Reference · plain English
Bitcoin glossary
The vocabulary you need to navigate Bitcoin without faking it. 30 terms, plain definitions, no jargon-on-jargon.
Sat (satoshi)(100,000,000 sats = 1 BTC)
The smallest unit of Bitcoin. Named after Satoshi Nakamoto. 1 BTC = 100 million sats. As BTC price rises, denominating in sats keeps numbers human-friendly.
Block
A bundle of confirmed Bitcoin transactions, added to the chain roughly every 10 minutes by miners. Each block references the previous one — that's why it's a chain.
Block height
The number of blocks since Bitcoin's first block (the genesis block, 3 January 2009). Used to talk about points in time on-chain.
Halving
Every 210,000 blocks (~4 years), the BTC reward miners get for adding a block is cut in half. Locks in Bitcoin's 21 million supply cap. Last halving: April 2024 (now 3.125 BTC/block). Next: ~2028.
Hash rate
Total computing power securing the Bitcoin network, measured in hashes per second. Higher hash rate = more secure. Currently in the exahash range (10¹⁸ hashes/sec).
UTXO(Unspent Transaction Output)
Bitcoin doesn't track account balances. Instead, your wallet holds a collection of UTXOs — discrete chunks of BTC received from previous transactions. When you spend, you consume UTXOs and create new ones for the recipient + change back to yourself.
Address
A string of 26-62 characters where BTC can be sent. Modern formats start with bc1 (native SegWit, lowest fees) or bc1p (Taproot). Best practice: a fresh address for every receive — for privacy.
Private key
The number that proves ownership of BTC. Whoever holds it controls the coins. Never share it. Modern wallets derive private keys from a 12 or 24-word seed phrase (see below).
Seed phrase(Recovery phrase, mnemonic)
12 or 24 English words that encode your wallet's master key. Write them on metal or paper, never digitally. Anyone with the seed phrase can spend your coins — protect it like the bearer asset it is. How to back up your seed →
Hardware wallet(Cold wallet, signing device)
A dedicated device that stores your private keys offline and signs transactions without exposing the keys to your computer. Examples: BitBox02, Trezor, Ledger, Coldcard. Compare hardware wallets →
Hot wallet
A wallet on an internet-connected device (phone, computer). Convenient for spending; not for storage. Sparrow, Aqua, Phoenix in self-custody mode are hot — but the best ones can sign with a paired hardware wallet to keep keys cold.
Multisig(Multi-signature)
A wallet that requires multiple keys to spend (e.g., 2-of-3 means any 2 of 3 keys). Used for treasury security, inheritance plans, and shared accounts. Coldcard and Trezor both support multisig.
PSBT(Partially Signed Bitcoin Transaction)
A standard format (BIP 174) for unsigned/partially signed transactions, allowing them to be passed between devices. Lets a hot wallet on your computer compose a transaction, then a cold hardware wallet sign it air-gapped via SD card or QR code.
Lightning Network(LN, Layer 2)
A second layer on top of Bitcoin enabling instant, near-zero-fee payments. Channels open between peers, balances update off-chain in milliseconds, and only the final state settles on-chain. Pick a Lightning wallet →
Lightning channel
A two-party payment channel on the Lightning Network. Backed by an on-chain Bitcoin transaction. Has a balance you can send/receive within. Auto-managed by wallets like Phoenix.
Lightning Address(LN Address)
An email-style identifier for receiving Lightning payments — e.g., [email protected]. Cleaner than copy-pasting an invoice.
Self-custody
Holding your own private keys (and therefore your own BTC), not trusting an exchange or custodian. The point of Bitcoin. "Not your keys, not your coins."
Custodial wallet
A wallet where someone else holds your keys (e.g., exchange, Wallet of Satoshi). Convenient for spending small amounts; not appropriate for storage. The 2022 collapses (Celsius, FTX) all started with this trade-off.
On-chain
A transaction recorded directly on the Bitcoin blockchain. Final, slow (10-60 min), and costs a fee in sats based on transaction size and network demand.
Confirmation
When a transaction is included in a block, it has 1 confirmation. Each subsequent block adds another. Most exchanges credit deposits at 1-3 confirmations; large transfers may want 6+ for finality.
Mempool
The pool of unconfirmed Bitcoin transactions waiting to be included in a block. Higher-fee transactions get picked first. Tools like mempool.space let you see live state.
Sat/vB(Sats per virtual byte)
The unit of Bitcoin transaction fees. A typical transaction is ~140 vB. Fees of 1-5 sat/vB are usual; can spike to 50+ during congestion.
Mining
The process by which new BTC is created and transactions confirmed. Miners run specialized hardware (ASICs) to find a valid hash for the next block, getting BTC reward + transaction fees.
VARA(Virtual Assets Regulatory Authority)
Dubai's crypto regulator. Issues VASP (Virtual Asset Service Provider) licenses to exchanges, custodians, brokers operating in Dubai. OKX, BitOasis, Binance FZE all hold VARA licenses. VARA-licensed exchanges →
SCA(Securities & Commodities Authority)
UAE-mainland (federal) regulator. Issues Virtual Asset Platform Operator licenses for crypto trading services across the UAE outside Dubai's VARA jurisdiction. Bybit holds the first SCA VAPO license (Oct 2025).
DCA(Dollar-Cost Averaging)
Buying a fixed amount of BTC on a regular schedule (e.g., weekly), regardless of price. Smooths out volatility. The boring strategy that has outperformed market timing for nearly all retail buyers in Bitcoin's history.
HODL
Holding BTC long-term. Originally a typo of "hold" in a 2013 forum post. The orthodox Bitcoin investor strategy.
Maxi(Bitcoin maximalist)
Someone who believes Bitcoin is the only meaningful crypto-asset. Skeptical of altcoins, NFTs, and "crypto" as a category. The bitcoiners.ae voice leans here.
CARF(Crypto-Asset Reporting Framework)
OECD framework for automatic exchange of crypto-related tax information between countries. UAE signed the multilateral agreement Sept 2025; CARF goes live in UAE 2027 with first international exchanges in 2028. Tax implications →
Liquid Network
A Bitcoin sidechain by Blockstream. Allows fast confidential transactions, USDt issuance, and Lightning-on-Liquid implementations (used by Aqua, Breez). Settled to Bitcoin via federation.
Missing a term you wanted? Email [email protected] and we'll add it. The glossary grows with reader requests.