin transaction.
Network
A group of interconnected entities.
Network effect
A situation in which something becomes more useful as more people use it.
Network tag
A label identifying the intended payment network.
Nixon Shock
The 1971 U.S. decision that ended international dollar-to-gold convertibility.
Node
A computer running Bitcoin software that verifies and relays transactions and blocks.
Node Network
A network of connected computers or devices that support and maintain the Bitcoin network.
Nonce
A number that miners repeatedly change in the block header to produce a hash that meets the required difficulty target.
Off-ramp
A way to move value from bitcoin into local money, goods, or services.
On-chain payment
A payment recorded directly in Bitcoin’s blockchain.
On-ramp
A way to move value into bitcoin.
Open Source
Software whose source code is publicly available for anyone to inspect, use, and improve. Bitcoin is open source.
Open-source software
Software whose source code can be publicly inspected, used, shared, and improved.
Opportunity cost
The best alternative given up when a choice is made.
Orphan Block
A block that is not included in the main chain of the blockchain due to being invalidated by a longer competing chain.
Paper claim
A paper record representing a claim on an issuer for a stated asset or amount.
Paper Wallet
A printed copy of a user’s private and public keys used for storing and managing cryptocurrency offline.
Payment channel
A mechanism for updating payments off-chain.
Payment destination
The receiving information to which funds are directed.
Peer to Peer (P2P)
A system in which participants interact directly without intermediaries.
Peer-to-peer network
A network in which independent computers communicate directly rather than through one central server.
Peg
A fixed exchange rate between two currencies, where one is pegged to the value of another.
Permissionless
A system that anyone can access and use without needing approval.
Person-to-person transaction
A payment made directly from one participant to another.
Portability
The ease of moving or transferring money from one person or place to another.
Price
The amount exchanged for a good, service, or asset.
Price inflation
A sustained increase in the general price level of goods and services.
Private Key
A secret piece of information that allows a user to sign transactions and control their bitcoin.
Project continuity
The likelihood that wallet software will remain maintained and usable.
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.
Public Ledger
A decentralized database that keeps a public record of all transactions on the Bitcoin network.
Purchasing Power
The ability of money to buy goods and services.
Qualified borrower
A borrower who meets a lender’s standards for a loan.
Recognizability
How easily people can identify a form of money and recognize authentic or equivalent units.
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.
Representative paper
Paper that can be redeemed for a stated amount of an asset, historically often metal.
Reserve Ratio
The proportion of deposits that a bank must hold as reserves.
Restrictive banking
Restrictions or limitations on banking services or access to banking services.
Restructuring
Changing debts, ownership, or operations to help an institution continue or resolve failure.
Reusable proof of work
An early proposal for transferring scarce digital value without relying on one central database.
Sat interchangeability
Whether equal sats are treated as equivalent in use; it is an application of fungibility.
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.
Satoshis per byte (sat/b)
A unit used to measure the amount of bitcoin transaction fee paid per byte of transaction data.
Scarcity
Limited supply. Bitcoin’s scarcity is enforced by code and capped at 21 million.
Secondary effects
Later indirect effects caused by an initial economic change.
SegWit (Segregated Witness)
A Bitcoin protocol upgrade that changes the way data is stored on the blockchain, allowing for increased capacity and lower transaction fees.
Self Custody
Holding and controlling your own private keys rather than relying on a third party.
Shared funds
Funds controlled for more than one person under agreed rules.
Single-signature
A spending arrangement in which one key authorizes a transaction.
Soft Fork
A change to the Bitcoin protocol that is backward-compatible with older versions of the software.
Solvency
Having assets sufficient to cover obligations.
Solvency risk
The danger that an institution’s assets will not cover what it owes.
Sound money
A judgment for money whose supply is difficult to expand and whose properties support reliable use over time.
Sovereignty
The ability of an individual to fully control their money without dependence on intermediaries.
Standard coins
Metal coins made to a recognized weight and value by an authority.
Store of value
A way of carrying purchasing power from the present into the future.
Subjective value
The idea that value depends on a person’s needs, preferences, information, and circumstances.
Supply and Demand
The economic principle that the price of a good or service is determined by the interaction of the quantity of the good or service that is supplied and the quantity that is demanded.
Target
The threshold that a proof-of-work result must satisfy.
Time preference
How strongly someone prefers value now rather than later.
Time Value of Money
The principle that money is worth more in the present than in the future.
Timestamp
A record embedded in each block that shows when it was created.
Too big to fail
The view that an institution is so important that authorities may intervene to prevent its disorderly failure.
Trade-off
A choice that gains one benefit while accepting a cost or giving up another benefit.
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.
Transaction ID
a string of numbers and letters that shows the details of a bitcoin transfer (such as the amount sent, the addresses of the sender and recipient, and the date of the transfer) on the Bitcoin blockchain.
Trust Minimization
Reducing reliance on third parties by enabling independent verification of rules and transactions.
Trustless
A system or transaction that does not require trust in any third party or intermediary, instead relying on the security and transparency of the underlying technology.
Two-Factor Authentication (2FA)
A security measure that requires two methods of authentication, typically a password and a separate code or device, to access an account or complete a transaction.
Unbanked
Individuals or communities without access to traditional banking services.
Unit of Account
A standard unit of measurement used to express the value of goods and services.
Unspent Transaction Output (UTXO)
A unit of bitcoin that has been received but not yet spent, representing spendable balance within the Bitcoin system.
Valid chain
A chain of blocks that follows Bitcoin’s rules.
Valid result
A proof-of-work result that satisfies the target.
Validating node
A node that independently checks Bitcoin’s rules.
Value
The usefulness or importance of something to a person.
Verifiability
The ability to check that money is genuine or that a transaction follows the rules.
Verification
The process of independently checking that transactions and blocks follow Bitcoin’s consensus rules.
Volatility
The degree of variation in the price of an asset over time.
Wallet
Software or hardware that stores private keys and allows users to send and receive bitcoin.
Wallet Address
A unique identifier used to send and receive bitcoin on the Bitcoin network, typically represented as a string of letters and numbers.
Wallet Backup
A copy of the private keys and recovery phrase/seed keywords of a Bitcoin wallet, which can be used to restore access to the wallet in case the original is lost or stolen.
Wallet compatibility
The ability of a wallet, backup, address, or network to work with another system.
Whitepaper
a report that explains the problem and solution that a blockchain project or cryptocurrency is trying to address.