Bitcoin Academy 101 Vocabulary

Use this glossary to keep common bitcoin and monetary terms close at hand as you work through the recommended readings.

Address: A string of letters and numbers that bitcoin can be sent to and from. Like an email address, it can be shared with others who wish to send you bitcoin.
Bear Market: A period of falling prices. Because bitcoin is volatile, this often refers to stretches when its price drops and investor confidence is low.
Bitcoin: The first global decentralized online payment protocol.
bitcoin: A digital currency created in 2008. Like traditional currency it can be purchased, earned, and spent, but all transactions occur online through a decentralized network.
Bitcoin Purchase / Sale: A customer transaction that exchanges fiat currency for bitcoin.
Block: A collection of bitcoin transactions that occur within roughly ten minutes. If the blockchain is a ledger, a block is one page in that ledger.
Blockchain: The authoritative record of every bitcoin transaction that has ever occurred.
Block Transaction: An entry on the blockchain that describes a transfer of bitcoin from one address to another. A single transaction can include multiple inputs and outputs.
BTC: An abbreviation for the bitcoin currency.
BTCW: The Bitcoin Well ticker on the Toronto Venture Stock Exchange.
Bull Market: A period of rising prices. In bitcoin markets this describes times when price climbs and investor confidence is high, often driven by fear of missing out.
Centralized: Organized so that one or more parties control a service, such as a bank.
Chargeback: The reversal of a bank payment or money transfer after it was authorized, sometimes used for fraud.
Cold Storage / Wallet: The storage of bitcoin private keys on a device or medium not connected to the internet, such as a hardware wallet, paper wallet, or offline computer.
Confirmations: A bitcoin transaction is pending until it is included in a block on the blockchain. Each additional block added afterward counts as another confirmation.
Consensus: A fault-tolerant mechanism used by distributed systems, including blockchains, to agree on a single data value. Bitcoin nodes must reach consensus to record new blocks.
Cosigner: An additional person or entity that has partial control over a bitcoin wallet.
Custodial Trading: Trading that requires users to deposit coins with a centralized exchange, giving the exchange custody while orders are executed.
Cryptocurrency: A type of currency that uses cryptography rather than a central bank to provide security and verify transactions. Bitcoin was the first cryptocurrency.
Cryptography: The use of mathematics to secure information. In bitcoin it protects wallets, signs transactions, and verifies the blockchain.
Decentralized: Lacking a central authority or controlling party. No single company, government, or individual controls the bitcoin network.
Deflation: An increase in purchasing power that leads to declining prices.
Distributed: A network design without a central server; participants connect directly to each other. Bitcoin is a distributed network.
Durability: A key monetary property meaning something does not break down or degrade over time.
Encryption: The use of cryptography to encode a message so only intended recipients can decode it. Bitcoin uses encryption to protect wallets from unauthorized access.
Exchanges: Businesses that allow customers to trade cryptocurrencies for other assets such as fiat money or other digital currencies.
Fiat Currency: Government-issued money not backed by a physical commodity. Central banks control supply by determining how much to print.
Financial Sovereignty: Enabling individuals to purchase and own bitcoin without needing permission from a third party.
FinTech: A term describing innovations at the intersection of finance and technology, typically companies offering technology-driven financial services.
Funding: Adding funds to an account to pay for services, sometimes called crediting.
Funding Source: A service that allows you to fund an account, such as selling bitcoin or adding cash at an ATM.
Fungibility: A monetary property meaning each unit is interchangeable with any other unit of the same type.
Game Theory (Economics): A framework for understanding strategic interactions among competing actors. In bitcoin it examines incentives that keep the network secure.
Hash: 1) A unique identifier of a bitcoin transaction. 2) The mathematical function miners perform on blocks to secure the network.
Hot Wallet: A bitcoin wallet stored on a device connected to the internet, such as a desktop or smartphone.
Inflation: A decline in the purchasing power of a currency over time.
Ledger: An electronic log containing transactions and balances. The bitcoin blockchain is the first distributed, decentralized, public ledger.
Medium of Exchange: A monetary property meaning something is widely accepted in exchange for goods or services.
Miner: A computer or group of computers that add new transactions to blocks and verify blocks created by other miners, earning fees and new bitcoin.
Multi-Signature: Also called multisig. A bitcoin transaction that requires signatures from multiple parties before it can be executed.
Full Node: A participant that stores a complete copy of the blockchain, validates transactions, and relays them to other nodes.
Maintainer(s): Volunteers who maintain the core bitcoin software and improve the protocol.
Node: Any computer running a bitcoin implementation that stores the blockchain and validates transactions before adding them.
Node Operators: Individuals or organizations that host and maintain nodes holding a copy of the blockchain.
Non-Custodial Services: Service providers that do not hold customer bitcoin. Users retain control of their private keys and funds.
NFT (Non-fungible token): A unique unit of data stored on a blockchain that can represent digital items such as photos, videos, or audio and establishes proof of ownership.
Open Source: Software whose code is publicly available and free to distribute. Bitcoin is open source.
Paper Wallet: A type of cold storage where private keys are printed on paper or another physical medium.
Peer to Peer: A network where participants communicate directly rather than through a central server. The bitcoin network is peer to peer.
Private Key: A string of letters and numbers used to spend bitcoin associated with a specific address.
Product: Anything received in exchange for funds from an account, such as receiving bitcoin, ETFs, or cash deposits.
Proof of Work: A piece of data that requires significant computation to generate but little computation to verify. Bitcoin uses proof of work to create new blocks.
Protocol: The official rules dictating how network participants communicate. Bitcoin's protocol defines node behavior, issuance schedule, and more.
Public Key: A string of letters and numbers derived from a private key that allows someone to receive bitcoin.
QR Code: A machine-readable representation of data such as a bitcoin address, easily scanned by cameras.
Signature: The portion of a transaction that proves the owner of the private key authorized it.
Satoshi (Sats): The smallest unit of bitcoin. One bitcoin equals 100 million satoshis.
Satoshi Nakamoto: The pseudonymous inventor of bitcoin.
Scarcity: A monetary property meaning supply is limited, reducing the risk of inflation or devaluation.
Stack Sats: A phrase meaning to regularly accumulate small amounts of bitcoin by buying, earning, or mining.
The Halving: An event that reduces the bitcoin block reward by 50% roughly every four years, cutting the rate at which new bitcoin enters circulation.
Transaction Fee: Also called a miner fee. An amount of bitcoin included in a transaction to encourage miners to include it in a block.
Users: People who have access to configure software in an administrative panel.
Transportable: A monetary property meaning a currency can easily move from one location to another.
Unbanked: People who do not have accounts or funds stored with a financial institution.
Unit of Account: A monetary property meaning a currency can be divided into smaller pieces or values.
Unit Bias: The tendency to prefer owning a whole unit of something rather than a fraction, even if the fractional unit is more valuable.
Universally Recognizable: A monetary property meaning society broadly accepts something as a store of value.
Vault: A type of bitcoin wallet with additional time locks and security measures, such as the Coinbase Vault.
Verifiable: A monetary property meaning a currency can be checked or proven authentic.
Wallet: A collection of bitcoin private keys used to spend bitcoin.