Bitcoin Glossary

Technical terminology reference for AI agents working with Bitcoin.

A

Address

A string representing a destination for Bitcoin payments. Derived from public keys. See Address Formats.

ASIC

Application-Specific Integrated Circuit. Specialized hardware for Bitcoin mining.

Atomic Swap

Trustless exchange between two cryptocurrencies using hash time-locked contracts (HTLCs).

B

Base58Check

Encoding format for legacy Bitcoin addresses. Excludes visually similar characters (0, O, I, l).

Bech32

Encoding format for native SegWit (v0) addresses. Case-insensitive, error-detecting. Prefix: bc1q.

Bech32m

Modified Bech32 encoding for SegWit v1+ (Taproot). Different checksum constant. Prefix: bc1p.

BIP

Bitcoin Improvement Proposal. Formal specification for changes to Bitcoin protocol.

Block

A data structure containing a header and list of transactions. ~10 minute average interval.

Block Header

80-byte structure: version, previous block hash, merkle root, timestamp, difficulty target, nonce.

Block Height

Number of blocks between genesis block and current block. Genesis = 0.

Block Reward

New bitcoins created per block. Currently 3.125 BTC (after 2024 halving). Halves every 210,000 blocks.

Blockchain

Append-only chain of blocks. Each block references its parent via hash.

C

Change Output

UTXO sent back to sender when input value exceeds payment amount.

Coinbase Transaction

First transaction in each block. Creates new bitcoins. No inputs.

Cold Storage

Keeping private keys offline, disconnected from internet.

Confirmation

A block containing a transaction (1 confirmation) or built upon it (n confirmations).

CPFP

Child-Pays-For-Parent. Accelerating stuck transaction by spending its output with high fees.

D

Derivation Path

BIP-32 path specifying how to derive child keys. Example: m/84'/0'/0'/0/0.

Difficulty

Mining difficulty adjustment every 2016 blocks (~2 weeks) to maintain ~10 minute block times.

Double Spend

Attempting to spend same UTXO twice. Prevented by blockchain consensus.

Dust

Output value too small to economically spend. Below ~294 sats for SegWit.

E

ECDSA

Elliptic Curve Digital Signature Algorithm. Used for Bitcoin signatures (pre-Taproot).

Electrum

Popular SPV wallet. Also refers to Electrum server protocol for lightweight clients.

F

Fee

Payment to miners for transaction inclusion. Implicit: inputs - outputs.

Fee Rate

Fee per virtual byte (sat/vB). Determines transaction priority.

Full Node

Software running complete Bitcoin protocol. Validates all transactions and blocks.

G

Genesis Block

First Bitcoin block. Height 0. Mined by Satoshi on January 3, 2009.

H

Halving

50% reduction in block reward every 210,000 blocks (~4 years).

Event	Block Height	Reward
Genesis	0	50 BTC
1st halving	210,000	25 BTC
2nd halving	420,000	12.5 BTC
3rd halving	630,000	6.25 BTC
4th halving	840,000	3.125 BTC

Hardened Derivation

BIP-32 derivation preventing parent public key exposure. Notation: ' or h.

Hash

Cryptographic function producing fixed-length output. Bitcoin uses SHA-256 and RIPEMD-160.

Hash Rate

Mining computational power. Measured in hashes per second (H/s, TH/s, EH/s).

HD Wallet

Hierarchical Deterministic wallet. Derives all keys from single seed. BIP-32.

HTLC

Hash Time-Locked Contract. Conditional payment using hash preimages and timelocks.

Hot Wallet

Wallet with keys accessible online. For convenience, higher risk.

I

Input

Reference to UTXO being spent in transaction. Contains txid, vout, and authorization.

K

Key Pair

Private key and corresponding public key.

L

Locktime

Transaction field preventing inclusion in blocks until specified time/height.

LNURL

Lightning URL. Protocol for simplified Lightning payments and authentication.

M

Mainnet

Bitcoin’s production network. Real value, real transactions.

Mempool

Memory pool. Unconfirmed transactions waiting for block inclusion.

Merkle Root

Hash of all transaction hashes in a block. Enables SPV proof.

Mining

Process of creating new blocks by finding valid proof-of-work.

Mnemonic

Human-readable seed phrase. 12-24 words per BIP-39.

Multisig

Multi-signature. Requires M-of-N signatures to spend. Example: 2-of-3.

N

Nonce

Number used once. In mining, incremented to find valid block hash.

Node

Software participating in Bitcoin network. Relays transactions and blocks.

O

OP_RETURN

Script opcode for storing data on blockchain. Creates unspendable output.

Orphan Block

Valid block not included in main chain. Also called stale block.

Output

Destination in transaction. Specifies value and spending conditions.

P

P2PKH

Pay-to-Public-Key-Hash. Legacy address format. Prefix: 1.

P2SH

Pay-to-Script-Hash. Script-based address. Prefix: 3.

P2TR

Pay-to-Taproot. Taproot address. Prefix: bc1p.

P2WPKH

Pay-to-Witness-Public-Key-Hash. Native SegWit. Prefix: bc1q.

PSBT

Partially Signed Bitcoin Transaction. Format for unsigned/partially signed transactions. BIP-174.

Private Key

256-bit secret number. Controls spending authority.

Proof of Work

Consensus mechanism requiring computational effort to create blocks.

Public Key

Point on secp256k1 curve derived from private key. Used to verify signatures.

R

RBF

Replace-By-Fee. Replacing unconfirmed transaction with higher-fee version. BIP-125.

Regtest

Regression test network. Local testing environment.

RIPEMD-160

Hash function used in address generation. Produces 160-bit output.

S

Satoshi

Smallest Bitcoin unit. 1 BTC = 100,000,000 satoshis.

Schnorr

Signature scheme used in Taproot. More efficient than ECDSA. BIP-340.

Script

Bitcoin’s stack-based programming language for spending conditions.

ScriptPubKey

Locking script. Specifies conditions to spend output.

ScriptSig

Unlocking script. Proves authorization to spend.

SegWit

Segregated Witness. Protocol upgrade separating signatures from transaction data. BIP-141.

secp256k1

Elliptic curve used in Bitcoin cryptography.

SHA-256

Secure Hash Algorithm. Primary hash function in Bitcoin.

Signet

Test network with centralized block signing. More predictable than testnet.

SPV

Simplified Payment Verification. Lightweight verification using headers only.

T

Taproot

Bitcoin upgrade enabling advanced scripting with privacy. SegWit v1. BIP-341.

Testnet

Bitcoin test network. Valueless coins for testing.

Timelock

Transaction or output restriction based on time or block height.

Transaction

Signed data structure transferring value from inputs to outputs.

txid

Transaction identifier. Double SHA-256 hash of serialized transaction.

U

UTXO

Unspent Transaction Output. Spendable Bitcoin balance unit.

V

Virtual Byte (vB)

Unit for fee calculation in SegWit. vsize = (weight + 3) / 4.

W

Wallet

Software managing keys and tracking UTXOs.

Watch-Only

Wallet that can view balance but not spend. Uses xpub without private keys.

Witness

SegWit signature data. Separated from main transaction body.

WIF

Wallet Import Format. Base58Check encoding of private key.

wtxid

Witness transaction ID. Hash including witness data.

X

xprv

Extended private key. BIP-32 master key for derivation.

xpub

Extended public key. Derives child public keys without private key.

Unit Conversions

Unit	Satoshis	BTC
1 satoshi	1	0.00000001
1 finney	10	0.0000001
1 bit (μBTC)	100	0.000001
1 millibit (mBTC)	100,000	0.001
1 bitcoin (BTC)	100,000,000	1

Machine-Readable Summary

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  "topic": "bitcoin-glossary",
  "entry_count": 85,
  "categories": ["addresses", "cryptography", "mining", "transactions", "wallets", "protocols"],
  "key_concepts": ["utxo", "segwit", "taproot", "bip32", "bip39", "psbt"]
}