Learn · Glossary
Bitcoin Glossary
All key terms explained in plain language.
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Blockchain
A distributed ledger that records all Bitcoin transactions in chronological, cryptographically linked blocks. Immutable and publicly verifiable by anyone.
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Wallet
Software or hardware that stores your cryptographic keys, allowing you to send and receive Bitcoin. Your coins stay on the blockchain — the wallet holds the keys to access them.
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Private key
A secret 256-bit number that proves ownership of Bitcoin and authorizes transactions. Anyone with your private key controls your Bitcoin — never share it.
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Public key
A cryptographic key mathematically derived from your private key. It can be shared publicly and is used to generate your Bitcoin address and verify transaction signatures.
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Seed phrase
A seed phrase is a list of 12 to 24 words that acts as a complete backup for your Bitcoin wallet. Anyone who has these words controls your bitcoin.
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Mining
Mining is the process by which new Bitcoin transactions are confirmed and added to the blockchain. Miners compete to solve a computational puzzle, and the winner earns newly created bitcoin as a reward.
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Node
A node is a computer that participates in the Bitcoin network by storing a copy of the blockchain and verifying every transaction and block against Bitcoin's rules. Nodes are the backbone of Bitcoin's decentralization.
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Halving
The halving is a scheduled event that cuts the bitcoin reward miners receive per block in half, approximately every four years. It is the mechanism that enforces Bitcoin's fixed supply of 21 million coins.
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Satoshi
A satoshi is the smallest unit of bitcoin. One bitcoin equals 100 million satoshis. The unit is named after Bitcoin's pseudonymous creator, Satoshi Nakamoto, and makes it practical to transact in very small amounts.
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Lightning network
A second-layer payment protocol built on top of Bitcoin that enables instant, low-fee transactions without recording every payment on the blockchain.
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Fork
A fork is a change to Bitcoin's protocol rules. Soft forks tighten the existing rules and remain backward-compatible. Hard forks introduce new rules that older software rejects, potentially splitting the network into two separate chains.
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Bitcoin cash
Bitcoin Cash is a cryptocurrency that emerged from a hard fork of Bitcoin in August 2017, born from a dispute over block size. It uses larger blocks to process more transactions per block but has significantly less network security and adoption than Bitcoin.
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Bitcoin
Bitcoin is the first decentralized digital currency, created in 2009 by the pseudonymous Satoshi Nakamoto. It runs on a global network with no central authority, has a fixed supply of 21 million coins, and is secured by the proof-of-work mechanism.
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Adresse
A Bitcoin address is a string of letters and numbers that identifies where bitcoin can be sent. Generated from a public key via cryptographic hashing, it works like a bank account number on the Bitcoin network.
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BTC
BTC is the ticker symbol for Bitcoin, used on exchanges, wallets, and financial platforms worldwide. One BTC equals one bitcoin.
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Block
A block is a bundle of confirmed Bitcoin transactions that is cryptographically sealed and permanently added to the blockchain. Miners compete to produce new blocks roughly every 10 minutes.
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Block header
The block header is the 80-byte metadata section of each Bitcoin block. It contains six fields: the previous block hash, the Merkle root of all transactions, a timestamp, the difficulty target, the version, and the nonce — the value miners vary to find valid proof-of-work.
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Block reward
The block reward is the total payment a miner receives for successfully adding a new block. It consists of the block subsidy (newly created bitcoin) plus all transaction fees in that block. As of the 2024 halving, the subsidy is 3.125 BTC per block.
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Block size
Block size determines how much transaction data a single Bitcoin block can hold. The base limit is 1 MB, extended in practice to roughly 2-4 MB via the SegWit upgrade, which introduced a weight-based measurement system.
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BIP
A BIP (Bitcoin Improvement Proposal) is a formal document proposing a change or addition to the Bitcoin protocol. BIPs are the primary mechanism by which technical upgrades, standards, and processes are proposed, discussed, and adopted by the Bitcoin community.
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Bear Market & Bull Market
A bear market describes a prolonged period of falling prices and negative sentiment; a bull market describes the opposite — rising prices and widespread optimism. Bitcoin has historically alternated between dramatic bull runs and deep bear markets, with each full cycle spanning roughly two to four years.
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Cypherpunks
A loosely organized movement of programmers, mathematicians, and activists who, from the late 1980s onward, advocated for strong cryptography as a tool for individual privacy and freedom. Their ideas laid the conceptual groundwork for Bitcoin.
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Cryptocurrency
A digital currency secured by cryptography, operating without a central bank or government authority. Bitcoin was the first cryptocurrency, created in 2009 by an anonymous developer known as Satoshi Nakamoto.
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CBDC
A Central Bank Digital Currency (CBDC) is a digital form of a national currency, issued and controlled directly by the central bank. Unlike Bitcoin or other cryptocurrency, a CBDC is centralized, programmable, and backed by state monetary authority.
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DLT
A Distributed Ledger Technology (DLT) is a digital record-keeping system shared and synchronized across multiple locations, without a central administrator. The blockchain underlying Bitcoin is one specific type of DLT.
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Cold wallet
A cold wallet stores Bitcoin private keys on a device or medium kept entirely offline, away from internet-connected threats. Hardware wallets and paper wallets are the most common forms of cold storage.
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Confirmation
A confirmation occurs each time a new block is added to the Bitcoin blockchain on top of the block containing a transaction. Each confirmation makes it exponentially more difficult to reverse the transaction, with six confirmations widely considered a standard threshold for finality.
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Difficulty
A number that controls how hard it is to mine a new Bitcoin block, adjusted every 2016 blocks to keep the average block time near ten minutes.
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Double spend
An attack in which the same bitcoin is spent twice; Bitcoin prevents this through its confirmation and mining mechanism, which makes rewriting transaction history prohibitively expensive.
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DCA
A purchasing strategy in which a fixed amount is spent at regular intervals regardless of price, reducing the impact of short-term price volatility on the average acquisition cost.
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Dip
A short-term price decline in an asset, often used to describe a temporary drop in the bitcoin price within a broader market context.
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Dump
A rapid, sharp decline in price caused by large-scale selling pressure, resulting in a dip or more sustained downturn.
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Genesis Block
The Genesis Block is the very first block of the Bitcoin blockchain, mined by Satoshi Nakamoto on 3 January 2009. It marks the launch of the Bitcoin network and contains a message referencing a newspaper headline from that day.
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Hash
A mathematical function that converts any input into a fixed-length string of characters. Bitcoin uses SHA-256 to link blocks and verify data. Hashes are one-way: the original input cannot be recovered from the output.
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Hashrate
Hashrate measures the total computational power used to mine blocks on the Bitcoin network, expressed in hashes per second. A higher hashrate means a more secure network.
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Exchange
A platform for buying, selling, or trading bitcoin. Exchanges come in two main forms: centralized (CEX), operated by a company that holds funds on behalf of users, and decentralized (DEX), where users trade directly from their own wallets.
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Fee
Transaction fees are small amounts of bitcoin paid to miners for including a transaction in a block. They are measured in sat/vbyte and rise when network demand is high.
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Hot Wallet
A hot wallet is a Bitcoin wallet that remains connected to the internet. It offers quick and convenient access to funds but is more exposed to online threats than a cold wallet kept offline.
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Inflation
Inflation is the gradual loss of purchasing power of a currency as the money supply expands. Bitcoin was designed with a fixed supply of 21 million coins as a direct contrast to monetary systems where new money can be created at will.
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ETF
An ETF (exchange-traded fund) is a financial product traded on a stock exchange that tracks the price of an underlying asset. Bitcoin spot ETFs, approved in the United States in January 2024, allow investors to gain exposure to bitcoin through traditional brokerage accounts.
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HODL
HODL originated from a 2013 typo in a Bitcoin forum post and became a term for the strategy of holding bitcoin long-term rather than trading it.
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FOMO
FOMO, short for Fear Of Missing Out, describes the anxiety that arises when bitcoin rises sharply and people worry they will miss a price move if they do not act immediately.
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FUD
FUD stands for Fear, Uncertainty and Doubt. In the context of bitcoin, it refers to negative narratives, misleading claims, or alarming headlines that create anxiety and can influence how people perceive bitcoin.
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Cryptography
Cryptography is the mathematical foundation of Bitcoin. Hash functions, public and private keys, and digital signatures work together to make transactions verifiable and secure without requiring anyone to trust a central authority.
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Mempool
The mempool is the waiting room for unconfirmed bitcoin transactions. When you send bitcoin, your transaction enters the mempool first and waits until a miner includes it in a block. Transactions with higher fees are usually picked first.
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Miner
Miners are the participants who process and secure Bitcoin transactions. They use specialised hardware to compete for the right to add the next block to the blockchain. In exchange, the winning miner receives newly issued bitcoin and the transaction fees from the block.
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Mining pool
A mining pool is a group of miners who combine their computing power and share rewards proportionally. Pools reduce the variance of solo mining, giving participants smaller but more frequent payouts instead of rare large ones.
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Mining farm
A mining farm is a large-scale facility housing hundreds or thousands of ASIC miners running continuously. These operations are purpose-built to maximise efficiency, with dedicated cooling systems and access to cheap electricity.
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Light node
A light node, also called an SPV client, downloads only block headers instead of the full blockchain. It can verify that a transaction is included in a confirmed block without storing the entire transaction history, making it practical for mobile wallets and everyday use.
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Mainnet
The mainnet is the live Bitcoin network where transactions carry real economic value. It is distinct from test networks used by developers to experiment without risking actual funds. Every bitcoin you can buy, send, or store exists on the mainnet.
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Max supply
Bitcoin has a hard cap of 21 million coins. No more than that amount will ever exist. This limit is encoded in Bitcoin's protocol and enforced by every node on the network, making it one of the most fundamental properties of bitcoin as a form of money.
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Market cap
Market capitalization is calculated by multiplying the total number of coins in circulation by the current price. It is commonly used to compare the relative size of different assets, though it has significant limitations as a standalone measure of value.
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KYC
KYC stands for Know Your Customer. It refers to the identity verification process that regulated financial services, including most bitcoin exchanges, require before allowing users to deposit, withdraw, or trade. The process typically involves submitting a government-issued ID and proof of address.
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Malware
Malware is software designed to damage, steal data from, or gain unauthorised access to a device. For bitcoin users, specific malware types such as clipboard hijackers, keyloggers, and fake wallet apps pose a targeted risk to funds and seed phrases.
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Moon
"Moon" or "to the moon" is informal slang used in the bitcoin community to describe a dramatic upward price movement. The phrase carries more enthusiasm than analytical weight and is generally understood as a cultural expression rather than a forecast.
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Multisignature
Multisignature, or multisig, is a bitcoin security setup that requires more than one private key to authorise a transaction. A common configuration is 2-of-3, where any two out of three designated keys must sign before funds can move. This eliminates the single point of failure that comes with a single-key wallet.
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On-Chain / Off-Chain
On-chain transactions are recorded directly on the Bitcoin blockchain and are publicly verifiable. Off-chain transactions happen outside the blockchain, such as on the Lightning Network, trading security and permanence for speed and lower fees.
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P2P
A network architecture where participants communicate directly with each other without a central intermediary. Bitcoin uses peer-to-peer technology to enable trustless transactions between any two parties in the world.
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Protocol
A fixed set of rules that all participants in a network must follow. Bitcoin's protocol defines everything from block size and transaction structure to the 21 million supply cap and halving schedule, with no single party able to change these rules unilaterally.
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Open source
The practice of making software source code publicly available for anyone to read, audit, and verify. Bitcoin's open source code means no hidden backdoors are possible and anyone can confirm the rules of the system themselves.
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Source Code
The human-readable instructions that make up a computer program. Bitcoin's source code defines every rule of the system and is publicly available for anyone to read and verify.
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SHA-256
The cryptographic hash function at the heart of Bitcoin mining and block creation. SHA-256 converts any input into a unique 256-bit fingerprint and is computationally irreversible, making it the foundation of Bitcoin's proof of work.
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Digital Signature
A cryptographic mechanism that proves authorization of a Bitcoin transaction without revealing the private key. Every valid Bitcoin transaction must carry a digital signature produced by the private key controlling the coins being spent.
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Proof of Work
The consensus mechanism Bitcoin uses to add new blocks. Miners compete to solve a computational puzzle that requires enormous effort but is trivially easy to verify. This asymmetry is what makes attacks on Bitcoin's history prohibitively expensive.
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SegWit
A Bitcoin protocol upgrade activated in August 2017 that fixed transaction malleability and increased effective block capacity. SegWit was a prerequisite for the Lightning Network and remains a core part of Bitcoin's current protocol.
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Orphan block
A valid block that was not included in the main Bitcoin blockchain because another block at the same height was accepted first.
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Re-org
A blockchain reorganization occurs when the network switches from one version of the chain to a competing version that has accumulated more proof-of-work.
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Solo mining
Solo mining means running a Bitcoin miner independently, without joining a pool, competing alone to find a block and collect the full block reward.
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Paper wallet
A paper wallet is a physical document containing a Bitcoin private key and its corresponding address, used as an offline storage method.
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Phishing
Phishing is a social engineering attack where a scammer impersonates a trusted entity to trick someone into revealing private keys, seed phrases, or login credentials.
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Ponzi scheme
A Ponzi scheme is a fraudulent investment operation that pays returns to earlier investors using money from newer investors, with no underlying business or asset generating real returns.
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OTC
OTC trading refers to the direct buying or selling of bitcoin between two parties outside of a public exchange order book, typically used for large transactions.
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SEC
The SEC is the U.S. federal regulator responsible for securities markets, and it has significant influence over how crypto assets are regulated in the United States.
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Stablecoin
A stablecoin is a crypto asset designed to maintain a stable value, usually pegged to a fiat currency like the U.S. dollar, to reduce price volatility.
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Supply
Bitcoin has a fixed maximum supply of 21 million coins, encoded into the protocol and enforced by every node on the network, making new supply creation impossible beyond that cap.
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Stock to flow
Stock-to-flow is a ratio that measures how much of a commodity exists in total stock relative to how much new supply is produced each year, used to quantify scarcity.
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Pump
A pump refers to a rapid, sharp increase in an asset's price, which can result from genuine market demand, speculative momentum, or coordinated manipulation.
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Shitcoin
Shitcoin is informal slang for a cryptocurrency that has little to no genuine utility, technological value, or credible long-term purpose.
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Stacking sats
Stacking sats means regularly accumulating small amounts of bitcoin, expressed in satoshis, typically through recurring purchases regardless of price.
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Quantum computer
A quantum computer uses quantum mechanical effects to perform certain calculations far faster than classical computers, raising theoretical concerns about long-term cryptographic security.
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Transaction
A Bitcoin transaction is a digitally signed message that transfers value from one or more addresses to one or more addresses. Once broadcast to the network, it waits in the mempool until a miner includes it in a block.
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UTXO
An Unspent Transaction Output (UTXO) is the fundamental unit of value tracking in Bitcoin. Rather than maintaining account balances, the Bitcoin network records individual outputs that have not yet been spent.
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Timestamp
Every Bitcoin block contains a timestamp set by the miner. Timestamps anchor the blockchain in time, enable the difficulty adjustment, and were central to Satoshi Nakamoto's solution to the double-spend problem.
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Taproot
Taproot is Bitcoin's most significant protocol upgrade since SegWit, activated in November 2021. It introduced Schnorr signatures, MAST, and Tapscript, delivering privacy improvements, lower fees for complex transactions, and a more flexible scripting system.
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Testnet
Bitcoin's testnet is a separate public blockchain that mirrors the main network, allowing developers and users to test transactions and applications without using real bitcoin. Testnet coins have no monetary value.
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Encryption
Encryption converts readable data into an unreadable form that can only be reversed with the correct key. It underlies the security of private communications, financial systems, and many of Bitcoin's cryptographic operations.
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Zero confirmation
A zero-confirmation transaction has been broadcast to the Bitcoin network and is visible in the mempool, but has not yet been included in a block. It carries a risk of double-spend until at least one confirmation is received.
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Volatility
Bitcoin's price can experience large swings over short periods, making it one of the more volatile assets in financial markets. Volatility has generally trended lower as the market has grown, though significant price movements remain part of the landscape.
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Store of value
A store of value is an asset that preserves purchasing power over time. Bitcoin is considered by many to have this property due to its fixed supply, decentralization, censorship resistance, and global portability.
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Whitepaper
The Bitcoin whitepaper is the nine-page document published by Satoshi Nakamoto on October 31, 2008. Titled "Bitcoin: A Peer-to-Peer Electronic Cash System," it describes the design of a decentralised digital currency without a trusted third party.
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Central bank
A central bank is an institution that manages a country's money supply and monetary policy. Central banks set interest rates, can create money, and act as lender of last resort. Bitcoin, by contrast, operates with no central bank and a fixed supply defined by code.
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Tether
Tether (USDT) is the largest stablecoin by market capitalisation, designed to maintain a stable value of one US dollar per token. It is centrally issued by Tether Limited and widely used on cryptocurrency exchanges for trading and value transfer.
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Whale
A whale is an individual or entity holding a very large amount of bitcoin. Because large holders can move significant volume in a single transaction, their activity is watched closely by market participants as a potential signal of shifting supply or demand.