Basic Concepts
Bitcoin (BTC)
A decentralized digital currency that operates without a central authority. Created in 2009 by the pseudonymous Satoshi Nakamoto. Limited to 21 million coins.
Satoshi (sats)
The smallest unit of Bitcoin. 1 Bitcoin = 100,000,000 satoshis. Named after Bitcoin's creator.
Example: "I just stacked 50,000 sats" means acquiring 0.0005 BTC.
Blockchain
A public, distributed ledger that records all Bitcoin transactions. Each "block" contains transaction data and links to the previous block, forming a chain.
Decentralization
A system where no single entity has control. Bitcoin is decentralized because thousands of computers worldwide maintain the network, with no central authority.
Fiat Currency
Government-issued money not backed by a physical commodity (like gold). Examples: US Dollar, Euro, Japanese Yen. Can be printed in unlimited quantities.
HODL
Originally a typo of "hold," now a rallying cry meaning to hold Bitcoin long-term regardless of price volatility. "Hold On for Dear Life."
🔐 Wallets & Security
Wallet
Software or hardware that stores your Bitcoin private keys and allows you to send/receive Bitcoin. Doesn't actually store Bitcoin. The coins live on the blockchain.
Private Key
A secret 256-bit number that proves ownership of Bitcoin and allows you to spend it. NEVER share your private key. Anyone with it can steal your Bitcoin.
Public Key / Address
Derived from your private key. Safe to share. It's like your email address for receiving Bitcoin. Starts with 1, 3, or bc1.
Seed Phrase (Recovery Phrase)
A 12 or 24 word phrase that backs up your entire wallet. Write it down and store it safely. Anyone with these words can restore your wallet and access your Bitcoin.
Example: "abandon ability able about above absent absorb abstract absurd abuse access accident"
Hardware Wallet
A physical device (like Ledger or Trezor) that stores your private keys offline, protecting them from hackers. The gold standard for Bitcoin security.
Hot Wallet
A wallet connected to the internet (phone app, desktop software). Convenient but less secure than cold storage. Good for small amounts.
Cold Storage
Keeping Bitcoin offline, not connected to the internet. Can be a hardware wallet, paper wallet, or even a steel plate with your seed phrase.
Self-Custody
Holding your own Bitcoin private keys rather than trusting an exchange. "Not your keys, not your coins."
💸 Transactions
Transaction (TX)
A transfer of Bitcoin from one address to another, recorded on the blockchain. Includes sender, receiver, amount, and fee.
Confirmation
When a transaction is included in a block. More confirmations = more security. 1 confirmation ≈ 10 minutes. 6 confirmations is considered fully confirmed.
Mempool
The "waiting room" for unconfirmed transactions. Transactions sit here until miners include them in a block.
Transaction Fee
A small amount paid to miners to process your transaction. Higher fees = faster confirmation. Measured in sats/vbyte.
UTXO
Unspent Transaction Output. Bitcoin doesn't have "accounts". It tracks individual chunks of Bitcoin that haven't been spent yet.
⛏️ Mining & Network
Mining
The process of using computers to validate transactions and add new blocks to the blockchain. Miners are rewarded with new Bitcoin and transaction fees.
Block
A bundle of transactions added to the blockchain. A new block is created approximately every 10 minutes.
Halving
Every ~4 years, the Bitcoin mining reward is cut in half. This reduces new supply and historically precedes price increases. Next halving: ~2028.
Hash Rate
The total computing power securing the Bitcoin network. Higher hash rate = more secure network. Measured in EH/s (exahashes per second).
Node
A computer running Bitcoin software that validates transactions and blocks. Anyone can run a node. More nodes = more decentralized.
Difficulty Adjustment
Every 2,016 blocks (~2 weeks), Bitcoin automatically adjusts mining difficulty to maintain 10-minute block times.
Layer 2 & Scaling
Lightning Network
A "Layer 2" payment system built on top of Bitcoin for instant, low-fee transactions. Great for small payments and everyday use.
Layer 2 (L2)
Systems built on top of Bitcoin's base layer to enable faster/cheaper transactions while inheriting Bitcoin's security.
SegWit (Segregated Witness)
A 2017 upgrade that reduced transaction sizes and fees. SegWit addresses start with "bc1q": use these for lowest fees.
Taproot
A 2021 upgrade improving privacy and enabling more complex smart contracts. Taproot addresses start with "bc1p".
📈 Trading & Investment
DCA (Dollar Cost Averaging)
Buying a fixed dollar amount regularly (e.g., $100/week) regardless of price. Removes emotion and averages out volatility.
ETF (Exchange-Traded Fund)
A fund that tracks Bitcoin's price and trades on stock exchanges. Allows buying Bitcoin exposure in regular brokerage accounts (IRA, 401k).
KYC (Know Your Customer)
Identity verification required by regulated exchanges. Usually involves submitting ID and proof of address.
Exchange
A platform to buy, sell, and trade Bitcoin. Examples: Coinbase, Kraken, Binance. Custodial exchanges hold your keys, so withdraw to self-custody for security.
ATH (All-Time High)
The highest price Bitcoin has ever reached. Often followed by corrections. Bitcoin has made new ATHs in every market cycle.
Bull/Bear Market
Bull market = prices rising, optimism. Bear market = prices falling, pessimism. Bitcoin has ~4-year cycles roughly aligned with halvings.
✨ Ordinals & Social Layer
Ordinals
A protocol for inscribing data (images, text, etc.) onto individual satoshis. Enables NFTs directly on Bitcoin.
Inscription
Data (image, text, HTML, etc.) permanently written to a specific satoshi using Ordinals. Lives on Bitcoin forever.
Runes
A protocol for creating fungible tokens (like meme coins) directly on Bitcoin. Created by the same developer as Ordinals.
Rare Sats
Satoshis with special significance based on when they were mined (first of a block, halving, etc.). Collectible under Ordinals theory.
BRC-20
An experimental token standard on Bitcoin using inscriptions. Predecessor to Runes. Creates tokens via JSON inscriptions.
🗣️ Bitcoin Culture
Stacking Sats
Accumulating Bitcoin over time, usually through regular small purchases. The community mantra for consistent buying.
NGMI / WAGMI
"Not Gonna Make It" / "We're All Gonna Make It": expressing pessimism or optimism about someone's crypto decisions.
Laser Eyes
A meme where Bitcoiners add laser eyes to their profile pictures to show bullishness. Started in 2021.
Bitcoin Maximalist (Maxi)
Someone who believes Bitcoin is the only cryptocurrency that matters. Often dismissive of altcoins.
Shitcoin / Altcoin
Altcoin = any cryptocurrency that isn't Bitcoin. Shitcoin = derogatory term for altcoins, implying they're worthless.
Number Go Up (NGU)
The simplest Bitcoin thesis: price will increase over time due to fixed supply and growing demand. "NGU technology."
HFSP
"Have Fun Staying Poor": sarcastic response to Bitcoin skeptics. Used (often jokingly) when someone dismisses Bitcoin.