Bitcoin glossary
The most common Bitcoin terms, explained in plain English. Short enough to skim, precise enough to quote.
- Satoshi
- The smallest unit of Bitcoin, equal to 0.00000001 BTC.
- A satoshi is the smallest unit of Bitcoin, equal to 0.00000001 BTC (one hundred-millionth of a bitcoin). Named after the pseudonymous creator Satoshi Nakamoto, it allows precise pricing for small purchases. At a BTC price of $100,000, one satoshi is worth 0.1 of a US cent.
- Halving
- The event every ~4 years that cuts the Bitcoin mining reward in half.
- A halving is a scheduled event in the Bitcoin protocol, occurring roughly every four years (every 210,000 blocks), that cuts the mining reward — and therefore new bitcoin issuance — in half. Halvings hardcap total supply at 21 million BTC and historically have preceded major price cycles.
- Block
- A batch of Bitcoin transactions, produced roughly every 10 minutes.
- A block is a bundle of Bitcoin transactions confirmed and added to the blockchain by a miner. The network targets one block every 10 minutes on average. Each block references the previous one, making the chain tamper-evident; once confirmed, a transaction cannot be reversed without enormous computational cost.
- Mempool
- The pool of pending Bitcoin transactions waiting to be confirmed.
- The mempool (memory pool) is the set of unconfirmed Bitcoin transactions that each node holds in memory. Miners pick the most profitable transactions from their mempool to include in the next block. A crowded mempool pushes fees higher because users compete for limited block space.
- Hash rate
- Total computing power securing the Bitcoin network, measured in hashes per second.
- Hash rate is the total computational power that miners collectively apply to the Bitcoin network, measured in hashes per second (H/s, typically EH/s today — exa-hashes). A higher hash rate means stronger security: an attacker would need to out-compute the rest of the network to rewrite history.
- Difficulty
- A metric that keeps Bitcoin block time at ~10 minutes as hash rate changes.
- Mining difficulty is a self-adjusting number that keeps the Bitcoin block time at roughly 10 minutes regardless of how much hash rate miners deploy. It retargets every 2,016 blocks (~two weeks). When miners are added, difficulty rises; when they leave, it falls.
- Fee
- The amount a sender pays miners to include a Bitcoin transaction in a block.
- A transaction fee is the amount (in satoshis per virtual byte) paid to miners to include your Bitcoin transaction in a block. Higher fees move to the front of the queue. Fees rise when the mempool is congested and fall during quiet periods; the Lightning Network offers near-zero-fee payments off-chain.
- Lightning Network
- A second layer on Bitcoin for instant, near-free, off-chain payments.
- The Lightning Network is a protocol built on top of Bitcoin that enables instant, low-fee payments by moving transactions off the base chain into payment channels. Settlement to the main chain happens only when channels open or close. Typical fees are fractions of a cent; confirmation is sub-second.
This glossary is informational and not financial advice. For the authoritative protocol specification see bitcoin.org.