Basics
Bitcoin has a small vocabulary at its centre and a very large one around the edges. This section is the centre: the words that have to make sense before any of the others can.
Start with the distinction most newcomers miss. Bitcoin the network is a shared ledger that thousands of independent computers keep in sync. Bitcoin the unit is what that ledger tracks. The network has no company behind it and no account anyone can close, which is the point, and also the reason a mistake here is permanent. A satoshi is the smallest unit, one hundred millionth of a bitcoin, so nobody has to buy a whole one. The 21 million supply cap is not a promise from anybody; it is a rule every node checks, and blocks that break it get rejected.
The rest is the language people use around those facts. Fiat, for the government money you are trading out of. Peer to peer, for a transfer that does not route through an intermediary. Decentralization, which reads like a slogan and is really a measurable claim about where the nodes and the mining actually are.
If you are here before a first purchase, read these and then go to buying and exchanges.
10 terms. Last reviewed 2026-09-07.
Terms in Basics
- 21 million supply capalso Hard cap, Supply cap, 21 millionThe 21 million supply cap is bitcoin's permanent ceiling on how many coins can ever exist, enforced by every node through a halving schedule no participant can override.
- Cryptocurrencyalso CryptoCryptocurrency is the broad category of digital assets secured by cryptography and issued on a public network, a category in which bitcoin is one asset among thousands of very different ones.
- Decentralizationalso DecentralisationDecentralization measures how widely the power to change or block bitcoin is spread across node operators, miners, developers, and users, so that no single group can impose a rule change.
- Denominationalso Bitcoin denominationsBitcoin denominations are the named units people price things in, from one whole BTC down through millibitcoin and microbitcoin to the satoshi, all of them the same asset scaled differently.
- Fiatalso Fiat currency, Fiat moneyFiat money is currency that a government declares valid by law rather than backing with gold or silver, which is why every dollar, euro, or naira price you see is a fiat price.
- Peer-to-peeralso P2PPeer-to-peer describes a network where every participant connects directly to other participants as an equal, with no central server in the middle deciding whose payment goes through.
- PermissionlessPermissionless means anyone can use bitcoin's base layer without applying to anybody: no account approval, no minimum balance, and no authority with a switch that turns your access off.
- Satoshialso Sat, SatsA satoshi is the smallest amount of bitcoin the protocol can record, one hundred millionth of a bitcoin, and the unit every fee estimate and Lightning payment is actually counted in.
- TokenA token is a unit of value issued inside someone else's blockchain by a contract or a metadata standard, which makes it something quite different from a chain's own native coin.
- TrustlessTrustless describes a system where you can verify the rules yourself instead of taking a counterparty's word for it, so no honest middleman is required.
Covered at length elsewhere
These belong to this section but already have a full article, so they do not get a second page competing with it.
The other 13 sections
- Addresses & keysWhere coins get sent, what a private key actually controls, and how one seed produces thousands of addresses.
- Wallets & custodyHot, cold, custodial and multisig, and what each one changes about who can move your coins.
- Privacy & securityThe attacks that take people's bitcoin, and the habits and tools that stop them.
- Transactions & feesWhat a bitcoin transaction is made of, why it costs what it costs, and how to unstick one.
- Buying & exchangesOrder types, spreads and fee schedules: the vocabulary an exchange uses while it is charging you.
- Markets & investingMarket cap, volatility and spot ETFs. The language of price, without the price predictions.
- Mining & consensusHow new blocks get made, what difficulty adjusts, and why the rules hold with nobody in charge.
- Protocol & upgradesSegWit, Taproot, soft forks and BIPs: how bitcoin changes and who gets to decide.
- Lightning & layer 2Payment channels, invoices and routing, for moving bitcoin without paying for space in a block.
- Regulation & taxKYC, the Travel Rule, MiCA and capital gains: the rules that reach your account and your tax return.
- Culture & historyMt. Gox, the genesis block, HODL, and the events and slang that shaped how people talk about bitcoin.
- Nodes & softwareBitcoin Core, full nodes, pruning and RPC: the software that enforces the rules.
- Developer referenceP2P message types, opcodes and script terms: the field names you meet reading bitcoin code.
Frequently asked questions
Where should a complete beginner start?
With three words: bitcoin, blockchain and private key. Bitcoin is the money, the blockchain is the shared record of who holds it, and the private key is what lets you spend it. Everything else in this glossary builds on those three, and nothing here assumes you have read the rest.
Is one bitcoin the smallest amount you can buy?
No, and this stops more beginners than anything else in the vocabulary. One bitcoin divides into 100 million satoshis, so you can buy a few dollars worth without owning a whole coin. Most exchanges accept purchases well under ten dollars.
What does decentralized actually mean here?
That no company runs bitcoin, and none can be asked to reverse a payment, freeze an account or issue more coins. The rules are enforced by thousands of independent computers checking each other. That property is what people are paying for, and it cuts both ways.
Do I need to understand the technology to own bitcoin?
No. You need to know where you bought it, who holds the keys, and how you would get them back. The terms in this section are worth an hour of your time because they make every later decision cheaper, not because owning bitcoin requires them.