Understand the terminology used in SatSigner and the Bitcoin ecosystem. Terms are organized by category for easy reference.Documentation Index
Fetch the complete documentation index at: https://mintlify.com/satsigner/satsigner/llms.txt
Use this file to discover all available pages before exploring further.
Bitcoin Fundamentals
Bitcoin
A decentralized peer-to-peer digital currency system. Bitcoin (uppercase) refers to the protocol and network, while bitcoin (lowercase) or BTC refers to the currency unit. SatSigner uses sat (satoshi) as the primary unit instead of BTC.Satoshi (sat)
The smallest unit of bitcoin. One bitcoin equals 100,000,000 satoshis:- 1 BTC = 100,000,000 sats
- 1 sat = 0.00000001 BTC
UTXO
Unspent Transaction Output — the fundamental unit of bitcoin ownership. Each UTXO represents a discrete amount of bitcoin that can be spent. Think of UTXOs like physical bills in a wallet:- Your bitcoin balance is the sum of all your UTXOs
- When you spend, you consume entire UTXOs as inputs
- Change is returned as a new UTXO
- Each UTXO has its own transaction history
Transaction
A transfer of bitcoin from one or more addresses to one or more addresses. Transactions:- Consume UTXOs as inputs
- Create new UTXOs as outputs
- Include a fee paid to miners
- Are immutable once confirmed in a block
Block
A collection of transactions bundled together and added to the blockchain. Blocks:- Are mined approximately every 10 minutes
- Contain a block reward and transaction fees for miners
- Are linked cryptographically to previous blocks
- Provide transaction finality through confirmations
Blockchain
The distributed ledger containing all Bitcoin transactions. It’s called a blockchain because:- Data is grouped in blocks
- Each block references the previous block
- Creates an immutable chain of transaction history
Confirmation
The number of blocks mined after the block containing your transaction. More confirmations = higher security:- 0 confirmations: Transaction broadcast but not in a block (unconfirmed)
- 1 confirmation: Transaction included in a block
- 2 confirmations: One block mined after your transaction’s block
- 6 confirmations: Standard for considering a transaction final
Mempool
The waiting area for unconfirmed transactions. When you broadcast a transaction:- It enters the mempool
- Miners select transactions from mempool based on fee rate
- Higher fee transactions are prioritized
- Once mined, transaction leaves mempool
Addresses & Keys
Address
A string of characters representing a destination for bitcoin. Similar to an email address for receiving funds. Address types (by script version):- P2PKH (Legacy): Starts with
1... - P2SH: Starts with
3... - P2WPKH (SegWit): Starts with
bc1q... - P2TR (Taproot): Starts with
bc1p...
Private Key
A secret 256-bit number that proves ownership of bitcoin. Private keys:- Must be kept secret
- Allow spending of associated bitcoin
- Cannot be recovered if lost
- Should never be shared
Public Key
A cryptographic key derived from a private key that can be shared publicly. Public keys:- Are used to generate addresses
- Can verify signatures made with the private key
- Cannot be used to derive the private key (one-way function)
- Are safe to share
Extended Key (xprv/xpub)
A master key that can derive multiple private keys (xprv) or public keys (xpub) following BIP32 hierarchical deterministic (HD) wallet standard. Extended Private Key (xprv):- Can derive all child private keys
- Must be kept secret
- Used for signing transactions
- Can derive all child public keys and addresses
- Safe to share for watch-only wallets
- Cannot sign transactions
- xpub/xprv: BIP32 (any address type)
- ypub/yprv: BIP49 (P2SH-wrapped SegWit)
- zpub/zprv: BIP84 (Native SegWit)
- vpub/vprv: Testnet equivalents
Mnemonic Seed Phrase
A human-readable backup of your wallet, typically 12 or 24 words from the BIP39 wordlist. Properties:- Derived from wallet entropy
- Can regenerate all private keys
- Should be written on paper and stored securely
- Never store digitally (photos, files, cloud)
- Must be backed up during wallet creation
Derivation Path
The path used to derive a specific key from a master key, following BIP32 standard. Format:m/purpose'/coin_type'/account'/change/index
Common paths:
m/84'/0'/0'/0/0: First SegWit receiving addressm/84'/0'/0'/1/0: First SegWit change addressm/44'/0'/0'/0/0: First Legacy addressm/86'/0'/0'/0/0: First Taproot address
- m: Master key
- 84’: Purpose (BIP84 for SegWit)
- 0’: Coin type (0 = Bitcoin, 1 = Testnet)
- 0’: Account number
- 0: External chain (receiving) or 1 (change)
- 0: Address index
Descriptor
A compact format for describing how to derive addresses from keys, including script type, derivation paths, and checksums. Example descriptor (SegWit):wpkh(): Script type (Witness Public Key Hash)[d34db33f/84h/0h/0h]: Master fingerprint and derivation pathxpub6ERa...: Extended public key/0/*: External chain, all addresses#checksum: Validation checksum
pkh(): P2PKH (Legacy)sh(wpkh()): P2SH-wrapped SegWitwpkh(): Native SegWittr(): Taprootwsh(multi()): SegWit multisigsortedmulti(): Sorted multisig (used by SatSigner)
Transaction Details
Input
A reference to a UTXO being spent in a transaction. Each input:- References a previous transaction output (UTXO)
- Provides a signature proving ownership
- Consumes the entire UTXO (no partial spending)
Output
A new UTXO created by a transaction. Typical transaction has two outputs:- Payment output: Sent to recipient
- Change output: Returned to sender
- Amount (in satoshis)
- Recipient address/script
- Spending conditions
Transaction Fee
Payment to miners for including your transaction in a block. Fee calculation:- Number of inputs and outputs
- Script type (SegWit is cheaper)
- Current network congestion
- Urgency (higher fee = faster confirmation)
Fee Rate
The fee per unit of transaction size, measured in sat/vByte (satoshis per virtual byte). Typical ranges:- Low priority: 1-5 sat/vByte (may take hours/days)
- Medium priority: 10-20 sat/vByte (next few blocks)
- High priority: 50+ sat/vByte (next block)
RBF (Replace-By-Fee)
A feature that allows replacing an unconfirmed transaction with a new version that pays a higher fee. How it works:- Send transaction with RBF enabled (sequence number < 0xfffffffe)
- If transaction is slow to confirm, create replacement
- Increase fee rate in replacement transaction
- Broadcast replacement (miners prioritize higher fee)
CPFP (Child-Pays-For-Parent)
A method to accelerate a stuck transaction by spending its unconfirmed output with a high fee. How it works:- Parent transaction has low fee (stuck in mempool)
- Create child transaction spending parent’s output
- Set very high fee on child transaction
- Miners process both together for combined fee
Virtual Size (vByte)
The effective size of a transaction for fee calculation, accounting for SegWit discount. Calculation:Wallet Types
Single-Signature Wallet
A wallet where one private key controls the funds. Characteristics:- Simple to set up and use
- Fast transaction signing
- Full control (and full responsibility)
- Standard for personal use
Multi-Signature Wallet (Multisig)
A wallet requiring M-of-N signatures to spend funds (e.g., 2-of-3). Example: 2-of-3 multisig- 3 cosigners have keys
- Any 2 signatures required to spend
- Protects against single key compromise
- Enhanced security (keys in different locations)
- Shared funds (business partnerships)
- Inheritance planning (trusted contacts)
- Corporate treasuries
- Each cosigner generates a key pair
- All xpubs combined to create multisig descriptor
- Each cosigner imports the descriptor
- To spend: create PSBT, collect M signatures, broadcast
Watch-Only Wallet
A wallet that can view balances and transactions but cannot spend funds (no private keys). Use cases:- Monitor cold storage balances
- Track hardware wallet without connecting device
- Share balance information without spending risk
- Coordinate multisig without exposing all keys
Hardware Wallet
A physical device designed to store private keys securely offline. Benefits:- Private keys never leave device
- Protected against malware
- Often have secure element chips
- Display for transaction verification
- Ledger (Nano S, Nano X)
- Trezor (One, Model T)
- Coldcard
- Passport
- BitBox
- Watch-only xpub import
- PSBT export/import
- QR code or NFC communication
Hot Wallet vs Cold Wallet
Hot Wallet:- Connected to internet
- Private keys on internet-connected device
- Convenient for frequent transactions
- Higher security risk
- SatSigner on your phone is a hot wallet
- Offline, air-gapped
- Private keys never touch internet
- Maximum security
- Less convenient
- Hardware wallets and paper wallets are cold storage
Advanced Concepts
PSBT (Partially Signed Bitcoin Transaction)
A standardized format (BIP174) for constructing and signing Bitcoin transactions collaboratively. Workflow:- Creator: Builds unsigned transaction
- Updater: Adds UTXO information and metadata
- Signer: Adds signatures (possibly multiple signers)
- Finalizer: Completes transaction for broadcast
- Extractor: Broadcasts to network
- Multi-signature coordination
- Hardware wallet signing
- Air-gapped signing (via QR codes)
- Complex transaction workflows
- Create PSBTs from transactions
- Import via QR code, NFC, clipboard, or file
- Sign with available keys
- Export signed PSBTs per cosigner
- Combine signatures
- Broadcast final transaction
Script Types
Bitcoin’s scripting language allows different ways to lock and unlock funds. P2PKH (Pay-to-Public-Key-Hash) — Legacy- Original Bitcoin address format
- Starts with
1... - Larger transaction size
- Higher fees
- Addresses start with
3... - Enables multisig and other complex scripts
- Can wrap SegWit (P2SH-P2WPKH)
- Addresses start with
bc1q... - Smaller transaction size (~40% fee savings)
- Widely supported
- Recommended default
- Used for multisig wallets
- Addresses start with
bc1q...(longer) - SegWit benefits for multisig
- Addresses start with
bc1p... - Enhanced privacy (all outputs look similar)
- Lower fees for complex scripts
- Schnorr signatures
- Newest standard (2021)
SegWit (Segregated Witness)
A Bitcoin protocol upgrade that separates (segregates) signature data (witness) from transaction data. Benefits:- Smaller transaction sizes (~40% reduction)
- Lower fees
- Fixes transaction malleability
- Enables Lightning Network
bc1... and are now the standard.
SatSigner defaults to SegWit for new wallets.
Taproot
The most recent Bitcoin upgrade (November 2021) providing:- Schnorr signatures: More efficient multi-sig
- MAST (Merklized Abstract Syntax Trees): Complex scripts without bloat
- Privacy: All taproot outputs look identical
- Lower fees: Especially for complex transactions
bc1p...
SatSigner supports Taproot (P2TR) wallets.
Coin Selection
The process of choosing which UTXOs to spend in a transaction. Strategies: Automatic:- Largest first: Minimize transaction size
- Smallest first: Consolidate dust
- Privacy-optimized: Avoid linking UTXOs
- Visual UTXO selection with bubble charts
- Choose specific coins based on:
- Value
- History/provenance
- Privacy considerations
- Consolidation goals
Gap Limit
The number of consecutive unused addresses to check when syncing a wallet. How it works:- Wallet generates addresses sequentially
- If gap limit is 20, wallet checks 20 addresses ahead
- If an address beyond the gap has funds, they won’t be found
- You generated many addresses without using them
- Missing funds after wallet restore
BIP (Bitcoin Improvement Proposal)
A design document for proposing changes to Bitcoin. Notable BIPs:- BIP32: HD wallets (hierarchical deterministic)
- BIP39: Mnemonic seed phrases
- BIP44: Multi-account HD wallet structure
- BIP49: P2SH-wrapped SegWit derivation
- BIP84: Native SegWit derivation
- BIP86: Taproot derivation
- BIP141: SegWit
- BIP174: PSBT
- BIP329: Wallet labels (used by SatSigner)
BIP329 Labels
A standard format for exporting and importing wallet labels (transaction notes, address names, UTXO tags). Format: JSON, JSONL, or CSV Label types:- Transaction labels
- Address labels
- Input labels
- Output labels
- UTXO labels
- Backup labels separately from wallet
- Transfer labels between wallet software
- Sync labels across devices (via Nostr in SatSigner)
Network & Backend
Mainnet
The primary Bitcoin network where real bitcoin with real value is transacted. Use mainnet for:- Real transactions
- Actual value storage
- Production use
Testnet
A parallel Bitcoin network for testing with test coins that have no value. Use testnet for:- Learning Bitcoin without risk
- Testing wallet features
- Development and debugging
- Practicing multisig setups
Signet
Another test network with more predictable block production (controlled miners). Benefits over testnet:- More reliable block times
- Less spam and attacks
- Better for testing
Electrum Protocol
A lightweight client-server protocol for Bitcoin wallets. Electrum servers:- Index blockchain data
- Respond to balance and transaction queries
- Broadcast transactions
- Don’t require full node
- Blockstream Electrum (default)
- Your own Electrs instance
- Public Electrum servers
Esplora API
An alternative backend API for blockchain data. Esplora:- RESTful HTTP API
- Provides block and transaction data
- Used by Blockstream.info explorer
- Alternative to Electrum protocol
Tor (The Onion Router)
An anonymity network that routes internet traffic through volunteer relays. Benefits for Bitcoin:- Hide IP address from backend servers
- Bypass censorship
- Enhanced privacy
- Slower connection
- Setup complexity
Lightning Network
Lightning Network
A “Layer 2” payment protocol built on top of Bitcoin enabling:- Instant payments
- Very low fees (fractions of a sat)
- High scalability
- Micropayments
- Open channel by locking bitcoin on-chain
- Make unlimited off-chain transactions within channel
- Close channel to settle final balance on-chain
LND (Lightning Network Daemon)
A popular Lightning Network implementation. SatSigner connects to LND nodes via REST API.Channel
A payment channel between two Lightning nodes. Channels:- Are funded with on-chain Bitcoin
- Allow unlimited off-chain transactions
- Have capacity limits
- Can be opened or closed on-chain
Invoice
A payment request on Lightning Network. Invoices:- Start with
lnbc...(mainnet) orlntb...(testnet) - Encode amount, recipient, and description
- Can be paid instantly via Lightning
- Often encoded as QR codes
Privacy & Security
eCash (Cashu)
A privacy-focused digital cash protocol backed by Bitcoin. Cashu:- Provides unlinkable transactions
- Uses blind signatures
- Tokens are custodial (mint holds Bitcoin)
- Excellent for privacy and small payments
- Connect to Cashu mints
- Receive and send eCash tokens
- Manage multiple mints
- Redeem for Bitcoin
Nostr
A decentralized protocol for social networking and messaging. SatSigner uses Nostr for:- Syncing wallet labels across devices
- Encrypted DMs for label storage
- Relay-based architecture (no central server)
Duress PIN
A secondary PIN that opens a different wallet, used in emergency scenarios where you’re forced to unlock SatSigner. Setup:- Create separate wallet for duress scenario
- Fund with small amount (for plausibility)
- Set duress PIN in settings
- In emergency, enter duress PIN instead of real PIN
Seed Dropping
The practice of deleting the mnemonic seed phrase after extracting the extended private key (xprv). Why:- Reduces attack surface
- Seed phrase is human-readable (easy to steal)
- xprv is encrypted with PIN
- Both can recover wallet
Coin Provenance
The transaction history of a UTXO. Some UTXOs may be:- From known sources (exchanges, mining pools)
- Mixed or coinjoined (enhanced privacy)
- Tainted (associated with illegal activity)
SatSigner-Specific Terms
Bubble Chart
SatSigner’s signature UTXO visualization where each bubble represents a UTXO:- Bubble size = UTXO value
- Colors indicate UTXO properties
- Interactive selection for coin control
- Visual representation of balance distribution
Sankey Diagram
A flow visualization showing how bitcoin moves in transactions:- Inputs on left
- Outputs on right
- Flow width represents amount
- Visual representation of transaction structure
Account Types
SatSigner organizes wallets into account types:- Single-signature: One key, full control
- Multi-signature: M-of-N cosigners
- Watch-only: No private keys, view-only
Related Resources
FAQ
Common questions about SatSigner
Troubleshooting
Solutions to common issues
UTXO Control
Learn about visual UTXO management
Security
Understand SatSigner’s security features