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7 MIN READ

Bitcoin & finance, decoded.

60+ terms you'll run into across this site, each defined in one plain-English sentence. Bookmark and come back whenever.

JUMP TO
# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

#

401(k)
Employer-sponsored retirement account in the U.S. that lets you defer income taxes on contributions until withdrawal. Learn more โ†’

A

Address
A public string (like bc1q...) that identifies where Bitcoin can be sent; derived from a public key.
ASIC
Application-Specific Integrated Circuit, a chip designed to do one thing efficiently, like hashing Bitcoin blocks.

B

Backdoor Roth
A legal workaround that lets high-income earners fund a Roth IRA by first contributing to a traditional IRA and then converting. Learn more โ†’
Basis point
One one-hundredth of a percent (0.01%), the unit analysts use to describe small changes in interest rates or fees.
Bear market
An extended period of falling prices, typically a drop of 20% or more from the recent peak.
Bitcoin (vs bitcoin)
Capital-B Bitcoin refers to the network and protocol; lowercase-b bitcoin refers to the currency unit itself. Learn more โ†’
Block
A bundle of Bitcoin transactions finalized together roughly every ten minutes and appended to the blockchain. Learn more โ†’
Blockchain
The append-only chain of blocks that represents Bitcoin's public transaction history. Learn more โ†’
Block reward
The newly minted bitcoin paid to a miner for successfully adding a block, currently 3.125 BTC plus fees.
BTC
The ticker symbol for one bitcoin, equal to 100 million satoshis.
Bull market
An extended period of rising prices and optimistic sentiment.

C

CAGR
Compound Annual Growth Rate, the smoothed average annual return over multiple years.
Cantillon Effect
The observation that those who receive newly printed money first benefit most, while those further from the source lose purchasing power. Learn more โ†’
CoinJoin
A privacy technique that combines multiple users' transactions into one to obscure which input paid which output.
Cold storage
Keeping Bitcoin keys on a device that has never touched the internet, usually a hardware wallet. Learn more โ†’
CPI
Consumer Price Index, the U.S. government's official measure of how prices for a basket of goods change over time. Learn more โ†’

D

DCA
Dollar-Cost Averaging, the practice of buying a fixed dollar amount on a fixed schedule regardless of price. Learn more โ†’
Deflation
A general decline in prices, which increases the purchasing power of money over time.
Difficulty adjustment
Bitcoin's automatic recalibration every 2,016 blocks that keeps block time near ten minutes. Learn more โ†’
Diversification
Spreading investment across different assets to reduce the impact of any single one going to zero.

E

ECDSA
Elliptic Curve Digital Signature Algorithm, the math Bitcoin uses to prove ownership of an address.
ETF
Exchange-Traded Fund, a stock-market instrument that holds an asset on your behalf, available inside retirement accounts.

F

FDIC
Federal Deposit Insurance Corporation, which insures U.S. bank deposits up to $250,000 per depositor per bank.
Fed funds rate
The interest rate banks charge each other for overnight loans, set by the Federal Reserve to influence the wider economy.
Fees
Small amounts of bitcoin paid to miners to include your transaction in a block, higher fees confirm faster.
Fiat currency
Money with no intrinsic backing, whose value comes from government decree and public trust. Learn more โ†’
Fiduciary
A financial advisor legally required to act in your interest rather than their own commission.
FIRE
Financial Independence, Retire Early, a movement built around saving aggressively and living off investments. Learn more โ†’
Full node
A computer running Bitcoin software that independently verifies every block and transaction. Learn more โ†’

H

Halving
The roughly four-year event where the Bitcoin block reward is cut in half, slowing new supply issuance. Learn more โ†’
Hard fork
A protocol change that is not backward compatible, which splits the chain unless everyone upgrades.
Hash
A fixed-length fingerprint of data produced by a one-way cryptographic function, used to secure Bitcoin blocks.
Hash rate
The total computing power being spent to secure the Bitcoin network, measured in hashes per second.
HD wallet
Hierarchical Deterministic wallet, which derives all future addresses from a single seed phrase.
HODL
The culture of holding bitcoin through volatility rather than trading, originating from a 2013 forum typo.
Hot wallet
A wallet whose private keys live on a device connected to the internet, convenient but more exposed to attack.
HTLC
Hashed Timelock Contract, a Bitcoin construct that makes Lightning Network payments trustless across hops.
HYSA
High-Yield Savings Account, an FDIC-insured bank account offering above-average interest, typically around 4% APY.

I

Index fund
A passive fund that mirrors a broad stock index like the S&P 500, charging very low fees.
Inflation
The erosion of purchasing power as prices rise, usually caused by expansion of the money supply. Learn more โ†’

J

JEPI
JPMorgan Equity Premium Income ETF, a covered-call fund aiming for monthly income with modest upside.

K

KYC
Know Your Customer, the regulatory process exchanges use to verify your identity before letting you trade.

L

Layer 2
A protocol built on top of Bitcoin (like Lightning) that enables faster or cheaper transactions while inheriting Bitcoin's security. Learn more โ†’
Ledger
A shared record of transactions, or the name of a popular hardware wallet brand.
Lightning Network
A Bitcoin Layer 2 that moves payments off-chain through channels for near-instant, low-fee transfers. Learn more โ†’
LTCG
Long-Term Capital Gains, a lower U.S. tax rate on assets held more than one year before selling. Learn more โ†’

M

M2
A broad measure of the U.S. money supply including cash, checking, savings, and money market funds. Learn more โ†’
Mempool
The pool of pending Bitcoin transactions waiting to be confirmed in the next block.
Merkle tree
A branching hash structure that lets Bitcoin prove a transaction is in a block without showing the whole block.
Mining
The act of spending electricity on hash computations in order to add new Bitcoin blocks and earn the block reward. Learn more โ†’
Monetary policy
Central bank decisions about interest rates and money supply that steer the economy. Learn more โ†’
Multisig
A wallet setup requiring multiple private keys to approve a spend, used for higher-security custody. Learn more โ†’

N

Node
A computer on the Bitcoin network that relays and verifies transactions. Learn more โ†’

O

OP_RETURN
A Bitcoin script opcode that lets a small amount of arbitrary data be embedded in a transaction.
Ordinals
A convention for numbering individual satoshis that allowed NFT-like data to be inscribed on Bitcoin.

P

P2P
Peer-to-Peer, a network architecture where participants communicate directly without a central server.
Private key
The secret number that lets you spend from a Bitcoin address, whoever knows it controls the coins. Learn more โ†’
Proof of Work
The consensus mechanism where miners compete by spending real-world energy to add blocks. Learn more โ†’
Public key
The non-secret counterpart to your private key, from which your Bitcoin address is derived.

Q

QE
Quantitative Easing, the central bank practice of creating money to buy bonds and push asset prices up. Learn more โ†’

R

Roth IRA
A U.S. retirement account where contributions are taxed now but all growth and withdrawals are tax-free. Learn more โ†’

S

Satoshi (unit)
The smallest divisible unit of bitcoin, equal to 0.00000001 BTC.
Satoshi Nakamoto
The pseudonymous creator of Bitcoin who published the whitepaper in 2008 and disappeared in 2011.
SCHD
Schwab U.S. Dividend Equity ETF, a low-fee fund holding quality dividend-paying U.S. stocks.
Seed phrase
A 12- or 24-word backup that can regenerate every key in a Bitcoin wallet, guard it like cash. Learn more โ†’
Segwit
Segregated Witness, a 2017 Bitcoin upgrade that enabled cheaper transactions and Lightning.
Self-custody
Holding your own private keys so no exchange or bank can freeze or lose your bitcoin. Learn more โ†’
Soft fork
A backward-compatible protocol change that old nodes still see as valid, how Bitcoin upgrades safely.
Stack sats
Slang for regularly accumulating bitcoin, usually via small recurring buys. Learn more โ†’
SWR
Safe Withdrawal Rate, the annual percentage you can pull from a portfolio without running out, historically about 4%. Learn more โ†’

T

Taproot
A 2021 Bitcoin upgrade that improved privacy, efficiency, and smart contract flexibility.
Timelock
A script condition that prevents a transaction from being spent until a certain time or block height. Learn more โ†’
Tor
An anonymity network that routes traffic through volunteer relays to obscure the user's IP address.
TXID
Transaction ID, the unique hash that identifies a Bitcoin transaction on the blockchain.

U

UTXO
Unspent Transaction Output, the individual coins-on-the-table that make up a Bitcoin balance.

V

VTI
Vanguard Total Stock Market ETF, a low-fee index fund covering nearly the entire U.S. equity market.

W

Wallet
Software or hardware that stores your Bitcoin private keys and lets you sign transactions. Learn more โ†’
Watch-only wallet
A wallet loaded with only your public keys, so you can monitor balances without being able to spend.
Whale
A holder whose position is large enough to move the market when they buy or sell.
Whitepaper
The nine-page 2008 document by Satoshi Nakamoto that defined Bitcoin's design.

Y

Yield
The income an asset returns annually as a percentage of its price, such as interest or dividends.

Last updated 2026-04-14

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