Bitcoin Glossary


Your Bitcoin address is a sequence of numbers and letters that enables other users to locate your wallet on the network, allowing them to send you funds.


Altcoins are alternative internet-based cryptocurrencies inspired inspired by the Bitcoin protocol. These generally emulate various aspects of Bitcoin and offer additional or adjusted features.

Altcoin Exchanges

Altcoin exchanges facilitate altcoin trades.


Application Programming Interface is a set of rules that enables users to create applications based on existing platforms.

Anti-Money Laundering ("AML")

Anti-Money Laundering rules are created by regulating bodies to prevent illegal money transfers.


An Application Specific Integrated Circuit is a computer chip created for faster and cheaper Bitcoin mining.


The technique of exploiting price differences between two or more exchanges in order to profit from temporary price differences.


The name for 0.000001 BTC, or 100 satoshi.

Bitcoin ATM

Bitcoin ATMs are physical machines that enable users to buy or sell Bitcoin. They are designed to emulate the process of withdawing or deposing using a fiat ATM.

Bitcoin Meetup

Meetups are local gatherings organised by enthusiasts of a particular topic. Bitcoin Meetups are places for Bitcoiners to come together to network, exchange coins and talk about the latest cryptocurrency events.

Bitcoin Whitepaper

The Bitcoin Whitepaper, authored by Satoshi Nakamoto, introduced the first Bitcoin protocol in 2009. The current Bitcoin protocol radically differs from the protocol presented on Nakamoto's initial Whitepaper.


Blocks are the groupings of transactions and associated information that make up the blockchain. Blocks are verified byminers before being recorded on the blockchain.


The blockchain is the distributed public ledger on which all Bitcoin transactions are recorded. The transactions and data on the blockchain are verified by miners before being recorded on the blockchain.

Block reward

The reward for the miner that discovered a block's hash. The Bitcoin protocol dictates the reward for each discovered hash will halve every 210,000 blocks. As of 2015, 25 BTC are rewarded per solved block.


The abbreviation for Bitcoin.

An online service that enables you to transfer Bitcoin and follow transactions made on the Bitcoin network.

Brain wallet

A name for a memorised private key. This is an unreliable method of guarding Bitcoin, as a single error can make the private key useless.

Central Bank

A national bank which issues currency and controls its supply on the national economy.


A software program running on a desktop or laptop computer, or a mobile device. It connects to the Bitcoin network and forwards transactions. It may also include a wallet.

Cold Wallet

Any kind of offline Bitcoin wallet. Keeping your Bitcoin wallet offline increases its security by preventing web-based attacks. It is more secure than a hot wallet, which is connected to the internet.


When a transaction is successfully introduced to the block, it is confirmed on the network and displayed in your client. This takes ten minutes on average; however, the Cubits platform enables instantaneous transactions.


A form of currency supported by cryptography. Instead of fiat currency, which is printed by a central bank, cryptocurrency relies on the computational power of computers and advanced security measures.

Cryptocurrency 2.0

Refers to projects focusing on creating decentralised services, including decentralised companies, contracts and applications.


A branch of mathematics devoted to creating and breaking ciphers. Bitcoin uses cryptography in order to protect user data and enable anonymity.


Not goverened or controlled by a single entity. Rather, responsibility is distributed.


The reduction of prices in an economy. Deflation is often harmful to the economy as it results in people hoarding their money, which has a negative impact on the economy.


A measurement of how difficult it is for a miner to create a transaction block. Difficulty is dependant on the computational power used by miners. The higher it is, the harder it is to create a transaction block. The increasing popularity of Bitcoin has made mining more and more specialised, and subsequently the difficulty has increased over time.

Double Spending

Spending Bitcoin twice. The blockchain, which contains a record of all transactions ever made, prevents a Bitcoin from being fraudulently reused. You are at risk of a double spending attack if you accept a zero-confirmation transaction.


The Elliptic Curve Digital Signature Algorithm is the lightweight cryptographic algorithm used to sign transactions in the Bitcoin protocol.


The act of holding funds or assets in a third-party account to protect them during an asynchronous transaction. If Bob wants to send money to Alice in exchange for a file, but they cannot conduct the exchange in person, then how can they trust each other to send the money and file to each other at the same time? Instead, Bob sends the money to Eve, a trusted party who holds the funds until Bob confirms that he has received the file from Alice. She then sends Alice the money.


A place where currency or commodities are exchanged. Generally a web platform enabling users to buy and sell Bitcoin for money or commodities.

Exchange verification process

Bitcoin exchanges and services need to verify their users. The process usually consists in providing scanned copy of your password together with proof of residence. Cubits enables you to buy Bitcoin with a simple SMS verification process.

Fiat currency

Currency that derives its value from government regulation or law and issued from a central bank.


The Financial Crimes Enforcement Network, an agency within the US Treasury Department. FinCEN is one of the organisations working to regulate in the Bitcoin space.


The name for an alternative version of the blockchain. Forks can occur when one set of miners begins hashing a different set of transaction blocks from another. Forks can also be implemented by the core development team in order to add a new functionality or fix issues within the Bitcoin source code.

Genesis block

The very first block in the blockchain.


The number of hashing attempts possible in a given second, measured in billions of hashes (or thousands of Megahashes).


A mathematical process that takes a variable amount of data and produces a shorter, fixed-length output. A hashing function has two important characteristics. First, it is mathematically difficult to work out what the original input was by simply viewing the output. Second, changing even the tiniest part of the input will produce an entirely different output. Miners must discover the hash of a transaction block to successfully mine the transaction block and receive the block reward in order to successfully mine the block and recieve the block reward.

Hash rate

The number of hashes that can be performed by a Bitcoin miner in a given period of time (usually a second).

Hot Wallet

A Bitcoin wallet with an active internet connection. It is not as secure as a cold wallet because it is vulnerable to internet-based attacks.


Rapid inflation of a currency caused by an increase in the money supply that outpaces the growth of a country's gross domestic product (GDP), triggering a steep decrease in the currency's real value.


A price increase over time that drives up the price of goods and decreases buying power, reducing the incentive to hoard money.


To interact with another system. Wallets interface with the Bitcoin network to complete transactions.


Know Your Client/Customer rules force financial institutions to verify the identities of the people they are doing business with in order to decrease the risk of fraud or money laundering.


The ability to buy and sell an asset easily, with pricing that stays roughly similar between trades. A suitably large community of buyers and sellers is important for liquidity. The result of an illiquid market is price volatility, and the inability to easily determine the value of an asset.

Market order

An instruction given to an exchange, asking it to buy or sell an asset at the going market rate. In a Bitcoin exchange,, you would place a market order if you simply wanted to buy or sell Bitcoin immediately, rather than holding them until a set market condition is triggered to try and make a profit.


1 thousandth of a Bitcoin (0.001 BTC).

Merchant fee

The amount of money a merchant needs to pay to money processing services.


Someone who mines Bitcoins.


The act of generating new Bitcoin by solving the cryptographic hash function.

Mining farm

A group of ASIC miners connected for the sole purpose of mining Bitcoin or another cryptocurrency.


Multi-signature Bitcoin addresses make it possible to sign Bitcoin transactions without a single point of failure. Cubits employs a 2-of-3-multi-signature process, which means that for every spending transaction, we need approval from at least two independent parties.


A computer connected to the Bitcoin network using a client that relays transactions to others.


A random string of data used as an input when hashing a transaction block. A nonce is used to try and produce a digest that fits the numerical parameters set by the Bitcoin difficulty. A different nonce will be used with each hashing attempt, meaning that billions of nonces are generated when attempting to hash each transaction block.

Offline Wallet

Another description for a cold wallet.


Online open-source projects are universally accessible and editable blueprints to which anyone can submit improvements.

Orphan block

A block that is part of a discarded fork and not the valid blockchain.


An abbreviation for peer-to-peer. A P2P transaction refers to a decentralised interaction between at least two parties in a highly interconnected network. It is an alternative system to a 'hub-and-spoke' arrangement, in which all participants in a transaction deal with each other through a single mediation point.

Paper wallet

A sheet of paper containing public and private Bitcoin addresses. It is extremely secure since all Bitcoin funds are completely offline.


A group of miners that collectively mine a block and share the subsequent reward. It is more efficient than individual mining when the block's difficulty is high.

Private key

A sequence of numbers and letters that represents the ownership of Bitcoin. Without the private key, a user can’t prove possession of Bitcoin to the network.


A Payment Service Provider. The PSP offers payment processing services for merchants who wish to accept payments online. A popular example is Paypal.

Proof of work

A system that ties mining capability to computational power. Blocks must be hashed, which is in itself an easy computational process, but an additional variable is added to the hashing process to make it more difficult. When a block is successfully hashed, the hashing must have taken some time and computational effort. Thus, a hashed block is considered proof of work.

Public key

A sequence of numbers and letters that represents the user's Bitcoin address. It is visible on the network, unlike the Private Key.

QR code

QR codes are designed to be scanned by cameras, including those found in mobile phones, and are frequently used to encode Bitcoin addresses.

Risk Management

A discipline developed in the end of 1980s which aims to understand the different risks a business can be exposed to. Cubits uses risk management to increase the safety of our customers' deposits.


Funds that are sent from abroad back to the country of origin, like with migrant workers.

Remittance Services

Companies specializing in currency transfers across the borders, like Western Union.


The smallest subdivision of a Bitcoin currently available (0.00000001 BTC).

Satoshi Nakamoto

Inventor of the Bitcoin protocol, who withdrew from the project at the end of 2010. His real identity remains unknown.

Single point of failure

Systems with a single point of failure can malfunction if the specific component is compromised. Bitcoin has no single point of failure due to its decentralised nature.


An alternative proof of work system to SHA-256, designed to be particularly friendly to CPU and GPU miners, while offering little advantage to ASIC miners.


A method of verifying that a Bitcoin transaction came from the particular address. It uses private and public keys to verify the origin of the transaction.


The Single European Payments Area. A payment integration agreement within the European Union, designed to make it easier and cheaper to send funds across Europe.


The cryptographic function developed by the NSA, used as the basis for Bitcoin’s proof of work system.

Shopping Cart Plugin

Software enabling connections between a shopping cart system and other platforms. In our case, Plugins enables you to accept Bitcoin on your site.

Simplified Payment Verification (SPV)

Simplified Payment Verification. A feature of the Bitcoin protocol that enables nodes to verify payments without downloading the full blockchain. Instead, they need only download block headers.


When a Bitcoin block is successfully hashed, the responsible miner collects the block reward. Anyone else who was attempting to hash the same block now considers it 'stale,' since there is no longer a reward for solving the block. The block is subsequently abandoned.


Society for Worldwide Interbank Financial Telecommunication (SWIFT) provides a network that enables financial institutions worldwide to send and receive information about financial transactions.


An alternative Bitcoin blockchain, used for testing purposes and development.

Transaction block

A collection of transactions on the Bitcoin network, gathered into a block that can then be hashed and added to the blockchain.

Transaction fee

Fee on Bitcoin transactions. It is relatively small and is used to stimulate miners to help continue securing the network.

Trading Bot

A program that uses predefined rules to trade on the Bitcoin markets. Most high frequency trading today is performed by automated programs.

Technical Analysis

A set of practices for analyzing price movements in order to make profitable market trades.


Set of characters specifying when certain event occurred. Used in Bitcoin system to show the time at which transaction occurred.


One microbitcoin (0.000001 BTC).

Vanity address

A Bitcoin address with a desirable pattern, like a name.


The measurement of price movements over time for a traded financial asset (including Bitcoin).


Software that enables you to store Bitcoin. Similar to a physical wallet, it is a container where you place your Bitcoin private keys. It can be additionally secured with a password.

Wire transfer

An electronic money transfer used to send and retrieve money globally. It is relatively cheap compared to other money transfer options, but requires access to a banking system.

Zero-confirmation transaction

A transaction in which the merchant is happy to provide a product or service before the Bitcoin’s transmission has been confirmed by a miner and added to the blockchain. It can carry a risk of double spending.