Bitcoin Glossary

Address

A representation (e.g., bc1...) of a destination for Bitcoin payments, derived from public keys.

Also: addresses

BIP

Bitcoin Improvement Proposal—a standardized process to propose and document protocol changes.

Also: bips

Bitcoin

A decentralized digital currency that operates without a central authority, secured by a network of nodes and miners.

Block

A batch of transactions plus metadata (timestamp, previous hash, nonce, Merkle root) added to the blockchain.

Blockchain

An append-only ledger of blocks that contain transactions, linked together by cryptographic hashes.

Confirmation

Occurs when a transaction is included in a block; more confirmations mean stronger finality.

Consensus

Network-wide agreement on valid transactions/blocks, following rules enforced by nodes.

Difficulty

A parameter that adjusts every 2016 blocks to target ~10-minute block times regardless of total hashrate.

Fee

An amount paid to miners to include a transaction; higher fees generally confirm faster.

Also: fees

Fork

A change or divergence in network rules; can be a soft fork (backward compatible) or hard fork (incompatible).

Also: forks

Halving

An event roughly every 210,000 blocks that reduces the block subsidy by half.

Hash

A fixed-size output produced by a hash function; in Bitcoin, SHA-256 is used extensively to secure data.

HTLC

Hash Time-Locked Contract enabling atomic, trustless, time-bound payments—core to Lightning.

Also: htlcs

Lightning Network

A layer-2 network of payment channels enabling instant, low-fee Bitcoin transactions.

Also: lightning

Mempool

A node’s pool of unconfirmed transactions waiting to be included in a block.

Miner

A participant that expends energy to find a valid block hash and add new blocks, earning rewards and fees.

Multisig

A setup where M of N keys are required to spend, reducing single-key risk.

Also: multi-signature, multi sig

Node

Software that validates and relays transactions/blocks and enforces Bitcoin’s consensus rules.

Private Key

A secret number that controls spending of associated bitcoins; must be kept confidential.

Also: private keys

Proof of Work

A consensus mechanism where miners compete to find a valid hash, making attacks economically expensive.

Also: proof-of-work

Public Key

Derived from a private key; used to verify signatures and generate addresses.

Also: public keys

Satoshi

The smallest unit of Bitcoin; 1 BTC = 100,000,000 satoshis.

Also: sats, satoshi, satoshis

Schnorr Signatures

Signature scheme enabling aggregation and improved efficiency, introduced with Taproot.

Also: schnorr

Seed Phrase

A 12–24 word mnemonic that encodes your wallet’s master key for backup and recovery.

Also: recovery phrase, mnemonic

SegWit

A 2017 upgrade that separated signatures (witness data), increasing capacity and fixing malleability.

SHA-256

A cryptographic hash function producing a 256-bit output, used for mining and block hashing.

Also: sha 256, sha256

Sidechain

A separate blockchain pegged to Bitcoin that can experiment with different rules and features.

Also: sidechains

Taproot

A 2021 upgrade improving privacy, efficiency, and smart contract flexibility via Schnorr signatures and MAST.

UTXO

Unspent Transaction Output—the fundamental unit of value in Bitcoin, consumed fully when spent.

Also: utxos

Wallet

Software or hardware that manages private keys and constructs/sends transactions.