Bitcoin Glossary

Altcoin

Any cryptocurrency other than Bitcoin, often presenting themselves as better alternatives.

Altcoin Season

A period when alternative cryptocurrencies outperform Bitcoin, showing significant price increases.

Arbitrage

Buying and selling the same asset in different markets to profit from price differences.

ASIC (Application-Specific Integrated Circuit)

Also known as a miner. Hardware designed specifically for mining cryptocurrencies more efficiently than general-purpose CPUs or GPUs.

ATH (All-Time High)

The highest price ever reached by a cryptocurrency.

Atomic Swap

A technology that enables the exchange of one cryptocurrency for another without the need for a trusted third party.

Bear/Bearish

Expectation that a market will decline in value.

Bitcoin

The first decentralized digital currency, introduced in 2009 by an individual or group using the pseudonym Satoshi Nakamoto.

Bitcoin Season (Bitcoin Dominance)

When Bitcoin grows faster than other cryptocurrencies, attracting most of the investment and attention.

Blockchain

A distributed database or ledger that is shared among the nodes of a computer network, storing information electronically in digital format. Bitcoin’s transactions are recorded in blocks on this ledger.

Bollinger Band

A technical analysis tool defined by a set of lines plotted two standard deviations (positively and negatively) away from a simple moving average (SMA) of a security’s price.

Bridge

A connection that allows the transfer of tokens and/or data between two different blockchain ecosystems.

Bull/Bullish

Expectation that a market will rise in value.

Capital Growth

Increase in the value of an asset or investment over time.

CBDC (Central Bank Digital Currency)

A digital currency issued by a central bank, intended to complement or replace traditional fiat currency.

Central Ledger

A ledger maintained by a central agency or institution, unlike Bitcoin’s decentralized blockchain.

Centralized

Controlled by a single entity or group, in contrast to Bitcoin’s decentralized network.

Chain

Refers to the blockchain, the technology underlying Bitcoin, where blocks containing transaction data are linked together.

Chargebacks

The reversal of a transaction by a bank, not applicable in the Bitcoin network due to its irreversible transactions.

Code

The software that defines how Bitcoin operates and processes transactions.

Cold Storage

Storing cryptocurrency offline to secure it from hacking or theft.

Consensus

Agreement among network nodes on the validity of transactions, crucial for the integrity of the blockchain.

CPU (Central Processing Unit)

The primary component of a computer that performs most of the processing inside a computer. In the context of Bitcoin, CPUs were initially used for mining.

Crypto Currency

A digital or virtual currency that uses cryptography for security. Bitcoin is the first and most well-known cryptocurrency.

Crypto Fall (Autumn)

A cooling-off phase where the market stabilizes or corrects after the highs, leading to more cautious investment.

Crypto Spring

The recovery phase after a downturn, where prices start rising, confidence grows, and new projects emerge.

Crypto Summer

The peak period of market activity and optimism, with high prices and a surge of new investors.

Crypto Winter

A challenging period of market decline, with falling prices and decreased interest, but also a time for accumulation and preparation for future growth.

Cryptocurrency addresses

Alphanumeric strings that represent destinations for Bitcoin payments.

Cryptographic Hash Function

A mathematical algorithm that takes input data and produces a fixed-size string of bytes, used in Bitcoin’s blockchain to secure transactions.

DAO (Decentralized Autonomous Organization)

An organization represented by rules encoded as a computer program that is transparent, controlled by the organization members and not influenced by a central government. Bitcoin is considered a precursor to DAOs due to its decentralized nature.

Decentralized

Not controlled by any single entity or authority, a key characteristic of Bitcoin.

DeFi (Decentralized Finance)

Financial services, including lending, borrowing, and trading, built on blockchain technology that operate without central financial intermediaries.

DeFi Season

A time of heightened interest and investment in decentralized finance (DeFi) projects, leading to growth and innovation in financial services without central control.

Delegated Proof of Stake (DPoS)

A consensus mechanism where token holders vote for a select number of delegates who are responsible for validating transactions and securing the network.

DEX (Decentralized Exchange)

A type of cryptocurrency exchange that operates without a central authority, enabling direct peer-to-peer cryptocurrency transactions.

Digital

Bitcoin is a form of digital currency, existing only in electronic form.

Digital Signature

A cryptographic technique used to verify the authenticity and integrity of a message, software, or digital document. It’s a key component of Bitcoin transactions.

Distributed Ledger

A database that is consensually shared and synchronized across multiple sites, institutions, or geographies, accessible by multiple people. The Bitcoin blockchain is a type of distributed ledger.

EIP (Ethereum Improvement Proposal)

A standard for proposing improvements to the Ethereum network, detailing features, processes, or information affecting the Ethereum protocol.

Ethereum

A decentralized platform that enables smart contracts and decentralized applications (DApps) to be built and operated without any downtime, fraud, control, or interference. Although not Bitcoin, it’s a significant altcoin.

Exchange

A platform where cryptocurrencies, including Bitcoin, can be bought, sold, or traded.

FIAT

Government-issued currency not backed by a physical commodity. Bitcoin is often traded against fiat currencies.

Firewall

A network security system that monitors and controls incoming and outgoing network traffic based on predetermined security rules. While more of a general IT term, firewalls are relevant for securing Bitcoin wallets and exchanges.

Fiscal

Related to government revenue, especially taxes. Bitcoin has implications for fiscal policy, particularly in how gains are taxed.

Flash Loan

A type of uncollateralized lending that occurs within a single transaction or block on the blockchain.

FOMO (Fear of Missing Out)

Anxiety to buy a cryptocurrency (like Bitcoin) because of the belief that its price will rise, driven by hearing others’ success stories.

Fork

Changes in the protocol of the Bitcoin network that results in two separate versions of the blockchain, with a shared history up to the point of the fork. Can be “hard” or “soft.”

FUD (Fear, Uncertainty, and Doubt)

A strategy to influence perception by disseminating negative, misleading, or false information about Bitcoin.

Gas Fees

Fees paid to conduct transactions or execute smart contracts on blockchain networks like Ethereum.

Genesis Block

The first block in the Bitcoin blockchain, created by Satoshi Nakamoto in 2009.

Going long

Investing in Bitcoin with the expectation that its price will rise.

Going short

Selling Bitcoin with the plan to buy it back later at a lower price, expecting its price to fall.

Hacking

Unauthorized intrusion into a computer system or network. Bitcoin exchanges and wallets can be targets for hacking.

Halving

An event in some cryptocurrencies like Bitcoin that reduces the reward for mining new blocks by half, occurring approximately every four years.

Hard Fork

A type of fork that creates a permanent divergence from the previous version of the Bitcoin blockchain; requires all nodes to upgrade to the new protocol.

Hardware Wallet

A physical device that stores the private keys necessary to access Bitcoin funds in a secure offline environment.

Hash

A function that converts an input (or ‘message’) into a fixed-size string of bytes. The process of mining Bitcoin involves finding a hash below a target value.

Hashgraph

An alternative to blockchain for distributed ledger technology, not directly related to Bitcoin but relevant in the context of digital ledger technologies.

ICO (Initial Coin Offering)

A fundraising method that trades future crypto coins for cryptocurrencies of immediate, liquid value. Not directly related to Bitcoin but a significant concept in the crypto world.

Impermanent Loss

A temporary loss of funds experienced by liquidity providers in a decentralized exchange’s liquidity pool due to volatility in a trading pair.

Interoperability

The ability of different blockchain networks to communicate and interact with each other without intermediaries.

Investment

Allocating resources, usually money, with the expectation of generating an income or profit. Bitcoin has become a popular investment vehicle.

Key

In cryptography, a piece of information that determines the functional output of a cryptographic algorithm. In Bitcoin, keys are part of the mechanism that ensures transaction security.

KYC (Know Your Customer)

The process of a business verifying the identity of its clients, relevant in the context of Bitcoin exchanges and wallets to prevent money laundering and fraud.

Lambo

Slang in the cryptocurrency community for Lamborghini, an exotic car that traders may aspire to buy with their profits.

Layer 1

Refers to the base layer of a blockchain network, encompassing the underlying protocol itself.

Layer 2 Solutions

Technologies developed to improve the scalability and transaction throughput of blockchain networks by processing transactions off the main chain.

Limit order / limit buy / limit sell

Orders placed by traders to buy or sell Bitcoin at a specific price.

Liquidity Mining

A process in decentralized finance (DeFi) where users provide liquidity to a pool and earn rewards in the form of tokens.

Liquidity Pool

A collection of funds locked in a smart contract used to facilitate trading by providing liquidity in decentralized exchanges.

M1, M2, M3, M4

Measures of the money supply that include various components of currency in circulation and deposits. Not directly related to Bitcoin, but Bitcoin can be considered part of broader discussions on money supply and monetary policy.

MACD (Moving Average Convergence Divergence)

A trend-following momentum indicator used in technical analysis of Bitcoin and other financial markets.

Margin Trading

Borrowing funds to increase the size of a Bitcoin trade, which increases both potential profits and potential losses.

Market Cap

The total value of all mined Bitcoin, calculated by multiplying the current price by the total supply.

Market order / market buy / market sell

Orders to buy or sell Bitcoin immediately at the best available current price.

Merkle Root

A single hash that represents all the transactions in a block, part of Bitcoin’s block header.

Metaverse

A virtual universe that combines aspects of digital economies, online communities, and augmented reality.

Mining

The process of using computer hardware to do mathematical calculations for the Bitcoin network in order to confirm transactions and increase security. As a reward for their services, miners receive newly created Bitcoins and transaction fees.

Mooning

Slang for a rapid increase in the price of Bitcoin.

Multi-Signature

A security feature that allows a Bitcoin transaction to require multiple independent approvals before spending.

NFT (Non-Fungible Token)

A type of cryptographic token on a blockchain that represents a unique asset or piece of content.

NFT Season

A phase marked by a surge in popularity and value of non-fungible tokens (NFTs), drawing new participants and investment into the crypto space.

Node

A computer connected to the Bitcoin network that validates and relays transactions.

Non-Reversible Transactions

Bitcoin transactions cannot be reversed once they have been confirmed by the network, reducing the risk of fraud.

Open Source

The practice of making the source code of a software program, including Bitcoin, freely available for modification and distribution.

Oracles

External sources that provide data to smart contracts. Not directly related to Bitcoin, but relevant in the broader context of blockchain technology.

Peer to Peer

A decentralized network of individuals directly interacting without a central authority. Bitcoin transactions occur directly between users.

Privacy Coins

Cryptocurrencies that provide enhanced anonymity and privacy for their users.

Private Key

A secret number that allows Bitcoin to be spent. Each Bitcoin wallet contains at least one private key, which is saved in the wallet file.

Proof of Stake (PoS)

A consensus mechanism used by certain blockchains to achieve distributed consensus that involves validators who stake their cryptocurrency holdings to be chosen to validate transactions and create new blocks.

Proof of Work (PoW)

A consensus mechanism that requires a participant node to prove that work has been done to receive the right to add a new transaction to the blockchain. Bitcoin uses this system to confirm transactions and produce new blocks to the chain.

Public Key

A number associated with a private key, used to create Bitcoin addresses and receive funds.

Pump & Dump

A manipulation scheme involving the artificial inflation of the price of an asset (such as Bitcoin) through false and misleading positive statements, followed by a sell-off.

Rekt

A slang term used to describe a significant financial loss in the cryptocurrency market.

Reversible Transactions

Unlike Bitcoin transactions, traditional financial transactions, such as those made with credit cards or bank transfers, can often be reversed.

ROI (Return on Investment)

A measure used to evaluate the efficiency of an investment, such as Bitcoin, by comparing the amount of return to the original cost.

Rug Pull

A scam where developers abandon a project and run away with investors’ funds.

Satoshi (Sats)

The smallest unit of Bitcoin, equal to 100 millionth of a bitcoin (0.00000001 BTC). 1 BTC = 100 millions Sats

Satoshi Nakamoto

The pseudonymous person or group of people who created Bitcoin.

Script

A scripting language used to process transactions on the Bitcoin network.

Segwit (Segregated Witness)

An implemented protocol upgrade intended to provide protection from transaction malleability and increase block capacity on the Bitcoin network.

SHA-256

The cryptographic hash function used by Bitcoin.

Sharding

A proposed scaling solution for blockchains, dividing the network into smaller pieces or “shards” that can process transactions in parallel.

Sidechain

A separate blockchain that is attached to a parent blockchain using a two-way peg, allowing assets to be interoperable between the sidechain and the main chain.

Smart contract

Contracts whose terms are recorded in a computer language instead of legal language. Smart contracts can be executed by the blockchain automatically. While not a native feature of Bitcoin, they are a significant part of other blockchain technologies.

Soft Fork

A backward-compatible upgrade, adjustment, or change to the Bitcoin protocol that makes only previously valid blocks/transactions invalid.

Software Wallet

A Bitcoin wallet that exists as software on a computer, allowing the user to manage their Bitcoin addresses.

Solidity

A programming language for writing smart contracts, primarily used on Ethereum, not directly related to Bitcoin but significant in the context of blockchain technology.

Stablecoin

A type of cryptocurrency that is pegged to a stable asset, like gold or fiat currencies, to minimize volatility. While not directly a Bitcoin concept, stablecoins are often traded against Bitcoin.

Staking

Participating in a proof-of-stake (PoS) blockchain network by holding and locking cryptocurrencies in a wallet to support network operations and security in exchange for rewards.

TA (Technical Analysis)

The study of past market data, primarily price and volume, to forecast future price movements of assets like Bitcoin.

Testnet

A test blockchain used by developers to prevent expending assets on the main network. Bitcoin has its own testnet for testing purposes.

Timestamp

Recording the time of each transaction or block in the Bitcoin network to ensure the integrity and chronological order of the blockchain.

Token

A unit of value issued by a project or company, operating on top of a blockchain like Ethereum. While not directly related to Bitcoin, tokens represent a broad range of assets or utilities in the digital economy.

Tokenomics

The study of the economics surrounding a cryptocurrency, including factors such as distribution, supply mechanisms, and incentives.

Transaction Block

A collection of Bitcoin transactions that have been confirmed and recorded on the blockchain.

Transaction Fee

A fee paid to miners to incentivize them to include a transaction in the block they are mining. Transaction fees vary depending on the Bitcoin network’s congestion.

Turing Complete

A system of data-manipulation rules (computer languages) that is comprehensive enough to allow any computation to be performed. Not directly related to Bitcoin, but a concept often discussed in the context of blockchain and smart contract capabilities.

Validator

A participant in a blockchain network who is responsible for verifying transactions and/or creating new blocks, depending on the consensus mechanism.

Virtual Currencies

Digital currencies without a physical form, represented electronically. Bitcoin is the first decentralized virtual currency.

Wallet

A digital wallet that allows users to store, send, and receive Bitcoin. There are various types of wallets, including software wallets, hardware wallets, and paper wallets.

Whale

A term used to describe an individual or entity that holds a large amount of cryptocurrency, capable of influencing the market price of that currency.

White paper

A document released by the creators of a project that provides investors and potential users with details about its technical and financial aspects. The Bitcoin white paper was published by Satoshi Nakamoto in 2008, introducing the concept of Bitcoin.

Wrapped Tokens

Cryptocurrency tokens pegged to the value of another crypto, but able to operate on a different blockchain through the use of smart contracts.

Yield Farming

The practice of lending or staking cryptocurrency in exchange for interest or rewards, often associated with the DeFi sector.

Zero-Knowledge Proofs

A method by which one party can prove to another party that a given statement is true, without conveying any additional information apart from the fact that the statement is indeed true.