Bitcoin and crypto glossary
Plain definitions of the words that keep coming up. Each one is written to make sense on its own.
- Bitcoin
- A digital currency that runs on a public network with no company or government in charge. New coins are issued on a fixed schedule and the supply is capped at 21 million.
- Blockchain
- The shared public ledger that records every Bitcoin transaction. Anyone can read it, and no single party can quietly rewrite it.
- Satoshi
- The smallest unit of Bitcoin: one hundred-millionth of a coin. You never have to buy a whole bitcoin.
- Wallet
- Software or a device that stores the keys controlling your coins. The coins live on the network; the wallet holds the proof that they are yours.
- Seed phrase
- A list of 12 or 24 words that can restore your entire wallet. Anyone who reads it can take your coins, and nobody legitimate will ever ask for it.
- Private key
- The secret number that authorises spending from an address. Whoever holds it controls the funds, which is why self-custody is a real responsibility.
- Self-custody
- Holding your own keys instead of leaving coins with an exchange. It removes the risk of the platform failing and adds the risk of you losing the keys.
- Cold storage
- Keeping keys on a device that never touches the internet, usually a hardware wallet. It is the standard answer to remote theft.
- Exchange
- A company that converts money into crypto and back. Your coins sit in its accounts until you withdraw them to your own wallet.
- KYC
- Identity checks an exchange must run before it lets you trade. Expect an ID document and sometimes proof of address.
- P2P trading
- Buying directly from another person, with the platform only holding the coins in escrow. Common where banks will not serve crypto companies.
- DCA
- Buying a fixed amount on a fixed schedule instead of trying to time the market. It does not guarantee a profit; it removes the timing decision.
- Spread
- The gap between the buy price and the sell price. It is a real cost even when a service advertises zero commission.
- Volatility
- How sharply the price moves. Bitcoin can move double digits in a day, in either direction, which is why position size matters more than prediction.
- Halving
- The roughly four-yearly event that cuts the rate of new coin issuance in half. It is written into the rules, not decided by anyone.
- Mining
- The process of securing the network with computing power in exchange for newly issued coins and fees.
- Node
- A computer that keeps a full copy of the ledger and checks every rule for itself. Running one means trusting nobody else's version of events.
- Lightning Network
- A layer built on top of Bitcoin for small, instant, cheap payments, settling back to the main chain later.
- Stablecoin
- A token designed to hold a steady value, usually one US dollar. It depends on whoever issues it actually holding the reserves.
- CFD
- A leveraged bet on price that never gives you any coins. The large majority of retail accounts lose money trading them.
Definitions are educational. Rules and products change; check a current official source before acting on any of this.