BITCOIN GLOSSARY
Bitcoin can be… different. So we’ve built an extensive Bitcoin Glossary to help guide you
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21 Million
21 Million refers to the number of bitcoins that will ever be minted which is just under 21 million.
Bitcoin’s monetary policy is set in its code base, these rules cannot be changed without a majority of the network agreeing to download and run any new code. Therefor, it’s very unlikely that this majority would accept and run a version of Bitcoin Core that expands the number of bitcoins the network accepts.
This is because the more bitcoins there are, the more diluted everyone’s existing bitcoins will become. This is why many are certain that there will only ever be 21 million bitcoins.
Two Factor Authentication (2FA)
Two Factor Authentication refers to a security method which enforces a secondary password or pass code for you to access your data. 2FA usually takes the form of either an SMS code that is sent to your phone or the much more secure Authentication App.
These apps generate a pass code every 1 minute or so and this needs to be entered in after your usual password. This allows for more security seeing as even if your password is compromised, the attacker still cannot gain access to your data without your phone or the SMS one time code.
51% Attack
A 51% Attack is a special kind of attack on a cryptocurrency blockchain by miners that control more than 50% of the network’s hash rate. When a group of miners has in their control more than 50% of the hash rate, they have the power to alter the blockchain in any way they see fit.
They can reorganise the order of the blocks, they can prevent transactions from being included in new blocks and even completely reverse already confirmed transactions. This last one is particularly bad as it would also allow them to double-spend those bitcoins.
The larger the cryptocurrencies hash rate is, the more secure it is because it means it would take more and more resources to attempt a 51% Attack. While this type of attack isn’t feasible anymore due to how big Bitcoin’s hash rate is, it’s a big risk when assessing smaller cryptocurrencies.
A
Airdrop
No this isn’t referring to the Apple AirDrop feature. In crypto an Airdrop refers to a marketing strategy where a cryptocurrency will distribute or “drop” tokens to users for free.
This is usually done by cryptocurrencies that are new and helps both fairly distribute the tokens as well as drum up new business (as everyone loves free stuff). While some are legitimate, many are fraudulent and even result in unsuspecting users having their personal funds stolen.
All Time High (ATH)
This refers to the highest value a cryptocurrency token has ever been priced at in fiat terms, usually in USD
Altcoin
Shortly after Bitcoin was first released, people began to copy the idea but with different (or alternative) coins. This led to the term alt-coin and refers to any cryptocurrency that is not Bitcoin. See also Shitcoin
Alpha
Alpha (α) is a term used in investing to describe the edge a certain strategy, investor or day trader has over a more normal market return from say, the S&P 500. Also called abnormal rate of return or excess return, it’s often used in conjunction with beta (β) which measures the general markets volatility.
While these terms are not strictly related in any way to cryptocurrencies or Bitcoin, they are investing and financial terms and so are often spoken about when investing or day trading with crypto assets.
Anti-Money Laundering (AML)
Anti-Money Laundering (AML) is often mentioned in conjunction with Know Your Customer (KYC) and refers to the rules enforced by the Financial Industry Regulation Authority (FINRA). These rules stem from the Bank Secrecy Act and are supposed to help detect and report suspicious activity including the predicate offences to money laundering and terrorist financing, such as securities fraud and market manipulation.
Many Centralised Exchanges (CEX) are mandated to comply with these AML/KYC laws and as a result, they will only do business or buy/sell crypto assets with you after you’ve fully verified your identity, often with extremely privacy invasive information requests such as your name, address, DOB, photo ID, drivers license, passport and more.
While verifying someone isn’t itself inherently bad, the knock on effects of AML/KYC laws have resulted in vast honey pots of extremely private and valuable data on millions or hundreds of millions of citizens. These treasure troves of data are prime targets for hackers and as a result, many large companies get hacked every year with the customers ultimately being the ones that suffer.
If your private verification data is stolen, it can result in physical harm and phishing / malware attacks. It’s particularly bad when applied to Centralised Exchanges (CEX) as the hackers get information both on where you live as well as how much funds you own.
Apeing
Coined around 2020 when many new token projects were being launched, apeing refers to when a trader buys a token shortly after the projects launch without doing any research or due diligence. As this is a generally stupid thing to do when investing, the comparison to a low IQ ape was given to this approach
Application-Specific Integrated Circuit (ASIC)
An ASIC is any computer hardware that has been specifically designed from the ground up to do one task, and only one task. While a CPU or GPU are mostly built to perform general compute tasks, an ASIC is built to do only one thing.
The benefit of this is that it will do that one thing incredibly fast and be very power efficient. The drawbacks are, obviously, that it can’t be used to do anything else and that the development costs for the hardware are very high. In the context of Bitcoin, ASICs are most often referred to as the hardware that’s used to perform Bitcoin Mining.
While mining started on CPUs and then moved to GPUs over the years, it’s now exclusively done on ASICs as it’s the most efficient and fastest. These mining computers are built to do one thing, perform SHA-256 hashes which is core to solving the Proof-of-Work (PoW) problem. Some popular Bitcoin mining ASICs include the Bitmain Bitcoin Miner S19j Pro+
Ask Price
Also called the offer price, offer or asking price is the price per unit that the seller is willing to accept when making a trade (usually denominated in fiat). For example, if you wish to buy bitcoins, a seller may have an ask price of $30,000 per bitcoin
Assets Under Management (AUM)
This refers to the total market value of all the financial assets that an individual, company or decentralised network protocol manages
B
Bag Holder
Banana Bread
Basis Of Lightning Technology (BOLT)
Bearish
Bear Market
Bear Trap
Bech32
Bech32m
Bid-Ask Spread
Bid Price
Bitcoin Improvement Proposal (BIP)
BIP 125 (Replace-by-Fee)
BIP 16 (P2SH)
BIP 174 (PSBT)
BIP 32 (Hierarchical Deterministic Wallets)
BIP 340 (Schnorr Signatures)
BIP 341 (Taproot)
BIP 342 (Tapscript)
BIP 39 (Mnemonic Phrases)
BIP 44 (Derivation Paths for P2PKH)
BIP 49 (Derivation Paths for Wrapped Segwit)
BIP 8 (Soft Fork Activation)
BIP 84 (Derivation Paths for Native Segwit)
BIP 9 (Soft Fork Activation)
Bitcoin
So what exactly is Bitcoin? Bitcoin is the first and most globally recognised cryptocurrency. It is a free, fully open source, decentralised and entirely digital currency for all.
OK explain Bitcoin to me like I’m 5: Bitcoin is online money that enables instant payments. Free for anyone, anywhere in the world to use at any time. It uses peer-to-peer technology (like torrents) and can be used without any permission from a government or central authority. It cannot be stopped or censored. Its rules cannot be changed, no matter how rich or powerful a country or person is.
Created by cryptographers (Cypherpunks technically) to cure the money problems caused by big governments and big banks it joins their other world changing technologies such as encryption of the Internet, encrypted messaging and the Tor project.
Bitcoin Core
Bitcoin Core is the software that runs the Bitcoin Network. The Bitcoin Network is simply a group of computers (or nodes) that are all connected up to each via the Internet and run the same code, which is Bitcoin Core.
Bitcoin Core is hosted on GitHub and developers from all around the world freely contribute to its design. Bitcoin Core not only handles all the networks rules, but can be used a Bitcoin Wallet to send, receive and store bitcoins.
It’s also what’s run on all Bitcoin Mining machines and you can even enable the mining feature on your own laptop or computer. Due to the huge hash rate of the Bitcoin Network though, mining on regular computers is no longer profitable. You need specialised ASICs to do this now.
Bitcoin Whitepaper
The Bitcoin Whitepaper is the original document that the pseudonymous inventor of Bitcoin posted it on the 31st of October, 2008. It’s only 9 pages long and has 8 references in it. It outlines how the network works as well as the Proof-of-Work mechanism and its Difficulty Adjustment changes as well.
It also describes exactly what problem Bitcoin solves (the removal of trusted third parties) and has been translated into dozens of languages and is hosted by tens of thousands of people. While it does have some moderate level mathematics included in it, it’s well worth a read and is easily understandable, even for Bitcoin Beginners
Block
In the context of cryptocurrencies, a Block is a group of transactions that have been bundled together and mined into a Blockchain. Each block will contain a certain number of transactions as well as cryptographic hashes that link it to the block before it.
Blockchain
A Blockchain is a group of Blocks that are “chained” together via cryptographic hashes. Also called a Ledger or Distributed Ledger it essentially forms a big database or file that is constantly updated to show who owns what tokens of the network. For example it might say “Bill owns 1 bitcoin”.
Block Explorer
A Block Explorer is exactly what it sounds like, a program or website that allows you to explore the various Blocks in a Blockchain. They allow you to view and track transactions, addresses, fees and more.
Block Header
Block Height
The Block Height is the current total number of blocks in that Blockchain. For example Bitcoin’s Block Height is approaching 800,000 as of 2023.
Block Reward
The Block Reward is the combined sum of the fees paid by all the transactions that’s included in the block together with the Block Subsidy (new bitcoins minted in each block).
Block Size
Block Subsidy
The Block Subsidy is the amount of new bitcoins minted for each new block that’s mined. This new bitcoin, combined with all the fees from each of the transactions in the block, form the overall Block Reward.
Block Weight
Brute Force Attack
Brain Wallet
BTC
The ticker symbol and official unit for Bitcoin. Just like you might write $10 USD, you write it as 10 BTC.
Bubble
Bullish
Bull Market
Bull Trap
Buy Wall
Buy The Fucking Dip (BTFD)
Internet and finance speak for buying an asset when it’s going through a temporary or even long term bear market. By buying when the price is low (dipped) you can get better returns if it starts to go back up again.
Byzantine Fault Tolerance (BFT)
Byzantine Generals Problem
C
Cantillon Effect
Capital Controls
Capital Gains
Capital Losses
Censorship Resistance
Chain Analysis
Circulating Supply
Cloud Mining
Coin Selection
Coinbase Transaction
CoinJoin
CoinSwap
Coin Age
Cold Wallet
Collateral
Common Input Ownership Heuristic
Confirmation
Consensus
Consumer Price Index (CPI)
Contango
Correlation
Cost Basis
Cost of Capital
Counterparty Risk
Cryptography
Custodial
Cypherpunk
Crypto
D
Debasement
Debt
Decentralised
Decentralised Apps (dApps)
Decentralised Autonomous Organisation (DAO)
Decentralised Exchange (DEX)
Decentralised Ledger
Deflation
Degen
Delta
Derivation Path
Diamond Hands
Difficulty
Discreet Log Contract (DLC)
Discrete Log Problem (DLP)
Diversification
Dividend
Do Your Own Research (DYOR)
Dollar Cost Averaging (DCA)
Don’t Trust, Verify
Don’t Trust, Verify is a saying that reflects Bitcoins value to not trust third parties. Rather than having to trust a third party that the monetary network is secure and honest, Bitcoin allows anyone to mathematically verify for themselves using a Full Bitcoin Node.
This notion, that you don’t have to trust and can instead verify, is what’s being referenced to when someone says this phrase. Beyond the Bitcoin network, it has also now become a common phrase used by many in crypto when referring to many different things including the software for wallets or even hardware.
Similar to the scientific method, it allows for an open and transparent viewing of all the data and method so that everyone can verify what work has been done and repeat it themselves if desired.
Double Spend
Durability
Dust (Dust Attack)
Dynamic Denial of Service (DDoS)
E
Elliptic Curve Digital Signature Algorithm (ECDSA)
Eclipse Attack
Encryption
End-to-End Encryption (E2EE)
Equity
ERC-20
Erlay
Escrow
European Central Bank (ECB)
Exchange
Exchange Traded Fund (ETF)
Executive Order 6102
Extended Private Key (xPrv)
Extended Public Key (xPub)
F
Fear Of Missing Out (FOMO)
Fear, Uncertainty, Doubt (FUD)
Faucet
Federal Deposit Insurance Corporation (FDIC)
Federal Open Market Committee (FOMC)
Federal Reserve (Fed)
Fee
Few
Fiat
Financial Crimes Enforcement Network (FinCEN)
Fisher Effect
Fixed Cost
Float
Foreign Exchange Risk
Fork
Forward Contract
Ractional Reserve Banking
Fungibility
Futures Contract
G
Game Theory
Gamma
Gas
Generator Point
Genesis Block
Grifter
Glass-Steagall Act
Graphical User Interface (GUI)
Graphics Processing Unit (GPU)
Green Candle
Gresham’s Law
Gross Domestic Product
Gwei
H
Halving
Hard Cap
Hard Fork
Hard Money
Hardware Wallet
Hash Function
Hash Power
Hash Rate
Hashed Time Locked Contract (HTLC)
Have Fun Staying Poor (HFSP)
Hedge Position
Hierarchical Deterministic (HD) Wallet
HODL
Hopium
Hot Wallet
Howey Test
Hyperinflation
Hyperbitcoinization
I
Immutability
Index Price
Inflation
Inflation Hedge
Initial Block Download
Instamine
IPFS
J
Just a Bunch Of Keys (JBOK)
K
Key Manager (see Hardware Wallet)
Key Send
Know Your Customer (KYC)
L
LARPer
Layer
Layer 1
Layer 2
Lazer Eyes
Ledger
Leverage
Light Client
Lightning Channel
Lightning Invoice
Lightning Network
Lightning Network Penalty
Liquid Network
Liquidity
Liquidity Provider
M
M-of-N
Mainnet
Maker
Market Capitalisation
Market Depth
Market Maker
Medium Of Exchange
Mempool
Mempool Explorer
Merkelized Alternative Script Tree (MAST)
Merkle Root
Merkle Tree
Merkle-Sum Tree
Metcalfe’s Law
Miner
Miner-Activated Soft Fork (MASF)
Mining
Mining Pool
Minting
Mixers
Mnemonic Phrase
Monetary Base
Money Supply
Moon
Moonboys
Moores Law
Moscow Time
Moscow Time refers to a humorous event that happened back on the 25th of March 2021. Twitter CEO Jack Dorsey appeared on a video call with the House Committee in order to answer questions about the spread of misinformation on social platforms such as Twitter.
While he discussed the matter, viewers could see a strange clock in the background featuring the numbers 1952. As many of the viewers weren’t aware of what a Blockclock Mini is or its purpose, many assumed that it was a regular clock telling the time in 24 hour mode.
They assumed that 1952 meant 7:52PM and then further jumped to the inaccurate conclusion that he was in fact located in Moscow. In reality, the Blockclock Mini has many modes that it can be set to and in this instance, it was set to show sats per US dollar. It was indicating it took 1952 sats to buy $1 USD.
One of the main people that jumped to these conclusions was Chris Vickery, a cyber-intelligence professional. In subsequent Tweets he even claimed that Jack was blinking in Morse code to us making the mistake even funnier and viral.
Multi-Path Payment (MPP)
Multisig
MuSig
N
Negative Interest Rates
Never Going To Make It (NGMI)
Never Going to Make It / Never Gonna Make It is a quick, slang term that is usually directed at people that seemingly don’t understand or who just generally have the wrong attitude as deemed by the sender.
It could be because they don’t believe in Bitcoin in general or even some other topic entirely. Either way it’s used to stress that the other person just doesn’t get it and thus, will never be rich or successful.
“You’re NGMI!”
Neutrino
Non-Custodial
Number Go Up (NGU)
A term first used by Bitcoiners around 2017 but now used in many other cryptocurrencies as well, it refers to the ability that Bitcoin has to go up rapidly in fiat price terms.
The reference also usually includes that it’s a “technology” built into Bitcoin as part of the joke and it’s usually most commonly heard during Bitcoin bull runs. It’s also a major reason as to why many new people get into Bitcoin or crypto in general (for the NGU technology).
Nocoiner
Node
Non-Fungible Token (NFT)
Nonce
Normie
Noob (n00b)
O
Off-Chain
Office of Foreign Assets Control (OFAC)
On-Chain
Opcode
Open Source
Operating Expenditure
Options Contract
Oracle Problem
Order Book
Orphan Block
Over The Counter (OTC) Desk
P
Paper Hands
Paper Wallet
Partially Signed Bitcoin Transactions (PSBT)
Pay-to-Public-Key (P2PK)
Pay-to-Public-Key-Hash (P2PKH)
Pay-to-Script-Hash (P2SH)
Pay-to-Taproot (P2TR)
Pay-to-Witness-Public-Key-Hash (P2WPKH)
Pay-to-Witness-Script-Hash (P2WSH)
PayJoin (P2EP)
Payment Rail
Peer-to-Peer (P2P)
Peg
Pegged-to-Market Order
Penalty Transaction
Perpetual Swap
Phishing Attack
Physical Settlement
Pleb
Point Time Locked Contract (PTLC)
Portability
Preimage
Premine
Present Value
Price Discovery
Prime Broker
Principal
Principal Model
Private Key
Probate
Proof-of-Work (PoW)
Protocol
Pseudonym
Public Key
Pump And Dump
Put Option
Q
QR Code
Quantitative Easing (QE)
R
Recession
Red Candle
Redeem Script
Regtest
Rehypothecation
Rekt
Reorganisation
Replace-By-Fee (RBF)
Reserve Ratio
Risk Free Rate
Rug Pull Technology
S
SAFU
Satoshi (Sats)
The smallest value that the Bitcoin network supports sending is the Satoshi, one hundred-millionth (0.000 000 01) of a Bitcoin. In other words, the network does not support sending fractions of a Satoshi.
Since it is a hard limit, it seems natural to use it as a unit, though it currently has very little value. The plural of Satoshi is Satoshi: “Send me 100 Satoshi”. This base unit is named after the pseudonymous creator(s) of Bitcoin, Satoshi Nakamoto.
Special Note! Be aware that 1 BTC = 100 Million Sats, NOT 1,000 Million Sats! We’re used to things growing in groups of 3 (eg 1 -> 1,000 -> 1,000,000) but Bitcoin only splits into 8 decimal places not 9. So rather than there being 1,000 million there is only 100 million.
This is why some suggest we should move towards the Satcomma Standard where denominations would be written as ₿1.23,456,789. This allows the user to clearly see that there are 123 million Satoshi while at the same time also seeing that that is equal to 1.23 Bitcoins.
A common saying from many Bitcoiners is “let me pay in sats”. This refers to them wanting the business in question to accept bitcoins via the Lightning Network as it has many advantages over legacy payment rails such as a credit card.
For more information see: What Are The Units Of Bitcoin?
Satoshi Nakamoto
Scarcity
Schnorr Signature
Script Witness
Securities and Exchange Commission (SEC)
Seed
Segregated Witness (SegWit)
Sell Wall
Settlement
SHA-256
Sharpe Ratio
Shill
Shitcoin
Shortly after Bitcoin was first released, people began to copy the idea but with different (or alternative) coins. This led to the term Altcoin and refers to any cryptocurrency that is not Bitcoin. As time went on, most of these Altcoins ended up collapsing or being revealed as a scam, as such they are also now referred to as shitcoins
