Guides / Decide / Glossary
Glossary

The bitcoin glossary for directors

Plain-English definitions, each with a shareable link, a pointer to the guide that uses it and a primary source.

Education only

60 terms a director or accountant is likely to meet, in plain English. 47 have a short entry below with its own link you can share, a pointer to where the site uses it, and a source. 35 have a full entry on their own page, listed here.

Address#

A short code, derived from a public key or script, that someone gives out to receive bitcoin. Addresses are public; sharing one does not let anyone spend from it.

See How a transaction works. Source: Bitcoin developer documentation.

Address poisoning#

A scam that plants a look-alike address in a wallet's history, matching the start and end of an address the victim uses, hoping it is copied for the next payment.

Read the full entry. See Sending bitcoin safely. Source: FBI Denver.

Block#

A batch of transactions added to the block chain together, roughly every 10 minutes on average. Each block points to the one before it.

See How a transaction works. Source: Bitcoin developer documentation, Bitcoin Core.

Block chain#

The public ledger of every confirmed bitcoin transaction, made of blocks linked one after another. Anyone can check it.

See Bitcoin basics. Source: Satoshi Nakamoto, Bitcoin developer documentation.

Block height#

The number of blocks before a given block. The genesis block is height 0, so the current height is also the number of blocks mined since then.

See Bitcoin by the numbers. Source: Bitcoin developer documentation, mempool.space.

Block subsidy#

The new bitcoin paid to whoever produces a block. It started at 50 BTC and halves every 210,000 blocks.

See The supply curve to 21 million. Source: Bitcoin Core.

Collaborative multisig#

A 2 of 3 multisig where the company holds two keys and a specialist provider holds the third. The provider cannot move funds alone.

Read the full entry. See the guide. Source: Bitcoin BIPs.

Consolidation#

Combining many small UTXOs into one by sending them to your own wallet, usually when fee rates are low, so later payments need fewer inputs.

Read the full entry. See Fees and UTXO housekeeping. Source: Bitcoin Optech.

Confirmation#

A transaction has one confirmation once it is in a block, and one more for each later block. More confirmations make it harder to remove or change.

Read the full entry. See How a transaction works. Source: Bitcoin developer documentation.

Custodian#

A third party that holds bitcoin and its keys on a client's behalf. The client relies on the custodian's controls and legal terms.

Read the full entry. See the guide. Source: US CFR.

Descriptor#

A short text record of exactly which keys and script a wallet uses. For a multisig wallet, a descriptor backup is what lets you rebuild the wallet in other software.

Read the full entry. See 2 of 3 multisig: a lost or stolen key. Source: Bitcoin BIPs.

Difficulty#

How hard it is to find a valid block. It resets every 2,016 blocks so blocks keep arriving about every 10 minutes on average.

See Market and network context. Source: Bitcoin developer documentation, Bitcoin Core.

Double spend#

An attempt to spend the same bitcoin twice. The block chain and proof of work exist to prevent it.

See Bitcoin basics. Source: Satoshi Nakamoto.

Exchange-traded product#

A listed security, such as a spot bitcoin ETF or a crypto ETN, that gives price exposure. The holder owns a share or note, not bitcoin.

Read the full entry. See the guide. Source: SEC, FCA.

Extended public key#

A public key that can generate a whole family of receiving addresses (often called an xpub). It can show balances but cannot sign.

Read the full entry. See Key ceremony walkthrough. Source: Bitcoin BIPs.

Fair value#

Under US GAAP (ASU 2023-08), the measure for in-scope crypto assets: the price that would be received to sell in an orderly transaction between market participants. Changes go through net income.

Read the full entry. See US accounting under ASU 2023-08. Source: FASB.

Fee rate#

What a transaction pays per unit of size, usually quoted in satoshis per virtual byte (sat/vB). Miners tend to include higher fee rates first.

Read the full entry. See Market and network context. Source: Bitcoin developer documentation, mempool.space.

Full node#

A computer running software that checks every block and transaction against the rules, without trusting anyone else.

Read the full entry. See How a transaction works. Source: Bitcoin developer documentation.

Genesis block#

The first block, created on 3 January 2009.

See Adoption timeline. Source: mempool.space, Bitcoin Core.

Halving#

The point, every 210,000 blocks, at which the block subsidy halves. The fourth halving was at block 840,000 on 20 April 2024.

Read the full entry. See The supply curve to 21 million. Source: Bitcoin Core, mempool.space.

Hardware signing device#

A device dedicated to holding a key and signing, so the key never sits on a general-purpose computer.

Read the full entry. See Key ceremony walkthrough. Source: Bitcoin developer documentation.

Hash rate#

The total computing power miners spend on proof of work, usually shown in exahashes per second (EH/s).

See Market and network context. Source: Bitcoin developer documentation, mempool.space.

HD wallet#

A wallet that derives many keys from one starting seed, so one backup covers them all.

See Key ceremony walkthrough. Source: Bitcoin BIPs.

Key register#

A company record of each key, its holder by role, its location and when it was last tested. It never contains the key or recovery words.

Read the full entry. See the guide. Source: NIST.

Lightning Network#

A payment network on top of bitcoin. Payments move off chain through payment channels; only opening and closing a channel is recorded on chain.

See Lightning for business payments. Source: Joseph Poon and Thaddeus Dryja.

Mempool#

Short for memory pool: where a node keeps valid transactions that are not yet in a block.

See How a transaction works. Source: Bitcoin developer documentation.

Miner#

Someone who runs hardware to produce blocks with proof of work, and is paid the block subsidy plus fees.

See How a transaction works. Source: Bitcoin developer documentation.

Multisig#

A wallet that needs M of N keys to sign, such as 2 of 3. No single key can move funds alone.

Read the full entry. See 2 of 3 multisig: a lost or stolen key. Source: Bitcoin BIPs.

Private key#

The secret number that signs transactions. Whoever can sign with the right keys can move the coins.

See Bitcoin basics. Source: Bitcoin developer documentation.

Proof of reserves#

A report by a custodian or exchange showing assets it controls at one point in time. It is not an audit and may not show matching liabilities.

Read the full entry. See Custodian due diligence. Source: PCAOB.

Proof of work#

Miners hash block headers with SHA-256 until the result is below a target. Rewriting history would mean redoing that work.

See Bitcoin basics. Source: Satoshi Nakamoto, Bitcoin developer documentation.

Pruned node#

A full node that checks every block and transaction in the same way, then deletes older block data it no longer needs to save disk space. It still enforces the rules itself, but it cannot serve old blocks to other computers or rescan old history for a newly imported wallet.

See Running your own node. Source: Bitcoin developer documentation.

PSBT#

Partially Signed Bitcoin Transaction: a standard file format for passing an unsigned or part-signed transaction between signers.

Read the full entry. See How a transaction works. Source: Bitcoin BIPs.

Public key#

Derived from a private key and safe to share. It lets others check a signature without being able to sign.

See Bitcoin basics. Source: Bitcoin developer documentation.

Recovery phrase#

A list of words (often 12 or 24) that encodes a wallet seed. Anyone who has it can recreate the key, so it is kept offline and never photographed or typed into a computer.

Read the full entry. See Key ceremony walkthrough. Source: Bitcoin BIPs.

Replace by fee#

A way to replace an unconfirmed transaction with a version that pays a higher fee.

Read the full entry. See How a transaction works. Source: Bitcoin BIPs.

Satoshi#

The smallest unit of bitcoin. One bitcoin is 100,000,000 satoshis (sats).

See Bitcoin by the numbers. Source: Bitcoin Core, Bitcoin developer documentation.

SegWit#

Segregated Witness, a 2017 upgrade that moved signature data into a separate structure. It activated at block 481,824.

See Adoption timeline. Source: Bitcoin BIPs, mempool.space.

SHA-256#

The hash function bitcoin uses for proof of work, standardised by NIST.

See Bitcoin basics. Source: NIST.

Signature#

Proof, made with a private key, that the keyholder approved a transaction. A 2 of 3 multisig needs two.

See How a transaction works. Source: Bitcoin developer documentation.

Single-signature wallet#

A wallet with one private key. We do not recommend it for a company treasury, because one device or person becomes a single point of failure.

Read the full entry. See the guide. Source: Bitcoin BIPs.

Taproot#

A 2021 upgrade adding new spending rules and signature types. It activated at block 709,632.

See Adoption timeline. Source: Bitcoin BIPs, mempool.space.

Transaction#

A signed message that moves bitcoin from inputs to outputs. Once confirmed, there is no bank to reverse it.

See How a transaction works. Source: Bitcoin developer documentation.

Transaction ID#

A unique identifier (txid) for a transaction, used to look it up in a block explorer.

See How a transaction works. Source: Bitcoin developer documentation.

UTXO#

Unspent transaction output: a spendable amount of bitcoin recorded on chain. A wallet balance is the sum of its UTXOs.

Read the full entry. See How a transaction works. Source: Bitcoin developer documentation.

Wallet#

Software or hardware that manages keys, builds transactions and tracks balances. It does not hold coins; they are recorded on chain.

See Key ceremony walkthrough. Source: Bitcoin developer documentation.

Watch-only wallet#

A wallet that tracks addresses without the private keys, so it can show balances and history but cannot spend.

Read the full entry. See Accountant's corner. Source: Bitcoin developer documentation.

Sources

Primary sources only. Each link was checked on 29 October 2026. Rules change, so confirm the current version with your adviser.

  1. FASBASU 2023-08, Intangibles: Goodwill and Other, Crypto Assets (Subtopic 350-60)
  2. US CFR17 CFR 275.206(4)-2, custody rule for investment advisers (definition of qualified custodian)
  3. NISTSP 800-57 Part 1 Rev. 5: Recommendation for key management
  4. Bitcoin BIPsBIP 11: M of N standard transactions (multisig)
  5. Bitcoin BIPsBIP 39: Mnemonic code for generating deterministic keys
  6. Bitcoin BIPsBIP 174: Partially Signed Bitcoin Transaction format (PSBT)
  7. SECInvestor Bulletin: exchange-traded products providing exposure to bitcoin and ether (September 2024)
  8. FCAFCA opens retail access to crypto ETNs (in force 8 October 2025)
  9. Satoshi NakamotoBitcoin: A Peer-to-Peer Electronic Cash System (white paper, 31 October 2008, PDF)
  10. Bitcoin Coresrc/consensus/amount.h: COIN (100,000,000 satoshis) and MAX_MONEY (21 million BTC)
  11. Bitcoin Coresrc/kernel/chainparams.cpp: halving interval of 210,000 blocks, 10 minute block target, two week retarget, genesis block
  12. Bitcoin Coresrc/validation.cpp: GetBlockSubsidy, 50 BTC halved every 210,000 blocks
  13. Bitcoin developer documentationBlock chain guide: proof of work, difficulty every 2,016 blocks, block subsidy
  14. Bitcoin developer documentationTransactions guide: public keys, private keys and signatures
  15. Bitcoin developer documentationGlossary: one bitcoin equals 100,000,000 satoshis
  16. mempool.spaceBlock 0, the genesis block (3 January 2009)
  17. mempool.spaceBlock 840,000, the fourth halving (20 April 2024)
  18. mempool.spaceREST API documentation: block height, hash rate, difficulty adjustment and fee estimates
  19. Bitcoin BIPsBIP 32: Hierarchical deterministic wallets (extended keys)
  20. Bitcoin BIPsBIP 125: Opt-in full replace-by-fee signalling
  21. Bitcoin BIPsBIP 141: Segregated Witness (consensus layer)
  22. Bitcoin BIPsBIP 341: Taproot, SegWit version 1 spending rules
  23. Bitcoin BIPsBIP 380: Output script descriptors, general operation (wallet backups and exports)
  24. NISTFIPS 180-4: Secure Hash Standard (SHA-256)
  25. Bitcoin developer documentationP2P network guide: transaction relay and the memory pool
  26. Bitcoin developer documentationWallets guide: signing-only wallets and hardware wallets
  27. mempool.spaceBlock 481,824, SegWit activation (24 August 2017)
  28. mempool.spaceBlock 709,632, Taproot activation (14 November 2021)
  29. PCAOBInvestor advisory: exercise caution with third party verification and proof of reserve reports
  30. FBI DenverFBI warns of cryptocurrency token impersonation scam (look-alike addresses in transaction history)
  31. Bitcoin OptechField report: UTXO consolidation (30 July 2018)
  32. Joseph Poon and Thaddeus DryjaThe Bitcoin Lightning Network: scalable off-chain instant payments (PDF)
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