This vocabulary guide is designed for facilitators and participants in community Bitcoin education sessions. Each definition uses plain language and aims to be accurate without requiring a technical background.
Print this out for sessions. Participants can keep it as a reference after the workshop ends.
Core Terms
Bitcoin A digital currency that exists on a global, open network. Unlike money held in a bank or mobile money account, Bitcoin is not controlled by any company, government, or organisation. Transactions are recorded on a shared public record called the blockchain.
Wallet A software application on your phone or computer that manages your Bitcoin. The wallet does not store your bitcoin the way a physical wallet stores cash. Instead, it stores the keys that prove you own your bitcoin and allow you to move it. If you have your keys, you have access to your bitcoin regardless of which device or app you use.
Private Key A secret piece of information that proves your ownership of bitcoin. You do not usually see the private key directly; your wallet manages it for you. Your recovery phrase (see below) is a readable representation of your private key.
Recovery Phrase (Seed Phrase) A sequence of 12 or 24 common words that represent your wallet’s private key. If you lose your phone or it breaks, you can use your recovery phrase to restore your wallet on a new device. Anyone who has your recovery phrase has full access to your bitcoin. This phrase should be written down on paper, stored safely, and never shared with anyone.
Address A Bitcoin address is like an account number. You share your address with someone who wants to send you bitcoin. Each address is a string of letters and numbers, and can also be displayed as a QR code that people scan with their phones. You can generate new addresses freely.
Transaction A transfer of bitcoin from one address to another. Once a transaction is confirmed on the network, it cannot be reversed. This is different from a bank transfer or card payment, which can sometimes be cancelled or disputed.
Confirmation After a transaction is sent, it is verified by the network in a process called mining. Each verification is a confirmation. More confirmations mean a transaction is more securely settled. For small payments, one confirmation is usually enough. This typically takes 10 minutes or more.
Blockchain The public record of all confirmed Bitcoin transactions. The blockchain is maintained by thousands of computers around the world. No single person or organisation controls it. Anyone can view the transaction history, though addresses do not contain names.
Lightning Network
Lightning Network A payment system built on top of Bitcoin that allows faster and cheaper transactions. Lightning is particularly useful for small everyday payments. A Lightning payment typically completes in seconds and has very low fees.
Lightning Wallet A wallet that supports Lightning Network payments in addition to standard Bitcoin transactions. Many mobile wallets include Lightning support.
Lightning Invoice A payment request used on the Lightning Network. Instead of sharing an address, you generate an invoice that specifies the amount and is valid for a limited time. The payer scans or pastes the invoice to complete the payment.
Payment Channel A connection between two parties on the Lightning Network that allows them to send payments back and forth without each transaction going onto the main blockchain immediately. Payment channels make Lightning fast and cheap.
Custody and Control
Custodial A custodial wallet or service holds your bitcoin on your behalf, similar to how a bank holds your money. You access your funds through the service but the service actually controls the keys. If the service is hacked or fails, your funds may be at risk.
Non-Custodial A non-custodial wallet means you control your own keys. No company or service holds your bitcoin for you. You are fully responsible for keeping your recovery phrase safe. “Not your keys, not your coins” is a phrase used to describe this principle.
Self-Custody The practice of holding your own bitcoin in a non-custodial wallet. Self-custody gives you full control and means no third party can freeze or seize your funds, but it requires you to take responsibility for your recovery phrase.
Getting and Using Bitcoin
Exchange A service that allows you to buy bitcoin using local currency or other payment methods, and to sell bitcoin back to local currency. Exchanges vary in the currencies they support, fees they charge, and identity verification they require.
On-Ramp A term for any service or process that allows you to convert local currency or cash into bitcoin. On-ramps include exchanges, peer-to-peer trading platforms, and local Bitcoin sellers.
Peer-to-Peer (P2P) A transaction or service that happens directly between two people without a company in the middle. Peer-to-peer Bitcoin trading allows you to buy or sell bitcoin directly with another person, often using local payment methods.
Fee The small amount paid to the Bitcoin network when you make a transaction. Fees go to the miners who verify transactions. Lightning Network fees are typically much smaller than main-network fees.
Safety Vocabulary
Scam Any scheme that attempts to steal your bitcoin or money by deceiving you. Common Bitcoin scams include investment schemes promising guaranteed returns, fake giveaways that ask you to send bitcoin first, and phishing sites that look like real exchanges or wallets.
Phishing An attempt to steal your credentials or recovery phrase by pretending to be a legitimate service. Phishing often arrives as a convincing-looking message or website that asks you to enter your recovery phrase or wallet password.
Seed Phrase Request Any request for your recovery phrase is a scam. No legitimate wallet, exchange, support team, facilitator, or other party needs your recovery phrase to help you. If someone asks for it, they are trying to steal your bitcoin.
Irreversible Transaction Once a Bitcoin transaction is confirmed, it cannot be undone. There is no dispute process or customer service that can reverse it. Always verify the recipient address carefully before sending.
Terms to Use Carefully
Decentralisation Bitcoin has no central authority: no head office, no CEO, no government in control. The network is run by thousands of independent computers globally. This is one of Bitcoin’s most important properties but is often misunderstood as meaning there is no accountability, which is not the same thing.
Store of Value The idea that bitcoin can be used to preserve purchasing power over time, like gold or other assets. This is a meaningful use case for some people in some contexts, but it comes with significant volatility risk and should not be described as guaranteed.
Volatility Bitcoin’s price can change significantly over short periods. This is a real risk for anyone holding bitcoin, particularly merchants and people who need to convert to local currency for living expenses. Explaining volatility honestly is part of responsible Bitcoin education.
Further Reading
For deeper explanations of any of these concepts, see the Guides section. The Bitcoin Safety for Beginners guide covers the safety terms in more detail, and How the Lightning Network Works explains Lightning in full.