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Chapter 11 · Glossary

Bitcoin Jargon in Plain English: The Words Every Family Should Know

Prefer to watch? This chapter is also a short video (about 4½ minutes). The full text is below.

In one minute: Bitcoin has a lot of jargon, and much of it means the same few things. The most important example: "recovery words," "seed phrase," "mnemonic" and "backup phrase" are all names for the same 12 or 24 words, and those words are the money. If you remember nothing else from this page, remember that.

Same thing, different names

You'll hear these used interchangeably. They mean the same thing.

• Recovery words = seed phrase = seed = mnemonic = backup phrase = secret recovery phrase.
• Hardware wallet = cold wallet = signing device = signer = cold storage device.
• Exchange = trading platform = custodian (when it holds your bitcoin for you).
• Multisig = multi-signature = a "vault" (in some apps).
• The wallet's map = output descriptor = wallet configuration file = wallet backup file.
• Sats = satoshis.

A to Z

Address. A code, usually starting with "bc1", that you give someone so they can send you bitcoin. Safe to share; it can't be used to take anything. Always check it on your device's own screen before sending. (Ch. 4)

Bitcoin. Money that lives on a shared public record kept by thousands of computers, with no bank in the middle. You never hold the coins themselves; you hold the key that can move them. (Ch. 2)

BIP. "Bitcoin Improvement Proposal": a written proposal to change or standardize something in bitcoin. BIP-39 is the standard that turns your key into words; BIP-110 was the proposal behind the 2026 chain split. (Ch. 3, Ch. 10)

Block, blockchain. Bitcoin's record is written in pages called blocks, about one every ten minutes, each linked to the one before: the blockchain. (Ch. 10)

Chain split (fork). When some participants start following different rules, and the record splits into two chains that share the same history up to that point. The one in August 2026 is in Chapter 10. (Ch. 10)

Coordinator app. The program on a computer that ties the keys of a multisig wallet together and holds its map. It can't move bitcoin on its own; the devices still have to sign. (Ch. 9)

Exchange. A company where you buy and sell bitcoin. If you leave bitcoin there, the exchange holds the key, and you're trusting it to give it back. Several famous ones haven't. (Ch. 2)

Genuine check. A test built into a hardware wallet maker's app that proves the device is real and hasn't been tampered with. Run it when the box arrives. (Ch. 9)

Hardware wallet. A small device that keeps your key offline and signs transactions inside itself, so the key never touches your phone or computer. It isn't where your bitcoin is; it's what holds the key. (Ch. 4)

Key (private key). The secret that can move your bitcoin. Whoever has it controls the bitcoin. Your recovery words are your key, written as words. (Ch. 2, Ch. 3)

Letter of instruction. A private, plain-language letter telling your family that your bitcoin exists, where the pieces are, how to put them together, and who can help. It says where, never what. Not part of your will. (Ch. 7)

Level. This guide's three ways to set up: Beginner (one hardware wallet), Intermediate (add a passphrase), Advanced (2-of-3 multisig). (Ch. 8)

Main chain. After the 2026 split, the chain that every major exchange and wallet calls bitcoin. (Ch. 10)

Metal backup. Your recovery words punched or etched into stainless steel or titanium, so they survive fire and water. Paper doesn't. (Ch. 6)

Multisig (2-of-3). A wallet that needs two of its three keys to move bitcoin. Losing one key, or having one stolen, isn't a disaster. Needs its map backed up too. (Ch. 7, Ch. 8)

Node. Bitcoin software that keeps its own copy of the record and checks every rule itself. Most families don't need to run one. (Ch. 10)

Passphrase. An optional extra secret added to your recovery words. Words alone then open nothing, which protects you if someone finds your backup. Lose the passphrase, and the bitcoin is lost. Not the same as your PIN. (Ch. 7, Ch. 8)

Phishing. A fake message, website or app made to look real, designed to get you to type your words or send bitcoin. The most common way families lose it. (Ch. 5)

PIN. The short code that unlocks your hardware wallet, like a phone's passcode. It protects the device; it isn't a backup. If you forget it, you restore from your words. (Ch. 4)

Probate. The court process that carries out a will. Once a will goes through probate, it usually becomes public, which is why the how never goes in it. (Ch. 7)

Recovery drill. Proving your backup works: note your first receiving address, reset the device, restore from your backup alone, and check the same address comes back. (Ch. 6)

Recovery words. The 12 or 24 words your device shows you once, during setup. They are your key, and so they are the money: anyone with them can take your bitcoin, from anywhere, without your device. Nobody can reset them. (Ch. 3)

Replay. Copying a transaction from one chain onto another after a split. It's why you shouldn't move or sell fork coins. (Ch. 10)

Rule #1. Nobody legitimate will ever ask for your recovery words. Not support, not your exchange, not us. Anyone who asks is a thief. (Ch. 3, Ch. 5)

Sats (satoshis). The smallest unit of bitcoin: 1 bitcoin = 100,000,000 sats. Handy for small amounts.

Self-custody. Holding your own key, instead of leaving bitcoin with an exchange. It's what this whole guide is about. (Ch. 2)

The map (output descriptor). In a multisig wallet, the file that says how the keys fit together. It can't move bitcoin, but you can't rebuild the wallet without it, and it shows your balance: keep it private, and back it up. (Ch. 7, Ch. 9)

Transaction. An instruction, signed with your key, that moves bitcoin from one address to another. Once it's confirmed, it can't be undone. (Ch. 4)

Talk about it

1. Which three words on this page would we most want each other to understand?
2. Can each of us explain, in one sentence, the difference between the PIN, the passphrase and the recovery words?
3. Now that we've finished Part 1: what's the first thing we'll do?

Sources