2- glossary, jargon & expressions

this will come in handy

As a beginner, trying to understand Bitcoin is hard enough.
“Digital scarcity”, “value”, the true meaning of “money”, and so on.
It’s not easy. Let’s sprinkle in a huge dose of strange and never-heard-before words and expressions, together with some very unique jargon and specific terms, and we can see how Bitcoin looks so intimidating to newcomers.

Here is a list of the most important and widely used expressions within the BTC-sphere. Feel free to keep this page open as you progress through the chapters.

Adoption: the rate at which Bitcoin is being implemented and used around the world
Altcoin: any cryptocurrency that is not Bitcoin, such as Ethereum, XRP, Solana. They were all created after Bitcoin, trying to emulate its incredible success. Shunned by every Bitcoiner.
Base layer: the foundation of the protocol, represented by the activity and the rules surrounding the blockchain
Bear market: in financial markets, “Bear” is the opposite of “Bull”. In this case, it describes a period where the asset’s value significantly decreases over an extended time frame
Bitcoin address: a long string of letters and numbers used to send and receive Bitcoin. It’s derived from a seed phrase and managed/operated by a wallet
Bitcoin treasury companies: firms putting BTC on their balance sheets in hopes to make significant profits in the long term.
Block: a group of Bitcoin transactions (roughly 4000) that are gathered and added to the blockchain in chronological order
Block reward: the amount of Bitcoin being granted as a form of payment to those miners who successfully add a block of transactions to the blockchain. Importantly, the block reward is cut in half every time a halving occurs. The reward is, currently (until 2028) 3.125 BTC
Blockchain: a digital, public, immutable ledger where all of the Bitcoin transactions ever made are recorded for everyone to see
BTC: today, the terms BTC and Bitcoin are interchangeable, but that wasn't always the case. Originally, Bitcoin (with a capital B) referred to the protocol/system, while bitcoin(s) referred to the units: one bitcoin, two bitcoins.
The short form BTC was then introduced to abbreviate the term bitcoin. These days, it is widely used when talking about both the protocol and the units. Purists still observe the “original” rules.
Bull market: an extended period where market optimism leads to Bitcoin’s price increasing
Bull run: a short and very intense phase where Bitcoin’s value greatly appreciates
Bullish & bearish: when individuals or markets are particularly optimistic or pessimistic about a certain asset
Cold storage: a synonym for “self-custody”, although not exactly the same, it describes the use of a non-custodial hardware wallet for “storing” your Bitcoin
Consensus: the process where nodes, without the intervention of a single authority, agree on the valid state of the blockchain, thus ensuring Bitcoin remains a decentralized system
Crash: when the asset’s value drastically plummets
Cycle: a four-year period starting (or ending) when a new halving occurs
Custodial/Non-Custodial: the two main types of Bitcoin wallets and/or forms of custody. The former implies that the user is not directly in possession of their wallet’s private keys and seed phrase. The latter refers to wallets that allow full key ownership to the user.
Paper hands/diamond hands: when Bitcoin holders sell at the first sign of a market downturn vs. when they confidently hold through a serious crash
Dip (Market dip): a modest and, usually, short-lived asset price decrease (-5%, for example)
ETFs: classic financial products called Exchange-traded funds. They also relates to Bitcoin as, from Jan 2024, Blackrock launched Bitcoin ETFs: a way for traditional investors to be exposed to BTC’s price appreciation without having to directly own it
Exchange: a financial institution that buys and sells Bitcoin
Fiat world/money/system: anything that revolves around traditional finance and the monetary system we all use. Fiat means ”by decree” (Latin)
FOMO: fear of missing out. When buyers are caught up in the excitement and market madness, and they irrationally spend too much money on an asset because they fear that this is their last chance before prices skyrocket.
FUD: fear, uncertainty, doubt. When market sentiment is low, bearish, and lacks in optimism
Genesis Block: the official launch on Jan 3 2009, when Satoshi himself added the very first block to the blockchain, earning 50 un-spendable (by design) Bitcoins.
God candle: a massive price increase, represented on a chart.
Green candle: when examining a chart, a green candle represents a value increase over a given period of time
Hard fork: a non backwards-compatible change to the protocol which results in a new version of Bitcoin where everyone must upgrade, lest the blockchain splits.
Hash rate: the total combined power of Bitcoin miners around the world
HODL: this term originated from an old comment a user made on a Bitcoin forum many years ago. It stands for Hold On for Dear Life, and it is widely used instead of “hold” when referring to the practice of holding on to your Bitcoin for the long term in spite of the market experiencing a bull run or a crash.
HyperBitcoinisation: the belief that Bitcoin will eventually go mainstream and be so widely adopted that it will become the new monetary global standard
Layer 2s: technologies and services, such as the Lightning Network, built on top of the Baselayer. They enable faster, cheaper and more scalable transactions.
Market rally: a modest price increase, as opposed to a dip.
Maximalist/Bitcoin Maximalism: people who reject fiat money and have all of their wealth in the form of Bitcoin
Mining: the process where new Bitcoin is created (roughly) every 10 minutes, by adding a new block of transaction to the blockchain, which results in the “winning” miner to be awarded with freshly minted Bitcoin
Nodes: the guardians of the blockchain. Computers (more than 40,000 worldwide) that custody and safeguard the Bitcoin protocol, ensuring that BTC is widely distributed, fully decentralized, and independent from any authority or institution. They crucially also validate every Bitcoin transaction on the network.
Private and public keys: again, two long strings of letters and numbers. Derived mathematically/deterministically from the seed phrase and used to sign Bitcoin transactions.
Proof of work: the mechanism where miners prove they have expended a significant amount of energy, in the form of computational power, to propose a newly created and valid block of transactions, thus earning Bitcoin as a reward for their efforts.
Protocol: a set of rules, in the form of code, that participants (nodes) agree upon. These rules revolve around the creation and validation of Bitcoin transactions, which are subsequently gathered into blocks and published onto the blockchain
Red candle: the opposite of a green candle
Satoshi (unit): the smallest unit of Bitcoin. One Bitcoin can be split into 100 millions Satoshis, also referred to as SATs.
Satoshi Nakamoto: the mystical and legendary person/organization behind the development and creation of Bitcoin. Satoshi’s identity is still a mystery.
Seed phrase: the master key to your Bitcoin. A combination of 12 or 24 words that’s randomly generated as you set up a wallet. Your most prized possession.
Self custody: the practice of not using custodial wallets (an exchange’s wallet, for example), and being the true owner of your seed phrase and private keys.
Soft fork: a backwards-compatible change to the Bitcoin protocol.
Store of value: an item, such as gold and Bitcoin, whose value keeps increasing over time.
The halving: an event that takes place every four years (or every 210.000 blocks), where the total amount of newly produced Bitcoin is literally cut in half, thus creating a constant supply shock and currency deflation (as opposed to inflation).
Wallet: a piece of software that uses, manages, and protects your Bitcoin address, keys, and seed phrase. It is responsible for doing all the hard work behind the scenes, when a transaction takes place.
Whale: individuals/addresses who hold large amounts of Bitcoin.