BitcoinMadeClearWhat does that word mean?
You do not need to learn every word at once. Look up the one you have just met, then return to your guide.
0-9
- 1Bitcoin1 (1BTC1)
- The Bitcoin Ecosystem project describes this as The Scarcity Anchor. This is a project label, not an assurance of value.
A
- Address
- A destination for receiving bitcoin, usually a string of letters and numbers or a QR code. You can share it to receive a payment; it is not a secret key.
B
- Backup
- A safe copy of the information needed to restore a wallet. For many wallets this means recovery words, kept offline and private.
- Bitcoin
- A system for sending digital money without a bank handling each payment. A bitcoin is a unit of that money.
- Bitcoin Cash (BCH)
- A separate coin that split from Bitcoin on 1 August 2017, mainly over block size.
- Bitcoin Core
- Free, open-source software that checks Bitcoin's record and rules. It can also provide wallet features. It is not a separate coin.
- Bitcoin Ecosystem family
- A group of chains described by the Bitcoin Ecosystem project. Its descriptions are project claims, not independent verification or a claim that these chains are Bitcoin forks.
- Bitcoin Genesis 1 (BTC1)
- The Bitcoin Ecosystem project describes this as The Decentralised Utility & Security Chain, using proof-of-work.
- Bitcoin Reserve / RWA1 (BTCr1)
- The Bitcoin Ecosystem project describes this as The Sovereign Reserve / Real World Asset Chain. These are the project's labels, not independently verified claims.
- Bitcoin SV (BSV)
- A separate coin that split from Bitcoin Cash in November 2018.
- Bitcoin1.ai (BTC1ai)
- The Bitcoin Ecosystem project describes this as The Decentralised Intelligence Layer. This is the project's description.
- Bitcoin1USD (BTC1USD)
- The Bitcoin Ecosystem project describes this as The Stability Layer. The name alone does not establish stability or redemption rights.
- BitcoinQu1 (BTC1q)
- The Bitcoin Ecosystem project describes this as The Quantum-Secure Ledger. This is a project claim, not independent verification of security.
- Block
- A group of payments added to Bitcoin's record, along with information linking it to the previous block.
- Block size
- The amount of information a block can contain. Block size was the main issue behind the Bitcoin Cash split from Bitcoin.
- Blockchain
- The shared history of confirmed payments. Think of linked pages in a notebook, with many computers keeping copies.
- Broker app
- An app through which you deal with a provider to buy or sell a digital asset. Check who controls the keys and whether withdrawals are available.
- BTC
- The common short label for bitcoin, like a currency abbreviation. You can send a fraction of one BTC.
C
- Centralised exchange
- A service run by an operator that provides accounts for exchanging digital assets. In a custodial account, the operator controls the keys.
- Chain split
- When some computers keep one set of rules and others follow different rules, creating separate records.
- Cold storage
- Keeping spending keys offline. It reduces some online risks, but still needs a careful backup and protection from loss or theft.
- Confirmation
- A sign that a payment has been included in a block. Each block added after that gives it another confirmation and makes changing its history harder.
- Cryptocurrency
- A broad name for digital money or assets that use cryptography and computer networks. Bitcoin is one example; other systems can have very different rules.
- Custodial account
- An account where a service controls the spending keys for you. Your account password is different from those keys.
- Custody
- Who controls the keys needed to spend. A service may hold them for you, or you may hold them yourself.
D
- Decentralised
- Shared across many participants rather than controlled by one central operator. It does not mean every participant has the same role.
- Decentralised exchange (DEX)
- A way to exchange digital assets through software on a blockchain. Check what each approval permits and who controls the keys.
- Digital signature
- An approval made using a private key. Others can check that approval without seeing the secret key itself.
E
- Ethereum (ETH)
- A smart-contract platform. Ethereum moved from proof-of-work to proof-of-stake in September 2022, in a change called the Merge.
- Exchange
- A service or system for swapping one digital asset for another asset or money. The name alone does not tell you who controls the keys.
F
- Fee
- An amount included with a payment to encourage a miner to put it in a block. Fees can vary with demand for block space.
- Fiat money
- Money issued by a government, such as dollars or pounds. Bitcoin is not issued by a government.
- FINTRAC
- The agency behind Canada's money services business registry. The registry is one check for a platform; an entry is not a safety guarantee.
- Fork
- A change to the rules of a blockchain. A chain split can happen when some computers keep the old rules and others follow new ones.
- Full node
- A computer running software that checks blocks and payments against Bitcoin's rules for itself.
H
- Hash
- A short digital fingerprint calculated from some information. Changing the information changes the fingerprint; Bitcoin uses hashes to link blocks.
- Hot wallet
- A wallet whose spending keys are accessible on an internet-connected device. Convenience comes with risks from malware and device access.
I
- Issuer
- The organisation that creates a token. For stablecoins, check its reserves and the terms for redeeming the token.
L
- Ledger
- A record of payments. Bitcoin's ledger is public and checked by many computers.
- Lightning Network
- An additional payment network built around Bitcoin. It uses payment channels so that many payments do not each need a separate entry on the blockchain.
M
- Mempool
- A computer's waiting area for payments that have not yet been included in a block. Different computers can have different waiting lists.
- Merge
- The name of Ethereum's change from proof-of-work to proof-of-stake in September 2022.
- Miner
- A participant that uses computing work and energy to propose new blocks in a proof-of-work system.
- Mining
- Computing work used to propose new blocks. Other computers still check that each proposed block follows Bitcoin's rules.
- Money services business (MSB)
- A category used in FINTRAC's registry. Check the official record and the appropriate provincial securities regulator separately.
N
- Network
- The connected computers that pass Bitcoin information between one another. Some check the rules, some mine, and some help send payments.
- Node
- A computer participating in the Bitcoin network. A full node checks the rules for itself.
P
- Peer-to-peer
- Participants communicating directly with one another instead of relying on one central server to handle everything.
- Peg
- The reference value a stablecoin is designed to track. A stablecoin can move away from that value.
- Private key
- Secret information that allows a wallet to approve spending. Anyone who gets it may be able to spend the bitcoin it controls.
- Proof-of-stake
- A way of choosing who can add blocks that uses validators who lock up coins.
- Proof-of-work
- A way of proposing new blocks that uses miners spending computing power and energy. Bitcoin uses it.
- Public key
- Information used to check a digital signature. It is related to a private key, but does not reveal it. A receiving address is derived from public information, not the secret key.
- Pump-and-dump
- A scam in which promoters create excitement around a token, then sell while others are drawn in.
R
- Recovery phrase
- Another name for the seed phrase: ordered words used by many wallets to restore their keys. Keep them private.
- Redemption
- Exchanging a token with its issuer for the reference asset or money, under the issuer's terms. Do not assume everyone can redeem.
- Reference software
- Software used as the main implementation of a system's rules. Bitcoin Core is Bitcoin's reference software; it is not a separate coin.
- Reserves
- Assets an issuer says it holds to support a token. The assets and the terms for accessing them matter.
- Rug pull
- A scam in which a token's creators take funds or abandon the project, leaving users exposed to loss.
S
- Satoshi
- A small unit of bitcoin. One bitcoin contains 100 million satoshis. Often shortened to sat.
- Securities regulator
- A public authority responsible for securities rules in a jurisdiction. In Canada, check the regulator for your province or territory.
- Seed phrase
- An ordered list of recovery words used by many wallets to rebuild their keys. Often 12 or 24 words; follow your wallet's exact instructions.
- Self-custody
- Holding and managing your own spending keys. It gives you control and makes you responsible for backups and security.
- Smart contract
- A program on a blockchain that carries out written rules. Ethereum is a platform for these programs.
- Spread
- The difference between the quoted buying and selling prices. It is a cost to check alongside stated fees.
- Stablecoin
- A token designed to track a reference such as the US dollar. Its reserves and redemption terms matter, and it can lose its peg.
- Supply cap
- The maximum amount allowed by the rules. Bitcoin's current rules limit the total supply to 21 million bitcoin.
T
- Ticker
- A short label used for an asset, such as BTC for bitcoin. A similar label does not make two assets the same.
- Token
- A digital asset recorded on a blockchain. A name or label does not prove it has a working product or is safe.
- Transaction
- A record that transfers control of some bitcoin. Your wallet uses keys to approve it before sending it to the network.
- Transaction ID
- A digital identifier for a particular transaction. It can help you find the payment in the public record.
V
- Validator
- A participant that locks up coins to help add blocks in a proof-of-stake system.
W
- Wallet
- Software or a device that helps manage keys and payments. It does not contain physical coins; the bitcoin is recorded on the blockchain.
- Withdrawal
- Moving an asset out of a service account. Check whether it is possible, the limits, and the fees before signing up.