Glossary¶

Key monetary terms with links to their encyclopedia articles.

Assignat: Paper currency issued during the French Revolution, backed by confiscated church lands. Rapidly hyperinflated and became worthless. See The Assignat.
Barter: Direct exchange of goods or services without money. Inefficient because it requires a "double coincidence of wants." See Barter.
Bitcoin: A decentralized digital currency created in 2009 by the pseudonymous Satoshi Nakamoto. Uses blockchain technology and has a fixed supply of 21 million coins. See Bitcoin.
Blockchain: A distributed, immutable digital ledger that records transactions across a network of computers. The technology underlying Bitcoin. See Blockchain.
Bretton Woods: The 1944 agreement that established the U.S. dollar as the world's reserve currency, backed by gold at $35/oz. Ended by Nixon in 1971. See Bretton Woods.
Coin Clipping: The practice of shaving metal from the edges of coins to collect precious metal while spending the debased coins at face value. A form of currency debasement. See Coin Clipping.
Continental Dollar: Paper currency issued by the Continental Congress during the American Revolution. Hyperinflated, giving rise to the phrase "not worth a Continental." See The Continental Dollar.
Copernicus, Nicolaus: Polish astronomer and economist (1473–1543) who authored Monetae Cudendae Ratio (1526), articulating the principle later known as Gresham's Law. See Nicolaus Copernicus.
Currency Debasement: The deliberate reduction in the value of money by those who control its supply. Methods include coin clipping, reducing precious metal content, and printing paper money. See Currency Debasement.
Denarius: Roman silver coin that was progressively debased from ~95% silver to under 5% over three centuries, contributing to the empire's economic decline. See The Denarius.
Divisibility: One of the five properties of good money. Money must be easily divided into smaller units without losing value. See Divisibility.
Double Coincidence of Wants: The requirement in barter that each party must have what the other wants at the same time. The fundamental inefficiency that money solves. See Double Coincidence of Wants.
Durability: One of the five properties of good money. Money must withstand physical wear and the passage of time. See Durability.
Fiat Currency: Money that has value by government decree rather than intrinsic worth. All modern national currencies are fiat. See Fiat Currency.
Gold Standard: A monetary system where the currency is directly convertible to a fixed quantity of gold. Abandoned by most nations in the 20th century. See Gold.
Gresham's Law: The economic principle that "bad money drives out good" when both circulate at a fixed exchange rate. First articulated by Copernicus (1526), later attributed to Sir Thomas Gresham. See Gresham's Law.
Gresham, Sir Thomas: English financier (1519–1579) who advised the Crown on monetary policy. The principle that "bad money drives out good" bears his name, though Copernicus described it first. See Sir Thomas Gresham.
Halving: The periodic reduction (approximately every four years) of the Bitcoin mining reward by 50%. Ensures Bitcoin's supply approaches but never reaches 21 million. See Mining.
HODLing: Bitcoin slang for holding rather than selling, derived from a misspelling of "hold." Consistent with Gresham's Law — holders spend fiat (bad money) and hoard Bitcoin (good money). See Bitcoin.
Hyperinflation: Extremely rapid, out-of-control inflation, typically exceeding 50% per month. Historical examples include Weimar Germany, Zimbabwe, and Venezuela. See Hyperinflation.
Kabunakama: Licensed merchant guilds in Tokugawa-era Japan that managed ledger-based money systems. See The Kabunakama.
Ledger Money: A monetary system based on recorded debts and credits rather than physical tokens. Predates coinage and persists in modern banking. See Ledger Money.
Metcalfe's Law: The principle that the value of a network is proportional to the square of its number of users (V ∝ n²). Applied to Bitcoin valuation. See Metcalfe's Law.
Mining (Bitcoin): The process of using computational power to validate Bitcoin transactions and create new bitcoins. Analogous to gold mining but digital. See Mining.
Monetae Cudendae Ratio: Latin: "The Way to Mint Coins." A 1526 treatise by Nicolaus Copernicus on monetary policy. See Nicolaus Copernicus.
Network Effect: The phenomenon where a product or service becomes more valuable as more people use it. Applies to both traditional money and Bitcoin. See Network Effect.
Nixon Shock: President Nixon's 1971 decision to end the convertibility of the U.S. dollar to gold, effectively ending the Bretton Woods system. See Bretton Woods.
Portability: One of the five properties of good money. Money must be easy to transport relative to its value. See Portability.
Quantitative Easing: A modern central bank policy of increasing the money supply by purchasing government bonds and other financial assets. A form of currency debasement. See Central Banking.
Recognizability: One of the five properties of good money. Money must be easily identified and difficult to counterfeit. See Properties of Good Money.
Satoshi: The smallest unit of Bitcoin (0.00000001 BTC), named after Bitcoin's creator, Satoshi Nakamoto. See Bitcoin.
Satoshi Nakamoto: The pseudonymous creator of Bitcoin who published the Bitcoin whitepaper in 2008 and launched the network in 2009. True identity remains unknown. See Satoshi Nakamoto.
Scarcity: One of the five properties of good money. Money must be limited in supply to maintain its value. See Scarcity.
Seigniorage: The profit a government makes by issuing currency — the difference between the face value of money and the cost to produce it. Increases with debasement. See Seigniorage.
B-Money: A digital currency protocol proposed by Wei Dai in 1998 where computational "work" equals money creation. Never implemented but directly influenced Bitcoin. See B-Money.
Back, Adam: British cryptographer who invented Hashcash (1997), the first implementation of proof of work for a money-like system. See Adam Back.
Bit Gold: A digital currency proposal by Nick Szabo (2005) combining proof of work with timestamping. The most direct precursor to Bitcoin. See Bit Gold.
Blind Signature: A cryptographic technique invented by David Chaum (1982) that allows a message to be signed without revealing its content. Enabled anonymous digital transactions. See DigiCash.
Byzantine Generals Problem: A fundamental challenge in distributed computing: how can distributed nodes reach consensus when some may be faulty or malicious? Bitcoin's blockchain provides a solution. See Byzantine Generals Problem.
Chaum, David: American cryptographer who invented blind signatures (1982) and founded DigiCash (1989). Often called the "father of digital cash." See David Chaum.
Cryptography: The practice of securing communication through codes and ciphers. Traces from ancient Egypt (2000 BC) through modern public key systems. Essential to Bitcoin. See Cryptography.
Dai, Wei: Computer engineer who proposed B-money (1998), introducing distributed ledger concepts that influenced Bitcoin. See Wei Dai.
DigiCash: Digital currency company founded by David Chaum in the early 1990s. Used blind signatures for anonymous transactions. Failed commercially but proved the concept of electronic cash. See DigiCash.
E-Gold: Digital currency backed by physical gold, created in 1996. First digital currency to gain widespread adoption, processing $2 billion by 2006. Shut down by authorities. See E-Gold.
Finney, Hal: Cryptographer (1956–2014) who created Reusable Proof of Work and received the first-ever Bitcoin transaction. See Hal Finney.
Hash Function: A mathematical function that converts input data into a fixed-size digital fingerprint. Foundational to blockchain technology and Bitcoin mining. See Hash Functions.
Lydian Stater: The first official currency in history, minted by King Alyattes of Lydia around 600 BC from electrum. See The Lydian Stater.
Proof of Work: A system requiring computational effort to produce a result that is easy to verify. Used in Bitcoin mining to secure the network. See Proof of Work.
Public Key Cryptography: A cryptographic system using paired public and private keys. The public key encrypts; the private key decrypts. Essential to Bitcoin transactions. See Public Key Cryptography.
Szabo, Nick: Computer scientist who proposed Bit Gold (2005) and coined the term "smart contracts." See Nick Szabo.
Thaler: A large silver coin first minted by Count Schlick of Bohemia in the 16th century. The etymological root of the word "dollar." See The Thaler.