Bitcoin & Blockchain Glossary

A decentralized digital currency that enables peer-to-peer transactions without intermediaries. Created in 2009 by the pseudonymous Satoshi Nakamoto, Bitcoin has a fixed supply of 21 million coins.

A distributed digital ledger that records transactions across many computers. Each "block" contains multiple transactions and is cryptographically linked to the previous block, creating an immutable chain.

The amount of new Bitcoin given to miners for successfully adding a new block to the blockchain. This reward halves approximately every four years (an event called "halving").

A method of storing Bitcoin offline, disconnected from the internet, to protect against hacking. Often uses specialized hardware devices.

A financial institution that holds and safeguards assets on behalf of clients. For Bitcoin, qualified custodians use enterprise-grade security, insurance, and regulatory compliance. Examples: Coinbase Custody, Fidelity Digital Assets, Anchorage.

A broad term for digital currencies that use cryptography for security. Bitcoin was the first; thousands of others (called "altcoins") have been created since. Not all cryptocurrencies share Bitcoin's properties.

A system that operates without a central authority or single point of control. Bitcoin's network is maintained by thousands of independent computers (nodes) worldwide.

A broad term encompassing any asset that exists in digital form. Includes Bitcoin, other cryptocurrencies, stablecoins, NFTs, and tokenized securities.

An event that occurs approximately every four years where the Bitcoin block reward is cut in half. This reduces the rate of new Bitcoin creation, contributing to its scarcity. The most recent halving was in April 2024.

A measure of the total computational power being used to mine and process Bitcoin transactions. Higher hash rate = more secure network. Measured in hashes per second (often exahashes/second or EH/s).

A Bitcoin wallet that is connected to the internet, allowing for quick transactions but with higher security risk than cold storage.

The process by which new Bitcoin transactions are verified and added to the blockchain. Miners use specialized computers to solve complex mathematical problems; the first to solve it gets to add the next block and receives the block reward.

A business that transfers money or monetary value on behalf of the public. Cryptocurrency exchanges and certain Bitcoin businesses may be classified as money transmitters and require state licensing.

A secret cryptographic code that proves ownership of Bitcoin and authorizes transactions. Whoever controls the private key controls the Bitcoin. Must be kept secure and never shared.

A cryptographic code derived from the private key that can be shared publicly to receive Bitcoin. Similar to an email address or bank account number.

The consensus mechanism Bitcoin uses to validate transactions and secure the network. Miners must expend computational energy to add new blocks, making it extremely costly to attack or manipulate the network.

A cryptocurrency designed to maintain a stable value, typically pegged 1:1 to the US dollar. Examples include USDC and Tether (USDT). Used for payments and trading without Bitcoin's price volatility.

A state or national reserve of Bitcoin held as a strategic asset, similar to gold reserves. Texas, New Hampshire, and Arizona have passed SBR legislation. Rhode Island's H.6007 would enable a similar reserve.

A type of bank charter specifically designed to serve digital asset businesses. Requires 100% liquid reserves (no fractional reserve banking). Currently only available in Wyoming and Nebraska.

The process of representing real-world assets (real estate, stocks, bonds) as digital tokens on a blockchain. Enables fractional ownership and easier transfer of traditionally illiquid assets.

Software or hardware that stores your Bitcoin private keys and allows you to send and receive Bitcoin. Can be "hot" (online) or "cold" (offline).