Bitcoin Protocol Quick Facts

Use this handy cheat sheet as a reference for whatever you may be up to bitcoin-wise. Know your protocol!

Want to dive deeper? Check out our Ultimate Bitcoin Guide, use our BTC unit converter tool, view the latest market prices or monitor the live blockchain.

Bitcoin Terms Glossary

Address
A string derived from a public key, used to receive bitcoin payments. Types include legacy, SegWit, and Taproot.

Address Types
Different formats for Bitcoin addresses, including Legacy (P2PKH), Pay-to-Script-Hash (P2SH), Pay-to-Witness-Public-Key-Hash (P2WPKH, SegWit), Pay-to-Witness-Script-Hash (P2WSH, SegWit), and Taproot (P2TR).

ASIC (Application-Specific Integrated Circuit)
Specialized hardware designed for efficient Bitcoin mining.

Bech32
A SegWit address format starting with "bc1" that is more efficient and error-resistant.

Bitcoin (BTC)
The native digital currency of the Bitcoin network; also refers to the protocol and network itself.

Bitcoin Core
The reference implementation of the Bitcoin protocol, maintained by a group of open-source developers.

Bit
A subunit of bitcoin equal to 100 satoshis.

Block
A collection of transactions bundled together and added to the blockchain by miners roughly every 10 minutes[1].

Block Height
The number of blocks preceding a particular block in the blockchain.

Block Reward
The amount of new bitcoin and transaction fees awarded to the miner of a new block.

Block Size Limit
The maximum size of a block (1 MB for legacy, up to 4 MB with SegWit)[2][3].

Blockchain
A public, immutable ledger of all Bitcoin transactions, organized as a chain of blocks[4][1][5].

Coinbase Transaction
The first transaction in a block, created by the miner, which includes the block reward.

Confirmation
Each time a block is added after a transaction’s block, the transaction gains a confirmation, increasing its security.

Consensus
The process by which the Bitcoin network agrees on the state of the blockchain.

Consensus Rules
The protocol rules that all valid blocks and transactions must follow.

CPFP (Child Pays For Parent)
A fee management technique where a child transaction with a higher fee incentivizes miners to confirm its parent transaction.

Cryptographic Algorithms
Mathematical functions used for security in Bitcoin, including SHA-256 for hashing and secp256k1 for digital signatures.

Denominations
Units of bitcoin, such as bitcoin (BTC), millibitcoin (mBTC), microbitcoin (bit), satoshi (smallest unit), and finney[2].

Difficulty
A measure of how hard it is to find a valid hash for a new block; adjusted every 2016 blocks (~2 weeks)[2][3][6].

Double Spend
An attempt to spend the same bitcoin twice; prevented by the network’s consensus mechanism.

Dust
A very small amount of bitcoin, often below the minimum relay fee, making it uneconomical to spend.

Elliptic Curve (secp256k1)
The cryptographic curve used for generating public and private keys in Bitcoin.

Epoch
A period defined by a specific block reward, which halves every 210,000 blocks.

Fee (Transaction Fee)
An amount paid to miners to include a transaction in a block.

Finney
A denomination equal to 0.1 BTC or 10,000,000 satoshis.

Fork
A change in the protocol or blockchain, which can be a soft fork (backward-compatible) or hard fork (not backward-compatible).

Full Node
A computer that fully enforces all Bitcoin protocol rules and maintains a complete copy of the blockchain[6].

Genesis Block
The very first block in the Bitcoin blockchain (block height 0).

Halving
An event every 210,000 blocks where the block reward is cut in half, reducing new bitcoin issuance.

Hash
A fixed-length output produced by a hash function (SHA-256) from input data; used for proof-of-work and transaction IDs.

Hash Rate
The total computational power being used by miners to process transactions and secure the network.

HD Wallet (Hierarchical Deterministic Wallet)
A wallet that can generate many addresses from a single seed phrase.

Input/Output (UTXO Model)
Bitcoin transactions consume previous outputs (UTXOs) as inputs and create new outputs, which become UTXOs for future transactions.

Lightning Network
A layer-2 protocol for off-chain, instant, and low-fee payments; controversial due to complexity and centralization risks.

Mempool
A collection of unconfirmed transactions waiting to be included in a block.

Merkle Root/Tree
A structure used to efficiently summarize and verify the integrity of transactions in a block.

Mining
The process of adding new blocks to the blockchain by solving proof-of-work puzzles.

Mining Pool
A group of miners who combine their computational resources and share rewards.

Multisig (Multi-signature)
A transaction that requires multiple signatures to spend funds, increasing security.

Node
Any computer participating in the Bitcoin network, either as a full node or a lightweight node[6].

Nonce
A variable in the block header that miners adjust to find a valid block hash.

OP Code (Operation Code)
A command in Bitcoin’s scripting language that performs a specific function in transaction validation.

OP_RETURN
A script opcode that allows data to be embedded in a transaction, making the output unspendable.

Orphan Block
A valid block that is not part of the main chain, usually because another block at the same height was accepted first.

P2P (Peer-to-Peer)
A decentralized network structure where participants connect directly without intermediaries.

P2PKH (Pay-to-Public-Key-Hash)
A common type of Bitcoin address and transaction output.

P2SH (Pay-to-Script-Hash)
A transaction type allowing complex scripts, such as multisig, to be paid to a hash of a script.

P2WPKH/P2WSH (Pay-to-Witness-Public-Key-Hash/Script-Hash)
SegWit address types that enable lower fees and improved efficiency.

Private Key
A secret number that allows the owner to spend bitcoins associated with a specific address[1].

Proof of Work (PoW)
A consensus mechanism requiring miners to solve computational puzzles to propose new blocks[4][5].

Pruned Node
A full node that discards old block data to save disk space, keeping only recent blocks.

Public Key
A cryptographic key that can be shared publicly and is used to receive bitcoin.

RBF (Replace-By-Fee)
A mechanism allowing a sender to replace a pending transaction with a new one that pays a higher fee.

Satoshi
The smallest unit of bitcoin, equal to 0.00000001 BTC.

Script
A simple programming language used to define how bitcoins can be spent.

Segregated Witness (SegWit)
A protocol upgrade that separates signature data from transaction data, enabling increased block capacity and fixing malleability.

SHA-256
The cryptographic hash function used for proof-of-work and transaction IDs.

Sidechain
A separate blockchain that is interoperable with Bitcoin, used for experimentation or additional features.

Soft Fork
A backward-compatible protocol upgrade that tightens validation rules[6].

SPV (Simplified Payment Verification)
A lightweight client that verifies transactions using block headers and Merkle proofs instead of the full blockchain.

Taproot
A protocol upgrade that enhances privacy and enables more complex smart contracts.

Transaction (Tx)
A transfer of bitcoin from one address to another, recorded on the blockchain.

Transaction ID (TXID)
A unique identifier for a specific transaction, derived from hashing the transaction data.

UTXO (Unspent Transaction Output)
An output from a previous transaction that can be used as an input in a new transaction.

Weight Units
A measure introduced with SegWit to more fairly account for transaction size and block capacity.