Appendix
Glossary
Every term from the chapters, in plain language
- Address
- A destination for receiving bitcoin: a long random string of characters that you can share freely, like an email address.→ Chapter 1
- Amended Payment Services Act (Japan)
- A Japanese law amendment that took effect in April 2017. It defined virtual currency in law and required exchanges to register with the Financial Services Agency, one of the earliest such frameworks in the world.→ Chapter 4
- Blockchain
- A ledger in which transactions are grouped into blocks and linked together in a chain. Nodes all over the world hold identical copies, and rewriting old entries is extremely hard.→ Chapter 1
- CBDC (Central Bank Digital Currency)
- A digital form of a national currency issued by its central bank. Unlike Bitcoin, it is controlled by the state. Facebook's Libra project spurred research into CBDCs worldwide.→ Chapter 5
- Cryptocurrency
- A general term for digital currencies based on cryptography. Bitcoin was the first and remains the largest; thousands of others followed.→ Chapter 1
- Crypto winter
- A long period of depressed cryptocurrency prices. The years 2018–2019 and 2022 are commonly described this way.→ Chapter 5
- Cypherpunks
- A blend of cipher and punk: a movement, begun in the 1990s, of people who believe cryptography should be used to protect individual privacy and freedom. Bitcoin's ideological roots lie here.→ Chapter 2
- Double spending
- The problem of copying a piece of digital money and spending it twice. It blocked digital cash for decades. Bitcoin was the first system to prevent it without an administrator.→ Chapter 2
- Ethereum
- A blockchain launched in 2015. Where Bitcoin focuses on being money, Ethereum can run contracts and applications on its blockchain. It is the second largest after Bitcoin.→ Chapter 4
- Fork
- A change of rules that splits a blockchain into two. The August 2017 split created a separate currency called Bitcoin Cash.→ Chapter 4
- FTX
- A large cryptocurrency exchange that collapsed in November 2022. It had secretly used customer funds at an affiliated firm; its founder was convicted.→ Chapter 5
- Genesis block
- The very first block of the blockchain (block 0), created by Satoshi Nakamoto on 3 January 2009. It contains a headline from The Times.→ Chapter 3
- Halving
- An event every 210,000 blocks (about four years) that halves the mining reward. It fell from 50 BTC in 2009 to 25 in 2012, 12.5 in 2016, 6.25 in 2020 and 3.125 in 2024.→ Chapters 1 and 4
- Lightning Network
- A system built on top of the Bitcoin blockchain for fast, low-cost small payments. It went live in 2018.→ Chapters 4 and 5
- Mining
- The work of bundling transactions into a block and adding it to the blockchain. Whoever wins a huge computational race receives newly created bitcoin as a reward. The people doing it are miners.→ Chapter 1
- Miscellaneous income (Japan)
- A category of income under Japanese tax law. Crypto gains currently fall here and are taxed together with salary at rates up to 55%, heavier than the roughly 20% on shares. The rules can change.→ Chapter 6
- Mt. Gox
- A Tokyo-based bitcoin exchange that opened in 2010 and at one point handled around 70% of global trading. It collapsed in 2014 with about 850,000 BTC missing.→ Chapters 3 and 4
- Node
- A computer that participates in the Bitcoin network, keeps a copy of the blockchain and rejects transactions that break the rules. Anyone can run one.→ Chapter 1
- Open source
- Software whose source code is published for anyone to read, check and propose improvements to. Bitcoin has been open source from the start.→ Chapter 1
- Private key
- The secret cryptographic key that lets its holder spend the bitcoin at an address. If someone learns it, they can steal the coins; if you lose it, the coins are gone forever.→ Chapter 1
- Proof of work (PoW)
- A scheme in which you prove you are honest by showing evidence of hard computational work. Hashcash (1997) was the prototype; it is the foundation of Bitcoin mining.→ Chapter 2
- Satoshi (unit)
- The smallest unit of bitcoin. 1 BTC = 100,000,000 satoshis. Named after Bitcoin's creator.→ Chapter 1
- Satoshi Nakamoto
- The name used by the person or group who designed and built Bitcoin. It sounds Japanese, but their identity is unknown. They published the paper in 2008 and disappeared from public view in 2011.→ Chapters 2 and 3
- Seed phrase
- A list of 12 to 24 English words that can restore a wallet. Anyone with these words can recreate all of its private keys, so never share them and keep them offline.→ Chapter 6
- SegWit
- Segregated Witness: a change to how transaction data is stored that lets more transactions fit in a block. Activated in August 2017.→ Chapter 4
- Spot ETF
- An ETF (Exchange Traded Fund) is an investment product traded on a stock exchange like a share. A spot bitcoin ETF actually holds bitcoin. The US approved them in January 2024.→ Chapter 5
- Taproot
- A Bitcoin upgrade activated in November 2021 that lets complex transactions be recorded more compactly and privately. The biggest update since SegWit in 2017.→ Chapter 5
- Wallet
- An app or device that stores private keys and lets you send and receive bitcoin. It can be a phone app, desktop software or a small USB-style device (hardware wallet).→ Chapter 1