Look it up · Glossary
Bitcoin glossary from A to Z
Technical terms explained briefly and clearly. Every entry links to related articles and lists its sources.
124terms · Updated 28/09/2026
0–9
21 million (Bitcoin’s supply cap)Under the network’s rules, there will never be more than just under 21 million bitcoin. The cap follows from the issuance schedule: new bitcoin per block halve every 210,000 blocks until none are created, around 2140.
Also21M21 million bitcoinmoney supplymaximum supplysupply capMAX_MONEY
BasicsRead the full entry: 21 million (Bitcoin’s supply cap)
A
Air gapAn air-gapped signing device has no cable or wireless connection to other devices. Transactions travel back and forth by QR code or memory card – so the private key stays completely offline.
Alsoair-gappedairgapoffline signingair-gapped signingair-gapped signer
Wallets & securityRead the full entry: Air gap
All-time high (ATH)The highest price bitcoin has ever reached. As of September 2026, it dates from 6 October 2025: $124,728 (daily close).
AlsoATHrecord highpeak priceall time high
Money & economicsRead the full entry: All-time high (ATH)
AltcoinA collective term for all crypto-assets other than bitcoin. They differ greatly in purpose, technology and distribution of power – many have an issuer or were pre-allocated to founders and companies.
Alsoaltcoinsalternative cryptocurrencycrypto tokentoken
Money & economicsRead the full entry: Altcoin
AMLR (EU Anti-Money Laundering Regulation)An EU regulation against money laundering that applies from 10 July 2027. It bans anonymous accounts at banks and crypto service providers and caps cash payments in trade at €10,000. Self-custody of bitcoin remains permitted.
AlsoAnti-Money Laundering RegulationRegulation (EU) 2024/1624EU AML RegulationEU AML packagesingle rulebook
Tax & lawRead the full entry: AMLR (EU Anti-Money Laundering Regulation)
B
BaFin (Germany’s Federal Financial Supervisory Authority)Germany’s financial regulator, based in Bonn and Frankfurt am Main. In Germany, it is responsible for authorising and supervising crypto service providers under MiCA, and it warns about unauthorised offers.
AlsoFederal Financial Supervisory AuthorityBundesanstalt für FinanzdienstleistungsaufsichtGerman financial regulatorGerman financial supervisor
Tax & lawRead the full entry: BaFin (Germany’s Federal Financial Supervisory Authority)
BIP (Bitcoin Improvement Proposal)A publicly documented proposal for Bitcoin – for example for new rules, standards or processes. A BIP is not a decision: whether it gets used is up to users, wallets and node operators themselves.
AlsoBitcoin Improvement ProposalBIPsimprovement proposal
BasicsRead the full entry: BIP (Bitcoin Improvement Proposal)
BIP 39 (standard for seed words)The widely used standard that turns random data into 12 to 24 words from a fixed list of 2,048 words. Your wallet calculates all its keys from these words – BIP 39 is behind most seed phrases.
AlsoBIP39BIP-39mnemonic codeBIP 39 word listword list
Wallets & securityRead the full entry: BIP 39 (standard for seed words)
BitcoinDigital money without a central authority: thousands of independent computers check every transfer against the same open rules. The supply is permanently capped at just under 21 million BTC.
AlsoBTCXBT₿Bitcoin network
Bitcoin addressA string of characters like ‘bc1q…’ that someone can send bitcoin to. It is usually derived from a public key, can be shared without risk to your funds and should be generated afresh for every payment.
Alsoaddressreceiving addresswallet addressbc1 address
Wallets & securityRead the full entry: Bitcoin address
Bitcoin appA smartphone app you can use to buy, save and often also store bitcoin. The key difference: some apps hold the bitcoin for you, others give you your own keys from the start.
Alsocrypto appBitcoin-only appBitcoin savings appbuying app
Buying & tradingRead the full entry: Bitcoin app
Bitcoin ATM (crypto ATM)A machine where you exchange cash for bitcoin. In Germany, the operator needs a licence; BaFin, the German financial regulator, seized unlicensed machines in 2024. Scammers deliberately push victims to pay in at such machines.
Alsocrypto ATMBTMBitcoin cash machinecrypto kiosk
Buying & tradingRead the full entry: Bitcoin ATM (crypto ATM)
Bitcoin CoreThe most widely used software for Bitcoin nodes, a direct descendant of Satoshi Nakamoto’s first program. It is open source, verifies all blocks and transactions itself and includes a wallet.
AlsoCoreBitcoin-Qtbitcoindreference implementation
BlockA bundle of transactions added to the blockchain roughly every ten minutes on average. Each block refers to its predecessor by its hash and contains the reward for the miner.
AlsoBitcoin blockblock headerblock height
Block rewardWhat a miner receives for a valid block: newly created bitcoin (the subsidy) plus the fees of all transactions in the block. The subsidy halves every 210,000 blocks; on 20 April 2024 it fell to 3.125 BTC.
Alsoblock subsidysubsidymining rewardcoinbase transaction
TechnologyRead the full entry: Block reward
BlockchainBitcoin’s public ledger: a chain of blocks in which each block refers to its predecessor. Anyone wanting to change an old entry would have to recreate all the blocks that follow it.
Alsoblock chainchain of blockspublic ledger
Broker (crypto broker)A provider that sells you bitcoin or buys it from you at a displayed price, instead of letting you trade in the order book yourself. The costs usually come from the spread, a fee or both.
Alsocrypto brokerBitcoin brokerneobrokerinstant buy
Buying & tradingRead the full entry: Broker (crypto broker)
C
CASP (crypto-asset service provider)A company that professionally provides crypto-asset services to customers – such as trading, exchange, custody or transfers. In the EU, every CASP needs an authorisation under MiCA.
Alsocrypto-asset service providercrypto service providercrypto providerMiCA-licensed provider
Tax & lawRead the full entry: CASP (crypto-asset service provider)
CBDC (central bank digital currency)Digital money issued directly by a central bank – unlike bank balances, which are a claim against a commercial bank. 146 countries and currency areas are exploring a CBDC, but only three have launched one (as of May 2026).
AlsoCentral Bank Digital Currencycentral bank digital moneydigital central bank moneyretail CBDCe-CNY
Money & economicsRead the full entry: CBDC (central bank digital currency)
Cold storageStoring bitcoin in a way that keeps the private keys from ever touching the internet – for example on a hardware wallet or an offline device. It protects against online attacks, but requires a carefully kept backup.
Alsocold walletoffline storagecold custodydeep cold storage
Wallets & securityRead the full entry: Cold storage
ConfirmationA transaction has one confirmation as soon as it is in a block; each further block adds one. With every confirmation, it becomes harder to displace the payment after the fact.
Alsoconfirmationsconfsblock confirmation0-conf
TechnologyRead the full entry: Confirmation
Consensus (consensus rules)The agreement of all nodes on which blocks and transactions are valid and which chain counts. It rests on fixed consensus rules that every node checks for itself – no vote, no boardroom.
Alsoconsensus rulesNakamoto consensusconsensus mechanism
Cost averaging (DCA)If you regularly invest a fixed amount, you buy more when prices are low and less when they are high. With fluctuating prices, your average cost ends up below the average price – but that doesn’t mean a higher return than investing straight away.
Alsodollar-cost averagingeuro-cost averagingDCAaverage cost effect
Buying & tradingRead the full entry: Cost averaging (DCA)
CPFP (Child Pays for Parent)A way to speed up a stuck transaction: a follow-up transaction (the ‘child’) spends one of its outputs and pays a high fee. It then pays off for miners to include both transactions together.
AlsoChild Pays for Parentchild-pays-for-parent
Custodian (custodial)A provider such as an exchange or app that holds the private keys for you. Convenient, because support can help if you lose your password – but you don’t hold the bitcoin yourself and depend on the provider paying out.
Alsocustodial walletcrypto custodiancustody providercustodythird-party custody
Wallets & securityRead the full entry: Custodian (custodial)
D
DAC8 (EU reporting rules for crypto-assets)EU directive that has required crypto providers to report customer data and transactions to the tax authorities since 1 January 2026. In Germany, the KStTG implements it; the first report, for 2026, is due by 31 July 2027.
AlsoDAC8 directiveDirective (EU) 2023/2226KStTGCrypto-Asset Tax Transparency Actcrypto reporting obligation
Tax & lawRead the full entry: DAC8 (EU reporting rules for crypto-assets)
DecentralisationBitcoin has no headquarters that could change the rules, freeze accounts or print more money. Instead, tens of thousands of independent nodes around the world check for themselves that all the rules are followed.
Alsodecentralizationdecentraliseddecentralized
Deposit guarantee (deposit protection)Statutory protection for bank deposits: up to €100,000 per person and bank if the bank goes bust. It generally doesn’t cover bitcoin – and neither does investor compensation.
Alsodeposit protectiondeposit guarantee schemestatutory deposit insuranceEinSiGEinlagensicherung
Tax & lawRead the full entry: Deposit guarantee (deposit protection)
Derivation pathThe route a wallet follows to calculate individual keys from your seed phrase, for example m/84'/0'/0'. If another wallet uses a different path when you restore, it looks empty – even though nothing has been lost.
AlsoHD pathderivation schemeBIP 44 pathgap limit
Wallets & securityRead the full entry: Derivation path
Difficulty adjustmentEvery 2,016 blocks, each node recalculates the mining target so that on average a block is created roughly every ten minutes – regardless of how much computing power is currently at work in the network.
Alsodifficultymining difficultyretargetdifficulty retarget
Digital euroA planned digital form of euro cash, issued by the European Central Bank. A pilot is planned for 2027 and a first issuance is possible in 2029 – if the EU adopts the law in 2026 (as of September 2026).
Alsoe-eurodigital euro casheuro CBDC
Money & economicsRead the full entry: Digital euro
Drawdown (decline from the peak)The decline of a price from its last peak to the following low, as a percentage. Bitcoin has fallen by more than 75% several times; from October 2025 to June 2026, it fell by around 53% (in US dollars).
Alsomaximum drawdownmax drawdownprice crashpeak-to-trough decline
Money & economicsRead the full entry: Drawdown (decline from the peak)
DYOR (Do Your Own Research)Short for ‘Do Your Own Research’: check information yourself instead of blindly following tips. Meant seriously, it’s good advice – tacked onto promotions for dubious projects, it’s often just a phrase that shifts responsibility.
AlsoDo your own researchown research
Community slangRead the full entry: DYOR (Do Your Own Research)
E
ESMA (European Securities and Markets Authority)The EU authority for securities and financial markets, based in Paris. What matters to you is its MiCA register: it lists all crypto-asset service providers authorised in the EU.
AlsoEuropean Securities and Markets AuthorityESMA registerMiCA registerEU securities regulator
Tax & lawRead the full entry: ESMA (European Securities and Markets Authority)
ETN (Exchange Traded Note)An exchange-traded debt security whose value tracks an underlying asset such as bitcoin. Unlike an ETF, an ETN is not a separately protected pool of assets: if the issuer fails, you risk a loss despite the collateral.
AlsoExchange Traded NoteBitcoin ETNexchange-traded debt securitybearer bond
Buying & tradingRead the full entry: ETN (Exchange Traded Note)
ETP (Exchange Traded Product)Umbrella term for exchange-traded securities such as ETFs, ETCs and ETNs. With a Bitcoin ETP, you hold a security that tracks the price – but no bitcoin keys of your own.
AlsoExchange Traded Productexchange-traded productBitcoin ETPcrypto ETP
Buying & tradingRead the full entry: ETP (Exchange Traded Product)
Exchange (crypto exchange)A trading platform where buyers and sellers trade bitcoin with each other via an order book. The price results from supply and demand; fees usually follow the maker-taker model.
Alsocrypto exchangeBitcoin exchangetrading platformtrading venue
Buying & tradingRead the full entry: Exchange (crypto exchange)
Exemption limit (€1,000 Freigrenze)In Germany, gains from private disposal transactions stay tax-free if they total less than €1,000 in a calendar year. From €1,000, the entire gain is taxable.
AlsoFreigrenze€1,000 exemption limit€1,000 thresholdexemption limit § 23 EStG
Tax & lawRead the full entry: Exemption limit (€1,000 Freigrenze)
F
Fiat moneyMoney that isn’t backed by gold or other physical assets but rests on government decree and trust – such as the euro and the US dollar. Most of it is created by commercial banks, for example through loans.
Alsofiatfiat currencyunbacked moneypaper moneygovernment money
Money & economicsRead the full entry: Fiat money
FIFO (first in, first out)A tax ordering rule: in Germany, if you can’t prove which bitcoin you sold, the ones bought first count as sold first for the holding period – assessed per wallet.
AlsoFirst in, first outFIFO methodorder of disposalfirst bought, first sold
FOMO (fear of missing out)‘Fear of missing out’. With Bitcoin, it’s the urge to buy quickly after sharp price rises. FOMO is a common trigger for costly bad decisions.
Alsofear of missing outFOMO buying
Community slangRead the full entry: FOMO (fear of missing out)
Four-year cycle (halving cycle)An observed pattern in which the bitcoin price has risen sharply roughly in step with the halvings and then fallen steeply. It is based on only four runs and is not a reliable buy or sell signal.
Also4-year cyclehalving cycleBitcoin cyclemarket cyclefour year cycle
Money & economicsRead the full entry: Four-year cycle (halving cycle)
FTXA large crypto exchange that collapsed in November 2022. Around $8 billion in customer funds was missing, and founder Sam Bankman-Fried was sentenced to 25 years in prison. Customers got dollars back instead of their bitcoin.
AlsoFTX collapseFTX bankruptcyFTX TradingSam Bankman-Fried
Money & economicsRead the full entry: FTX
FUD (fear, uncertainty and doubt)Short for ‘fear, uncertainty and doubt’. It refers to news that stirs up sentiment against Bitcoin. Not every criticism is FUD – some warnings are justified.
Alsofear, uncertainty and doubtspreading FUD
Community slangRead the full entry: FUD (fear, uncertainty and doubt)
Full nodeA node that checks every block and every transaction itself against all the consensus rules. If you run a full node, you don’t have to trust anyone to know whether a payment is valid.
Alsofull-nodefully validating nodeyour own nodepruned node
G
Genesis blockThe very first block of the Bitcoin blockchain, created on 3 January 2009. It contains a newspaper headline about bank bailouts – and its reward of 50 BTC can never be spent, for technical reasons.
AlsoBlock 0first blockgenesis
H
HalvingEvery 210,000 blocks – roughly every four years – the number of new bitcoin per block is cut in half. The fourth halving, on 20 April 2024, reduced it from 6.25 to 3.125 BTC.
AlsoBitcoin halvinghalveninghalving event
Hard forkA change to the consensus rules that allows previously invalid blocks. Old nodes reject such blocks; if not everyone goes along, two permanently separate chains emerge – and with them a new, separate currency.
Alsohardforkhard-forkchain splitsplitreplay protection
TechnologyRead the full entry: Hard fork
Hardware walletA small dedicated device that keeps your private keys offline and signs transactions internally. The key never leaves the device, so malware on your computer can’t get at it.
Alsosigning devicehardware signercrypto hardware walletHW wallet
Wallets & securityRead the full entry: Hardware wallet
Hash (hash value)A fixed-length digital fingerprint that a hash function calculates from any data. Even the tiniest change produces a completely different value, and the original data can’t be worked out from the hash.
Alsohash valuehash functiondigestdigital fingerprint
TechnologyRead the full entry: Hash (hash value)
Hashrate (computing power)How many hash attempts per second a mining device or the whole network makes. The network hashrate shows how much computing work secures Bitcoin.
Alsohash ratehashing powercomputing powerhashes per secondEH/sTH/s
HODLCommunity slang for holding bitcoin for the long term, even when the price falls sharply. It began in 2013 with a typo (‘hodling’ instead of ‘holding’) in a forum post.
AlsohodlinghodlerHold On for Dear Life
Community slangRead the full entry: HODL
Holding period (speculation period)In Germany, the gain from selling privately held bitcoin is tax-free if more than one year passes between purchase and sale (§ 23 EStG, as of September 2026). Each purchase has its own holding period.
Alsospeculation periodone-year ruleone-year holding periodHaltefristSpekulationsfrist
Tax & lawRead the full entry: Holding period (speculation period)
Hot walletA wallet whose private keys are stored on a device connected to the internet – such as a smartphone app. Handy for payments and small amounts, but more exposed to online attacks than cold storage.
Alsoonline wallethot storage
Wallets & securityRead the full entry: Hot wallet
I
InflationA general rise in prices that makes money lose purchasing power. The ECB aims for 2% a year over the medium term for the euro area.
Alsorising pricescurrency debasementinflation rateloss of purchasing powerHICPconsumer price index
Money & economicsRead the full entry: Inflation
K
KMAG (German Crypto Markets Supervision Act)Germany’s act accompanying the EU’s MiCA regulation. It makes BaFin the competent supervisor, makes providing crypto services without authorisation a criminal offence and protects crypto-assets held in custody if the provider becomes insolvent.
AlsoCrypto Markets Supervision ActKryptomärkteaufsichtsgesetz§ 45 KMAGGerman MiCA implementation act
Tax & lawRead the full entry: KMAG (German Crypto Markets Supervision Act)
KYC (Know Your Customer)The obligation of regulated providers to identify you before the business relationship starts and to ask, for example, about its purpose and, where necessary, the source of your money. In Germany, the legal basis is the Money Laundering Act (GwG).
AlsoKnow Your Customercustomer identificationidentity checkverificationcustomer due diligence
Buying & tradingRead the full entry: KYC (Know Your Customer)
L
Lightning NetworkA second layer on top of Bitcoin for fast, low-cost payments. Amounts move off the blockchain via payment channels; only opening and closing a channel ends up in a block as a normal transaction.
AlsoLightningLNlayer 2second layerLightning invoice
TechnologyRead the full entry: Lightning Network
Limit orderA buy or sell order with a price limit: it is only executed at your price or better. That secures the price, but not the execution – the market may never get there.
Alsolimitlimit buylimit sell
Buying & tradingRead the full entry: Limit order
M
Maker and taker feesA fee model used by exchanges: whoever places an order in the order book and so provides liquidity (maker) usually pays less than someone who immediately accepts an existing order (taker).
Alsomaker-taker modelmaker feetaker feemakertaker
Buying & tradingRead the full entry: Maker and taker fees
Market capitalisation (market cap)Circulating supply multiplied by the current price. The figure shows the order of magnitude – not how much money has actually been invested or would come out if everything were sold.
Alsomarket capmarketcapmarket valuemarket capitalization
Money & economicsRead the full entry: Market capitalisation (market cap)
Market orderAn order that is executed immediately at the best available price in the order book. You get speed but no price guarantee: with large amounts, the price can differ from the last price shown.
Alsomarketmarket buymarket sellat-best order
Buying & tradingRead the full entry: Market order
MempoolThe buffer in which a node collects valid but still unconfirmed transactions until a miner includes them in a block. There is no central mempool – every node keeps its own.
Alsomemory poolqueueunconfirmed transactionstransaction queue
TechnologyRead the full entry: Mempool
Metal backupA backup of your seed phrase on steel or titanium – punched, engraved or made with letter tiles. Unlike paper, it survives fire and water. Independent tests show that simple stainless steel plates are robust and often the cheapest.
Alsometal seed backupsteel plateseed platemetal seed storagesteel backup
Wallets & securityRead the full entry: Metal backup
MiCA (Markets in Crypto-Assets Regulation)The EU regulation on markets in crypto-assets. Since 30 December 2024, exchanges, brokers and custodians in the EU have needed authorisation; the last transitional period ended on 1 July 2026. MiCA regulates providers, not Bitcoin itself.
AlsoMiCARMiCA regulationRegulation (EU) 2023/1114Markets in Crypto-Assets Regulation
Tax & lawRead the full entry: MiCA (Markets in Crypto-Assets Regulation)
MiningThe process in which specialised computers create new blocks using proof of work. In doing so, miners confirm transactions and are rewarded with newly created bitcoin plus the fees of the transactions in the block.
AlsoBitcoin miningminerto mine
TechnologyRead the full entry: Mining
Mining poolA group of miners who combine their computing power and share the block reward according to the work each contributes. This means even small miners receive small amounts regularly instead of a large one very rarely.
Alsopoolpool miningshares
TechnologyRead the full entry: Mining pool
Mt. GoxA Japanese Bitcoin exchange that collapsed in February 2014. Around 850,000 BTC were missing; just under 200,000 turned up again. Since July 2024, the trustee has also been repaying creditors in bitcoin; the current deadline is 31 October 2026.
AlsoMtGoxMt.GoxMount GoxMt. Gox collapse
Money & economicsRead the full entry: Mt. Gox
Multisig (multi-signature)A wallet in which several keys jointly control the bitcoin – for example 2 of 3. If one key is lost or stolen, the bitcoin stays safe. In return, setting it up and backing it up is considerably more demanding.
Alsomulti-signaturemultisignaturemulti-sigm-of-n2-of-3
Wallets & securityRead the full entry: Multisig (multi-signature)
N
NodeA computer that runs Bitcoin software and exchanges transactions and blocks with other nodes. Together, the nodes form the Bitcoin network; full nodes check every rule themselves.
AlsoBitcoin nodenetwork nodenodes
NonceA 4-byte number in the block header that miners change over and over during proof of work until the hash of the block header is less than or equal to the target. Each new value is a new attempt.
Alsonumber used oncenonce fieldextra nonce
TechnologyRead the full entry: Nonce
Not your keys, not your coinsA guiding principle of the Bitcoin community: if you don’t hold the private keys yourself, you don’t own your bitcoin directly – you only have a claim against the custodian. Exchange collapses such as Mt. Gox and FTX show why.
AlsoNot your keys, not your bitcoinNYKNYC
Community slangRead the full entry: Not your keys, not your coins
O
OP_RETURNA command in Bitcoin’s scripting language that marks a transaction output as provably unspendable. It lets data be written into the blockchain. How much of it nodes should relay has been hotly disputed since 2025.
AlsoOP_RETURN outputnull data outputdata outputdatacarrierdatacarriersize
TechnologyRead the full entry: OP_RETURN
Orange pillCommunity slang for convincing someone of Bitcoin – or for ‘waking up’ yourself and understanding Bitcoin. The colour stands for Bitcoin orange; the image comes from the red pill in the film ‘The Matrix’ (1999).
Alsoorange-pillingorange-pilledorangepilledto orange-pill someone
Community slangRead the full entry: Orange pill
Order bookA list of all open buy and sell orders for a trading pair such as BTC/USD, sorted by price. The price forms between the highest bid and the lowest ask.
Alsoorderbookmarket depthbid and askdepth of market
Buying & tradingRead the full entry: Order book
Ordinals (inscriptions)A protocol that numbers individual satoshis and links them to content such as images or text (‘inscriptions’). Usable by anyone since January 2023; the data sits in Taproot scripts in the blockchain. Its usefulness is disputed.
AlsoOrdinal TheoryinscriptionsBitcoin NFTs
P
P2P trading (peer-to-peer trading)Buying or selling bitcoin directly between private individuals, often via software that locks the bitcoin in an escrow address until the payment arrives. More privacy, but more effort and scam risks of its own.
Alsopeer-to-peer tradingP2PP2P exchangeBitcoin without KYCdecentralised exchange
Buying & tradingRead the full entry: P2P trading (peer-to-peer trading)
Passphrase (the ‘25th word’)An extra word of your choice added to your seed phrase. The same words then produce a completely different wallet. This protects you if someone finds your words – but if you forget the passphrase, access is lost for good.
AlsoBIP 39 passphrase25th word13th wordseed passphraseseed extensionhidden wallet
Wallets & securityRead the full entry: Passphrase (the ‘25th word’)
Payment channelA shared bitcoin pot between two parties, secured by a 2-of-2 multisig address. Within the channel, both shift balances by signing a new channel state, without writing every payment to the blockchain.
AlsoLightning channelchannelchannel capacity
TechnologyRead the full entry: Payment channel
Peer-to-peer (P2P)‘Between equals’: participants exchange data or money directly with one another, without a central intermediary. In Bitcoin, nodes pass transactions and blocks directly to each other.
AlsoP2Ppeer to peercomputer to computerperson to person
PhishingFraud using fake emails, text messages, websites or calls that look like genuine exchanges, wallet makers or banks. The goal is your passwords, 2FA codes – and above all your seed phrase.
Alsophishing emailsmishingfake websitevishingcredential phishing
Wallets & securityRead the full entry: Phishing
Private disposal transaction (privates Veräußerungsgeschäft)A German tax term from § 23 EStG: if you sell or swap privately held bitcoin within one year of buying them, the gain is taxable – unless all such gains in that year together stay below the €1,000 exemption limit.
AlsoPrivates Veräußerungsgeschäftspeculative transaction§ 23 EStGprivate disposal gaindisposal
Tax & lawRead the full entry: Private disposal transaction (privates Veräußerungsgeschäft)
Private keyA secret, randomly generated number that you use to sign transactions and so control your bitcoin. Anyone who knows the private key can spend the bitcoin that belongs to it – it must never fall into anyone else’s hands.
Alsoprivkeysecret keysigning key
Wallets & securityRead the full entry: Private key
Proof of workThe method by which miners prove that they have done real computing work for a new block. It lets the network agree on the valid chain without a central authority, and makes rewriting old blocks extremely expensive.
AlsoPoWproof-of-work
TechnologyRead the full entry: Proof of work
PSBT (partially signed Bitcoin transaction)A standard format for Bitcoin transactions that are not yet fully signed. It lets a wallet app, a hardware wallet and co-signers pass a payment between them without sharing private keys.
AlsoPartially Signed Bitcoin TransactionBIP 174BIP174.psbt file
Wallets & securityRead the full entry: PSBT (partially signed Bitcoin transaction)
Public keyCalculated from the private key and used to check your signatures. The calculation only works in one direction: the private key cannot be worked out from the public key.
Alsopubkeyverification key
Wallets & securityRead the full entry: Public key
R
RebalancingBringing your asset allocation back to its planned shares. If the bitcoin share has risen sharply, you sell some; if it has fallen, you top up. This keeps your risk within the limits you set yourself.
Alsoportfolio rebalancingreweightingrebalanceasset rebalancing
Money & economicsRead the full entry: Rebalancing
Replace-by-fee (RBF)A method of replacing a still-unconfirmed transaction with a new version that pays a higher fee. This lets you speed up a stuck payment, as long as it isn’t in a block yet.
AlsoRBFfull RBFopt-in RBFBIP 125bump feefee bumping
S
sat/vB (satoshis per virtual byte)Unit for the fee rate of a Bitcoin transaction: how many satoshis you pay per virtual byte of its size. The higher the rate, the sooner miners will include the transaction in a block.
Alsosat/vBsats/vBsatoshis per vbytefee ratevbytevirtual byte
TechnologyRead the full entry: sat/vB (satoshis per virtual byte)
Satoshi (sats)The smallest unit of Bitcoin: 1 satoshi (‘sat’ for short) equals 0.00000001 BTC, so one bitcoin consists of 100 million sats. The unit is named after Bitcoin’s creator, Satoshi Nakamoto.
Alsosatssatsatoshismillisatoshi
Satoshi NakamotoPseudonym of the person or group who invented Bitcoin. Satoshi published the whitepaper in 2008, launched the network in 2009 and withdrew in 2011. Who is behind the name remains unknown to this day.
AlsoSatoshiNakamotoinventor of Bitcoin
Savings plan (Bitcoin savings plan)Automatically buying bitcoin at fixed intervals with a fixed amount, for example $50 a month. A savings plan takes the question of the right moment off your hands, but doesn’t promise a higher return.
AlsoBitcoin savings planDCAdollar-cost averagingrecurring buyregular purchase
Buying & tradingRead the full entry: Savings plan (Bitcoin savings plan)
Schnorr signatureA digital signature scheme that Bitcoin introduced with Taproot in 2021, alongside ECDSA. Schnorr signatures are compact (64 bytes), provably secure and can be combined into a single joint signature.
AlsoSchnorr signaturesBIP 340MuSig2key aggregation
TechnologyRead the full entry: Schnorr signature
Secure element (security chip)A chip specially hardened against physical attacks, like the ones in bank cards and passports. In many hardware wallets it protects the PIN and secrets if the device falls into the wrong hands.
Alsosecurity chipsecure chipSE chiptamper-resistant chip
Wallets & securityRead the full entry: Secure element (security chip)
Seed phrase (recovery phrase)A sequence of usually 12 or 24 words from which your wallet derives all its private keys. Anyone who knows the words has full access to your bitcoin – so they belong in an offline backup and never in anyone else’s hands.
Alsorecovery phraserecovery seedmnemonicseedrecovery wordsbackup phrase
Wallets & securityRead the full entry: Seed phrase (recovery phrase)
SegWit (Segregated Witness)A 2017 soft fork that treats signature data (the ‘witness’) separately. It fixed transaction malleability, increased block capacity and makes payments with modern addresses (bc1q…) cheaper.
AlsoSegregated WitnessBIP 141native SegWitnested SegWitbc1qwitness
Self-custodyYou hold the private keys to your bitcoin yourself – in your own wallet rather than with a provider. Nobody can freeze your bitcoin. But nobody can help you if you lose your seed phrase and keys.
Alsoself-custodialnon-custodialself-hosted walletunhosted wallet
Wallets & securityRead the full entry: Self-custody
SEPA transferA standardised euro bank transfer within the European SEPA payment area. For buying bitcoin, it is usually the cheapest way to get money to the provider; as an instant transfer, it arrives within seconds.
AlsoSEPAbank transferinstant transferSEPA Instant Credit Transferinstant payment
Buying & tradingRead the full entry: SEPA transfer
SHA-256A standardised cryptographic hash function that calculates a 256-bit fingerprint from any data. Bitcoin uses it for mining and identifiers – and even hashes the block header twice in a row.
AlsoSHA256Secure Hash Algorithm 256SHA-256ddouble SHA-256
TechnologyRead the full entry: SHA-256
SIM swappingFraudsters get your mobile number transferred to their own SIM card and so receive your text-message codes. They use this to take over accounts that are only protected by SMS. Protection: 2FA via an app or security key instead of SMS.
AlsoSIM swapSIM swap fraudSIM hijackingnumber takeover
Wallets & securityRead the full entry: SIM swapping
Soft forkA change to the consensus rules that only tightens them. Blocks that follow the new rules remain valid for old nodes – so Bitcoin can be developed further without a chain split, as with SegWit and Taproot.
Alsosoftforksoft-forkbackward-compatible rule changeUASFuser-activated soft fork
TechnologyRead the full entry: Soft fork
Software walletA wallet in the form of an app on a smartphone or computer. It stores your keys on a device with internet access – convenient and usually without a purchase price, but more vulnerable than a hardware wallet. Good for smaller amounts and for practising.
Alsoapp walletmobile walletdesktop walletsmartphone walletphone wallet
Wallets & securityRead the full entry: Software wallet
Spot ETF (Bitcoin spot ETF)An exchange-traded fund that holds real bitcoin rather than futures contracts. Such funds have been approved in the US since January 2024. Retail investors in the EU generally can’t buy them and use ETPs instead.
AlsoBitcoin ETFspot Bitcoin ETFBitcoin spot ETFExchange Traded Fund
Buying & tradingRead the full entry: Spot ETF (Bitcoin spot ETF)
Spread (bid-ask spread)The difference between the buy and sell price. With many apps, the spread is the real fee – it just doesn’t appear as a separate item on your statement.
Alsobid-ask spreadbid-offer spreadtrading spreadprice mark-up
Buying & tradingRead the full entry: Spread (bid-ask spread)
StablecoinA crypto-asset whose value is meant to be pegged to a currency such as the US dollar or the euro. Unlike bitcoin, a stablecoin has an issuer – its value depends on the issuer keeping its reserves and remaining solvent.
Alsostable coine-money tokenEMTfiat-backed tokenprice-stable token
Money & economicsRead the full entry: Stablecoin
Stack satsCommunity slang for regularly accumulating small amounts of bitcoin, counted in satoshis (sats) – usually via a savings plan and regardless of the price. 1 BTC is 100 million sats.
Alsostacking satssat stackingstacker
Community slangRead the full entry: Stack sats
Stock-to-flow (S2F)A measure of scarcity: the existing stock divided by annual new production. A 2019 price model based on it became very popular, but was far off the mark and is no use for forecasts.
AlsoS2Fstock-to-flow modelS2F modelstock-to-flow ratio
Money & economicsRead the full entry: Stock-to-flow (S2F)
Store of valueOne of the three classic functions of money: it should keep its value over time so that you can save today and spend later. Whether bitcoin fulfils this role is disputed.
AlsoSoVvalue storestore of wealthstore-of-value asset
Money & economicsRead the full entry: Store of value
T
TaprootA soft fork from November 2021 that introduced Schnorr signatures and more flexible spending conditions. Complex arrangements such as multisig can look like a simple payment. Taproot addresses start with bc1p.
AlsoBIP 341P2TRPay-to-Taprootbc1pTaproot addressTapscript
TechnologyRead the full entry: Taproot
Testnet & SignetBitcoin test networks with their own worthless test coins, where you can try out wallets and transactions without real money. Modern addresses start with ‘tb1’ instead of ‘bc1’.
AlsoTestnetTestnet4SignetRegtesttest networktBTCtest bitcoin
Wallets & securityRead the full entry: Testnet & Signet
TimelockA condition under which bitcoin may only be spent from a certain block height or point in time, or after a waiting period. Timelocks are a building block for Lightning and for inheritance and emergency setups.
Alsotime locklocktimenLockTimeCLTVCheckLockTimeVerifyCSVCheckSequenceVerify
TechnologyRead the full entry: Timelock
TransactionA signed message that transfers bitcoin from existing outputs (UTXOs) to new outputs. It only counts as confirmed once it is in a block – and after that it can practically no longer be reversed.
AlsoBitcoin transactionTXTXIDtransfer
TechnologyRead the full entry: Transaction
Transaction fee (network fee)The amount a Bitcoin transaction pays to the miner. It depends on the transaction’s size in vbytes and the fee rate offered – not on the amount you send.
Alsonetwork feeminer feemining feefeeon-chain fee
TechnologyRead the full entry: Transaction fee (network fee)
Travel Rule (Transfer of Funds Regulation)An EU rule requiring crypto providers to send details of the sender and recipient with transfers. Since 30 December 2024, for more than €1,000 from or to your own wallet, the provider also checks that the address is yours.
AlsoTFRTransfer of Funds RegulationRegulation (EU) 2023/1113proof of wallet ownershipcrypto travel rule
Buying & tradingRead the full entry: Travel Rule (Transfer of Funds Regulation)
Two-factor authentication (2FA)Logging in with two independent proofs, such as a password plus a code from an authenticator app. For accounts with exchanges and Bitcoin apps, 2FA is a must – and SMS codes are the weakest option.
Also2FAtwo-step verificationMFAmulti-factor authenticationauthenticator appTOTPsecurity key
Wallets & securityRead the full entry: Two-factor authentication (2FA)
U
UTXO (Unspent Transaction Output)An output of an earlier transaction that hasn’t been spent yet – like a single banknote in your wallet. Bitcoin has no account balances: your balance is the sum of all the UTXOs you can spend with your keys.
Alsounspent transaction outputoutputcoincoin control
TechnologyRead the full entry: UTXO (Unspent Transaction Output)
V
Video identification (video ident)A process in which you identify yourself with your ID document via video chat instead of visiting a branch. Providers use it for the legally required KYC check; scammers abuse it to open accounts in other people’s names.
Alsovideo identVideoIdentvideo verificationonline identification
Buying & tradingRead the full entry: Video identification (video ident)
VolatilityA measure of how strongly a price fluctuates, usually given as annualised standard deviation in per cent. Bitcoin fluctuates much more than a broad stock index or gold – up and down.
Alsoprice swingsprice fluctuationvolannualised volatility
Money & economicsRead the full entry: Volatility
W
Wallet (Bitcoin wallet)Software or a device that manages your private keys, generates receiving addresses and signs transactions. The bitcoin itself isn’t in the wallet but on the blockchain – the wallet holds the access to it.
AlsoBitcoin walletcrypto walletwallet appdigital walletkeychain
Wallets & securityRead the full entry: Wallet (Bitcoin wallet)
WhaleCommunity term for holders with very large bitcoin holdings, often 1,000 BTC or more. Large purchases or sales can move the price. However, many ‘whale addresses’ belong to exchanges that hold the bitcoin of many customers.
AlsoBitcoin whalewhaleslarge holder
Community slangRead the full entry: Whale
Whitelist (address book)A list of withdrawal addresses that you have stored and confirmed with your provider in advance. When it’s active, withdrawals can only go to these addresses – effective protection if someone breaks into your account.
Alsoaddress whitelistwhitelistingaddress bookwithdrawal whitelistallowlist
Buying & tradingRead the full entry: Whitelist (address book)
Whitepaper (Bitcoin whitepaper)The nine-page founding document in which Satoshi Nakamoto introduced Bitcoin on 31 October 2008. It explains how payments can work without a bank and how double spending is prevented.
AlsoBitcoin whitepaperwhite paperBitcoin: A Peer-to-Peer Electronic Cash System
Wrench attack ($5 wrench attack)An attack using violence or threats instead of technology: criminals force Bitcoin owners to unlock their wallet or transfer bitcoin. The best protection is discretion – if nobody knows you own bitcoin, you are less likely to become a target.
Also$5 wrench attackrubber-hose attackphysical attackextortion of Bitcoin ownerscoercion attack
Wallets & securityRead the full entry: Wrench attack ($5 wrench attack)
X
xpub (extended public key)An extended public key from which all the addresses of a wallet account can be calculated. Nobody can spend bitcoin with it – but anyone who knows it can see your entire account history.
Alsoextended public keyzpubypubmaster public keywatch-only key
Wallets & securityRead the full entry: xpub (extended public key)
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