Bitcoin glossary
The words you meet in our articles and on our maps, defined in a few lines each. Every term links to the articles, charts and maps where it matters, and to its French equivalent.
0-9
- 21 million capFundamentals
- Bitcoin’s supply is capped just under 21 million coins by its consensus rules. The cap exists because every node checks it, not because an institution promises it.
- 51% attackMining
- A 51% attack is control of most of the hashrate by a hostile party, who could reorganise recent blocks to double spend or censor transactions, but not steal coins or print new ones.
A
- Address reusePrivacy
- Address reuse is receiving several payments on the same Bitcoin address. It lets anyone add up your balance and link your counterparties, and it is the easiest privacy mistake to avoid.
- Anonymity setPrivacy
- An anonymity set is the number of plausible owners for a coin or output. Privacy on Bitcoin is measured in these odds, not in absolutes.
- ArkLayers and protocols
- Ark is a Bitcoin layer 2 where users hold virtual UTXOs inside shared on-chain outputs coordinated by an operator, with instant payments, no channels to manage and a unilateral exit to Bitcoin.
- Atomic swapLayers and protocols
- An atomic swap exchanges funds across 2 chains or layers so that both legs happen or neither does, using a shared secret and timelocks. Submarine swaps move value between Lightning and on-chain.
B
- Bitcoin addressWallets and custody
- A Bitcoin address is a string that encodes the conditions to lock coins to, usually derived from a public key or a script. It is meant to be used once.
- BitVMLayers and protocols
- BitVM is a technique to verify arbitrary computation on Bitcoin without changing its rules. A prover claims a result, a verifier can challenge it, and only a fraud ends up on-chain.
- BlockFundamentals
- A Bitcoin block groups transactions under a header that commits to them and to the previous block. One block is found every 10 minutes on average.
- Block rewardMining
- The block reward is what a miner earns for a valid block, the newly created subsidy plus the fees of the transactions it contains.
- BlockchainFundamentals
- The Bitcoin blockchain is a public, time-ordered ledger of blocks, each committing to the previous one and made costly to rewrite by proof of work.
C
- Censorship resistanceFundamentals
- Censorship resistance is Bitcoin’s ability to let any valid transaction through without a gatekeeper. It rests on nobody controlling miners, nodes and developers at once.
- Chain analysisPrivacy
- Chain analysis mines Bitcoin’s public ledger to cluster addresses, follow flows and attach identities, using heuristics and off-chain data such as KYC records.
- Channel closure (force close)Lightning
- Closing a Lightning channel writes its final balance back to Bitcoin. It can be cooperative, forced by 1 side, or punitive when someone publishes an old state.
- Client-side validationLayers and protocols
- Client-side validation keeps contract state off-chain with its owners and uses Bitcoin only to commit to state changes, through single-use seals on UTXOs. RGB is built on it.
- Coin controlPrivacy
- Coin control is choosing by hand which UTXOs a transaction spends, instead of letting the wallet pick. It keeps coins with different histories apart and keeps fees in check.
- CoinJoinPrivacy
- A CoinJoin is a single Bitcoin transaction built by several users together, with equal-sized outputs, so that an observer cannot tell which input paid which output.
- Cold storageWallets and custody
- Cold storage keeps Bitcoin keys on a device that never touches the internet, for long-term savings. A hot wallet, by contrast, lives on a connected phone or computer for spending.
- Common input ownership heuristicPrivacy
- The common input ownership heuristic assumes that all inputs of a transaction belong to the same person. It is the main tool for clustering addresses, and collaborative transactions defeat it.
- Confidential transactionsLayers and protocols
- Confidential transactions hide the amounts of a transaction while letting the network verify that nothing was created. Liquid uses them and also hides the asset type.
- ConfirmationFundamentals
- A Bitcoin transaction is confirmed once it sits in a valid block. Each later block adds a confirmation and makes reversing it more expensive.
- Covenants (OP_CTV, OP_CAT)Fundamentals
- Covenants are proposed Bitcoin script features that restrict how a coin may be spent in the future. OP_CTV and OP_CAT are the 2 best-known proposals, neither activated.
- Custodial walletWallets and custody
- A custodial wallet is a service that holds the keys for you. You have a claim on bitcoin, not bitcoin. It is simple to start with and exposes you to freezes, hacks and bankruptcy.
D
- Difficulty adjustmentMining
- Every 2,016 blocks, Bitcoin recomputes its proof-of-work target so that blocks keep arriving every 10 minutes on average, whatever the hashrate.
- DLC (Discreet Log Contract)Layers and protocols
- A DLC is a Bitcoin contract whose payout depends on an outcome attested by an oracle, such as a price. The oracle never sees the contract or holds the funds, and the chain shows an ordinary payment.
- Double spendingFundamentals
- Double spending is spending the same digital unit twice. Bitcoin prevents it without a central party by ordering transactions in a chain secured by proof of work.
- DrivechainLayers and protocols
- A drivechain is a proposed kind of sidechain, BIP300 and BIP301, where Bitcoin miners hold the peg and release withdrawals by voting over months. It is not activated and divides the community.
E
- E-cash (Cashu, Fedimint)Layers and protocols
- E-cash is bearer digital money issued by a mint that holds bitcoin and signs tokens blindly, so it cannot link a withdrawal to a spend. Cashu uses 1 mint, Fedimint a federation.
F
- FederationLayers and protocols
- A federation is a known group of parties who jointly hold funds or sign blocks under a threshold rule such as 11 of 15. It replaces proof of work or a single operator with a quorum.
- Fork (soft fork, hard fork)Fundamentals
- A fork is a divergence in Bitcoin’s rules, software or chain. A soft fork tightens the rules so old nodes still accept new blocks. A hard fork loosens them and splits off old nodes.
- Full nodeFundamentals
- A full node downloads and verifies the whole Bitcoin blockchain against the consensus rules, then relays valid blocks and transactions without trusting anyone.
H
- HalvingMining
- The halving cuts the number of new bitcoins created per block in half every 210,000 blocks, roughly every 4 years. The last one, in April 2024, set the subsidy at 3.125 BTC.
- Hardware walletWallets and custody
- A hardware wallet is a dedicated device that keeps private keys off your computer and signs transactions internally, so malware on the host cannot read the keys.
- Hash function (SHA-256)Fundamentals
- A cryptographic hash function turns any data into a fixed-size fingerprint that is easy to compute and infeasible to reverse. Bitcoin relies on SHA-256.
- HashrateMining
- Hashrate is the number of hashes per second computed by a miner, a pool or the whole network. It measures the computing power behind Bitcoin’s security.
- HTLCLightning
- An HTLC is a Bitcoin contract that pays whoever reveals a secret before a deadline, and refunds the sender after. It is how Lightning routes payments across several hops safely.
I
- Inbound liquidityLightning
- Inbound liquidity is a Lightning node’s capacity to receive, the funds sitting on the far side of its channels. A new node that only opens channels can send but not receive.
- Inscriptions (Ordinals, Runes)Layers and protocols
- Inscriptions store arbitrary data inside Bitcoin transactions. Ordinals attach it to individual satoshis, Runes define fungible tokens on UTXOs. Both compete with payments for block space.
K
- KYCWallets and custody
- KYC, know your customer, is the identity verification that regulated exchanges impose before selling bitcoin. It links a legal identity to coins, and that link outlives the account.
L
- L402Lightning
- L402 is a protocol that sells access to a web API or resource for a Lightning payment, by pairing an HTTP 402 response with an invoice and a bearer token.
- Layer 2Layers and protocols
- A Bitcoin layer 2 is a system built on top of the blockchain to make payments fast, cheap or private, while keeping funds anchored in Bitcoin and an exit back to it.
- Lightning invoice (BOLT11)Lightning
- A Lightning invoice is a payment request created by the recipient. It encodes the destination, an optional amount, a payment hash and an expiry, in the BOLT11 format.
- Lightning NetworkLightning
- The Lightning Network is Bitcoin’s payment layer, a network of payment channels where transactions settle instantly off-chain and only the net result returns to the blockchain.
- Lightning service provider (LSP)Lightning
- A Lightning service provider opens channels, supplies inbound liquidity and routes payments for wallets, so users get a working Lightning wallet without running a node.
- Liquid NetworkLayers and protocols
- Liquid is a federated Bitcoin sidechain run by Blockstream and a federation of 15 functionaries. It offers 1-minute blocks, confidential amounts and asset issuance, in exchange for trusting the federation.
- LNURLLightning
- LNURL is a family of protocols that lets a wallet talk to a web server to fetch invoices, withdraw funds or log in, turning Lightning interactions into a scan or a click.
M
- MempoolFundamentals
- The mempool is the set of valid, unconfirmed transactions a node holds while they wait for a block. Each node has its own, shaped by its relay policy.
- MiningMining
- Mining is the process of assembling candidate blocks and searching for a valid proof of work. It orders transactions, secures history and distributes new coins.
- Mining poolMining
- A mining pool combines the hashrate of many miners and shares block rewards in proportion to their work, trading a rare jackpot for steady income.
- MultisigWallets and custody
- A multisig wallet requires several keys out of a set to spend, such as 2 of 3. It survives the loss or theft of 1 key, at the cost of more complex backups.
N
- NostrLayers and protocols
- Nostr is an open protocol for social publishing where identity is a key pair and messages are signed events carried by relays. Zaps add Lightning payments to posts.
O
- Onion routingLightning
- Onion routing wraps a Lightning payment in layers of encryption so that each hop learns only the previous and next node, never the full path or the endpoints.
P
- PayJoinPrivacy
- A PayJoin is a payment where the recipient adds an input of their own, so the transaction no longer reveals who paid whom or how much, while looking perfectly ordinary.
- Payment channelLightning
- A payment channel locks bitcoin between 2 parties in a 2-of-2 output, then lets them update their balances off-chain. Only opening and closing touch the blockchain.
- Private keyWallets and custody
- A private key is the secret number that lets you sign Bitcoin transactions and spend the coins locked to its public key. Whoever holds it controls the funds.
- Proof of workFundamentals
- Proof of work is the mechanism by which miners spend energy and computation to propose blocks. Nodes verify the proof cheaply and follow the chain with the most work.
R
- Replace-by-fee (RBF)Fundamentals
- Replace-by-fee lets a sender replace an unconfirmed Bitcoin transaction with a new version paying higher fees, so a stuck payment can be unstuck.
- RGBLayers and protocols
- RGB is a smart contract and asset protocol for Bitcoin and Lightning built on client-side validation. Contract state lives with its owners, and Bitcoin UTXOs only commit to it.
- RollupLayers and protocols
- A rollup executes transactions off-chain, bundles them and publishes a compact commitment and proof to Bitcoin. Citrea is the main attempt to build 1 on Bitcoin, verified through BitVM.
- RoutingLightning
- Lightning routing finds a path of channels to carry a payment between 2 nodes that share no channel. Each hop charges a small fee and forwards without holding the funds.
S
- Satoshi (sat)Fundamentals
- The satoshi, or sat, is the smallest unit of bitcoin. 1 BTC equals 100,000,000 sats. Lightning and everyday payments are usually counted in sats.
- Seed phrase (recovery phrase)Wallets and custody
- A seed phrase is a list of 12 or 24 words that encodes the master secret of a wallet. Anyone who holds it can rebuild every key and spend every coin.
- SegWitFundamentals
- SegWit is the 2017 Bitcoin soft fork that moved signatures out of the transaction ID, fixed malleability, introduced block weight and made Lightning practical.
- Self-custodyWallets and custody
- Self-custody means holding the keys to your own bitcoin, with no third party able to spend, freeze or lose them for you. It brings sovereignty and the full responsibility that comes with it.
- SidechainLayers and protocols
- A sidechain is a separate blockchain with its own rules, linked to Bitcoin by a peg that locks BTC on 1 side and issues an equivalent asset on the other. Liquid and Rootstock are examples.
- Silent PaymentsPrivacy
- Silent Payments, BIP352, let you publish 1 static address that every payer turns into a different on-chain output, so donations and recurring payments no longer reuse an address.
- SparkLayers and protocols
- Spark is a Bitcoin layer 2 built on statechains. Users move bitcoin off-chain by sharing signing with a group of operators, keep an exit to Bitcoin, and reach Lightning through service providers.
- StatechainLayers and protocols
- A statechain transfers the right to spend a whole UTXO off-chain, by rotating a key shared between the owner and an operator who promises to forget old keys. Spark builds on it.
T
- TaprootFundamentals
- Taproot is the 2021 Bitcoin upgrade that brought Schnorr signatures and a new script structure, making complex spends look like simple ones and cheaper to settle.
- Taproot AssetsLayers and protocols
- Taproot Assets, formerly Taro, is Lightning Labs’ protocol for issuing assets such as stablecoins on Bitcoin and moving them through Lightning channels, with proofs held by the users.
- TimelockFundamentals
- A timelock is a Bitcoin script condition that keeps a transaction or an output from being spent before a given block height or time. Layer 2s are built on it.
- Transaction feesFundamentals
- Bitcoin transaction fees are the difference between a transaction’s inputs and outputs. They pay miners for block space and are quoted in satoshis per virtual byte.
- Trust assumptionsFundamentals
- Trust assumptions are what a Bitcoin system asks you to believe about third parties for your funds to be safe. Every layer above Bitcoin adds some.
- Two-way pegLayers and protocols
- A two-way peg is the mechanism that moves bitcoin into a sidechain or rollup and back. Who can release the locked BTC defines how much trust the whole system requires.
U
- Unilateral exitLayers and protocols
- A unilateral exit is a user’s ability to pull funds from a layer 2 back to Bitcoin without the operator’s cooperation. It is the line between a trust-minimized layer and a custodian.
- UTXOFundamentals
- A UTXO is an unspent transaction output, the unit in which Bitcoin tracks ownership. Spending consumes whole UTXOs and creates new ones, including change.
V
- VTXOLayers and protocols
- A VTXO, virtual UTXO, is Ark’s unit of ownership. It is a leaf in a tree of pre-signed Bitcoin transactions, spendable off-chain and redeemable on-chain, but only until it expires.
W
- WatchtowerLightning
- A watchtower watches the blockchain on behalf of a Lightning user and punishes a counterparty who publishes an old channel state while the user is offline.
- Wrench attack ($5 wrench attack)Wallets and custody
- The $5 wrench attack is coercion by physical threat to extract a seed phrase or force a transfer. It bypasses all cryptography by targeting the person rather than the keys.
Terms by topic