A bitcoin glossary is only useful if the definitions are short enough to remember and accurate enough to trust. Most beginners meet the same handful of words first, usually in a video or a forum thread, and bounce off the jargon before they ever buy anything. This guide puts the terms in plain English, grouped the way you will actually meet them: the basics, wallets and keys, fees and confirmations, safety, then prices and Canadian tax.
Every definition below is written for a Canadian reader buying or selling at a Bitcoin ATM, an online exchange, or an over-the-counter desk. Nothing here is investment advice, and a definition is not a recommendation.
Table of Contents
- Bitcoin Glossary: The Core Terms
- Bitcoin Glossary: Wallets, Keys and Custody
- Bitcoin Glossary: Fees, Mempool and Confirmations
- Bitcoin Glossary: Safety, Privacy and Scams
- Bitcoin Glossary: Prices, Fees and Canadian Tax
- Frequently Asked Questions
Bitcoin Glossary: The Core Terms
These are the words you see in every headline about Bitcoin. Get them straight and most technical articles stop looking like code.
Bitcoin (BTC)
A digital asset that runs on a public network with no company or government issuing it. Bitcoin was described in a 2008 paper published under the name Satoshi Nakamoto, which is the document most people mean when they say the original Bitcoin whitepaper. BTC is the ticker used on price charts and receipts.
Satoshi (sat)
The smallest unit of Bitcoin. One Bitcoin equals 100,000,000 satoshis, so a sat is 0.00000001 BTC. Sats are useful for talking about small amounts: if Bitcoin trades at $100,000, one sat is worth about $0.001. Most people buying $50 or $200 at a time are really buying a few hundred thousand sats.
Blockchain
The public record of every Bitcoin transaction ever confirmed, copied across thousands of independent computers. It is append-only: new blocks are added to the end, and rewriting old entries would require redoing an enormous amount of work. That is what makes the history verifiable without asking anyone’s permission.
Block
A bundle of transactions that miners have added to the chain. On average a new Bitcoin block is found roughly every ten minutes. Each block carries a number, called block height, which counts upward from the very first block in 2009.
Node
A computer running Bitcoin software that keeps a full copy of the blockchain and checks incoming transactions against the rules. Nodes do not mine and do not earn money. They exist so that no single party can quietly change the rules. The Bank of Canada studies digital currencies and payment systems, but it does not control the Bitcoin network.
Mining and proof of work
Mining is the process of competing to find the next block by doing repeated hashing. Proof of work is the result: a mathematical receipt showing real energy and hardware were spent. Miners earn newly issued Bitcoin plus the fees paid by everyone in the block they found.
Halving
Every 210,000 blocks, about four years, the reward paid to miners is cut in half. The most recent halving in April 2024 reduced it to 3.125 BTC per block. Halving is written into the code, so the total supply is capped at 21 million BTC.
Bitcoin Glossary: Wallets, Keys and Custody
This is the section where beginners make expensive mistakes, so read it twice. If you want the longer version, our guide to how to store Bitcoin safely in Canada walks through the practical setup.
Wallet
Software or hardware that stores the keys controlling your Bitcoin. The coins never sit inside the wallet. The wallet holds the keys that let you sign a transaction moving coins on the blockchain.
Custodial vs self-custodial
Custodial means a company holds the keys on your behalf, which is how most exchange balances work. Self-custodial means you hold them. Custodial is convenient and depends on someone else staying solvent; self-custodial removes that risk and puts the responsibility on your backup habits.
Private key
A long secret number that proves ownership and authorizes spending. Anyone who has it can move the Bitcoin. It should never be typed into a website, sent in a message, or photographed and left in cloud storage.
Seed phrase
Twelve to twenty-four ordinary words that can regenerate every key in a wallet. It is the master backup. Write it on paper or metal, store it offline, and treat any request for it as a scam without exception, no matter who appears to be asking.
Address
The string you share to receive Bitcoin, like a bank account number with no name attached. Older addresses start with 1 or 3. Modern addresses start with bc1 and usually cost less to spend. Sharing an address is safe; sharing a private key or seed phrase is not.
Hot wallet vs cold wallet
A hot wallet is connected to the internet, which makes it handy for spending and easier to attack. A cold wallet keeps keys offline, such as a hardware device or a paper backup. A common split is a small hot balance for weekly use and cold storage for the rest.
Bitcoin Glossary: Fees, Mempool and Confirmations
Fee language confuses people because it changes by the hour. If you want the mechanics in more detail, we explained what the mempool is and how it works in a separate article.
Transaction fee
The amount you pay miners to include your transaction in a block. It is priced by weight, measured in satoshis per virtual byte (sat/vB), not by dollar value. Sending $10,000 and sending $10 costs about the same if the transaction has the same number of inputs.
Mempool
The waiting room where broadcast transactions sit before a miner picks them up. When the mempool is crowded, fees rise; when it empties, fees fall back to a few sats per byte. You can watch the queue live on mempool.space.
Confirmation
A transaction has one confirmation once it is inside a mined block. Each later block adds another. One confirmation is normally enough for a small purchase, while six is the traditional threshold for treating a large payment as settled.
Unconfirmed
Broadcast but not yet mined. The funds are not spendable by the recipient yet, and a transaction paying too little can sit for hours or drop out of the mempool entirely. This is the single most common beginner panic, and it is almost always a fee issue, not a lost coin.
UTXO
Unspent transaction output. Bitcoin has no account balances, only chunks of coins you control. Spending combines chunks and returns the change to a new address, which is why one payment can look like several inputs on a block explorer.
Bitcoin Glossary: Safety, Privacy and Scams
Most losses in Canada are not caused by broken cryptography. They come from a person being talked into sending coins. These terms show up in nearly every case.
KYC
Know your customer. Canadian dealers and ATM operators are required to verify identity for cash transactions above set thresholds. Expect a photo ID and, for larger amounts, a selfie or document scan. A legitimate service never asks for your seed phrase during verification.
AML
Anti-money laundering. The rulebook that requires reporting suspicious activity, screening against sanctions lists, and keeping records. It is why a first-time buyer with a large cash amount may be asked extra questions at the counter.
Phishing
A fake site, ad, email, or support chat that imitates a real brand to capture logins or keys. The tell is usually urgency: act now, your account is locked, send the coins to this new address. Real companies do not move funds on your behalf through a chat window.
Guaranteed returns
Any offer of a fixed, risk-free percentage from trading or arbitrage is a red flag. Bitcoin has no yield, no staking reward, and no dividend. If the pitch includes a referral bonus or a countdown clock, treat it as a scam and walk away.
When buying or selling in person, stick to verified operators and known places. Our directory of Bitcoin ATM locations across Canada lists real store addresses with buy and sell availability for each machine, which makes it easy to confirm you are dealing with the actual operator.
Bitcoin Glossary: Prices, Fees and Canadian Tax
These are the terms that appear on quotes, receipts, and tax slips in Canada.
Spot price
The current market price for one Bitcoin, quoted in dollars. It moves every second on global exchanges. You can follow live Bitcoin and crypto prices in Canadian dollars on our exchange page to see how quickly the number changes.
Spread
The gap between the price you pay and the market price, which is how most dealers earn money instead of charging a visible fee. The all-in cost of a purchase is the spread plus any service fee plus network fees, so compare the total, not the headline percentage.
Dollar-cost averaging (DCA)
Buying a fixed dollar amount on a schedule regardless of price, for example $100 every second Friday. It removes the guesswork about timing and averages your entry across highs and lows. It does not remove the risk that the price falls.
HODL, FOMO and FUD
HODL started as a typo for hold and now means holding long term without selling on every dip. FOMO is the fear of missing out that pushes people to buy at highs. FUD is fear, uncertainty and doubt, the negative equivalent that pushes people to panic sell.
Capital gain
In Canada the CRA treats crypto-assets as commodities, not currency. Buying and holding is not itself a taxable event, but selling, trading one asset for another, or spending Bitcoin generally is. The CRA publishes guidance for crypto-asset users on how to value and report it. Keep the date, the CAD amount, the BTC amount, the fees, your wallet address, and the transaction ID for every trade. Inclusion rates and reporting rules have been debated and revised, so confirm the current position with the CRA guidance or an accountant rather than relying on a forum post.
Frequently Asked Questions
What are sats, and why does everyone use that word?
Sats are short for satoshis, the smallest division of Bitcoin: 100 million of them make one BTC. People use the word because most buys are fractions of a coin, and “250,000 sats” sounds clearer than “0.0025 BTC” when prices are high. It is the same asset, just a smaller unit of measure, like cents versus dollars.
If I move Bitcoin to my own wallet, do I really own it?
You own it either way, but self-custody means you also control it. On an exchange you own a claim that the company must honour, which is why withdrawals can be paused. In your own wallet you hold the keys and no third party can freeze or lose the coins. The trade-off is that your backup becomes the only recovery path.
Why is my Bitcoin transaction still unconfirmed?
It is most likely paying a low fee relative to how busy the network is. Unconfirmed means broadcast but not yet included in a block, so it sits in the mempool waiting. Busy periods clear in minutes; quiet periods with a stingy fee can take hours. Check the transaction ID on a block explorer before assuming anything is lost.
Is Bitcoin a store of value, or is it speculative?
It behaves like both, depending on how you use it. The supply cap and public ledger make it scarce and verifiable, which is the store-of-value argument. Price swings of 20 percent in weeks show it still trades like a volatile asset. Only hold an amount you would be comfortable seeing drop sharply.
Learning this vocabulary is the cheapest part of using Bitcoin and the part that prevents the most costly mistakes. Start with the words, then practise with a small amount, keep your own records, and never share a seed phrase with anyone for any reason.