Bitcoin & crypto glossary

A public identifier used to direct a cryptocurrency payment. Address formats depend on the network. An address can be shared to receive funds; it is different from the private key that authorizes spending.

The distribution of free tokens to a community, often used as a marketing strategy or to reward early adopters.

Any cryptocurrency other than Bitcoin.

A smart contract technology that enables the exchange of one cryptocurrency for another without the need for a centralized intermediary.

A physical kiosk used to buy cryptocurrency with cash. Some machines also let users sell cryptocurrency for cash. Supported assets, fees, limits, and verification steps depend on the operator and location.

A cryptocurrency and payment network created by a split from Bitcoin in 2017. BCH and BTC operate on separate networks with different rules, so the two assets are not interchangeable.

A block’s position in the chain, measured from the genesis block at height zero. It is an index, not a measure of the block’s file size.

For Bitcoin, the value a miner can claim for a valid block: the newly issued block subsidy plus the fees from transactions included in that block.

New cryptocurrency that a protocol permits a block producer to create. In Bitcoin, the subsidy follows a halving schedule and is separate from transaction fees.

The process of permanently removing a certain amount of cryptocurrency from circulation to reduce supply.

A trading platform operated by a company that manages order matching and customer accounts. In a typical custodial exchange, the operator controls deposited assets until a withdrawal is processed.

A transaction gains its first Bitcoin confirmation when it appears in a block on the accepted chain. Each later block adds another confirmation, making a reversal through chain reorganization progressively harder.

A digital asset whose transfers and ownership are secured using cryptography and network rules. Bitcoin is one example; cryptocurrencies differ in their design, uses, issuance, and governance.

Mathematical techniques that protect information and verify its origin or integrity. Cryptography includes encryption, digital signatures, and hashing; it does not always involve making a message unreadable.

A wallet service where a provider holds or controls the keys on your behalf. You access funds through that provider’s account system and depend on it to process withdrawals.

An organization that operates through smart contracts and is governed by its members, often using tokens to vote on decisions.

Distribution of authority, information, and power across a network, rather than being held by a single central entity.

A measure of how hard it is to find a valid proof-of-work block. Bitcoin periodically adjusts this target to keep average block production near its intended interval.

A cryptographic code that verifies the authenticity and integrity of a digital message or document.

A peer-to-peer cryptocurrency that began in 2013 with branding inspired by the Doge meme. DOGE is its native coin and is used for transfers, tipping, and payments.

A third-party service that holds funds or assets until the completion of a transaction or agreement.

The native cryptocurrency of Ethereum. Ether pays transaction fees and is used as stake in Ethereum’s proof-of-stake system. Ethereum is the network; ether is the asset.

Government-issued currency that is not backed by a physical commodity, such as USD, EUR, etc.

The feeling of urgency to invest in a rapidly appreciating asset.

Negative information or sentiment that may cause panic selling or discourage investment in a cryptocurrency.

The unit that measures computational work on Ethereum. A transaction’s gas usage and gas price determine its fee, which is paid in ETH. Gas itself is a measure of work, not a separate token.

A denomination of ether equal to one billion wei, or 0.000000001 ETH. Ethereum gas prices are commonly expressed in gwei.

A scheduled reduction of Bitcoin’s block subsidy by half every 210,000 blocks, roughly four years. It reduces newly issued bitcoin; transaction fees paid to miners are not halved by this event.

A rule change that can allow blocks older software rejects. Participants must adopt compatible rules to stay on the upgraded chain; disagreement can result in separate networks.

A physical device designed to keep private keys isolated and sign transactions without exposing those keys to the connected computer or phone. Its recovery backup is still needed if the device is lost.

The number of hash calculations performed per second by mining equipment or an estimated network total. It measures computational activity in proof-of-work mining, not the number of transactions processed.

A slang term in the cryptocurrency community meaning to hold onto your investments rather than selling, even during market volatility.

A cryptocurrency wallet that is connected to the internet.

A fundraising method in which new projects sell their underlying cryptocurrency tokens in exchange for Bitcoin or Ethereum.

The process of verifying the identity of customers, often required by regulations for financial institutions.

A record-keeping system for tracking transactions and balances.

A payment network built on Bitcoin that routes payments through connected channels. Participants can make many offchain payments, while Bitcoin transactions establish and ultimately settle channel balances.

The ease with which an asset can be converted into cash without affecting its market price.

Crypto assets supplied to a smart contract so others can trade or use a protocol. Liquidity providers (LPs) may receive fees, but their holdings and returns can change as prices and pool balances move.

A peer-to-peer cryptocurrency and payment network derived from Bitcoin’s codebase. Its native coin is LTC, and its proof-of-work system uses the Scrypt hashing algorithm.

The primary network where actual transactions take place, as opposed to a testnet used for development and testing.

An asset’s quoted price multiplied by its circulating supply. Market capitalization is an estimate of market value, not the amount of cash invested or the amount that all holders could withdraw at once.

A node’s collection of transactions it has received and accepted but that are not yet confirmed in a block. Different nodes can have different mempools.

In proof-of-work networks, the process of assembling candidate blocks and repeatedly hashing them to find a valid proof of work. Other nodes independently check the resulting blocks and transactions.

A group of miners who combine their computational power to increase their chances of successfully mining a block and share the rewards.

A security feature that requires multiple keys to authorize a transaction.

A decentralized network model where each participant (node) can act as both a client and a server.

A physical document containing a cryptocurrency address and private key, used for offline storage.

In BIP 39 wallets, an optional secret combined with the recovery words to derive a different wallet. It is separate from the device PIN; changing the passphrase changes the resulting wallet.

A secret key that is used to sign transactions and provide access to one’s cryptocurrency holdings.

A consensus approach in which validators commit cryptocurrency as stake to help secure a network. Protocol rules govern block proposals, voting, rewards, and penalties; staking does not guarantee a return.

A consensus mechanism that requires miners to solve complex mathematical problems to validate transactions and create new blocks.

A cryptographic value derived from a private key. It allows others to verify signatures made with that private key. A public key and a wallet address are related concepts, but are not identical.

A scheme where the price of a cryptocurrency is artificially inflated through false or misleading statements, followed by a rapid sell-off.

A sequence of words used by many wallets to recreate their keys. In BIP 39 wallets, the words and any optional passphrase derive a seed. Anyone with the necessary recovery information can control the wallet.

Replacing an unconfirmed Bitcoin transaction with another that spends overlapping inputs and pays a higher fee, subject to node policy. Wallet support and replacement rules affect whether the new transaction is accepted.

A scaling system that processes transactions outside Ethereum’s base execution layer and submits data and commitments or proofs to Ethereum. Optimistic and zero-knowledge rollups use different methods to establish correctness.

The smallest unit of Bitcoin, equal to 0.00000001 BTC, named after Bitcoin’s pseudonymous creator, Satoshi Nakamoto.

A Bitcoin upgrade that separates signature-related witness data from the base transaction structure. It changes transaction accounting and resolves forms of transaction malleability that previously complicated payment protocols.

An arrangement in which you control the keys or authorization needed to move your crypto, rather than relying on a custodian. You are responsible for keeping access and recovery information available and secure.

The difference between a trade’s expected price and the price actually received when it executes. Slippage tolerance limits the permitted difference; it is separate from the price impact caused by the trade itself.

A protocol change that tightens existing validation rules. Upgraded nodes enforce the additional restrictions, while older nodes can still recognize compliant blocks as valid under the earlier rules.

A cryptocurrency designed to track a reference value, often a fiat currency such as the US dollar. Different stablecoins use different reserve or stabilization mechanisms, and their market price can move away from the intended peg.

Committing cryptocurrency to participate in a proof-of-stake network, directly or through a service. Rewards, withdrawal conditions, custody arrangements, and penalties depend on the protocol and the method used.

A Bitcoin upgrade that introduces a spending design using Schnorr signatures and script commitments. It can make certain complex spending conditions more efficient and reveal less information when the simple key-spending path is used.

A fee paid to the network for processing a transaction.

An identifier derived from a transaction’s data. You can use it to look up a transaction in a block explorer; it is not a private key or proof that a payment has confirmed.

An output from a Bitcoin transaction that has not yet been spent. A new transaction consumes earlier outputs and creates new ones, including any change returned to the sender.

A participant in a proof-of-stake network that performs duties such as proposing blocks or voting on their validity. Protocol-specific rules determine required stake, rewards, penalties, and removal.

An individual or entity that holds a large amount of cryptocurrency, capable of influencing market prices through their transactions.