BitcoinKeys.guide

Glossary

Every term, in plain English

No jargon left unexplained. Each term is one or two sentences, with a note on why it matters when you’re holding your own Bitcoin.

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A string of letters and numbers you give someone so they can send you Bitcoin, like an email address for payments. Sharing one is normal and cannot cost you coins — but it is permanent and public, so use a fresh one for every payment (see address reuse).
Receiving Bitcoin to the same address more than once. It hurts your privacy because anyone can see all payments tied to that address, so good wallets give you a new address for every payment.
Keeping a device completely offline, with no internet, Bluetooth, or USB data connection. It matters because a key that never touches an online device is far harder for a hacker to steal.
The widely used standard that turns your secret key into a list of 12 or 24 ordinary words (your seed phrase). Because most wallets follow it, you can restore your Bitcoin on a different brand of wallet if yours breaks.
A feature that lets one master seed phrase generate many separate child seed phrases on demand. It means you can back up just one phrase and derive others from it, instead of storing many unrelated backups.
A free website where you can look up any Bitcoin transaction or address and see its status. It's useful for confirming a payment went through, but typing your addresses into one can leak privacy to that website.
Companies and tools that study Bitcoin's public record to guess who owns which coins and how they move. It matters because reusing addresses or buying through KYC exchanges makes you easier to track.
The Bitcoin that comes back to you as leftover when you spend part of a coin, similar to getting change from a cash bill. Your wallet handles this automatically and sends it to a fresh address you control.
A wallet feature that lets you choose which chunks of your Bitcoin (see UTXO) a payment spends, instead of letting the wallet pick for you. It matters for privacy: when a wallet pulls several chunks into one payment, it tells anyone reading the ledger that all of them belong to the same person. Keeping coins from different sources apart is what coin control is for.
A privacy technique where many people combine their coins into one big transaction, making it hard to tell whose coin is whose. It helps break the trail that chain analysis relies on.
Keeping your Bitcoin keys on a device or backup that stays offline. It's the safest way to hold savings you don't spend often, since offline keys can't be drained by remote hackers.
A multisig setup where you hold most of the keys and a trusted company holds one, helping only if you lose a key. You stay in control because the company alone can never move your funds.
A payment you've been sent shows up in your wallet almost immediately, but it only counts as final once the network writes it into the public ledger — that's a confirmation. The first one typically takes ten minutes to an hour; until then the payment shows as "unconfirmed," seen but not yet settled.
A desktop app — Sparrow is the best-known — that assembles your separate hardware-wallet keys into one multisig wallet and passes each transaction around for signing. It organizes the keys but never holds them; the signing still happens on the devices.
"Custodial" means a company holds your Bitcoin for you (like an exchange) — they have the keys and you have an account. "Non-custodial" means you hold the keys yourself. Self-custody is non-custodial: no company can freeze or lose your coins, but the backup is on you.
A short recipe your wallet follows to generate all your addresses from one seed phrase. You rarely see it, but matching the right path matters when restoring a wallet in different software.
A company where you buy and sell Bitcoin (River, Swan, Strike, and so on). Fine for buying, but while your coins sit on the exchange the company holds the keys — so they're not really yours yet. Moving Bitcoin off the exchange into your own custody is what this guide is about.
A short code that acts like a name tag for a specific wallet key, so software can tell your devices apart. It's especially handy in multisig, where you need to know which device is which.
Software that downloads and independently checks the entire Bitcoin record, so you don't have to trust anyone else's version of the truth. Running your own lets your wallet verify payments privately, on your own terms.
A physical device that keeps your private keys offline and signs transactions inside itself. It matters because your keys never touch your phone or computer, where malware could steal them.
A wallet whose keys live on an internet-connected device like your phone. It's convenient for small, everyday spending but riskier for large savings, since online keys can be hacked.
"Know Your Customer" rules that require exchanges to collect your ID before you buy Bitcoin. It matters because it links your identity to your coins, so many self-custody holders prefer to limit how much of their stack is tied to ID-checked accounts.
A faster, cheaper layer built on top of Bitcoin for small, instant payments like buying coffee. It settles back to the main Bitcoin network, so you still ultimately hold real Bitcoin.
A setup that requires several keys to approve a spend, such as 2 of 3, instead of just one. It protects you because losing or having one key stolen doesn't put your Bitcoin at risk.
The software inside a device that anyone can inspect for hidden flaws or backdoors. It matters because independent experts can verify a wallet actually does what it claims with your keys.
The everyday habits that stop information about you being collected and joined up: what you publish, who you tell, which details you hand over, and which ones you never create in the first place. In Bitcoin it covers both halves of one problem — keeping your coins from being linked to your name on the public ledger, and keeping your name away from the fact that you hold any. It is a practice, not a product; no tool sells it to you. See threat model.
An extra secret added on top of your seed phrase. Despite the nickname it is not a word — any string works, and it is stored nowhere: your seed and your passphrase go into one calculation, and a wallet comes out. So there is no wrong passphrase, only a different one, and mistyping it opens a real, empty wallet with nothing to warn you. One seed opens any number of wallets this way. Roll it rather than inventing something memorable, and back it up as carefully as the seed but somewhere separate — forget it and the coins are gone even though the seed is safe.
A privacy-friendly way to pay where both the sender and receiver add coins to the transaction, confusing outside observers about who paid whom. Unlike CoinJoin, it happens during a normal payment you were already making.
The secret number that controls your Bitcoin and lets you spend it. Whoever knows it owns the coins, so keeping it secret and backed up is the whole point of self-custody.
A report some exchanges publish to show they really hold customer funds. Better than nothing, but not a guarantee: it usually shows some coins held at one moment and not what the company owes — its debts — which is the number that sinks a failing exchange. Treat it as partial reassurance, not safety. Your Bitcoin is only truly safe in your own custody (see custodial / non-custodial).
A "Partially Signed Bitcoin Transaction" is a draft payment passed between devices so an offline signer can approve it. It lets an air-gapped hardware wallet sign without ever going online.
A number derived from your private key and used to create your receiving addresses. Nobody can spend your Bitcoin with it, and nobody can work backwards from it to your private key — but that is not the same as harmless: what you publish can be linked together. Share addresses when you need to be paid; don't publish more than you have to.
A plain-language document that tells your family which wallet to use and where each backup lives, so they can restore your Bitcoin. It should point to your backups but never contain the actual seed words or passphrase.
Short for satoshis — the tiny units that make up a Bitcoin. One Bitcoin is 100 million sats, so a sat is like a penny to Bitcoin's dollar. Small tips and prices are often counted in sats.
A tamper-resistant chip inside better hardware wallets that guards your keys against physical attacks. It makes it much harder for a thief with the device in hand to extract your secrets.
A list of 12 or 24 simple words that is the master backup of your entire wallet. Anyone who has it can take your Bitcoin, so write it on paper or metal and never type it into a website or store it online.
Holding your own Bitcoin yourself — you keep the keys, instead of leaving your coins on an exchange or with a company. It's the whole point of this guide: no one can freeze, lose, or take your Bitcoin, but you're the one responsible for backing it up safely.
A newer way to receive Bitcoin using one reusable address that still creates a fresh private address for each payment behind the scenes. You get the convenience of a fixed address without the privacy cost of address reuse.
A standard wallet where one key controls the Bitcoin. It's simpler than multisig and fine for many people, but it means a single lost or stolen key can mean lost funds.
A backup method that splits your seed into several shares, where you need a chosen number of them (like 3 of 5) to recover. It protects against losing one backup or having one found, without a single all-or-nothing piece of paper.
Being able to restore your Bitcoin entirely on your own, without asking any company for permission or help. It's the core promise of self-custody: your open standards and backups are enough.
An honest list of what you're actually protecting against, such as hackers, theft, fire, or losing your keys. Naming your real risks helps you pick security that fits your situation instead of over- or under-doing it.
A small amount you pay to Bitcoin miners to get your payment confirmed. Fees rise when the network is busy, and paying a bit more gets your transaction included sooner.
An "Unspent Transaction Output" is a chunk of Bitcoin you've received and haven't spent yet, like an individual bill in your wallet. Understanding them helps with privacy and keeping fees low when you spend.
A plain-text summary describing exactly how your wallet generates its addresses, including keys and derivation paths. Saving it alongside your backup makes restoring your wallet, especially multisig, far more reliable.
A wallet loaded with your public key (xpub) so it can show your balance and create addresses but cannot spend. It lets you check your Bitcoin on a phone while the real spending keys stay offline.
A stand-in token on a different blockchain (Ethereum, BNB Chain) that is named after Bitcoin — you'll see it called things like "BTC (BEP-20)" or "WBTC." It is not real Bitcoin: it lives on another network and uses a different kind of address. If you send "Bitcoin" out as a wrapped copy to your own wallet, it lands somewhere your Bitcoin wallet can't see it. Only ever send real, native Bitcoin.
A master public key that can generate all of a wallet's receiving addresses without the power to spend. It's what you load into a watch-only wallet, but keep it private since it reveals your full balance and history.
A quick Bitcoin tip sent over the Lightning network, common on social apps like Nostr. "Zap a few sats" just means "send a small tip."

✓ Last verified: July 30, 2026