Bitcoin and crypto glossary

Bitcoin

A digital currency that runs on a public network of computers rather than being issued by a central bank. No single company or government controls it, its supply is capped at 21 million units, and anyone with an internet connection can send or receive it without asking permission.

Blockchain

A shared record of every transaction, copied across thousands of independent computers. Entries are grouped into blocks and each block is mathematically linked to the one before it, so altering an old record would require redoing all the work that followed it on a majority of those computers.

Satoshi

The smallest unit of Bitcoin: one hundred-millionth of a bitcoin (0.00000001 BTC). Because one whole bitcoin costs more than most people spend at once, amounts in Asia are often quoted in satoshis instead.

Private key

The secret number that authorises spending from a Bitcoin address. Whoever holds the private key controls the coins, regardless of who bought them. It is never shared, and no exchange, wallet maker or support agent legitimately needs it.

See also seed phrase, self-custody.

Seed phrase

A list of 12 or 24 ordinary words that a wallet generates when you first set it up. Those words can rebuild the wallet and all its private keys on any device, so they are a complete backup — and a complete way to lose everything if someone else gets them. Nobody can recover a lost seed phrase for you.

Anyone asking for your seed phrase is trying to steal from you, without exception.

Wallet

Software or a device that stores your private keys and lets you send and receive Bitcoin. A wallet does not hold coins the way a physical wallet holds notes; the coins stay on the network and the wallet holds the keys that prove they are yours.

Hot wallet

A wallet on a device that is connected to the internet, such as a phone app. Convenient for small amounts and everyday spending, but exposed to malware and phishing, so it is the wrong place for savings.

Cold storage

Keeping private keys on a device that never connects to the internet, usually a hardware wallet. Transactions are signed on the device itself, so the keys are not exposed even if the computer used to broadcast the transaction is compromised.

Self-custody

Holding your own private keys instead of leaving coins with an exchange. It removes the risk that the platform freezes withdrawals or fails, and replaces it with the responsibility of protecting a backup yourself — there is no password reset.

Exchange (CEX)

A company that matches buyers and sellers and holds customer funds while they trade. Convenient and usually the cheapest way to buy, but coins left there are held by the company, not by you, and availability differs sharply between Asian markets.

P2P trading

Buying directly from another person, usually through a platform that holds the coins in escrow until both sides confirm payment. Common in markets where banks are reluctant to serve exchanges. The escrow is the protection, so moving the conversation off the platform removes it.

KYC

“Know Your Customer” — the identity check a regulated platform runs before you can trade, typically an ID document and a selfie. It is a legal requirement in most Asian markets, and the level of checking often determines your withdrawal limits.

Stablecoin

A crypto token designed to hold a steady value, almost always one US dollar, by being backed by reserves. It is used to move value or park funds without Bitcoin's price swings — but the guarantee is only as good as the issuer behind it, which is a company, not a government.

DCA (dollar-cost averaging)

Buying a fixed amount at regular intervals instead of all at once. It removes the need to pick a moment and averages out the price paid over time. It does not prevent losses — it spreads the entry price, nothing more.

You can work this out on the calculator.

Spread

The gap between the price at which you can buy and the price at which you can sell at the same moment. It is a real cost even when a platform advertises zero commission, and on apps aimed at beginners it is often larger than the visible fee.

Maker and taker fees

Two fee rates on the same exchange. A maker places an order that waits on the order book and usually pays less; a taker fills an existing order immediately and usually pays more. Choosing a limit order instead of a market order is often what moves you from one rate to the other.

Network fee

What you pay the Bitcoin network itself to include your transaction in a block. It depends on how busy the network is and the size of the transaction in data, not on the amount being sent — so sending a large sum can cost the same as a small one.

Lightning Network

A payment layer built on top of Bitcoin that settles small transfers almost instantly and for a fraction of a normal network fee. It is what makes Bitcoin usable for everyday payments and small remittances rather than only for larger transfers.

Halving

An event roughly every four years that cuts in half the number of new bitcoins created in each block. It is written into the rules and is why the total supply is capped at 21 million.

Volatility

How sharply a price moves over short periods. Bitcoin's volatility is far higher than that of currencies or index funds, which is why money you may need soon does not belong in it and why a stablecoin is the usual choice for a dated payment.