The glossary
A little less jargon.
Short definitions. Useful distinctions. A place to get your bearings and return to your reading.
28 definitions
- Address
- An encoded payment destination that a wallet interprets to construct spending conditions. An address is not a container holding coins, and its format does not prove who controls it.
- Block
- A collection of transactions with a header linking it to an earlier block. Bitcoin nodes check a block against their rules before accepting it into a valid history.
- Blockchain
- A sequence of linked blocks used to describe an accepted history. Hash links help identify changes; agreement about which valid history to follow requires additional rules.
- Change
- Value assigned to a new output controlled by the spender after covering the recipient amount and fee. Change is a wallet interpretation, not a special transaction-field label.
- Channel capacity
- The value allocated to a channel. It is not the same as the amount available to send or receive in one direction.
- Channel liquidity
- Value that can currently move in a given direction through a channel or route. Balances, reserves, fees, pending payments and availability can constrain it.
- Confirmation
- In Bitcoin, inclusion in a block on the observer’s active chain is the first confirmation. Each subsequent block adds another. A reorganization can change that count.
- Consensus rules
- Rules that determine what a node considers valid in the chain. They are distinct from a peer’s local willingness to relay an unconfirmed transaction.
- Custody
- An arrangement describing who controls the capability to move funds. A custodial service generally controls relevant keys on a user’s behalf; a displayed balance may be an account claim.
- Digital signature
- Evidence checked against a message and public key using a signature algorithm. Successful verification does not establish the message’s truth or the signer’s real-world identity.
- Fee rate
- A fee expressed per unit of transaction size or weight. Bitcoin wallets commonly show sats per virtual byte; this is different from the total fee.
- HTLC
- A hash time-locked contract: a conditional payment with a hash-related fulfillment condition and timeout path. Real Lightning operation includes constraints omitted from our balance model.
- Hash
- A digest computed from bytes by a hash function. A cryptographic hash supports comparison against a reference, but does not conceal predictable input or prove who created it.
- Idempotency
- The property that retrying the same logical operation does not produce additional unintended effects. Payment integrations need stable operation identities and durable enforcement.
- Invoice
- A payment request or provider record connecting an expected amount and payment terms to a business purpose. Provider invoice states do not by themselves describe whether an order shipped.
- Mempool
- A node’s local set of accepted unconfirmed transactions. There is no single universal Bitcoin pending queue shared identically by every peer.
- Node
- Software participating in a network. A fully validating Bitcoin node independently checks the rules of the chain it accepts; it need not also mine blocks.
- Payment channel
- An arrangement where participants update their claims to allocated funds without putting every update into a new on-chain payment. Enforcement depends on the channel protocol.
- Private key
- Secret cryptographic material used for operations such as signing. Possession can confer spending capability when the corresponding conditions are satisfied.
- Public key
- Public cryptographic material used for tasks such as signature verification. Associating a key with a person or organization requires evidence outside the verification equation.
- Reorganization
- A change to a node’s active chain when another valid branch becomes preferred. Transactions in disconnected blocks may have a different status afterward.
- Satoshi (sat)
- One hundred-millionth of a bitcoin. Lessons use whole sats for arithmetic; some payment protocols internally account in smaller units.
- Transaction fee
- For an ordinary Bitcoin transaction, the difference between total input value and total output value. It is not an ordinary output addressed to a miner.
- Transaction input
- A reference to a previous output being spent, together with data relevant to spending it. The previous output supplies the value; the input is not a bank-account withdrawal instruction.
- Transaction output
- A value and a set of spending conditions created by a transaction. Until spent, an output is part of the unspent output set.
- UTXO
- An unspent transaction output. A later transaction can consume it completely and create new outputs with new values and conditions.
- Virtual size (vsize)
- Bitcoin transaction weight divided by four, rounded up. Virtual bytes account for witness data differently from a raw byte count.
- Webhook
- An HTTP notification sent by a service to an application. Delivery may be repeated, delayed, or arrive in a different order; the notification needs authentication and reconciliation.
Definitions describe the scope used in these lessons. Protocol details are linked in each article’s sources. Read our editorial policy.