Bitcoin words explained: a plain-English glossary

Bitcoin comes with a lot of new words. You don't need to learn them all at once. Keep this page handy and come back when something isn't clear.

We will never ask for your recovery words, your backup or your password. Nobody genuine ever will.

A–C

Address Where Bitcoin is sent, like an account number. It's a long string of letters and numbers, often starting with "bc1". You can use a new address every time you receive. Always check the first and last 6 characters.

Air-gapped A device that never connects to the internet or to another device by cable, Wi-Fi or Bluetooth. It exchanges information only in ways you can see, such as QR codes.

Backup What lets you get your Bitcoin back if your wallet is lost or broken. Usually a recovery phrase, sometimes an encrypted copy on a memory card. Our backup guide

Bitcoin, bitcoin and BTC "Bitcoin" is the network. "bitcoin" or "BTC" is the money that moves on it. One bitcoin can be split into 100 million smaller units, called sats.

Block and blockchain Payments are grouped into blocks, about one every 10 minutes. Each block is linked to the one before, making a chain: the blockchain. It's the shared record of every Bitcoin payment ever made.

Cold wallet A wallet that keeps your keys offline, usually a hardware wallet. Best for savings. Hot or cold?

Confirmation When your payment is included in a block, it has one confirmation. Each new block adds another. The more confirmations, the more final the payment.

E–H

Exchange A company where you buy and sell Bitcoin, such as an app or website. While your Bitcoin stays there, the exchange holds the keys. Moving off an exchange

Fee A small amount you pay to the network to process your payment. It goes up when the network is busy. A higher fee usually means a faster confirmation.

Firmware The software that runs inside a hardware wallet. Only install updates from the maker's official source, and only ones the device itself checks and accepts.

Hardware wallet A small device made only for keeping your keys safe and signing payments. The keys stay inside it, even when you use it with your phone or computer.

Hot wallet A wallet app on a phone or computer that's connected to the internet. Handy for small, everyday amounts.

K–P

Keys (private and public) Your private key is the secret that lets you spend your Bitcoin. Whoever has it controls the money, so never share it. Your public key is used to create your addresses. It's safe to share, but it shows your balance.

KYC "Know your customer": the identity checks exchanges must do, such as asking for your ID. Normal on a real exchange. A wallet itself never needs your ID.

Multisig A wallet that needs more than one key to approve a payment, for example 2 out of 3. Safer for large amounts, but more complicated to set up.

Node A computer that keeps a copy of the blockchain and checks every payment against Bitcoin's rules. Anyone can run one. Wallets connect to nodes to see your balance and send payments.

Passphrase An optional extra word or phrase added to your recovery words. It adds protection, but if you forget it, the recovery words alone won't restore your Bitcoin. Not the same as a PIN or a password.

Phishing A fake email, text, website or app that pretends to be a real company to steal your login or recovery words. Scams to avoid

PIN A short number that unlocks your device. It protects the device if it's lost or stolen. It isn't a backup.

PSBT "Partially signed Bitcoin transaction": a payment prepared but not yet approved. Your app creates it, your hardware wallet checks and signs it, and the app sends it.

Q–S

QR code A square pattern a camera can read. Air-gapped wallets use QR codes to pass payments to and from your phone or computer without any connection.

Recovery phrase (seed phrase) Usually 12 or 24 ordinary words, in a set order, that can rebuild your keys on any compatible wallet. Whoever has the words has your Bitcoin. Write them on paper or metal, never in a photo or online.

Sats (satoshis) The smallest unit of Bitcoin. 100 million sats make one bitcoin. Named after Satoshi Nakamoto, the pseudonym of Bitcoin's creator.

Secure element A special chip built to protect secrets against physical attacks. Many hardware wallets keep the keys inside one.

Self-custody Holding your own keys instead of leaving them with an exchange. You're in control, and you're responsible for your backup. "Not your keys, not your coins" is the short version.

Signing Approving a payment with your private key. It proves the payment is yours without revealing the key. On a hardware wallet, signing happens inside the device.

T–W

Transaction ID (TXID) A unique code for each payment. You can look it up on a block explorer website to see if your payment has confirmations.

Wallet The app or device that holds your keys and lets you send and receive Bitcoin. Your Bitcoin itself lives on the network, not in the wallet.

Watch-only wallet An app that shows your balance and history, and can prepare payments, but holds no private keys. It can't spend anything without your hardware wallet.

Withdrawal Moving Bitcoin out of an exchange to an address you control. Test with a small amount first.

This guide is general information about keeping your own Bitcoin safe. It is not financial or investment advice, and we don't tell anyone whether to buy or sell.