Bitcoin Glossary & Script Primer

Essential Bitcoin terminology and the Script language explained. From blocks and nodes to PoW, UTXO, and opcodes.

9 min readLast updated: August 15, 2026

Key points

A structured glossary covering core Bitcoin terminology — blocks, nodes, UTXOs, opcodes — alongside the Bitcoin Script language itself. It explains the stack-based Script model, standard transaction types like P2PKH and Taproot, and security concepts such as the 51% attack.

Basic Terms

Block: A bundle of verified transactions. A new block is generated approximately every 10 minutes and cryptographically linked to the previous block.
Blockchain: The chain formed by each block containing the hash of the previous block. It guarantees transaction verification and irreversibility.
Node: Software connected to the Bitcoin network. Full nodes maintain the entire blockchain and verify all rules.
Miner: Software that repeatedly calculates hashes to produce new blocks. Successful miners receive block rewards.
Mempool (Memory Pool): Temporary storage for unconfirmed transactions waiting to be included in a block. Each node manages its own mempool independently.

Cryptographic Terms

Hash: The output of a cryptographic hash function. It generates a fixed-length "fingerprint" from arbitrary data. The same input always produces the same output, but reversing the process is computationally infeasible.
Proof of Work: Data that is "costly to produce but easy to verify." Bitcoin uses the Hashcash system, requiring a block's hash to fall below a specific threshold.
Nonce: An otherwise meaningless number used to alter the hash outcome. Miners iterate through nonces to find a hash that meets the difficulty condition.
Merkle Root: A single hash that recursively summarizes all transaction hashes in a block. Included in the block header, it enables efficient tamper detection.
Difficulty: A parameter adjusted every 2,016 blocks (~2 weeks) that represents how hard it is to generate a block. It auto-adjusts based on the network's total hash rate.

Transaction Terms

Transaction: A record of Bitcoin transfer. Composed of inputs (consuming UTXOs) and outputs (creating new UTXOs).
UTXO (Unspent Transaction Output): An unspent transaction output. A Bitcoin "balance" is the sum of all UTXOs associated with an address—fundamentally different from an account balance model.
Coinbase: The first transaction in a block. It contains the mining reward, and miners can embed arbitrary data in its input. The Times headline in the genesis block was recorded here.
Confirmation: After a transaction is included in a block, the number of blocks stacked on top. Convention considers 6 confirmations as "final."
Double Spending: Attempting to spend the same coins twice. Bitcoin's consensus mechanism prevents this.
Transaction Fee: An optional fee attached to a transaction. Higher fees result in faster processing by miners.

Network Terms

Main Chain: The valid blockchain with the most accumulated computational work (the longest chain).
Orphan Block: A block whose parent is unknown. A Stale Block was once part of the main chain but is no longer included.
Reorganization (Reorg): When a longer (higher-difficulty) chain is found, the blockchain switches to it. Small reorgs of 1–2 blocks occur naturally.
Seed Nodes: Nodes whose IP addresses are hardcoded into the Bitcoin client. Used for initial network connection during fresh installation.
Satoshi: The smallest unit of Bitcoin. 1 satoshi = 0.00000001 BTC. Named after Bitcoin's creator.
Virgin Bitcoin: Block rewards that have never been spent since being mined. Sometimes noted for regulatory reasons as coins with no transaction history.

What Is Bitcoin Script?

Bitcoin Script is the programming language that controls Bitcoin transactions. It's a stack-based language similar to Forth, intentionally designed to be Turing-incomplete (no loops).
Scripts consist of two parts: scriptPubKey (sets spending conditions) and scriptSig (provides inputs to satisfy those conditions). If execution completes with a true (non-zero) value on top of the stack, the transaction is valid.
This design enables flexible spending conditions: "only the owner of a specific private key can spend," "requires multiple signatures," or "cannot be spent until a certain time has passed."
The Turing-incomplete design is intentional. It prevents infinite loops and resource exhaustion attacks, guaranteeing that all scripts complete in finite time.

Standard Transaction Types

P2PKH (Pay-to-Public-Key-Hash): The most common format. Requires a public key matching the hash and a corresponding signature. Addresses starting with "1" use this type.
P2SH (Pay-to-Script-Hash): Sends to the hash of a script. Enables multisig and more complex conditions. Addresses start with "3."
P2WPKH / P2WSH (SegWit): Uses Segregated Witness. Separates signature data from the transaction body for improved block capacity efficiency. Addresses start with "bc1q."
P2TR (Taproot): The latest format, introduced in 2021. Combines Schnorr signatures with MAST (Merkelized Alternative Script Trees) for improved privacy and efficiency. Addresses start with "bc1p."
OP_RETURN: An opcode that creates provably unspendable outputs. Used for data embedding. Allows recording metadata on the blockchain without polluting the UTXO set. The data size is governed by node relay policy (not consensus); its default cap was long ~80 bytes, but Bitcoin Core v30 (2025) raised that default dramatically, effectively removing the limit (configurable per node).

Key Opcodes

Crypto operations: OP_SHA256 (SHA-256 hash), OP_HASH160 (double hash: SHA-256 + RIPEMD-160), OP_CHECKSIG (signature verification), OP_CHECKMULTISIG (multisig verification).
Stack operations: OP_DUP (duplicate top item), OP_DROP (discard top item), OP_SWAP (swap top two items).
Flow control: OP_IF / OP_ELSE / OP_ENDIF (conditional branching), OP_VERIFY (abort script on verification failure).
Timelocks: OP_CHECKLOCKTIMEVERIFY (absolute timelock), OP_CHECKSEQUENCEVERIFY (relative timelock). These are foundational technologies for the Lightning Network.
Disabled opcodes: OP_CAT (string concatenation), OP_MUL (multiplication), and others were disabled due to past bugs. Adding new opcodes requires careful softfork implementation.

Security Concepts

51% Attack: An attack where an entity controls over half the network's computing power. They can reverse their own transactions and block others' confirmations, but cannot steal anyone else's coins.
Sybil Attack: Creating numerous fake nodes to manipulate the network. Bitcoin mitigates this by limiting outbound connections to one per /16 subnet.
Finney Attack: A double-spend attack against zero-confirmation transactions. For small transactions, waiting a few seconds significantly reduces the risk.
Timejacking: Manipulating a node's clock to affect block validity judgments. Mitigated through improved time calculation methods.
DoS Attack: Overloading nodes with excessive data to disrupt normal operations. Bitcoin clients implement 20+ defenses including rate limiting, peer scoring, and IP banning.

Wallet & Custody Terms

Address: A string identifying where bitcoin is sent. It is derived from a public key or a script and encodes the conditions required to spend those coins. Depending on the format, it begins with "1", "3", "bc1q", or "bc1p".
Private Key: The only data that can produce the signature needed to spend coins. It is effectively a very large random number, and whoever knows it can move those coins.
Public Key: A key derived from the private key through a one-way elliptic-curve computation. The public key (or its hash) becomes the basis of an address and is used to verify signatures. The private key cannot be recovered from it.
Seed Phrase (Recovery Phrase): A sequence of 12 or 24 words that serves as a wallet backup. Based on the BIP-39 standard, every private key in the wallet can be regenerated from it.
Passphrase: An optional extra secret added on top of the seed phrase, informally called the "25th word." Adding one produces an entirely different wallet, so forgetting it makes recovery impossible.
HD Wallet (Hierarchical Deterministic Wallet): A scheme that derives an unlimited tree of keys and addresses from a single seed (BIP-32). It is what allows a fresh address to be used for every receipt.
Hot Wallet / Cold Wallet: A hot wallet handles private keys on an internet-connected device; a cold wallet keeps them completely disconnected. The choice is a trade-off between convenience and security.
Hardware Wallet: A dedicated device that stores private keys internally and performs signing inside the device, so the keys are never exposed to a general-purpose PC or phone. It is the most common implementation of cold storage.
Paper Wallet / Steel Wallet: Storing keys or a seed phrase by printing them on paper or stamping them into metal. Both are fully offline, but paper is vulnerable to fire and decay, which is exactly the weakness metal is used to cover.
Multisig (Multi-signature): A setup requiring m signatures out of n keys before funds can move. It builds in redundancy so that losing a single key does not mean losing the coins.
Custodial / Non-custodial (Self-custody): Custodial means a third party such as an exchange holds the private keys; non-custodial means the user holds them. Self-custody grants full control and full responsibility at the same time.
KYC (Know Your Customer): The identity-verification process that operators such as exchanges perform on their users. Required in most jurisdictions as an anti-money-laundering measure, it links the addresses used through that account to a real identity.

Ecosystem & Market Terms

Halving: The rule that cuts the mining reward in half every 210,000 blocks (roughly four years). The fourth halving, in 2024, reduced the reward to 3.125 BTC.
Lightning Network: A Layer 2 that uses payment channels and HTLCs to move value off-chain, instantly and at low cost. Only channel opens and closes are recorded on-chain.
Layer 1 / Layer 2: Layer 1 is the Bitcoin base chain itself. Layer 2 refers to protocols built on top of it that settle back to the base chain only for final results.
Sidechain: A separate chain linked to Bitcoin by a two-way peg, with its own consensus and block production. Liquid is the best-known example.
On-chain / Off-chain: On-chain transactions are recorded directly on the blockchain; off-chain transactions are settled on a Layer 2 or inside the internal ledger of a service provider.
Ordinals / Inscription: Ordinals is the scheme that assigns a serial number to each individual satoshi, and an inscription is data written onto one of those numbered satoshis. It required no protocol change, and later gave rise to token standards such as Runes.
Stablecoin: A crypto-asset designed to track the value of a fiat currency or similar reference. In Japan they are regulated as "electronic payment instruments," with issuance limited to banks, funds-transfer operators, and trust companies.
CBDC (Central Bank Digital Currency): Fiat currency issued in digital form by a central bank itself. Having a central issuer and administrator makes it a fundamentally different design from Bitcoin, which has no issuer at all.
Bitcoin ETF: An exchange-traded product tracking the bitcoin price. Spot ETFs hold the asset itself while futures ETFs track it through futures contracts, and U.S. spot ETFs were approved in January 2024.
CEX / DEX (Centralized / Decentralized Exchange): A CEX takes custody of user assets and performs identity verification, while a DEX lets users trade through a protocol without handing over custody. For bitcoin itself, non-custodial exchange is typically done through mechanisms such as atomic swaps.
RBF (Replace-By-Fee): A mechanism for replacing an unconfirmed transaction with a higher-fee one that spends the same inputs (BIP-125). It is the standard remedy when a fee turns out to be too low to confirm.
CPFP (Child-Pays-For-Parent): Creating a high-fee "child" transaction that spends the output of a stuck low-fee parent, which gives miners an incentive to mine both together.
sat/vB (satoshis per virtual byte): The unit for expressing a fee rate — how many satoshis are paid per virtual byte. The total fee equals fee rate multiplied by transaction size, which is why the amount being sent does not by itself affect the fee.
Dust: A UTXO so small that spending it would cost more in fees than it is worth. Most nodes and wallets apply a dust threshold below which such outputs are not relayed, and sending tiny amounts to probe how addresses are linked is known as a dusting attack.
Travel Rule: A requirement, based on FATF recommendations, that service providers share originator and beneficiary information when crypto-assets are transferred between them. Implementation is progressing jurisdiction by jurisdiction.