Reference
Glossary
- Air-gapped
- A signing device that never connects to a computer or network by cable, Bluetooth or Wi-Fi. Data moves by QR code or microSD card instead, which shrinks the attack surface.Learn more →
- BIP-39
- The standard that turns a wallet's random secret into a list of 12 or 24 words from a fixed 2,048-word list, and defines the optional passphrase.BIP-39
- Cold storage
- Keeping private keys on a device or medium that is not exposed to the internet, typically a hardware wallet plus an offline seed backup.Learn more →
- Derivation path
- The route, written like m/84'/0'/0', that a wallet follows from the master key to a particular set of addresses.BIP-84
- Difficulty adjustment
- The recalculation every 2,016 blocks that keeps blocks about 10 minutes apart, limited to a factor of 4 per change.pow.cppLearn more →
- Entropy
- The randomness used to create a seed. Weak entropy produces seeds an attacker can guess; that was the root cause of the 2026 COLDCARD thefts.Learn more →
- Firmware
- The software that runs on a hardware wallet. Update only through the maker's official app or signed files, and confirm the version on the device screen. Updating firmware does not repair a seed made by flawed firmware.Learn more →
- Hardware wallet
- A dedicated device that generates and stores private keys and signs transactions internally, so keys never touch your computer or phone.Learn more →
- Master fingerprint
- An 8-character identifier for a wallet's master key. Recording it lets you confirm a restore or a passphrase produced the right wallet.BIP-32
- Mempool
- The set of valid, unconfirmed transactions a node is holding while they wait to be mined. Each node keeps its own.bitcoin.orgLearn more →
- Multisig
- A wallet that needs several keys to spend, for example any 2 of 3. It removes single points of failure but adds setup and backup complexity.BIP-11Learn more →
- Output descriptor
- A short text string that describes exactly how a wallet derives its addresses: script type, keys and derivation paths. For multisig it is essential: without it, seeds alone may not be enough to find the coins.BIP-380Learn more →
- Passphrase (25th word)
- An optional extra secret combined with the seed to create a separate wallet. It protects against someone who finds only the seed; lose it and the funds are gone.BIP-39Learn more →
- Private key
- The secret number that authorizes spending. Whoever holds it controls the coins.Learn more →
- PSBT
- Partially Signed Bitcoin Transaction: a standard file format that lets a watch-only wallet build a transaction and pass it to one or more signing devices.BIP-174Learn more →
- Replace-by-fee (RBF)
- Rebroadcasting an unconfirmed transaction with a higher fee so it confirms faster.BIP-125
- Sats (satoshis)
- The smallest unit of bitcoin. One bitcoin is 100,000,000 sats, so one sat is 0.00000001 BTC. Prices and small amounts are often given in sats.Bitcoin Core amount.h (COIN)Learn more →
- Seed phrase
- The 12 or 24 recovery words that can rebuild every key in a wallet. Write it by hand, move it to metal, and never photograph, type or cloud-store it.BIP-39Learn more →
- SegWit
- An upgrade that moved signature data out of the main transaction body, lowering fees; native SegWit addresses start with bc1q.BIP-141
- Self-custody
- Holding the keys to your own bitcoin instead of leaving it with an exchange or other custodian.Learn more →
- Single-sig
- A wallet controlled by one key (one seed). Simpler than multisig, but the seed is a single point of failure.Learn more →
- Taproot
- An upgrade adding Schnorr signatures and a new address type (starting bc1p) with better privacy and flexibility.BIP-86
- UTXO
- Unspent transaction output: a discrete chunk of bitcoin your wallet can spend. Your balance is the sum of your UTXOs.Bitcoin developer guide: transactions
- Watch-only wallet
- A wallet on your computer that knows your public keys, so it can show balances and build transactions, but cannot spend without the hardware wallet.Learn more →
- xpub (extended public key)
- A public key that can derive all of a wallet's receiving addresses. It cannot spend, but it reveals your full balance and history, so keep it private.BIP-32