The A-Z Bitcoin dictionary

A Bitcoin address represents conditions for receiving and later spending bitcoin. Wallets generate addresses from cryptographic key information and commonly present them as text or QR codes.

Bitcoin is both a digital asset and the network that transfers it. It lets people send value without relying on a bank or central payment company.

Miners assemble valid transactions into blocks. Each accepted block references the previous block, extending the transaction history that nodes verify.

A valid block can pay its miner newly issued bitcoin according to the supply schedule plus the fees from included transactions. The newly issued portion is also called the block subsidy.

The Bitcoin blockchain is a chronological ledger. Each block contains transactions and references the previous block, creating a chain that is very difficult to rewrite.

A transaction has one confirmation when it first appears in a block. Each block built after that adds another confirmation and makes reorganizing the transaction more difficult.

With a custodial wallet, a company manages the private keys and processes withdrawals for the user. Account recovery may be easier, but access depends on the custodian.

Bitcoin adjusts mining difficulty periodically so blocks continue to be found near the intended average rate even when the network's total computing power changes.

Miners generally compare transactions by fee rate rather than the total fee alone. A larger transaction can need a higher total fee to offer the same fee rate as a smaller transaction.

A full node checks incoming data against Bitcoin's consensus rules and rejects invalid blocks or transactions. It can also relay valid data to other nodes.

The halving is built into Bitcoin's supply schedule. It reduces the rate of new bitcoin issuance about every four years.

A hardware wallet signs transactions inside a specialized device so private keys do not need to be exposed to an internet-connected computer. The recovery backup still needs strong protection.

Bitcoin uses cryptographic hash functions to identify data and connect blocks. A small change to the input produces a different hash, which helps make tampering detectable.

Hash rate describes how many mining calculations are attempted over time. More total hash rate means miners collectively perform more proof-of-work attempts each second.

The Lightning Network lets users make many quick payments while only settling final results on the Bitcoin blockchain. It is commonly used for smaller, faster transactions.

Mainnet is the production Bitcoin network. It is separate from testing networks that developers use to experiment without risking mainnet funds.

After a node accepts an unconfirmed transaction, it may keep the transaction in memory and relay it to peers. Each node maintains its own mempool according to its local view and policies.

Mining uses proof-of-work to make adding blocks costly and competitive. This helps protect the network from easy rewriting or spam.

Multisignature arrangements can require a chosen number of keys to authorize a payment. This can reduce reliance on one device or one person when backups and procedures are managed carefully.

Nodes enforce Bitcoin rules by checking blocks and transactions. Running a node lets a user verify the network directly instead of trusting someone else's copy.

A non-custodial wallet lets the user authorize transactions without asking a custodian. The user is also responsible for securing the keys and maintaining a usable backup.

A wallet uses private keys to create signatures that satisfy spending conditions. Private keys must remain secret because control of a key can mean control of the associated funds.

Miners repeatedly hash block data while searching for a result below the network target. Nodes can verify a successful result quickly even though finding one requires substantial repeated work.

A public key can be shared without revealing the corresponding private key. Bitcoin scripts use public-key information to verify that a spender produced an authorized signature.

One bitcoin is divided into 100 million satoshis. Prices and payments can therefore be expressed as small whole-number amounts of satoshis instead of fractions of a bitcoin.

A seed phrase is the backup for a wallet's keys. It must be protected because anyone with the phrase can usually recover and spend the wallet's bitcoin.

A Bitcoin transaction spends one or more existing outputs and creates new outputs. Nodes verify the transaction's signatures and rules before relaying or confirming it.

Wallets and block explorers use a transaction ID to refer to a specific transaction. It helps users look up whether the transaction is unconfirmed or included in a block.

Bitcoin balances are composed of unspent outputs rather than a single account number. A new transaction selects UTXOs as inputs and creates new outputs for recipients and, often, change.

A wallet helps users receive bitcoin, check balances, and sign transactions. It controls keys, while the bitcoin itself remains recorded on the blockchain.