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Address (Bitcoin)
A Bitcoin address is a unique string derived from a public key, used to receive bitcoin payments. It acts as a public identifier, allowing anyone to send funds while only the corresponding private key holder can spend them. Common formats include legacy (starting with 1), P2SH (3), Bech32 (bc1q for SegWit), and Bech32m (bc1p for…
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Bitcoin
Bitcoin (BTC) is a decentralized digital currency created by an unknown person or group using the pseudonym Satoshi Nakamoto. The Bitcoin whitepaper was released on October 31, 2008 and the network began operating with the genesis block on January 3, 2009.
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Bitcoin Core
The official open-source software client for the Bitcoin network.
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Bitcoin Node
A node runs the Bitcoin Core software (or another reference implementation) that allows users to interact with and participate in network consensus by maintaining a copy of the Bitcoin blockchain and validating transactions and blocks.
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Bitcoin Script
Bitcoin’s native programming language used to define how bitcoins are spent and who can spend them. It is a simple, stack-based language used to be secure, efficient, and easy for developers to work with.
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BitVM
BitVM, or the Bitcoin Virtual Machine, is an innovative protocol by Robin Linus designed to enable Turing-complete smart contracts on the Bitcoin network without modifying its consensus rules. It achieves this by performing arbitrary computations off-chain using Bitcoin Script and then verifying the results on-chain through a challenge-response system between a prover and a verifier.…
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Blind oracle
A blind oracle is a cryptographic protocol based on zero-knowledge proofs that enable a user to send a confidential message to an entity known as an oracle. The oracle processes the message through operations like signing or encryption without gaining knowledge of the message’s contents. The user can then verify the outcome without exposing the…
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Blind signatures
Blind signatures are a signature scheme that provides anonymity by allowing one party to sign a transaction without learning the details of the transaction.
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Block
A block is a structured data unit that batches validated Bitcoin transactions and links to the previous block via its hash, forming one step in the ever-growing blockchain ledger.
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Block Header
A block header is the compact 80-byte bundle of metadata that summarizes a Bitcoin block. By chaining and securing these headers together, miners protect the blockchain, and nodes can verify it efficiently.
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Block Height
Block height is the numerical distance between a given block and Bitcoin’s very first block (the Genesis Block, height 0). Every time miners add a new block to the chain, the height increases by one, so the current block height tells you exactly how many blocks, and therefore how much proof-of-work, sit beneath that block.
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Blockchain
A blockchain is a publicly auditable ledger in which transactions are grouped into cryptographically linked blocks and agreed upon by a decentralized network of nodes running proof-of-work consensus.
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Blockchain Explorer API
A blockchain explorer is a web-based tool that allows users to search, view, and analyze data on the Bitcoin blockchain, such as blocks, transactions, addresses, and balances. It serves as a public interface to the immutable ledger, enabling verification without needing to run a full node.
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BOLT12
A proposed extension to the Lightning Specification, focusing on enhancing the efficiency and flexibility of the network. The primary feature introduced by BOLT12 is the Offers protocol, which streamlines the process of creating, managing, and executing Lightning invoices.
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Borromean ring signatures
A cryptographic protocol that enables signers to stay anonymous among multiple public keys in a ring. Borromean ring signatures are used in Liquid to enhance privacy by protecting the sender’s identity and allowing for verification that at least one party from a predefined set signed a message without disclosing the specific signer’s identity.
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Broadcast Transaction
Broadcasting a transaction is the process of propagating a signed Bitcoin transaction across the peer-to-peer network, where nodes validate it, add it to the mempool, and miners eventually include it in a block for permanent recording on the blockchain. This step transforms user intent into confirmed settlement.
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Bulletproofs
A type of zero-knowledge proof in Bitcoin-related systems that enable confidentiality without revealing transaction amounts.
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Checksum
A checksum is a simple way of detecting errors or mistakes in data.
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Confidential Transactions (CT)
A privacy-enhancing feature implemented on the Liquid Network that blinds both the asset amount and type being transferred (other than the two parties involved) in a transaction while allowing nodes to verify and process it securely. CT is particularly valuable for businesses and individuals who want to transact without revealing sensitive financial information to the…
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Core Lightning (CLN)
A community-driven Lightning implementation focusing on specification compliance and performance. CLN is known for its lightweight memory footprint, allowing it to run on low-spec devices, and its modular approach to design, giving developers the freedom to create custom plugins and enhance functionality. More information on CLN can be found on its official website: corelightning.org
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Decentralization
Decentralization is the distribution of authority and decision-making away from a single, central entity to a broad network of independent participants.
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Diceware
Diceware is a method for generating passphrases, passwords, and other cryptography, like Bitcoin seeds, using ordinary dice.
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Difficulty Adjustment
Bitcoin’s mechanism to automatically adjust the computational effort required for mining every ~2,016 blocks to maintain a ~10-minute block time.
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Digital securities
Digital securities, or security tokens, represent digitized real-world assets or financial instruments, such as stocks, bonds, or real estate. These tokens are issued and managed on a blockchain like the Liquid Network and are subject to financial regulations and often give investors rights, such as dividends, profit sharing, or voting.
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Dynamic Federations (DynaFed)
Dynamic Federations (DynaFed for short) was a Liquid hard fork activated in October 2021.
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Federations
Refers to a group of participants collaborating to manage a network, striking a balance between centralization and decentralization. In federated blockchains, like the Liquid Network, a distributed group of members sign blocks and maintain the network. Unlike exchanges or custodial wallets, federations prevent a central point of failure, as the responsibility is shared among multiple…
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Fedimint
Fedimint, or federated mint, is an open-source eCash protocol that complements existing layer-2 solutions to help scale Bitcoin. It offers scalable, community-focused custody that is natively interoperable with Lightning and uses a federated model similar to Liquid .
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Fee Estimates
Fee estimates are algorithmic predictions of the minimum fee rate (in satoshis per virtual byte, or sat/vB) needed for a Bitcoin transaction to be confirmed within a specified number of blocks, such as 1 for fast or 6 for standard. They enable users to optimize costs while ensuring timely inclusion by miners in the competitive…
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Fork
A fork in Bitcoin refers to a change in the protocol rules. There are two main types:
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FROST
FROST (Flexible Round-Optimized Schnorr Threshold Signatures) is a protocol that minimizes the number of rounds of communication between participants in Schnorr signature schemes, reducing network bandwidth, time, and probability of errors. It requires a maximum of three rounds for signing, even without a trusted signature aggregator or preprocessing stage. It can be used to implement…
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FUD
FUD stands for Fear, Uncertainty, and Doubt. It refers to misinformation or negative claims aimed at reducing confidence in Bitcoin’s value or use.
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Genesis Block
The Genesis Block (block 0) is the very first block in the Bitcoin blockchain, mined by Satoshi Nakamoto on January 3 2009. It has no parent block, is hard-coded into every Bitcoin node, and serves as the root-of-trust for the entire ledger.
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Halving
The Bitcoin halving is a programmed event in Bitcoin’s protocol that occurs approximately every four years, or precisely every 210,000 blocks, where the block reward given to miners for successfully adding a new block to the blockchain is reduced by 50%. This mechanism controls the issuance rate of new bitcoins, ensuring a gradual approach to…
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Hashcash
In 1997, Blockstream CEO Dr. Adam Back proposed Hashcash, a proof-of-work (PoW) mechanism intended to stop spam and denial-of-service (DoS) attacks. It is now used as the basis of Bitcoin’s mining algorithm.
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Hashrate
An aggregate measure of how many hashes Bitcoin miners produce per second in the Proof-of-Work consensus algorithm. At current, Bitcoin hashrate is measured in exahashes per second (EH/s), representing the speed at which miners attempt to find a valid hash for a new block.
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HODL
HODL is a Bitcoin community term meaning to hold onto Bitcoin long-term, regardless of market volatility, reflecting a belief in its enduring value as sound money.
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HODLer
An intentional misnomer for ‘holder’; a person who keeps long-term savings in Bitcoin. The misnomer originates from a 2013 drunken rant by BitcoinTalk forum user GameKyuubi, titled “I AM HODLING,” in which he explains that trading typically creates losses and the best strategy is to never sell.
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Introspection opcodes
Introspection opcodes are a specific subset of opcodes that allow for a more modular approach to covenant construction, providing a way for scripts to inspect certain aspects of the transaction.
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Key-value store
A key-value store in Bitcoin is a simple and efficient type of database used to store and retrieve data by using unique keys to access the stored values.
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Lightning implementation
A software program capable of operating a Lightning node and engaging with the Lightning Network on the backend. Each implementation follows the BOLT (Basis of Lightning Technology) specifications, ensuring compatibility and seamless interaction between nodes within the network.
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Lightning Network (LN)
A decentralized layer-2 protocol built on top of Bitcoin that uses a peer-to-peer network of payment channels to enable cheaper, faster, and more scalable transactions. Payments on Lighting are aggregated off-chain and then sent to the Bitcoin mainchain for final settlement, leveraging Bitcoin’s security and decentralization while improving transaction throughput and helping Bitcoin scale globally.
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Lightning Service Provider (LSP)
A Lightning Service Provider, or LSP, is an entity that facilitates various liquidity and network services on the Lightning Network for users and businesses.
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Lightning Specification
The Lightning Specification, also known as the Basis of Lightning Technology (BOLT), is a collection of the Bitcoin community’s efforts to specify and consolidate the technical standards around the Lightning Network, intending to reach feature compatibility and interoperability across implementations. At the time of writing, there are 11 BOLTs, with the much-anticipated BOLT12 currently in…
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Lightning-as-a-Service (LaaS)
Lightning-as-a-Service, or LaaS, is a specialized service model where third-party providers offer infrastructure and solutions related to Bitcoin’s Lightning Network to businesses and developers.
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Liquid Network (LQ)
A federated layer-2 solution built on top of Bitcoin, designed to function as Bitcoin’s financial layer. One of its key features is the ability to issue digital securities and other assets, such as stablecoins or utility tokens. By digitizing (tokenizing) these assets on Liquid, users can benefit from 24/7 trading, greater liquidity, fractional ownership, reduced…
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Mempool
The mempool, or memory pool, is where Bitcoin transactions wait before being confirmed and recorded immutably on the blockchain. Each Bitcoin node has its own mempool that stores these pending transactions after verifying their validity. This verification includes checking for double spending and proper cryptographic signatures.
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Merge conflict
A merge conflict in the context of Bitcoin occurs when two branches have made conflicting changes to the same code, and the version control system cannot automatically determine which change is correct.
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Merkle tree
Named after its inventor, Ralph Merkle, a Merkle tree, also known as a hash tree, is a data structure that ensures the integrity of data verification in Bitcoin. Its tree-like structure enables lightweight nodes to verify transactions without having to download the entire block by encoding all transactions in a block into a single hash,…
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Mining
Mining is the decentralized process where specialized computers, known as miners, solve complex Proof-of-Work puzzles to validate transactions, add new blocks to Bitcoin’s blockchain, and introduce new bitcoin into circulation.
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Miniscript
Miniscript is a subset of Bitcoin Script introduced by Blockstream in 2019 that imposes a tree structure on scripts for safer, more extensible smart contracts on Bitcoin.
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Mnemonic
Also referred to as a recovery phrase or seed phrase, a mnemonic is typically a sequence of 12 or 24 randomly generated words used to create and recover a Bitcoin wallet. The mnemonic represents your private key’s hexadecimal data in the form of easily legible and rememberable (thus more human-friendly) English words. It is used…
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Multi-part payments (MPP)
Multi-part payments (MPP), also referred to as multi-path payments, are a feature initially added to the Lightning Specification in BOLT3 and further detailed in BOLT11. MPP allows the sender to split a payment across an arbitrary number of channels and routes, combining liquidity in all channels up to the desired amount.
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MuSig2
A cryptographic protocol for creating Schnorr -based multisignatures in Bitcoin. An improvement over the original MuSig protocol, MuSig2 offers greater privacy, scalability, and flexibility when compared to standard multisignature by enabling a group of signers to produce a single signature representing their collective consent for a specific transaction. In MuSig2, each signer’s key material is…
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Opcode
Opcodes, short for operation codes, are the basic building blocks in Bitcoin Script that define and enable various operations on the network. They allow users to set transaction conditions, manipulate data on the stack, execute calculations, validate or invalidate transactions, and perform cryptographic functions, among other functions.
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Orange Pill
Orange Pill is a Bitcoin meme for introducing someone to Bitcoin’s principles, awakening them to its value as sound money.
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Payment channel
Multisignature contracts between peers that enable instant, low-fee transactions off-chain. When the participants decide to close a channel, the final balance is then settled on the Bitcoin mainchain in a single transaction.
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Pedersen commitments
Pedersen commitments are a cryptographic tool used in the Liquid Network’s Confidential Transactions to conceal the amounts of an asset being transferred, while still being able to verify that the amounts are balanced within any particular transaction.
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Peer-to-Peer (P2P) Network
A peer-to-peer (P2P) network is a decentralized communication model in which every participant (or “peer”) can connect, share data, and relay messages directly with every other participant, no central server or coordinator required.
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Proof-of-Work (PoW)
The algorithm that concurrently secures the Bitcoin blockchain, processes transactions, facilitates consensus, and mints new bitcoin. In PoW, Bitcoin miners compete to solve complex cryptographic puzzles with computing power, which is measured in hashrate . The first Bitcoin miner to solve the block is rewarded with bitcoin (plus transaction fees) and wins the right to…
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Rangeproofs
Rangeproofs are a type of zero-knowledge proof used in the Liquid Network and other blockchains with Confidential Transactions to ensure transaction amounts are valid without revealing them.
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Real-world assets (RWAs)
Real-world assets, also known as RWAs, are tangible assets with intrinsic value that have been tokenized on a blockchain. This tokenization process involves creating a digital representation of a physical asset, like real estate, commodities, and debt instruments.
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RIPEMD-160
RIPEMD-160 (RIPE Message Digest) is a cryptographic hash function producing a 160-bit (20-byte) hash value. There are five functions in the family: RIPEMD, RIPEMD-128, RIPEMD-160, RIPEMD-256, and RIPEMD-320, of which RIPEMD-160 is the most common.
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RISC-V
RISC-V can be thought of as an open-source instruction manual for processors.
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ROAST
ROAST (Robust Asynchronous Schnorr Threshold signatures) is a proposed cryptographic protocol designed to enhance existing Schnorr threshold signature schemes used in Bitcoin and its second layers.
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Satoshis (sats)
The smallest denomination of Bitcoin, named after its pseudonymous creator(s), Satoshi Nakamoto. One sat represents 1/100,000,000 (one hundred millionths) of a Bitcoin or 0.00000001 BTC.
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Schnorr signatures
A signature scheme in Bitcoin activated in the Taproot upgrade with BIP 340. Schnorr signatures offer several advantages over ECDSA in terms of efficiency, scalability, and privacy.
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SHA-256
SHA-256, or Secure Hash Algorithm 256-bit, is a cryptographic hash function used in many Bitcoin processes. It is used to hash blocks in mining (proof of work), create Bitcoin addresses from public keys (with RIPEMD-160), generate transaction IDs (txid) to secure transactions, and construct the Merkle tree for transaction verification.
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Shamir’s Secret Sharing
Shamir’s Secret Sharing, named after its creator, Adi Shamir, who introduced the concept in 1979, is a method for securely sharing a secret (like a private key) in a distributed manner.
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SNARKs
SNARKs, or Succinct Non-Interactive Arguments of Knowledge, are a type of zero-knowledge proof system similar to STARKs but with the added property of succinctness (their ability to produce compact, quick-to-verify proofs).
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Sound Money
Sound money is a stable, reliable currency that maintains its purchasing power over time through scarcity, durability, and resistance to arbitrary inflation or manipulation.
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STARKs
STARKs, or Scalable Transparent Arguments of Knowledge, are a type of zero-knowledge proof system that allows for the creation of non-interactive proofs (the prover and verifier do not need to interact) for computational integrity. In a STARK, one can prove that they know a solution to a problem without revealing any information about the solution…
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Synthetic asset
Sometimes referred to as simply synths, synthetic assets are collateral-backed assets whose value fluctuates depending on a reference price. They can be defined as anything an oracle can attest to, from digital securities or a share of Apple stock to entire index funds like the S&P 500.
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Timelocks
Transaction or output restrictions that permit spending only after a certain point in time. They are valuable for postdating transactions and securing funds to a specific date in the future.
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UTXO Set
UTXO Set Quick Definition The UTXO set is the complete collection of all Unspent Transaction Outputs (UTXOs) in the Bitcoin…
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Vaults
Vaults are a way to improve the security of Bitcoin self-custody by adding additional spending restrictions. Today, vaults can be possible with the addition of new covenant opcodes .
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Zero-Knowledge Proofs (ZKPs)
A class of mathematical functions that allow someone to prove they know something about a hidden value without revealing that value.