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- 21 million supply cap
- The maximum number of bitcoin that can ever exist, set in the protocol's rules. New bitcoin enter circulation only through the block subsidy paid to miners, and that subsidy halves every 210,000 blocks, so issuance slows towards zero over time. Changing the cap would require the vast majority of node operators to adopt different software, which is why the market treats it as fixed. For a treasurer, the cap matters because supply is predictable and published in advance, unlike the supply of a currency managed by a central bank.Read: Bitcoin's 21 million supply cap explained →
- 24/7 market
- A market that trades continuously, including nights, weekends and public holidays. Bitcoin trades around the clock, but banks, fiat payment systems and many regulated exchanges do not, so cash legs may only settle in banking hours. Prices can move significantly when finance teams are offline, which matters for margin, price monitoring, alerts and month-end valuation cut-offs.Read: 24/7 Bitcoin markets and treasury operations →
- 51% attack
- A scenario in which one party controls more than half of the network's mining power and uses it to reorganise recent blocks, potentially reversing its own transactions or delaying others. It cannot be used to steal coins from other people's addresses or create bitcoin outside the rules. For Bitcoin, the cost of acquiring that much specialised hardware and energy is very high, which is why the attack is considered impractical.Read: Can Bitcoin be hacked? Where the real risks sit →
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- Accretive
- Describes a transaction that increases a per-share measure, such as earnings per share or bitcoin per share. A Bitcoin treasury company issuing shares at a price above the value of its bitcoin per share can buy more bitcoin than the new shares represent, which is accretive to bitcoin per share. If shares are issued below that value, the effect is dilutive.Read: What is mNAV? The metric for Bitcoin treasury companies →
- Active market
- A market in which transactions for an asset take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Whether an active market exists matters for fair value hierarchy levels and, under IFRS, for whether the revaluation model under IAS 38 may be used. Bitcoin is generally considered to trade in active markets, but each entity assesses the markets it can access.Read: Measuring Bitcoin fair value: principal market and ASC 820 →
- Address
- A string of characters that identifies where bitcoin can be sent, derived from a public key or a script. An address is roughly comparable to an account number, but it is generated by the holder's wallet rather than issued by a bank, and one wallet can produce many addresses. Companies normally use a fresh address for each receipt to improve privacy and record-keeping. Sending to a mistyped or wrong address cannot be reversed, which is why corporate processes include address verification, allowlisting and small test transactions before large transfers.Read: What is Bitcoin? A CFO's guide →
- Address allowlisting
- A control that restricts withdrawals to a pre-approved list of destination addresses. Adding a new address normally requires separate approval, sometimes with a waiting period, before funds can be sent to it. Allowlisting reduces the risk of funds being sent to an attacker's address through fraud, social engineering or a compromised system. It is one of the simplest and most effective custody controls, and treasury policies should specify who may add or remove addresses and how each address is verified.Read: Key management and signing policies for corporates →
- Address poisoning
- A scam in which an attacker sends a tiny transaction from an address that closely resembles one the victim uses, hoping the victim will later copy the wrong address from their transaction history. Checking only the first and last few characters of an address is not enough. Allowlisted addresses, full verification on a signing device and test transactions reduce the risk.Read: Cybersecurity for finance teams holding Bitcoin →
- Address reuse
- Receiving more than one payment to the same Bitcoin address. It works, but it weakens privacy, because anyone who knows the address can see every payment to it and the total balance. Good practice is to generate a fresh address for each receipt, which HD wallets do automatically. Some institutional workflows deliberately reuse an allowlisted deposit address, accepting the privacy cost for operational simplicity.Read: What is a Bitcoin address? Address types and controls →
- Adverse media screening
- Searching news and other public sources for negative information about a customer, its owners or a counterparty, such as allegations of fraud, corruption or sanctions breaches. It forms part of customer due diligence and ongoing monitoring. Companies can apply the same practice when vetting Bitcoin service providers, alongside licence checks and financial review.Read: Counterparty due diligence for Bitcoin providers →
- Agency execution
- A trading model in which the broker acts on the client's behalf, routing orders to exchanges or other liquidity sources and charging a commission, rather than trading against the client from its own book. The client typically sees the prices achieved and bears the market risk during execution. Agency execution can offer transparency on where and how orders were filled. Its main contrast is principal execution, where a dealer quotes a firm price and takes the risk of the position itself.Read: What is a Bitcoin OTC desk? →
- Air gap
- The physical isolation of a device from any network, including the internet, Bluetooth and local networks. Air-gapped devices are used to generate and store private keys and to sign transactions in cold storage. Data moves in and out only through controlled channels such as QR codes or removable media. An air gap greatly reduces exposure to remote attacks but requires strict physical security and procedures.Read: Cold storage explained for corporate treasuries →
- Algorithmic execution
- The use of computer programs to break a large order into many smaller trades and send them to the market according to set rules. Common strategies include TWAP, VWAP and participation-rate algorithms, each designed to reduce market impact or track a benchmark. Algorithms suit orders that are large relative to available liquidity, or where the company prefers to trade gradually. The execution plan should set limits on price, timing and participation, and results should be reviewed against an agreed benchmark afterwards.Read: TWAP and VWAP execution for large Bitcoin orders →
- Anti-money laundering (AML)
- The laws, regulations and controls designed to prevent criminals from disguising the proceeds of crime as legitimate funds. In Bitcoin markets, regulated firms must identify their clients, monitor transactions, screen against sanctions lists and report suspicious activity. For a company buying bitcoin, AML means its counterparties will ask for documents and explanations, and it should apply its own checks to the providers it uses. Strong AML practices at counterparties are a sign of a sound, sustainable provider.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Approved counterparty list
- A register, maintained under the treasury policy, of the trading desks, custodians, banks and other providers the company may use for bitcoin activity. Each entry usually records the due diligence performed, the services approved, exposure limits and the date of the next review. Using an approved list stops staff from opening new relationships without oversight. Adding or removing a counterparty should require a defined approval, and the list should be reviewed at least annually or after any significant event affecting a provider.Read: How to write a Bitcoin treasury policy: a sample outline →
- Arbitrage
- Buying an asset where it is cheaper and selling it where it is dearer, or exploiting a price gap between related instruments, to earn the difference. Arbitrage keeps Bitcoin prices close across exchanges and links spot, futures and ETF prices. It is rarely without risk in practice: transfer delays, fees, counterparty exposure and capital limits can all prevent gaps from closing instantly.Read: How is the Bitcoin price determined? →
- Arrival price
- The market price, usually the mid, at the moment a decision to trade is made or an order is sent. It is the benchmark for implementation shortfall: the difference between the arrival price and the final average fill price shows the total cost of executing the order, including market impact, spread and timing. Recording arrival price is a simple, valuable discipline.Read: Best execution for corporate Bitcoin trades →
- ASC 350-60
- The US GAAP subtopic created by ASU 2023-08 that sets the accounting for in-scope digital assets such as Bitcoin. It requires measurement at fair value, with changes recognised in net income each period, separate presentation from other intangible assets, and specific disclosures including holdings, cost basis, contractual sale restrictions and a roll-forward. It applies to fiscal years beginning after 15 December 2024, with early adoption permitted.Read: ASU 2023-08: fair value accounting for Bitcoin explained →
- ASC 820
- The US GAAP standard that defines fair value, sets out how to measure it and specifies required disclosures. It defines fair value as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date, in the principal market or, if none, the most advantageous market. Under ASU 2023-08, bitcoin within scope is measured at fair value using ASC 820, so finance teams need to identify the principal market and document their pricing source.Read: ASU 2023-08: fair value accounting for Bitcoin explained →
- ASIC
- Short for application-specific integrated circuit: a chip designed to do one task very efficiently. Bitcoin ASICs compute SHA-256 hashes for mining and are far more efficient than general-purpose computers. Because they cannot be repurposed easily, ASICs represent a large, specialised investment, which gives miners an economic interest in the network's long-term health.Read: How mining secures the Bitcoin network →
- Ask
- The price at which a seller is willing to sell, also called the offer. A company buying bitcoin pays the ask, while a company selling receives the bid. On an exchange, the best ask is the lowest sell order on the order book; in an OTC trade, the ask is the price the dealer quotes to sell. The ask is usually only firm for a specific size and a limited time, so it should always be read together with the quantity and validity of the quote.Read: How request-for-quote (RFQ) pricing works for Bitcoin →
- ASU 2023-08
- A US accounting standards update issued by FASB in December 2023 that requires certain digital assets, including bitcoin, to be measured at fair value with changes recognised in net income each period. It is effective for fiscal years beginning after 15 December 2024, with early adoption permitted. It also requires holdings to be presented separately on the balance sheet and disclosures such as significant holdings, cost basis, restrictions and a roll-forward of activity. It replaced the previous impairment-only approach. Companies should take their own accounting advice.Read: ASU 2023-08: fair value accounting for Bitcoin explained →
- At-the-market (ATM) equity programme
- An arrangement under which a listed company sells new shares gradually into the market at prevailing prices, through a broker, rather than in a single offering. ATM programmes give flexibility over timing and size. Some Bitcoin treasury companies have used them to raise funds for purchases. Each sale dilutes existing shareholders, so investors focus on whether the funds raised increase bitcoin per share.Read: Funding a corporate Bitcoin purchase: cash, debt or equity →
- Audit evidence
- Information an auditor uses to support their conclusions. For Bitcoin, evidence can include custodian statements, independent confirmation from the custodian, blockchain data showing balances at specific addresses, demonstrations of control such as signing a message, trade confirmations and SOC reports. Auditors weigh the reliability of each source, and evidence directly from the blockchain or third parties generally carries more weight.Read: Bitcoin audit readiness: a checklist for finance teams →
- Audit trail
- The complete, linked record that allows each bitcoin transaction to be traced from authorisation through execution, settlement and accounting. For bitcoin, it typically includes approvals, trade confirmations, bank records, transaction IDs, wallet addresses and custodian statements. A strong audit trail lets auditors verify existence, ownership and valuation efficiently. Gaps, such as trades without matching transaction IDs or approvals recorded only in email, are a common cause of delays and additional audit work.Read: Bitcoin audit readiness: a checklist for finance teams →
- A financial institution, usually a large broker-dealer, permitted to create and redeem shares of an exchange-traded fund directly with the issuer. Authorised participants arbitrage gaps between the ETF's share price and its net asset value, which helps keep the two close. Their willingness to act, especially during market stress, affects how well an ETF tracks its underlying asset.Read: Bitcoin ETFs vs holding Bitcoin directly →
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- Backwardation
- A market condition in which futures prices are below the spot price, or longer-dated futures are cheaper than near-dated ones. It is the opposite of contango. In Bitcoin markets, backwardation has tended to appear during periods of stress or heavy selling. It changes the economics of hedging and of basis trades, since rolling a futures position can produce a gain rather than a cost.Read: Bitcoin futures and options for corporate treasuries →
- Bankruptcy remoteness
- The degree to which client assets would be protected, and returned to the client, if the custodian or another service provider became insolvent. It depends on legal structure, such as trust arrangements or statutory segregation, on how the assets are recorded and on the insolvency law of the provider's jurisdiction. Past failures in digital asset markets showed that clients of firms with weak segregation can become unsecured creditors. Companies should obtain legal advice on bankruptcy remoteness before choosing a custodian.Read: Qualified custodian vs self-custody for companies →
- Basel prudential standard (digital assets)
- A prudential standard published by the Basel Committee on Banking Supervision in December 2022 setting out how banks should treat exposures to digital assets for capital purposes. Unbacked assets such as bitcoin fall into Group 2, which carries the most conservative capital treatment, alongside limits on total exposure. The standard shapes how willing regulated banks are to hold, lend against or provide services related to bitcoin, which in turn affects the banking relationships available to corporate holders.Read: A short history of institutional Bitcoin adoption →
- Basis
- The difference between the price of a futures contract and the spot price of the same asset. When futures trade above spot, the basis is positive; when below, negative. In Bitcoin markets, the basis often reflects demand for exposure without immediate cash outlay, funding costs and the time to expiry. Basis is closely watched by traders and arbitrageurs, and changes in it can indicate shifts in market positioning. For corporate holders, it is mainly relevant if they hedge or gain exposure through futures.
- Basis trade
- A strategy that buys an asset in the spot market and sells a futures contract on it (or the reverse) to capture the difference in price, the basis, as the two converge at expiry. Also called cash-and-carry. The return is largely independent of price direction, but the trade carries margin, counterparty, funding and execution risks. Funds often run basis trades using spot ETFs and CME futures.Read: Bitcoin futures and options for corporate treasuries →
- Beneficial owner
- The individual or individuals who ultimately own or control a company, directly or indirectly, often defined by a shareholding or control threshold set in local law. Identifying beneficial owners is a core part of KYB checks, since it prevents criminals from hiding behind layers of companies. A company opening an account with a Bitcoin trading desk or custodian should expect to provide its ownership structure, registers and identification for beneficial owners, and to update these when ownership changes.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Best execution
- The obligation or objective of achieving the most favourable overall result for an order, taking into account price, costs, speed, likelihood of settlement, order size and other relevant factors. Best execution is not the same as the lowest quoted price on one screen. For corporate Bitcoin buying, it means having a documented process: comparing quotes, recording why a counterparty was chosen, measuring results against a benchmark and reviewing execution quality periodically. Boards and auditors increasingly expect this evidence for large trades.Read: How to choose a Bitcoin liquidity provider →
- Bid
- The price at which a buyer is willing to buy. A company selling bitcoin receives the bid. On an exchange, the best bid is the highest buy order on the order book; in an OTC trade, it is the price a dealer quotes to buy from the client. As with the ask, a bid is firm only for a stated size and time. The gap between the best bid and best ask is the spread, one of the most visible costs of trading.Read: How request-for-quote (RFQ) pricing works for Bitcoin →
- Bid-ask spread
- The difference between the best price a buyer is offering and the best price a seller is asking. It is an immediate cost of trading: buying at the ask and selling at the bid straight away would lose the spread. Spreads are usually narrower in liquid, calm markets and wider during volatility, outside peak hours or for large sizes. For corporate orders, the quoted spread on a screen often understates the true cost, because large trades also move the price through market impact.Read: Slippage and market impact in Bitcoin trading →
- BIP-39
- The standard that turns a wallet's master seed into a list of common words, usually 12 or 24, drawn from a published list of 2,048 words. The word list, known as a seed phrase or mnemonic, is easier to write down and check than raw numbers. Anyone with the words can recreate the wallet, so BIP-39 phrases must be stored offline and protected as carefully as the funds themselves.Read: Public and private keys explained for companies →
- Bitcoin Improvement Proposal (BIP)
- A public design document proposing a change or standard for Bitcoin, discussed openly by developers and users. Some BIPs change consensus rules, such as SegWit or Taproot; others set conventions that wallets follow, such as BIP-39 seed phrases or BIP-32 key derivation. A BIP has no authority by itself; a rule change takes effect only if node operators choose to run software that implements it. BIP numbers often appear in custody due diligence.Read: Who created Bitcoin, and why no one controls it →
- A metric used by some listed companies holding bitcoin, calculated as the total bitcoin held divided by the number of shares outstanding, sometimes on a fully diluted basis. Changes in it show whether capital raising and acquisitions have increased each shareholder's underlying bitcoin. It is a company-defined, non-GAAP measure, so definitions vary. Investors should read how it is calculated, including treatment of convertible debt and options, before comparing one company with another.Read: What are Bitcoin treasury companies? →
- Bitcoin Script
- The simple programming language that defines the conditions under which bitcoin can be spent. Every output carries a locking script, and anyone spending it must provide data, typically signatures, that satisfies those conditions. Script is deliberately limited, which reduces the risk of unexpected behaviour. It supports single-signature payments, multisig, timelocks and recovery paths, which are the building blocks of most corporate custody designs.Read: How Bitcoin transactions work, for finance teams →
- Bitcoin treasury company
- A company, typically listed, that holds bitcoin as a significant part of its balance sheet and makes that holding central to its strategy and investor communication. MicroStrategy, renamed Strategy in 2025, began buying bitcoin in August 2020 and is the most widely known example. Such companies often raise equity or debt to buy more bitcoin, and their share prices can trade at a premium or discount to the value of their holdings, commonly measured by mNAV.Read: What are Bitcoin treasury companies? →
- Bitcoin white paper
- The nine-page paper titled 'Bitcoin: A Peer-to-Peer Electronic Cash System', published by Satoshi Nakamoto on 31 October 2008. It describes how a network could prevent double spending without a trusted intermediary, using proof of work and a chain of timestamped blocks. It remains a short, readable introduction to Bitcoin's design and is often recommended to board members who want to understand the asset's foundations.Read: Who created Bitcoin, and why no one controls it →
- Bitcoin yield (KPI)
- A metric used by some Bitcoin treasury companies to describe the percentage change in bitcoin held per diluted share over a period. It is a company-defined, non-GAAP performance indicator, not a yield in the usual sense of income from an asset. Definitions differ between companies, so readers should check exactly what each includes, especially how convertible instruments are treated.Read: What is mNAV? The metric for Bitcoin treasury companies →
- Bitcoin-backed loan
- A loan, usually in cash or stablecoins, secured by bitcoin posted as collateral. It lets a holder raise money without selling, which may matter for tax or strategic reasons. Risks include margin calls in falling markets, liquidation at unfavourable prices, the lender's handling of collateral, including rehypothecation, and the lender's own solvency. Terms should be reviewed by legal and treasury advisers.Read: Bitcoin-backed lending for companies: uses and risks →
- Block
- A batch of confirmed Bitcoin transactions added to the shared ledger, on average about every ten minutes. Each block contains a header that references the previous block, a timestamp, and the proof-of-work solution found by the miner who produced it. Because every block points to the one before it, altering an old transaction would mean redoing the work for that block and every block since. For finance teams, a transaction is considered settled once it is included in a block and buried under further blocks, known as confirmations.Read: What is Bitcoin? A CFO's guide →
- Block explorer
- A website or tool that displays public blockchain data in a readable form: blocks, transactions, addresses and balances. Finance teams use explorers to check confirmations or trace a settlement by its transaction ID. Public explorers are run by third parties and may log the addresses users look up, so some institutions prefer their own node or a private explorer for sensitive lookups.Read: How Bitcoin transactions work, for finance teams →
- Block header
- The compact summary at the top of every Bitcoin block. It contains the hash of the previous block, the Merkle root of the block's transactions, a timestamp, the difficulty target, the nonce and a version field. Miners hash the header repeatedly to perform proof of work. Because each header includes the previous block's hash, headers chain together, which is what makes altering history so difficult.Read: What is a blockchain? The Bitcoin ledger explained →
- Block height
- The number of blocks that come before a given block in the Bitcoin blockchain, counting from the first block at height zero. Block height works as the network's clock: protocol events such as the halving and difficulty adjustments are scheduled by height rather than by calendar date. Finance teams meet it in custody statements and execution reports, where the height at which a transaction was confirmed provides an objective, verifiable timestamp for audit and cut-off purposes.Read: What is a blockchain? The Bitcoin ledger explained →
- Block reward
- The total amount a miner receives for producing a valid block: the block subsidy of newly issued bitcoin plus the transaction fees paid by users whose transactions are included. The subsidy part falls by half every 210,000 blocks, so over the long run miners will rely increasingly on fees. Since the April 2024 halving, the subsidy has been 3.125 BTC per block. The block reward is the economic incentive that pays for the computing work securing the network.Read: The Bitcoin halving explained for finance teams →
- Block subsidy
- The newly created bitcoin a miner may award itself in each block, and the only way new bitcoin enter circulation. It began at 50 BTC per block in 2009 and halves every 210,000 blocks, roughly every four years. After the April 2024 halving it stands at 3.125 BTC. The subsidy schedule is written into the protocol, which is why total issuance can be calculated in advance and why supply approaches, but never exceeds, 21 million bitcoin.Read: The Bitcoin halving explained for finance teams →
- Block time
- The average interval between Bitcoin blocks, targeted at about ten minutes. Individual intervals vary widely because finding a block is a matter of probability; some blocks arrive within seconds, others after much longer. The difficulty adjustment every 2,016 blocks keeps the long-run average close to the target. Treasury teams should plan settlement around this variability rather than assume exactly ten minutes.Read: How mining secures the Bitcoin network →
- Block trade
- A single large trade negotiated privately between two parties, usually through an OTC desk, rather than executed piece by piece on a public order book. Block trades let a company buy or sell a significant amount at one agreed price, reducing information leakage and the risk of moving the market against itself. The price reflects the dealer's cost of sourcing or offloading the position. Terms to agree in advance include size, price, settlement method, settlement window and what happens if either side fails to deliver.Read: What is a Bitcoin block trade? →
- Block weight
- The measure of a block's size introduced by SegWit, replacing the earlier simple byte limit. Each block is limited to four million weight units. Witness data, mainly signatures, counts as one unit per byte; other data counts as four. The fixed limit means block space is scarce, and when demand exceeds it, users compete through higher fees. This scarcity is the basis of Bitcoin's fee market.Read: How Bitcoin network fees work and how to budget for them →
- Blockchain
- A ledger made of blocks linked in sequence, where each block includes a reference to the one before it. In Bitcoin, thousands of independent computers hold a copy of this ledger and check every new block against the same rules, so no single party controls the record. The term is often used loosely for many different systems. For a CFO, the practical point is that Bitcoin's ledger is public, shared and very hard to alter once transactions have several confirmations, which gives settlement a high degree of finality.Read: What is Bitcoin? A CFO's guide →
- Blockchain analytics
- Tools and services that analyse the public Bitcoin ledger to trace the flow of funds and assess the risk associated with addresses and transactions, for example links to sanctioned parties, fraud or illicit markets. Regulated firms use blockchain analytics for transaction monitoring and sanctions compliance. Companies can use the same tools to check incoming bitcoin before accepting it. The results are probabilistic assessments rather than definitive findings, so they should inform, not replace, human judgement.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Board resolution
- A formal decision of the board of directors, recorded in minutes, that authorises a specific action. For a Bitcoin treasury, a board resolution typically approves the strategy, the maximum allocation, the treasury policy, the approved counterparties and the officers authorised to act. Counterparties often ask for a copy as part of onboarding. A clear resolution protects directors by showing the decision was made deliberately and with appropriate information, and it gives management a defined mandate.Read: How to get board approval for a Bitcoin treasury →
- Business continuity plan
- A documented plan for keeping critical operations running during and after a disruption, such as the loss of key staff, systems failure or a natural disaster. For Bitcoin holdings, the plan should cover access to custody accounts, availability of signers, backup locations of key material, and how trades or transfers would be approved if normal decision-makers are unavailable.Read: Bitcoin succession and continuity planning for organisations →
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- Call option
- An option that gives its holder the right to buy the underlying asset at the strike price before or at expiry. A buyer of a Bitcoin call benefits if the price rises above the strike plus the premium paid, and can lose no more than the premium. A seller of a call receives the premium but takes on the obligation to deliver, which can be costly if the price rises sharply.Read: Bitcoin futures and options for corporate treasuries →
- Capital gains tax
- Tax on the profit realised when an asset is sold for more than its cost. In many jurisdictions, companies pay corporate income tax on such gains rather than a separate capital gains tax, while individuals may face specific capital gains rules. How disposals of Bitcoin are taxed depends on the entity type and jurisdiction, so companies should take local tax advice.Read: How Bitcoin is taxed for companies: the principles →
- CARF
- The OECD's reporting framework for the automatic exchange of tax information on transactions in digital assets, published in 2022. It requires certain service providers, such as exchanges and brokers, to collect information about their customers' transactions and report it to tax authorities, which then exchange it with other participating jurisdictions. Companies should expect their providers to request tax residency information.Read: How Bitcoin is taxed for companies: the principles →
- Carrying amount
- The value at which an asset is recorded on the balance sheet at a given date. For bitcoin, the carrying amount depends on the accounting framework: under ASU 2023-08 it is fair value at the reporting date; under the older US approach it was cost less impairment; under IAS 38 it is cost less impairment, or a revalued amount if the revaluation model is used. Differences between carrying amount and tax base can give rise to deferred tax.Read: How Bitcoin appears on the balance sheet →
- Cash drag
- The reduction in overall returns caused by holding cash or near-cash that earns less than other uses of capital or less than inflation. For a corporate treasury, some cash drag is the price of liquidity and safety. The concept is often raised in discussions of reserve assets, but any comparison should weigh the volatility and liquidity of alternatives against the certainty that cash provides.Read: Inflation, cash drag and the corporate Bitcoin case →
- Cash equivalents
- Short-term, highly liquid investments that are readily convertible to known amounts of cash and carry an insignificant risk of changes in value, such as treasury bills and money market funds. Bitcoin does not meet this definition because its value fluctuates significantly. It is therefore presented separately from cash and cash equivalents on the balance sheet.Read: How Bitcoin appears on the balance sheet →
- Cash flow forecasting
- Projecting a company's expected cash receipts and payments over coming weeks, months and quarters. Forecasts determine how much cash must stay liquid for operations and contingencies. They are the starting point for sizing any allocation to Bitcoin: only cash not needed under base and stress forecasts is usually considered for a longer-term reserve.Read: How much Bitcoin should a company hold? →
- Cash runway
- The length of time a company could continue operating on its current cash and expected inflows before running out of money. Runway is a key measure for growth companies and others with negative cash flow. Boards considering a Bitcoin allocation typically require that the operating runway is preserved without counting on the value of any bitcoin held.Read: How much Bitcoin should a company hold? →
- Cash-settled contract
- A derivative that settles by paying the difference between the contract price and a reference price in cash, rather than by delivering the underlying asset. CME Bitcoin futures are cash-settled against a published reference rate. Cash settlement avoids the need to handle bitcoin itself, but the company holds no bitcoin at the end and is exposed to the reference rate's methodology.Read: Bitcoin futures and options for corporate treasuries →
- Censorship resistance
- The property that makes it difficult for any single party to block valid transactions or freeze balances on the Bitcoin network. Because many independent miners and nodes operate worldwide, a transaction refused by one may be included by another. Censorship resistance applies to the protocol; intermediaries such as custodians and exchanges can still restrict their own customers' activity in line with law and policy.Read: Can governments ban Bitcoin? What history shows →
- Central bank digital currency (CBDC)
- A digital form of a country's fiat currency, issued and backed by its central bank. A CBDC is a liability of the central bank, with supply set by monetary policy, and can be designed to give the issuer visibility and control over transactions. Bitcoin, by contrast, has no issuer and a fixed supply. Several central banks have launched or are researching CBDCs.Read: Bitcoin vs other digital assets: why treasuries focus on Bitcoin →
- Central limit order book (CLOB)
- The standard exchange structure in which buy and sell orders are collected in a single list, ranked by price and then by time, and matched automatically. The order book shows visible liquidity at each price level. A CLOB offers transparent prices, but a large order sent to it can consume several price levels at once and signal its presence to other traders. This is why corporate orders of meaningful size are often executed through an OTC desk or an algorithm instead.Read: OTC vs exchange: executing large Bitcoin orders →
- Chain reorganisation (reorg)
- An event in which nodes replace one or more recent blocks with an alternative sequence that has more accumulated proof of work. Short reorgs of a single block happen occasionally and are usually harmless. Deeper reorgs are rare and would require substantial mining power. The risk of a reorg is why custodians and exchanges require a set number of confirmations before crediting deposits or releasing funds.Read: What is a blockchain? The Bitcoin ledger explained →
- Change address
- An address controlled by the sender that receives the leftover amount when a transaction spends more than it needs to pay. Bitcoin outputs must be spent in full, so a payment from a larger UTXO creates one output to the recipient and another back to the sender as 'change'. Accounting and monitoring tools must recognise change outputs as the company's own funds, not as payments to third parties.Read: How Bitcoin transactions work, for finance teams →
- Child-pays-for-parent (CPFP)
- A fee-bumping technique in which the recipient of a stuck, low-fee Bitcoin transaction spends one of its outputs in a new transaction with a high fee. Miners must include the original (parent) transaction to collect the fee on the new (child) one, so both are confirmed together. CPFP is useful when the sender cannot or will not use replace-by-fee. It requires the recipient to control an output of the stuck transaction.Read: How Bitcoin network fees work and how to budget for them →
- Circulating supply
- The number of bitcoin that have been issued so far through block subsidies. It rises gradually according to the issuance schedule and will approach, but never exceed, 21 million. Circulating supply includes coins believed to be permanently lost, since lost coins cannot be distinguished reliably from dormant ones. For finance teams, the main point is that current supply and future issuance are known with precision, which is unusual and can be checked by anyone running a full node.Read: Bitcoin's 21 million supply cap explained →
- CME Bitcoin futures
- Cash-settled futures contracts on bitcoin listed on the Chicago Mercantile Exchange, a US regulated derivatives exchange, since December 2017. They give institutions regulated exposure to bitcoin's price, and the ability to hedge, without holding bitcoin directly. CME futures are widely used by asset managers and in basis trades, and their open interest is watched as an indicator of institutional activity. Using them requires a futures account with a clearing broker and margin management.
- Coin control
- The ability to choose exactly which unspent outputs (UTXOs) a wallet uses when making a payment. Coin control helps manage fees, avoid combining coins from sources that should stay separate, and support specific identification for tax lot tracking. Many consumer wallets select coins automatically, but institutional platforms often expose coin control to treasury operators.Read: How Bitcoin transactions work, for finance teams →
- Coin mixer
- A service that pools bitcoin from many users and redistributes it to break the visible link between sources and destinations. Mixers can serve legitimate privacy needs but are also used to launder proceeds of crime, and some have been sanctioned by OFAC. Coins with a history of passing through mixers may be treated as high risk or rejected by regulated providers.Read: Sanctions screening and blockchain analytics for corporates →
- Coinbase transaction
- The first transaction in every Bitcoin block, created by the miner who found the block. It has no inputs and pays the miner the block subsidy plus all transaction fees in that block. It is the only way new bitcoin enter circulation. The name predates, and has nothing to do with, any company of the same name. Coinbase outputs cannot be spent until 100 further blocks have been added, a rule known as coinbase maturity.Read: How mining secures the Bitcoin network →
- Cold storage
- Holding private keys on systems that are never connected to the internet, such as air-gapped devices or hardware security modules in secure facilities. Cold storage greatly reduces the risk of remote theft, at the cost of slower access: moving funds may take hours or days and require several people in several places. Corporate treasuries usually keep the bulk of long-term holdings in cold storage and only a small operational balance in warmer systems, with the split set out in the treasury policy.Read: Corporate Bitcoin custody: the options explained →
- Collaborative custody
- A multisig arrangement in which keys are split between the company and one or more third-party specialists. For example, the company might hold two of three keys and a provider one. The company can usually move funds with its own keys, while the provider can help with recovery or co-sign. It combines elements of self-custody and third-party custody.Read: Qualified custodian vs self-custody for companies →
- Collar
- A hedging strategy combining a bought put and a sold call on the same asset. The put sets a floor on value; the call caps the upside; the premium received from the call offsets some or all of the cost of the put. A collar narrows the range of outcomes for a holding over a set period. It requires derivatives authority and an understanding of margin and accounting implications.Read: Hedging a corporate Bitcoin position →
- Collateral
- Assets pledged to secure an obligation, such as a loan or derivatives position, which the counterparty can take if the obligation is not met. Bitcoin can serve as collateral, and cash or other assets can be posted against Bitcoin exposures. Key questions include where collateral is held, whether it can be rehypothecated, and how it is valued and returned.Read: Bitcoin-backed lending for companies: uses and risks →
- Complementary user entity controls (CUECs)
- Controls that a service organisation's SOC report assumes its customers will operate themselves for the overall control system to work. For a Bitcoin custodian, CUECs might include reviewing user access, approving withdrawal allowlists or reconciling statements. A company relying on a custodian's SOC report must identify the CUECs and show that it actually performs them.Read: Choosing a Bitcoin custodian: a due diligence list →
- Completeness assertion
- A management claim that all transactions and balances that should be recorded have been recorded. For Bitcoin, completeness requires that every wallet, address and custody account the company controls is captured in the books, including small balances, fee payments and any assets received from forks. Maintaining a register of all wallets and addresses is the main control.Read: Bitcoin audit readiness: a checklist for finance teams →
- Concentration limit
- A cap in the treasury policy on how much of a particular exposure the company may hold. For bitcoin, limits may apply to bitcoin as a share of total treasury assets or net assets, to the amount held with a single custodian or counterparty, or to the amount in hot wallets. Concentration limits stop a single decision, provider or market move from causing outsized harm. They should state what happens if a limit is breached, for example through a price rise, and who decides on rebalancing.Read: How to set Bitcoin concentration limits for a company →
- Confirmation
- The inclusion of a transaction in a block, with each further block added on top counting as one more confirmation. The more confirmations, the harder it becomes to reverse the transaction, because doing so would require redoing the work for all of those blocks. Many institutions treat six confirmations, about an hour on average, as final for large amounts, though counterparties set their own thresholds. Settlement agreements should state how many confirmations are required before a transfer is considered complete and the other leg is released.Read: Settlement and counterparty risk in Bitcoin trades →
- Consensus rules
- The rules every Bitcoin node enforces to decide whether a block or transaction is valid: for example, that no one spends coins they do not control, that block subsidies follow the issuance schedule, and that the 21 million supply cap is respected. Because each node checks these rules independently, a miner or developer cannot change them unilaterally. Changing them requires broad voluntary adoption of new software.Read: What is a Bitcoin node and should a company run one? →
- Contango
- A market condition in which futures prices are above the current spot price, so the futures curve slopes upward. Contango is common in Bitcoin markets, reflecting funding costs and demand for exposure without buying spot. It means holding long futures positions and rolling them forward can be more expensive than holding spot over time. It also creates opportunities for basis trades. Companies using futures for exposure or hedging should account for this cost.
- Contractual sale restriction
- A legal or contractual limit on a company's ability to sell an asset, such as a lock-up, a pledge as collateral or terms of a financing arrangement. ASU 2023-08 requires disclosure of the fair value of restricted digital asset holdings, the nature and remaining duration of the restriction, and the circumstances that could cause it to lapse.Read: Bitcoin disclosure requirements in financial statements →
- Convertible note
- A debt instrument that can be converted into the issuer's shares under defined conditions, usually at a set conversion price. Convertibles typically carry lower interest than straight debt because investors receive the conversion option. Several listed companies have issued convertible notes to fund Bitcoin purchases, which adds refinancing risk and potential future dilution to the strategy's risk profile.Read: Funding a corporate Bitcoin purchase: cash, debt or equity →
- Correlation
- A statistical measure, from minus one to plus one, of how closely two assets' returns move together. Bitcoin's correlation with equities, gold and other assets has varied considerably over time and across market conditions, and it tends to change during periods of stress. Treasurers should treat any historical correlation figure as unstable rather than as a reliable diversification property. Stress-testing the treasury under scenarios where bitcoin and other assets fall together is more prudent than relying on an average.Read: Bitcoin vs cash, T-bills and gold as treasury assets →
- Cost basis
- The original cost of an asset for accounting or tax purposes, usually the purchase price plus directly attributable costs such as fees. When bitcoin is sold, the gain or loss is calculated by comparing proceeds with the cost basis of the units sold. Because bitcoin is often bought in many lots at different prices, the method used to assign cost to units sold, such as FIFO, specific identification or average cost, affects reported results. Companies should confirm permitted methods with their tax and accounting advisers.Read: Cost basis methods for corporate Bitcoin holdings →
- Cost model
- An accounting approach in which an asset is carried at its original cost less any accumulated impairment. Under IFRS, bitcoin classified as an intangible asset under IAS 38 is usually held on the cost model unless the revaluation model is chosen. Under the cost model, falls in value below cost can trigger impairment losses, but increases in value are not recognised until the bitcoin is sold. This can make reported figures diverge significantly from market value during strong price rises.Read: How Bitcoin is accounted for under IFRS →
- Cost of capital
- The return that a company's investors and lenders expect for providing funds, which sets a minimum return the company should aim to earn on new investments. It combines the cost of debt, usually after tax, and the cost of equity. Funding Bitcoin with debt or new equity carries this cost, while the bitcoin itself produces no income, which is a central point in board discussions.Read: Funding a corporate Bitcoin purchase: cash, debt or equity →
- Counterparty risk
- The risk that the other party to a transaction fails to meet its obligations, for example by not delivering bitcoin or cash, or by becoming insolvent while holding the company's assets. In Bitcoin markets, counterparty risk arises with trading desks, exchanges, custodians and lenders. It is managed through due diligence, exposure limits per counterparty, delivery-versus-payment settlement, minimal pre-funding and prompt withdrawal of assets to segregated custody. Treasury policies should name approved counterparties and set maximum exposures to each.Read: Settlement and counterparty risk in Bitcoin trades →
- Credit risk
- The risk that a counterparty fails to meet its financial obligations, such as a lender not returning collateral, a trading counterparty not delivering, or a custodian becoming insolvent. Holding bitcoin directly in well-structured custody removes some credit risk, but exposure returns whenever bitcoin or cash is lent, pre-funded or left with an intermediary.Read: Settlement and counterparty risk in Bitcoin trades →
- Custodian
- A firm that safeguards assets on behalf of clients. A Bitcoin custodian manages the private keys that control client holdings, applies agreed approval procedures to withdrawals and provides statements and audit evidence. Custodians differ in regulatory status, technology, insurance, segregation of client assets and the controls they have independently tested. Due diligence should cover legal structure, bankruptcy remoteness, assurance reports such as SOC 2, key management, operating hours and how quickly withdrawals can be processed.Read: Choosing a Bitcoin custodian: a due diligence list →
- Custody
- The safekeeping of assets and the control of how they can be moved. For Bitcoin, custody means controlling the private keys, because whoever controls the keys controls the funds. Corporate options include using a regulated third-party custodian, self-custody with the company's own keys, or a collaborative model where keys are split between the company and one or more providers. The right choice depends on the company's size, internal capabilities, regulatory position, auditor expectations and appetite for operational responsibility.Read: Corporate Bitcoin custody: the options explained →
- Custody insurance
- Insurance cover arranged by a custodian or by the company against defined losses of digital assets, such as theft from cold or hot storage, employee fraud or physical damage to key material. Policies vary widely in limits, exclusions and whether cover is shared across all clients. Insurance does not usually cover market losses or the company's own errors. When reviewing a custodian, ask for the policy summary, the insurer, the limits per client and in aggregate, and the specific events excluded.Read: Choosing a Bitcoin custodian: a due diligence list →
- Customer due diligence (CDD)
- The process a regulated firm follows to identify a client, verify that identity, understand the nature and purpose of the relationship and monitor activity over time. For a company, CDD covers the legal entity, its directors, beneficial owners and the expected size and type of transactions. It is risk-based: more complex or higher-risk clients receive more scrutiny. Companies can speed up onboarding with trading desks and custodians by preparing a standard CDD pack in advance.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
D
- Debt covenant
- A condition in a loan agreement that requires the borrower to do, or not do, certain things, such as maintaining minimum liquidity or limiting additional borrowing. Covenants can restrict which assets count as liquid or may be pledged. Before buying bitcoin, a company should check that its existing borrowing agreements permit the purchase and that a fall in value would not breach any covenant.Read: The main risks of a corporate Bitcoin treasury →
- Decentralisation
- The distribution of control across many independent participants rather than a central authority. In Bitcoin, decentralisation applies to who validates transactions (nodes), who produces blocks (miners) and who writes software (developers). No single party can change the rules or reverse confirmed transactions on its own. The degree of decentralisation in each area is debated and is a reasonable topic for a board's risk discussion.Read: Who created Bitcoin, and why no one controls it →
- Deferred tax
- Tax that will become payable or recoverable in future periods because of differences between an asset's carrying amount in the accounts and its value for tax purposes. If bitcoin is measured at fair value in the accounts but taxed only when sold, unrealised gains may create a deferred tax liability, and unrealised losses a potential deferred tax asset. Recognising and measuring deferred tax depends on local tax rules and judgement, so companies should take their own tax and accounting advice.Read: How Bitcoin is taxed for companies: the principles →
- The documented framework setting out which decisions the board keeps for itself and which it delegates to committees, executives or managers, along with the limits that apply. For a Bitcoin treasury, the delegation might reserve strategy and maximum allocation for the board, give the CFO authority to execute within those limits, and require two approvers for any transfer. A clear delegation of authority avoids ambiguity, supports internal controls and is often reviewed by auditors.Read: How to write a Bitcoin treasury policy: a sample outline →
- Delivery versus payment (DvP)
- A settlement method in which the transfer of an asset and the payment for it happen together, or are conditional on each other, so neither party is left exposed after delivering its side. In traditional securities, DvP is provided by central settlement systems. In Bitcoin trades, similar outcomes are achieved through custodian-based settlement networks, escrow arrangements or tightly sequenced transfers with small tranches. A treasurer should understand exactly which leg moves first and what protection exists if the other leg does not arrive.Read: Settlement and counterparty risk in Bitcoin trades →
- Derivative
- A financial contract whose value depends on the price of another asset, the underlying. Bitcoin derivatives include futures, perpetual swaps and options. They can be used to hedge, to gain exposure without holding the asset, or to speculate. Derivatives introduce counterparty, margin and basis risks, and they usually require specific board authority and separate accounting treatment.Read: Bitcoin futures and options for corporate treasuries →
- Difficulty adjustment
- The automatic recalibration of how hard it is to mine a block, carried out every 2,016 blocks, roughly every two weeks. If blocks have been found faster than the ten-minute target, difficulty rises; if slower, it falls. This keeps the pace of new blocks broadly stable regardless of how much computing power joins or leaves the network. For finance teams, the adjustment explains why Bitcoin's issuance schedule stays predictable even when mining activity changes sharply, and why miners' economics shift after each change.
- Digital gold
- A shorthand describing Bitcoin as a scarce, non-sovereign store of value comparable to gold, but native to the internet. The comparison highlights shared features: limited supply, no issuer liabilities and independence from any single government. It also has limits: Bitcoin is more volatile, has a much shorter history, and depends on networks and software rather than a physical object. It is a narrative, not a classification.Read: Bitcoin vs cash, T-bills and gold as treasury assets →
- Digital signature
- A mathematical proof, created with a private key, that the holder of that key approved a specific message. In Bitcoin, every spend must carry valid signatures that match the conditions locking the coins. Anyone can verify a signature using the public key, but no one can create one without the private key. Signatures also bind the approval to the exact transaction, so the amount or destination cannot be changed after signing.Read: Public and private keys explained for companies →
- Dilution
- The reduction in existing shareholders' percentage ownership when a company issues new shares. Dilution is not necessarily harmful if the funds raised add more value per share than the new shares take away. For Bitcoin treasury companies, the comparison is often made using bitcoin per share: whether issuing equity increases or decreases the amount of bitcoin backing each share.Read: Funding a corporate Bitcoin purchase: cash, debt or equity →
- Disaster recovery
- The plans and procedures for restoring systems and access after a serious incident, such as the loss of a data centre, destruction of devices or a cyberattack. For Bitcoin, disaster recovery means being able to regain control of funds from backups, with keys, descriptors and procedures available in separate locations. Recovery should be rehearsed, not just documented.Read: Bitcoin succession and continuity planning for organisations →
- Disposal
- Any event in which a company gives up ownership of bitcoin, such as selling it for cash, exchanging it for another asset or using it to pay for goods and services. In many tax systems, a disposal triggers a taxable gain or loss measured against cost basis. Some transfers, like moving bitcoin between the company's own wallets, are not disposals. Because the tax treatment of particular events differs between jurisdictions, companies should take their own tax advice before entering unusual transactions.Read: How Bitcoin is taxed for companies: the principles →
- Dollar-cost averaging
- Buying a fixed amount of an asset at regular intervals regardless of price, rather than investing a large sum at once. For a corporate Bitcoin treasury, dollar-cost averaging spreads entry over time, reducing the risk of buying the whole allocation at a short-term peak and making execution easier to manage. It can also mean buying less if prices rise during the programme. The schedule, amounts and conditions for pausing should be set in the treasury policy and execution plan.Read: Dollar-cost averaging vs lump sum for corporate Bitcoin buying →
- Double spend
- An attempt to spend the same bitcoin twice, for example by paying a merchant and then getting a conflicting transaction confirmed instead. Bitcoin's consensus rules and proof of work are designed to prevent this. The practical risk is concentrated in unconfirmed transactions and in very recent blocks, which is why companies receiving large payments wait for multiple confirmations before treating funds as settled.Read: Can Bitcoin be hacked? Where the real risks sit →
- Drawdown
- The fall in value from a previous peak to a subsequent low, usually expressed as a percentage. Bitcoin has experienced several drawdowns of well over 50% in its history. Maximum drawdown is a useful planning measure for treasurers: it shows the scale of paper losses the company may need to absorb and explain. A treasury policy should consider how a severe drawdown would affect reported earnings, covenants, liquidity and investor communication, and decide in advance how management would respond.Read: Bitcoin on the balance sheet: planning for drawdowns →
- Dust
- An amount of bitcoin so small that the network fee needed to spend it would equal or exceed its value. Node software refuses to relay transactions that create outputs below a dust threshold, which depends on the output type. Dust can also be sent deliberately to many addresses to try to track wallets. Treasury teams generally leave unsolicited dust untouched and avoid creating it through poor UTXO management.Read: How Bitcoin network fees work and how to budget for them →
E
- A company's net income divided by its weighted average number of shares outstanding. Under fair value accounting for Bitcoin, changes in the value of holdings flow through net income, so EPS can swing significantly with the Bitcoin price, independently of operating performance. Many companies explain these effects in commentary or show adjusted measures alongside reported EPS.Read: Bitcoin and earnings volatility under fair value →
- ECDSA
- The Elliptic Curve Digital Signature Algorithm, the original signature scheme Bitcoin used to prove ownership of coins. It relies on a specific curve called secp256k1. ECDSA remains in wide use for legacy and SegWit addresses, while Taproot introduced Schnorr signatures on the same curve. For finance teams, the detail matters mainly in custody due diligence, where providers state which signature schemes and address types they support.Read: Public and private keys explained for companies →
- Enhanced due diligence (EDD)
- Additional checks applied when a client, transaction or jurisdiction presents higher money-laundering or sanctions risk. EDD may include more detailed evidence of source of funds and source of wealth, senior management approval, deeper research into ownership and more frequent monitoring. Large or unusual Bitcoin transactions can trigger EDD at a counterparty. Companies should expect it for significant trades and allow time for it in their execution plans rather than treating it as an obstacle.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Enterprise value
- A measure of a company's total value: market capitalisation plus debt and preferred equity, less cash. It represents roughly what an acquirer would pay for the whole business. For Bitcoin treasury companies, analysts sometimes compare enterprise value with the value of bitcoin held, as a variant of mNAV, because debt-funded bitcoin purchases are not captured by market capitalisation alone.Read: What is mNAV? The metric for Bitcoin treasury companies →
- ETF creation and redemption
- The process by which an exchange-traded fund issues new shares or cancels existing ones. Authorised participants deliver cash or the underlying asset to the fund to create shares, or return shares to receive cash or assets. This mechanism keeps an ETF's market price close to its net asset value. US spot Bitcoin ETFs initially used cash creations; in-kind creations were later permitted by the SEC.Read: Bitcoin ETFs vs holding Bitcoin directly →
- Exchange-traded fund (ETF)
- A fund whose shares trade on a stock exchange, tracking an underlying asset or index. A spot Bitcoin ETF holds bitcoin directly, with a custodian, and lets investors gain exposure through an ordinary brokerage account. ETFs simplify custody, accounting and access, but add management fees, trade only during exchange hours and give holders a claim on the fund rather than bitcoin itself. Companies should compare these trade-offs against direct holding in light of their objectives.Read: Bitcoin ETFs vs holding Bitcoin directly →
- Execution plan
- A written plan for how a specific purchase or sale will be carried out: total size, timing, method (block trade, RFQ, algorithm or a mix), counterparties, price limits, settlement arrangements and the benchmark used to judge results. It turns a board-approved allocation into concrete steps the treasury team can follow and auditors can check. A good execution plan also states who can change it, what market conditions would pause trading and how the outcome will be reported to management.Read: How do companies buy Bitcoin? A step-by-step guide →
- Execution risk
- The risk that a trade is completed at a worse price, later, or in a smaller size than intended. Causes include market moves during execution, limited liquidity, counterparty failures, operational errors and technical outages. A written execution plan, pre-agreed limits and a choice of liquidity providers help manage it. Execution risk is greater for large orders and in volatile markets.Read: Selling a large Bitcoin position without moving the market →
- Existence assertion
- A management claim, tested by auditors, that assets recorded on the balance sheet actually exist at the reporting date. For Bitcoin, existence is usually tested by reconciling recorded holdings to custodian confirmations or to blockchain balances at known addresses. It is closely linked to the rights and obligations assertion, because holding coins at an address does not by itself prove the company controls them.Read: Bitcoin audit readiness: a checklist for finance teams →
- Expense ratio
- The annual fee a fund charges, expressed as a percentage of assets, to cover management, custody and administration. For a Bitcoin ETF, the fee is usually taken by gradually selling a small amount of the fund's bitcoin, so each share represents slightly less bitcoin over time. Comparing expense ratios with the costs of direct custody is part of the ETF-versus-direct decision.Read: Bitcoin ETFs vs holding Bitcoin directly →
- Expiry
- The date and time at which a futures or options contract ends. At expiry, a contract is settled in cash or by delivery of the underlying, depending on its terms. Treasury teams holding derivatives need to track expiries, decide in advance whether to roll positions, and understand which reference price will be used at settlement.Read: Bitcoin futures and options for corporate treasuries →
- Extended public key (xpub)
- A single key from which a wallet can derive a whole sequence of public keys and addresses, without being able to spend anything. Sharing an xpub with an accounting system or auditor lets them see every address and balance in a wallet. It cannot move funds, but it reveals the wallet's full history and future receiving addresses, so it should be treated as confidential information and shared only on a need-to-know basis.Read: Public and private keys explained for companies →
- External auditor
- An independent accounting firm engaged to express an opinion on whether a company's financial statements are presented fairly in accordance with the applicable framework. For Bitcoin holdings, auditors typically seek evidence of existence, ownership, valuation and the design of controls over keys and transactions. Engaging the auditor early, before the first purchase, avoids surprises at year end.Read: Bitcoin audit readiness: a checklist for finance teams →
F
- Fair value
- The price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Under ASU 2023-08 in US GAAP, bitcoin within scope is measured at fair value each reporting period, with changes recognised in net income. Under IFRS, fair value is used in the IAS 38 revaluation model and in fair value less costs to sell for broker-traders under IAS 2. Measuring fair value requires choosing a principal market and a consistent pricing source and time.Read: ASU 2023-08: fair value accounting for Bitcoin explained →
- Fair value hierarchy
- A three-level classification of the inputs used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 are other observable inputs; Level 3 are unobservable inputs based on the company's own assumptions. Bitcoin held directly is usually measured with Level 1 inputs, given its active markets. Restrictions on sale, or instruments linked to bitcoin rather than bitcoin itself, may lead to a different classification, which should be discussed with auditors.Read: ASU 2023-08: fair value accounting for Bitcoin explained →
- Fair value through net income
- An accounting approach in which an asset is carried at fair value and every change in that value is recognised in the income statement in the period it occurs. ASU 2023-08 requires this treatment for in-scope digital assets under US GAAP. It gives a current balance sheet value but makes reported earnings move with the Bitcoin price, which companies usually explain to investors.Read: ASU 2023-08: fair value accounting for Bitcoin explained →
- FATF
- The Financial Action Task Force, an intergovernmental body that sets international standards for combating money laundering and terrorist financing. Its recommendations are implemented through national laws. FATF's standards cover virtual assets and virtual asset service providers, including Recommendation 16, known as the Travel Rule, which requires originator and beneficiary information to accompany transfers between providers. FATF standards shape the compliance checks companies encounter when buying, selling or transferring bitcoin through regulated firms.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Fee market
- The competition between users for limited space in Bitcoin blocks. Because each block has a fixed capacity, users bid with fees, and miners generally include the highest-paying transactions first. As the block subsidy falls with each halving, fees are expected to make up a larger share of miner revenue over time. For treasuries, the fee market means transfer costs vary and should be budgeted for.Read: How Bitcoin network fees work and how to budget for them →
- Fee rate
- The price paid for including a Bitcoin transaction in a block, measured in satoshis per virtual byte (sat/vB). Miners select transactions mainly by fee rate, because block space is limited. The total fee equals the fee rate multiplied by the transaction's size, so a transaction with many inputs costs more at the same rate. Fee rates move with demand and can rise sharply in busy periods.Read: How Bitcoin network fees work and how to budget for them →
- Fiat currency
- Money that has value because a government declares it legal tender and people accept it, rather than because it is backed by a physical commodity. Most of the world's currencies, including the US dollar, euro and pound, are fiat. Central banks manage fiat money supply through monetary policy. Bitcoin differs in having a fixed supply schedule enforced by software rather than by an institution.Read: Bitcoin vs cash, T-bills and gold as treasury assets →
- Fiduciary duty
- The legal obligation of directors, trustees and certain advisers to act in the best interests of those they serve, with appropriate care and skill. For a board considering Bitcoin, fiduciary duty is usually met through a documented process: information, expert input, risk assessment, clear limits and minutes recording the reasoning. The specific duties vary by jurisdiction and entity type.Read: How to get board approval for a Bitcoin treasury →
- FIFO
- First in, first out: a cost basis method that assumes the earliest units acquired are the first ones sold. When bitcoin prices have risen over time, FIFO tends to match older, lower-cost units against sales, producing higher reported gains; when prices have fallen, the reverse. FIFO is simple to apply and is the default in some tax systems. Whether it is required, permitted or optional depends on the jurisdiction and accounting framework, so companies should confirm with their advisers.Read: Cost basis methods for corporate Bitcoin holdings →
- Fill
- The execution of all or part of an order. A fill record shows the quantity traded, the price, the time and the venue or counterparty. Large orders often consist of many fills, and the execution report should list them or summarise them with an average price. Fill records support best execution reviews and form part of the accounting audit trail.Read: What a Bitcoin execution report should contain →
- Finality
- The point at which a transaction can no longer realistically be reversed. Bitcoin offers probabilistic finality: each additional confirmation makes reversal exponentially more costly, rather than a single legal moment of completion. In practice, institutions choose a confirmation threshold they accept as final. Finality matters for treasury because it determines when risk transfers between parties in a trade, when funds can be released on the other leg, and when a receipt can be recorded with confidence in the accounting records.Read: Settlement and counterparty risk in Bitcoin trades →
- Firm quote
- A price that a dealer commits to trade at, for a stated quantity, if the client accepts within the quote's validity period. Firm quotes give price certainty for the whole order, which is one of the main reasons companies use OTC desks for large Bitcoin trades. The terms, including how acceptance is communicated, should be clear in the trading agreement.Read: How request-for-quote (RFQ) pricing works for Bitcoin →
- Foreign exchange risk
- The risk that changes in exchange rates affect the value of assets, liabilities or cash flows. Bitcoin is mostly priced in US dollars, so a company reporting in another currency faces both Bitcoin price risk and dollar exchange rate risk. Treasury reporting should make clear how much of a change in reported value comes from each source.Read: Bitcoin's correlation with equities, bonds and gold →
- Fork
- A divergence in the Bitcoin blockchain or its rules. A temporary fork occurs when two miners find blocks at almost the same time; the network soon settles on one. A protocol fork is a change to the rules, either a soft fork, which remains compatible with older nodes, or a hard fork, which does not. A contentious hard fork can create a separate asset, raising questions for custodians and accountants about which chain the company's holdings refer to.Read: Can governments ban Bitcoin? What history shows →
- Four-eyes principle
- A control requiring that a significant action be approved by at least two people, so no single individual can complete it alone. In Bitcoin treasury operations, it typically applies to trades, withdrawals, adding new addresses and changing custody settings. It reduces the risk of error, fraud and coercion. Multisig and MPC custody can enforce the principle technically, but it should also be reflected in written procedures and in the company's delegation of authority.Read: Key management and signing policies for corporates →
- Four-year cycle
- A pattern some observers identify in Bitcoin's price history, with major rises and falls loosely aligned to the halving roughly every four years. The pattern rests on a small number of past cycles and may weaken as the market matures and new influences, such as ETFs and institutional demand, grow. Treasury planning should not rely on any cycle repeating.Read: Bitcoin market cycles: a historical view →
- Free cash flow
- Cash generated by operations after capital expenditure, available to repay debt, pay dividends, buy back shares or invest elsewhere. Companies that allocate to Bitcoin from free cash flow, rather than from borrowing or new equity, generally have more flexibility to hold through price falls. Free cash flow is a common basis for recurring purchase programmes.Read: Bitcoin treasury for private companies →
- Front-running
- Trading ahead of a known pending order to profit from the price movement it is expected to cause. An intermediary that front-runs a client's order raises the client's cost. Controls include information barriers at the provider, using firm quotes rather than working orders where suitable, limiting who knows the trade plan, and reviewing execution against arrival price.Read: Selling a large Bitcoin position without moving the market →
- Full node
- A computer running Bitcoin software that downloads and independently checks every block and transaction against the consensus rules. A full node does not rely on anyone else to tell it which payments are valid. Some companies run their own full node so they can verify balances and incoming payments directly, rather than trusting a third-party data provider. Running one requires modest hardware and an internet connection.Read: What is a Bitcoin node and should a company run one? →
- Functional currency
- The currency of the primary economic environment in which an entity operates, in which it measures its transactions. Bitcoin is not a functional currency under current accounting standards; it is measured and reported in the entity's functional currency. A company with a non-dollar functional currency records Bitcoin values in that currency, so both the Bitcoin price and exchange rates affect results.Read: Bitcoin under IFRS vs US GAAP: the key differences →
- Funding rate
- A periodic payment between holders of long and short positions in perpetual futures, designed to keep the contract's price close to spot. When the perpetual trades above spot, longs typically pay shorts; when below, shorts pay longs. Funding rates indicate how heavily traders are positioned on one side of the market and how much they are paying to maintain borrowed exposure. Persistently high funding can signal crowded positioning, though it is not a reliable predictor of price direction.
- Fungibility
- The property of an asset whose units are interchangeable, so one unit is worth the same as any other. Cash and gold bars of the same weight are largely fungible. Bitcoin is fungible at the protocol level, but because its history is public, some coins may be treated differently by compliance teams if linked to illicit activity. This is why provenance and blockchain analytics matter to institutions.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Futures contract
- An agreement to buy or sell an asset at a set price on a future date. Bitcoin futures are traded on regulated exchanges and on other venues, settled either in cash or in bitcoin. Futures allow exposure or hedging without holding the asset, but they require margin and can lead to forced closure of positions if prices move sharply. Corporate treasuries that hold bitcoin directly may use futures to hedge, and treasury policies should specify whether derivatives are permitted and for what purposes.
- Futures roll
- Closing a futures position near expiry and opening an equivalent position in a later contract to maintain exposure. The cost or gain from rolling depends on the price difference between the two contracts. In contango, rolling a long position costs money over time; in backwardation it can earn money. Roll costs are an important part of comparing futures with holding spot bitcoin.Read: Bitcoin futures and options for corporate treasuries →
G
- General ledger
- The master set of accounts in which a company records all its financial transactions, from which financial statements are prepared. Bitcoin holdings, gains and losses, fees and related tax balances are posted to general ledger accounts, usually as summarised journal entries supported by a detailed subledger. Account structure should separate Bitcoin from cash and other intangibles.Read: Bitcoin journal entries: worked examples →
- Genesis block
- The first block of the Bitcoin blockchain, mined by Satoshi Nakamoto on 3 January 2009. It is block height zero. Its coinbase transaction contains a newspaper headline from that day referring to a second bank bailout, which is widely read as a comment on the financial system at the time. The 50 bitcoin subsidy in the genesis block cannot be spent because of how the block was coded.Read: Who created Bitcoin, and why no one controls it →
- Gold standard
- A monetary system in which a currency's value is directly linked to a fixed quantity of gold, and paper money can be exchanged for gold. Most major economies left the gold standard during the twentieth century; the US ended the convertibility of the dollar into gold for foreign governments in 1971. Comparisons between Bitcoin and gold often draw on this history.Read: Bitcoin vs cash, T-bills and gold as treasury assets →
- Gresham's law
- The economic observation, often summarised as 'bad money drives out good', that when two forms of money circulate at a fixed legal value, people spend the one they value less and hoard the one they value more. It is sometimes used to explain why holders of Bitcoin tend to spend fiat currency and keep their bitcoin. The law applies most clearly where exchange rates are fixed by law.Read: Bitcoin vs cash, T-bills and gold as treasury assets →
H
- Haircut
- A reduction applied to the market value of collateral to determine how much it counts towards an obligation. A 50 percent haircut means bitcoin worth 100 secures only 50 of borrowing. Haircuts reflect price volatility and liquidity, and give lenders a cushion against falls in value. Bitcoin typically attracts larger haircuts than government bonds or cash.Read: Bitcoin-backed lending for companies: uses and risks →
- Halving
- The scheduled 50% cut in the block subsidy that occurs every 210,000 blocks, roughly every four years. Halvings took place in 2012, 2016, 2020 and April 2024, when the subsidy fell to 3.125 BTC per block. The halving reduces the rate at which new bitcoin are issued, not the number already in existence. Its timing is known in advance. Finance teams should treat claims that a halving will move the price in a particular direction with caution, since past patterns do not predict future outcomes.Read: The Bitcoin halving explained for finance teams →
- Hard fork
- A change to Bitcoin's rules that loosens what is valid, so nodes running older software reject blocks made under the new rules. If not everyone upgrades, the chain splits into two, each with its own history from the split onward. Bitcoin Cash emerged from such a split in 2017. A company's treasury policy should say how it would treat assets arising from a hard fork, including custody support and accounting.Read: What is a Bitcoin node and should a company run one? →
- Hardware security module (HSM)
- A tamper-resistant physical device built to generate, store and use secret keys without exposing them, even to the people operating it. HSMs are standard in banking and payments and are used by many Bitcoin custodians to protect private keys. They are often certified to recognised security standards. An HSM protects the key itself, but the overall security still depends on the policies and approvals that govern when the device is allowed to sign a transaction.Read: Key management and signing policies for corporates →
- Hardware wallet
- A dedicated physical device that stores private keys and signs transactions internally, so the keys never touch an internet-connected computer. The user confirms the destination and amount on the device's own screen. Hardware wallets are commonly used as signers in corporate multisig set-ups. Procurement, firmware updates and secure storage of the devices should be covered by the key management policy.Read: Cold storage explained for corporate treasuries →
- Hash function
- A mathematical function that turns any input into a fixed-length output, called a hash, in a way that is fast to compute but practically impossible to reverse. A tiny change to the input produces a completely different output. Bitcoin uses hash functions to link blocks, to summarise transactions, to derive addresses and to run proof of work. Its security relies on the assumption that no one can find two inputs with the same hash.Read: Proof of work explained for CFOs →
- Hash rate
- The total computing power being used to mine Bitcoin, measured in hashes per second. A higher hash rate means more work would be needed to rewrite recent history, so it is often used as a rough indicator of network security. Hash rate is estimated from how quickly blocks are being found relative to the current difficulty, so published figures are approximations. It responds to mining profitability, energy costs and hardware supply, and it is not a reliable short-term signal for the bitcoin price.
- Hedging
- Taking a position designed to offset potential losses on another exposure. A company holding bitcoin might hedge with futures, put options or collars to limit downside over a period. Hedging has costs, may reduce gains, and can introduce margin, basis and counterparty risks. Whether hedge accounting applies depends on the framework and documentation, so specialist advice is needed.Read: Hedging a corporate Bitcoin position →
- Hierarchical deterministic (HD) wallet
- A wallet that generates all of its keys from a single master seed in a predictable tree structure, following the BIP-32 standard. One backup of the seed can recover every address the wallet has ever used or will use. HD wallets make it easy to use a fresh address for each payment, which improves privacy and simplifies reconciliation, but they also mean the seed must be protected with great care.Read: Public and private keys explained for companies →
- Hot wallet
- A wallet whose keys are held on an internet-connected system, allowing quick transfers. Hot wallets are convenient for frequent payments or trading but are more exposed to hacking and fraud than cold storage. Corporate treasury policies normally cap the amount held in hot wallets, require approvals and allowlisted addresses for withdrawals, and set rules for moving excess balances back to cold storage. Most large losses in digital asset markets have involved hot wallets or the people controlling them.Read: Corporate Bitcoin custody: the options explained →
- Hurdle rate
- The minimum expected return a company requires before committing capital to a project or investment, often set at or above its cost of capital. Applying a hurdle rate to Bitcoin is not straightforward, because bitcoin produces no cash flows and its returns are highly uncertain. Boards therefore often assess a Bitcoin allocation as a reserve or risk-budget decision rather than a project with a hurdle rate.Read: Funding a corporate Bitcoin purchase: cash, debt or equity →
I
- IAS 2
- The IFRS standard on inventories. The IFRS Interpretations Committee's June 2019 agenda decision concluded that bitcoin and similar holdings should be accounted for as inventory under IAS 2 when held for sale in the ordinary course of business. Inventory is normally measured at the lower of cost and net realisable value, but commodity broker-traders may measure it at fair value less costs to sell, with changes in profit or loss. Most corporate treasuries holding bitcoin long term fall under IAS 38 instead.Read: How Bitcoin is accounted for under IFRS →
- IAS 38
- The IFRS standard on intangible assets. The IFRS Interpretations Committee's June 2019 agenda decision concluded that bitcoin held by most companies meets the definition of an intangible asset under IAS 38, because it is identifiable, non-monetary and lacks physical substance. Companies may use the cost model, with impairment testing, or the revaluation model if an active market exists, under which increases go to other comprehensive income. Bitcoin held for sale in the ordinary course of business falls under IAS 2 instead.Read: How Bitcoin is accounted for under IFRS →
- Iceberg order
- A large limit order of which only a small portion is shown in the order book at any time. When the visible part fills, another slice appears. Iceberg orders aim to reduce information leakage by hiding the true size from other traders. Experienced market participants may still detect them from repeated refills at the same price, so they are one tool among several for executing size discreetly.Read: Selling a large Bitcoin position without moving the market →
- IFRIC agenda decision (2019)
- A June 2019 decision by the IFRS Interpretations Committee on how existing IFRS standards apply to holdings of digital currencies such as bitcoin. It concluded that such holdings are generally intangible assets under IAS 38, or inventory under IAS 2 if held for sale in the ordinary course of business. It also confirmed they are not cash or financial assets. The decision did not create a new standard, so IFRS reporters continue to apply these existing standards to their bitcoin holdings.Read: How Bitcoin is accounted for under IFRS →
- IFRS 13
- The IFRS standard on fair value measurement, the counterpart of ASC 820 in US GAAP. It defines fair value as the price that would be received to sell an asset in an orderly transaction between market participants, sets out the fair value hierarchy and requires related disclosures. Where Bitcoin is measured at fair value under IFRS, for example under the revaluation model, IFRS 13 governs how that value is determined.Read: How Bitcoin is accounted for under IFRS →
- Immutability
- The practical permanence of transactions once they are buried under enough blocks. Reversing a confirmed Bitcoin transaction would require redoing the proof of work for that block and every block after it, faster than the rest of the network. For finance teams, immutability means there is no chargeback: mistaken or fraudulent payments generally cannot be reversed, so controls before sending matter greatly.Read: What is a blockchain? The Bitcoin ledger explained →
- Impairment
- A reduction in an asset's carrying amount when its value falls below that amount. Before ASU 2023-08, US companies treated bitcoin as an indefinite-lived intangible asset, recording impairment whenever the price fell below carrying value, even briefly, and could not reverse it when the price recovered. This produced reported values that understated market value. Under IFRS, IAS 38's cost model still requires impairment testing, though IFRS allows reversals of impairment in some circumstances, unlike the former US approach.Read: Bitcoin accounting: impairment vs fair value →
- Implementation shortfall
- A measure of total trading cost: the difference between the price when the decision to trade was made and the final average price achieved, including fees and the cost of any part of the order left unfilled. It captures spread, market impact, timing and delay in a single number. For corporate Bitcoin buying, implementation shortfall is a useful way to judge whether an execution approach worked, because it reflects what the company actually paid compared with the price available when it chose to act.Read: Slippage and market impact in Bitcoin trading →
- Implied volatility
- The level of future volatility implied by the prices of options. Higher implied volatility means options are more expensive, reflecting the market's expectation of larger price swings. It is forward-looking, unlike realised volatility, which measures past price movement. For treasurers, implied volatility gives a market-based view of expected price variability, which can help in setting expectations, sizing positions and evaluating the cost of hedging with options. It is an expectation, not a forecast that can be relied upon.Read: Bitcoin on the balance sheet: planning for drawdowns →
- In-kind creation
- A method of creating ETF shares in which the authorised participant delivers the underlying asset, rather than cash, to the fund. For a spot Bitcoin ETF, this means delivering bitcoin. In-kind processes can reduce trading costs inside the fund and may be more tax efficient in some jurisdictions. Cash creations require the fund or its agents to buy the asset themselves.Read: Bitcoin ETFs vs holding Bitcoin directly →
- Indefinite-lived intangible asset
- An intangible asset with no foreseeable limit to the period over which it is expected to provide benefits, so it is not amortised. Before ASU 2023-08, US companies generally classified bitcoin this way, carrying it at cost less impairment. Impairment losses could not be reversed, so a company's balance sheet could show bitcoin well below its market value, and gains appeared only on sale. ASU 2023-08 changed this by requiring fair value measurement for in-scope digital assets.Read: Bitcoin accounting: impairment vs fair value →
- Indicative quote
- A price given for information only, without a commitment to trade. Indicative quotes help a treasury gauge the market or budget for a purchase, but the actual executable price may differ when a firm quote is requested. Execution reports and board papers should distinguish clearly between indicative and executed prices.Read: How request-for-quote (RFQ) pricing works for Bitcoin →
- Inflation
- A general rise in the prices of goods and services over time, which reduces the purchasing power of money. It is usually measured by consumer price indices. Central banks typically aim for low, stable inflation. For corporate treasury, inflation erodes the real value of cash holdings, which is one context in which some companies consider assets with limited supply.Read: Inflation, cash drag and the corporate Bitcoin case →
- Inflation hedge
- An asset expected to hold or increase its real value when general prices rise. Gold and inflation-linked bonds are traditional examples. Whether Bitcoin acts as an inflation hedge is debated: its fixed supply supports the argument, but its price has often been driven by liquidity and risk appetite, and its short history limits the evidence. Boards should treat the claim with care.Read: Inflation, cash drag and the corporate Bitcoin case →
- Information leakage
- The spread of signals that a large buyer or seller is active, which can cause other market participants to move prices before the order is complete. Leakage can come from visible orders on an exchange, from requesting quotes from too many dealers at once, or from counterparties sharing information. It raises the cost of execution. Companies reduce leakage by limiting who knows about a trade, choosing counterparties carefully, controlling how many dealers are asked to quote and using block trades where suitable.Read: What is a Bitcoin block trade? →
- Insider threat
- The risk that someone with authorised access, such as an employee, contractor or service provider, misuses it, whether deliberately or through negligence. For Bitcoin custody, insider risk is managed with multi-person approval, segregation of duties, distributed key material, background checks, access reviews and logging, so that no single individual can move funds alone.Read: Cybersecurity for finance teams holding Bitcoin →
- Internal control over financial reporting (ICFR)
- The processes designed to provide reasonable assurance that financial statements are reliable and prepared in accordance with the applicable framework. For Bitcoin, ICFR covers authorising trades, safeguarding keys, recording transactions completely and accurately, valuation and reconciliation. US public companies must assess and report on ICFR, and auditors of larger filers test it.Read: Internal controls over Bitcoin for finance teams →
- Investment policy statement (IPS)
- A formal document setting out how an organisation invests its funds: objectives, risk tolerance, permitted assets, limits, liquidity requirements, roles and reporting. For a company or foundation adding Bitcoin, the IPS or treasury policy is where the allocation, custody standards, approval levels and rebalancing rules are written down and approved by the board.Read: How to write a Bitcoin treasury policy: a sample outline →
- ISAE 3402
- An international assurance standard for reports on the controls at a service organisation that are relevant to its clients' financial reporting. It is broadly the international counterpart of a SOC 1 report and is common for providers outside the United States. As with SOC reports, a Type II report, which tests controls over a period, is more informative than a Type I report. Companies using a custodian should obtain the latest report and check that its scope covers the services they actually use.Read: Choosing a Bitcoin custodian: a due diligence list →
- Issuance schedule
- The pre-set timetable by which new bitcoin are created. Each block pays a subsidy that started at 50 bitcoin and halves every 210,000 blocks, roughly every four years. After the halving in April 2024 the subsidy is 3.125 bitcoin. Issuance continues to shrink until it reaches zero, at which point total supply will be just under 21 million. The schedule is enforced by every node and is publicly known.Read: Bitcoin's 21 million supply cap explained →
J
- Journal entry
- A record in the accounting system that debits and credits accounts to reflect a transaction or adjustment. Common Bitcoin journal entries record a purchase, transaction fees, a sale and its realised gain or loss, and period-end remeasurement to fair value. Each entry should be supported by documentation and approved in line with the company's controls.Read: Bitcoin journal entries: worked examples →
K
- Key ceremony
- A formal, documented procedure for generating, backing up or recovering private keys, carried out under controlled conditions with named participants and independent witnesses. Each step is scripted and recorded, sometimes on video, and the equipment used is checked beforehand. The aim is to produce evidence that keys were created securely and that no single person had complete access. Key ceremonies are standard for institutional custody and are often reviewed by auditors as part of custody controls.Read: Key management and signing policies for corporates →
- Key compromise
- Any event in which a private key or key share may have been exposed to an unauthorised party, through theft, loss, malware or an insider. A compromised key must be treated as unsafe even if no funds have moved. Incident procedures should specify how to move funds to new keys quickly, who authorises it, and how the event is investigated and reported.Read: Key management and signing policies for corporates →
- Key person risk
- The risk that the loss or unavailability of one individual disrupts an organisation's operations. In Bitcoin custody, key person risk arises when only one or two people know how to access or move funds. Good practice spreads knowledge and signing authority across several people, documents procedures, and tests recovery so that no single person is indispensable.Read: Bitcoin succession and continuity planning for organisations →
- Key rotation
- Replacing signing keys, which in practice usually means moving funds to a new set of keys, on a schedule or in response to events such as staff departures or suspected compromise. In multisig, rotation means creating a new wallet and transferring funds; in MPC, shares can often be refreshed without moving funds. Rotation policy should balance security benefits against transaction costs and operational risk.Read: Key management and signing policies for corporates →
- A fragment of a private key, or of the information needed to sign, held by one participant in an MPC or threshold scheme. No single share is enough to sign. Shares are typically distributed across different people, devices or locations. Policies should cover how shares are created, stored, backed up, refreshed and revoked, and who can authorise their use.Read: MPC vs multisig: custody models compared →
- Know your business (KYB)
- The process a regulated firm uses to verify a corporate client: its legal existence, registration, ownership, directors, beneficial owners, business activities and expected transactions. KYB is the company-level counterpart of KYC. A company buying bitcoin through a trading desk or custodian should expect to supply incorporation documents, registers, financial statements, board resolutions and identification for key individuals. Preparing a complete KYB pack in advance usually shortens onboarding considerably.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Know your customer (KYC)
- The process of verifying the identity of individual clients and understanding their activity, as required by anti-money laundering rules. For corporate clients, KYC applies to the individuals connected to the company, such as directors, authorised signatories and beneficial owners, alongside KYB checks on the entity itself. It typically involves identity documents, proof of address and screening against sanctions and politically exposed person lists. Reputable Bitcoin trading desks and custodians will not trade or hold assets without it.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Know your transaction (KYT)
- The practice of screening individual Bitcoin transactions and addresses using blockchain analytics, to assess the risk associated with where funds came from or are going. KYT complements know-your-customer checks on identity. Institutional platforms typically run KYT screening on deposits and withdrawals and may hold transfers for review if risk indicators appear.Read: Sanctions screening and blockchain analytics for corporates →
L
- Last look
- A practice in which a liquidity provider, after a client accepts a quote, has a short window to confirm or reject the trade. It protects the provider against prices that have moved, but can disadvantage the client if rejections happen mainly when the market moves in the client's favour. Companies should ask whether a provider applies last look, how long the window is, and how rejections are reported.Read: Best execution for corporate Bitcoin trades →
- Layer 2
- A general term for systems built on top of Bitcoin's base blockchain that handle transactions away from it and rely on the base layer for final settlement. The Lightning Network is the best-known example. Layer 2 systems aim to increase speed or reduce cost, but their security models vary. Some keep users in control of their coins; others rely on a federation or third party to hold them.Read: What is the Lightning Network? A treasury view →
- Level 1 input
- Under the fair value hierarchy in ASC 820 and IFRS 13, a quoted price in an active market for an identical asset that the entity can access at the measurement date. Level 1 inputs are the most reliable evidence of fair value. Bitcoin traded on an active principal market is generally measured using Level 1 inputs, though entities must still justify their choice of market and pricing source.Read: Measuring Bitcoin fair value: principal market and ASC 820 →
- Level 2 input
- Under the fair value hierarchy, an input other than a Level 1 quoted price that is observable, directly or indirectly, such as prices for similar assets or quoted prices in markets that are not active. Level 2 might apply to an instrument linked to Bitcoin, such as certain derivatives or restricted holdings where an observable discount can be applied. Classification affects disclosures.Read: Measuring Bitcoin fair value: principal market and ASC 820 →
- Level 3 input
- Under the fair value hierarchy, an unobservable input reflecting the entity's own assumptions about how market participants would price an asset. Level 3 measurements require the most judgement and the most extensive disclosure. They are uncommon for directly held Bitcoin but may arise for illiquid instruments, private fund interests or holdings with significant restrictions.Read: Measuring Bitcoin fair value: principal market and ASC 820 →
- LIFO
- Last in, first out: a cost flow assumption in which the most recently acquired units are treated as sold first. LIFO is not permitted under IFRS, and its availability for digital assets for tax and accounting purposes varies by jurisdiction. Where permitted, it can produce very different gains from FIFO in a rising or falling market. Companies should take tax advice before choosing.Read: Cost basis methods for corporate Bitcoin holdings →
- Lightning Network
- A payment network built on top of Bitcoin that lets parties send bitcoin instantly and at low cost through payment channels, settling to the main blockchain only when channels are opened or closed. It suits frequent, smaller payments rather than large treasury transfers. Lightning requires online keys and active channel management, which brings operational considerations different from cold storage.Read: What is the Lightning Network? A treasury view →
- Limit order
- An instruction to buy or sell at a specified price or better. A buy limit order will not pay more than its limit; a sell limit order will not accept less. Limit orders protect against paying an unexpected price, but they may fill only partly or not at all if the market moves away. Large buyers often use a series of limit orders rather than one market order.Read: OTC vs exchange: executing large Bitcoin orders →
- Liquidation
- The forced closure of a position when the holder's margin falls below the required level, usually because the market moved against them. In Bitcoin derivatives and lending markets, large waves of liquidations can amplify price moves, as forced selling triggers further declines. Companies holding bitcoin outright, without borrowing, are not liquidated by price falls. Those that borrow against bitcoin or use derivatives must understand margin terms, set conservative limits and plan how they would meet calls.
- Liquidity
- The ability to buy or sell an asset in meaningful size, quickly, without moving the price much. Liquidity has several dimensions: tight spreads, depth at each price level, resilience after large trades, and availability across hours and venues. Bitcoin trades around the clock, but liquidity varies by time of day, venue and market conditions. For corporates, the relevant question is not whether bitcoin is liquid in general, but how much the specific size they need can be traded, and at what cost, at the time they need to trade.Read: What is institutional Bitcoin liquidity? →
- Liquidity buffer
- A reserve of cash or highly liquid assets held to meet obligations during periods of stress, such as revenue shortfalls or delayed receipts. A buffer is normally sized from cash flow forecasts and stress scenarios. In a Bitcoin treasury policy, the liquidity buffer is typically kept separate from any Bitcoin allocation, so the company never needs to sell bitcoin at a bad time to pay bills.Read: How much Bitcoin should a company hold? →
- Liquidity fragmentation
- The spreading of trading activity across many separate venues, such as exchanges, OTC desks and electronic platforms, each with its own order book. No single venue shows the whole market. Fragmentation means a large order may need to access several pools to get a fair price, and it is one reason companies use liquidity providers that aggregate multiple sources.Read: What is institutional Bitcoin liquidity? →
- Liquidity provider
- A firm that stands ready to buy or sell, supplying prices that others can trade on. In Bitcoin markets, liquidity providers include market makers, OTC dealers and principal trading firms that quote on exchanges and directly to clients. When choosing one, a company should review its regulatory standing, financial strength, settlement process, credit terms, typical size and pricing consistency. Using more than one provider helps with price comparison and reduces dependence on a single counterparty.Read: How to choose a Bitcoin liquidity provider →
- Liquidity risk
- The risk that an asset cannot be sold quickly enough, or in sufficient size, without a significant price concession, or that a company cannot meet its obligations as they fall due. Bitcoin trades continuously and in large volumes, but liquidity for very large orders can thin out in stressed markets. Liquidity risk also covers access to custody and banking channels when needed.Read: The main risks of a corporate Bitcoin treasury →
- Liquidity sweep
- An order, or series of orders, that rapidly takes all available liquidity across several price levels or several venues at once. A sweep achieves speed but usually at the cost of significant market impact and slippage. Sharp price moves are sometimes attributed to large participants sweeping thin order books. Corporate execution plans generally aim to avoid creating sweeps.Read: Slippage and market impact in Bitcoin trading →
- Loan-to-value (LTV)
- The ratio of a loan's balance to the value of the collateral securing it. If a company borrows 30 against bitcoin worth 100, the LTV is 30 percent. As the bitcoin price falls, the LTV rises; crossing agreed thresholds can trigger margin calls or liquidation. Conservative starting LTVs and clear monitoring are central to managing Bitcoin-backed borrowing.Read: Bitcoin-backed lending for companies: uses and risks →
- Lump-sum purchase
- Buying an entire planned allocation in one trade or over a short period, rather than spreading purchases over months. A lump sum gives full exposure immediately and simplifies the execution programme, but concentrates timing risk: the whole allocation is exposed to the price on one day. For large amounts, a lump-sum decision still requires careful execution, often through a block trade or a short algorithmic programme, to manage market impact. The choice between lump sum and averaging should be documented.Read: Dollar-cost averaging vs lump sum for corporate Bitcoin buying →
M
- Maker
- A trader whose order rests in the order book and adds liquidity, waiting for someone else to trade against it. Limit orders placed away from the current best price act as maker orders. Many exchanges charge makers lower fees than takers, or pay them a rebate, to encourage deeper order books. Makers take the risk that the price moves before their order fills.Read: OTC vs exchange: executing large Bitcoin orders →
- Margin
- Collateral a trader must post to open or maintain a derivatives position or a borrowing arrangement. Margin protects the counterparty against losses. Because Bitcoin prices can move quickly, margin requirements can rise suddenly and require additional collateral at short notice. A company using derivatives needs a liquidity plan to meet margin calls without forced selling.Read: Bitcoin-backed lending for companies: uses and risks →
- Margin call
- A demand from a broker, exchange or lender for additional collateral because the value of the existing collateral, or the position, has moved adversely. If the call is not met in time, the position can be liquidated. For companies using bitcoin as loan collateral, margin calls can arrive outside business hours, so procedures for approving and funding top-ups should be agreed in advance.Read: Bitcoin-backed lending for companies: uses and risks →
- Mark-to-market
- Valuing an asset at its current market price at each reporting date, rather than at historical cost. Under ASU 2023-08, bitcoin within scope is effectively marked to market each period, with gains and losses flowing through net income. This makes reported earnings more volatile when the bitcoin price moves, even if no bitcoin is bought or sold. Companies adopting this approach often explain to investors how much of reported profit or loss comes from changes in bitcoin's fair value.Read: ASU 2023-08: fair value accounting for Bitcoin explained →
- Market abuse
- Behaviour that distorts a market or exploits non-public information, such as insider dealing, spoofing, wash trading or spreading misleading information. Regulation of market abuse in Bitcoin markets varies by jurisdiction and venue. Companies should prefer venues and providers with surveillance and clear rules, and should have internal policies on who knows about planned trades.Read: Best execution for corporate Bitcoin trades →
- Market capitalisation
- For bitcoin, the circulating supply multiplied by the current price. It is a quick way to express the total market value of bitcoin in issue, and to compare it with other assets. It does not represent money invested or the amount that could be realised by selling, since selling a large amount would move the price. For listed companies, market capitalisation is shares outstanding multiplied by share price, the figure used in calculating mNAV for Bitcoin treasury companies.
- Market depth
- The volume of buy and sell orders available at each price level around the current market price. A deep market can absorb large orders with little price movement; a shallow one cannot. Depth is often expressed as the amount that can be traded within a set percentage of the mid price. Visible depth on any single exchange usually understates total available liquidity, since much institutional volume is provided directly by OTC desks and market makers rather than displayed on public order books.Read: What is institutional Bitcoin liquidity? →
- Market impact
- The change in price caused by the act of trading itself. A large buy order consumes the cheapest available offers and signals demand, pushing the price up; a large sell order does the reverse. Impact grows with order size relative to available liquidity and with urgency. It is often the biggest cost in a corporate Bitcoin trade, exceeding fees or spread. Block trades, algorithms and careful timing all aim to reduce market impact, and it should be estimated before a large order is placed.Read: Slippage and market impact in Bitcoin trading →
- Market maker
- A firm that continuously quotes both buy and sell prices, earning the spread and managing the resulting inventory risk. Market makers supply much of the visible liquidity on Bitcoin exchanges and often quote directly to OTC clients. Their willingness to quote large size depends on volatility, their existing positions and their ability to hedge. Corporate buyers benefit from market makers' tight prices, but should still assess each firm as a counterparty, including its settlement process and financial standing.Read: How to choose a Bitcoin liquidity provider →
- A multiple used to compare a Bitcoin treasury company's valuation with the value of its bitcoin holdings, typically calculated as market capitalisation, or sometimes enterprise value, divided by the market value of the bitcoin it holds. An mNAV above one means the market values the company at more than its bitcoin; below one means less. Definitions vary between companies and analysts, especially in the treatment of debt and dilution, so the calculation method should be checked before any comparison.Read: What is mNAV? The metric for Bitcoin treasury companies →
- Market order
- An instruction to buy or sell immediately at the best available prices. Speed of execution is prioritised over price. A large market order walks through the order book, filling at progressively worse prices, which can create significant slippage. For corporate-sized Bitcoin purchases, market orders on a single exchange are generally avoided in favour of OTC quotes or algorithmic execution.Read: Slippage and market impact in Bitcoin trading →
- Market risk
- The risk of loss from changes in market prices, such as the price of bitcoin, exchange rates or interest rates. For a corporate Bitcoin holding, market risk is the most visible exposure and, under fair value accounting, flows directly into reported earnings. It is managed through position sizing, concentration limits and, where permitted, hedging.Read: The main risks of a corporate Bitcoin treasury →
- Material weakness
- A deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility a material misstatement will not be prevented or detected on a timely basis. Weak controls over Bitcoin, such as unclear key ownership or missing reconciliations, could lead to a material weakness, which US public companies must disclose.Read: Internal controls over Bitcoin for finance teams →
- Materiality
- The threshold above which an omission or misstatement could reasonably be expected to influence the decisions of users of financial statements. Auditors set materiality to plan their work. A Bitcoin holding may be small relative to total assets but material because of its volatility, its effect on earnings or investor interest, so disclosure decisions should not rely on size alone.Read: Bitcoin disclosure requirements in financial statements →
- Medium of exchange
- Something widely accepted in payment for goods and services, one of the classic functions of money alongside store of value and unit of account. Bitcoin can be used for payment, but most corporate holders treat it as a reserve asset rather than a payment method. Payment use is more common on the Lightning Network or through processors that convert to fiat on receipt.Read: What backs Bitcoin? →
- Mempool
- Short for memory pool: the set of valid transactions that have been broadcast to the network but not yet included in a block. Each node keeps its own mempool, and miners usually pick the transactions paying the highest fee rate first. When the mempool is crowded, fees rise and lower-fee transactions wait longer. Treasury teams planning a transfer with a deadline, such as a settlement window, should check mempool conditions and set an appropriate fee so the transaction confirms in time.
- Merkle root
- A single hash, stored in each block header, that summarises every transaction in the block. It is produced by hashing transactions in pairs, then hashing those results in pairs, until one value remains. Changing any transaction would change the Merkle root and invalidate the block. It also lets a light client check that a specific transaction is in a block without downloading the whole block.Read: What is a blockchain? The Bitcoin ledger explained →
- Metal seed backup
- A seed phrase or key backup stamped or engraved on metal plates, designed to survive fire, water and other physical damage better than paper. Metal backups are a common part of cold storage set-ups. They are only as secure as their storage location, so they are usually held in separate, access-controlled sites and recorded in a key inventory.Read: Key management and signing policies for corporates →
- MiCA
- The European Union's regulation for digital asset markets, which entered into force in 2023 and applies in stages from 2024. It creates a single authorisation regime for service providers such as custodians, exchanges and brokers operating in the EU, with rules on governance, client asset protection, market abuse and disclosure. It also sets specific rules for stablecoins. Companies using EU providers should understand their providers' MiCA status.Read: Bitcoin regulation for corporates: a global overview →
- Mid price
- The midpoint between the best bid and the best ask at a given moment. It is a common reference for measuring execution quality: the difference between a fill price and the mid at the time of the order shows the effective cost of crossing the spread. Mid prices from different venues can differ slightly, so execution reports should say which source was used.Read: How request-for-quote (RFQ) pricing works for Bitcoin →
- Miner
- A participant who runs specialised hardware to perform proof of work, assembling transactions into blocks and competing to add the next block to the chain. The successful miner earns the block subsidy and transaction fees. Miners do not decide the rules; nodes reject any block that breaks them. Mining is a competitive, capital-intensive industry whose economics depend on hardware efficiency, energy costs and the bitcoin price.Read: How mining secures the Bitcoin network →
- Mining
- The process of using computing power to find a valid proof of work, which allows a new block to be added to the chain and earns the block reward. Mining turns energy and hardware into security: rewriting history would require outspending the honest miners. Mining is also how new bitcoin are issued, according to a fixed schedule. Companies holding bitcoin on their balance sheet do not need to mine, but understanding mining helps explain issuance, fees and the incentives that keep the network running.
- Mining pool
- A group of miners who combine their computing power and share rewards in proportion to the work each contributes. Pools smooth out income, because an individual miner might otherwise wait a very long time to find a block. The pool operator chooses which transactions go into blocks, which raises questions about concentration. Individual miners can switch pools easily, which limits any one operator's influence.Read: How mining secures the Bitcoin network →
- Monetary debasement
- A decline in the value of a currency, historically from reducing the precious metal content of coins and today usually associated with rapid growth in the money supply. Debasement erodes the purchasing power of money held as cash. The concept is often cited in the case for scarce assets such as gold and Bitcoin, though the link between money growth and inflation varies over time.Read: Inflation, cash drag and the corporate Bitcoin case →
- Monetary policy
- The actions a central bank takes to influence money supply, interest rates and credit conditions in pursuit of goals such as price stability and employment. Tight policy raises rates and tends to weigh on risk assets; loose policy does the opposite. Bitcoin's own supply is unaffected by monetary policy, but its price has often responded to shifts in global liquidity.Read: Bitcoin and interest rates: what treasurers should watch →
- Money market fund
- A fund that invests in short-term, high-quality debt such as treasury bills, commercial paper and repurchase agreements, aiming to preserve capital and offer daily liquidity. Many companies use money market funds for operating cash. They are typically classified as cash equivalents, unlike Bitcoin, and are a useful contrast when explaining different treasury asset tiers to a board.Read: Bitcoin vs cash, T-bills and gold as treasury assets →
- Money services business (MSB)
- A US regulatory category for businesses that transmit money, exchange currency or provide similar services. Many Bitcoin exchanges and brokers that serve US customers must register with FinCEN as MSBs and comply with anti-money laundering rules, and may also need state money transmitter licences. A company simply buying bitcoin for its own treasury is generally not an MSB.Read: Bitcoin regulation for corporates: a global overview →
- Multi-factor authentication (MFA)
- A log-in method requiring two or more independent forms of proof, such as a password plus a hardware security key or authenticator app. MFA significantly reduces the risk of account takeover. For custody and trading platforms, hardware keys or app-based codes are preferred over SMS, which is vulnerable to SIM swaps. MFA should be enforced for all users, not optional.Read: Cybersecurity for finance teams holding Bitcoin →
- Multi-party computation (MPC)
- A technique that lets several parties jointly produce a transaction signature without any of them ever holding the complete private key. Each party holds a key share, and a set number of shares must cooperate to sign. To the Bitcoin network, an MPC transaction looks like an ordinary single-signature one. MPC allows flexible approval structures and key-share rotation without moving funds. Its security depends on the quality of the provider's implementation, so independent audits and assurance reports are important.Read: Corporate Bitcoin custody: the options explained →
- Multisig
- Short for multi-signature: a Bitcoin wallet that requires signatures from several keys out of a defined set before funds can move, for example two of three or three of five. Multisig is enforced by the Bitcoin protocol itself and is visible on the ledger. It removes single points of failure, since one lost or stolen key is not enough to lose or steal funds. Keys can be spread across executives, locations and service providers in line with the company's approval policy.Read: Multisig Bitcoin custody for companies →
N
- Native SegWit address (Bech32)
- An address type that uses SegWit natively and an encoding format called Bech32. These addresses begin with 'bc1q', use only lower-case characters and include a strong error-detecting checksum, which reduces the chance of a mistyped address being accepted. Transactions spending from them generally have lower fees than older types. Most institutional custodians and exchanges support sending to and receiving at native SegWit addresses.Read: What is a Bitcoin address? Address types and controls →
- The value of a fund's or company's assets minus its liabilities. For a Bitcoin ETF, NAV per share is the value of the bitcoin held, less accrued expenses, divided by shares outstanding, and the share price usually trades close to it. For a Bitcoin treasury company, the term is often used loosely to mean the value of its bitcoin holdings, which underpins the mNAV multiple. Clarity about which assets and liabilities are included is essential.Read: What is mNAV? The metric for Bitcoin treasury companies →
- Node
- Any computer connected to the Bitcoin network that relays transactions and blocks. A full node also checks everything against the protocol's rules and keeps a copy of the ledger. Thousands of independently run nodes are what make Bitcoin decentralised: no single company, government or developer can change the rules without broad agreement. For corporate users, nodes matter mainly as the source of independent data for verifying balances, confirmations and transaction histories, either directly or through a custodian or data provider.
- Nonce
- Short for 'number used once'. In Bitcoin mining, the nonce is a field in the block header that miners change repeatedly, hashing the header each time, in search of a result below the network's target. Finding a valid nonce is the proof of work. Because the result is unpredictable, the only way to succeed is through trial and error at scale, which is why mining consumes significant computing power and energy.Read: Proof of work explained for CFOs →
- Notional value
- The total value of a position or contract based on the underlying asset's price, rather than the amount of cash put up. For a Bitcoin futures contract, notional value is the contract size multiplied by the price. Notional figures help compare exposure across instruments, but they can greatly exceed the money actually at risk or posted as margin.Read: Bitcoin futures and options for corporate treasuries →
O
- OFAC
- The Office of Foreign Assets Control, part of the US Treasury Department, which administers and enforces US economic sanctions. OFAC maintains lists of sanctioned persons and entities, including some Bitcoin addresses. US persons are generally prohibited from dealing with them, and non-US companies can also be exposed where transactions have a US nexus. Sanctions screening against OFAC lists is standard for institutional providers.Read: Sanctions screening and blockchain analytics for corporates →
- Omnibus account
- An arrangement where a provider holds the assets of many clients together in shared wallets, tracking each client's entitlement in its own internal records. Omnibus structures can be operationally efficient, but clients rely on the provider's books and controls to show what they own, and on the legal framework to protect them if the provider fails. Companies should ask whether their bitcoin would be held in an omnibus or segregated structure and what that means in an insolvency.Read: Qualified custodian vs self-custody for companies →
- On-ramp
- The process of converting conventional money, such as US dollars or euros, into bitcoin or another digital asset. For a company, it typically means onboarding with a trading counterparty, sending fiat by bank transfer, executing the trade and moving the bitcoin to custody. The bank must be comfortable with the payment, and the counterparty will complete KYB and source-of-funds checks. Delays at the banking stage are common, so on-ramp routes are best tested with smaller amounts first.Read: How do companies buy Bitcoin? A step-by-step guide →
- Open interest
- The total number of derivatives contracts, such as futures or options, that are outstanding and not yet closed or settled. Rising open interest means new positions are being opened. It is a measure of activity and exposure in the derivatives market, not of direction: every long position has a matching short. Analysts watch it alongside price and funding rates.Read: Bitcoin futures and options for corporate treasuries →
- Operational risk
- The risk of loss from failed processes, people or systems, or from external events. For Bitcoin, operational risk includes sending funds to a wrong address, losing key material, internal fraud, cyberattacks and service outages at providers. Because Bitcoin transfers are irreversible, operational controls such as test transactions, allowlists and multi-person approval carry particular weight.Read: The main risks of a corporate Bitcoin treasury →
- Opportunity cost
- The value of the next best alternative given up when a choice is made. Money used to buy bitcoin cannot be used for buybacks, debt repayment, investment in operations or interest-bearing deposits. A sound board paper sets out the opportunity cost explicitly, alongside expected benefits and risks, rather than comparing Bitcoin only against idle cash.Read: Bitcoin vs cash, T-bills and gold as treasury assets →
- The price paid by the buyer of an option to the seller. It reflects the option's intrinsic value, if any, plus time value, which depends mainly on time to expiry and implied volatility. Because Bitcoin's implied volatility is typically high compared with many traditional assets, option premiums can be substantial, which affects the cost of hedging.Read: Hedging a corporate Bitcoin position →
- Options contract
- A contract giving the buyer the right, but not the obligation, to buy (a call) or sell (a put) an asset at a set price on or before a set date. The buyer pays a premium for this right; the seller receives it and takes on the obligation. Bitcoin options trade on regulated exchanges and over the counter, and can be used to hedge or to shape the risk of a treasury position.Read: Bitcoin futures and options for corporate treasuries →
- Order book
- The live list of buy orders (bids) and sell orders (asks) waiting on an exchange, arranged by price. The best bid and best ask set the current market, and the quantities behind each price show how much could trade before the price moves. Reading the order book helps a treasury estimate how a large order might affect the price, though visible orders can be cancelled at any moment.Read: Reading Bitcoin market depth and the order book →
- Order book depth
- The quantity of bitcoin available to buy or sell at successive price levels away from the best bid and ask. Depth is often measured within a band, such as one or two percent of the mid price. A deeper book can absorb a large order with less price movement. Depth varies through the day and across venues, and visible depth may overstate what is truly available.Read: Reading Bitcoin market depth and the order book →
- OTC desk
- A trading desk that arranges or executes large bitcoin trades directly with clients, away from public exchange order books. OTC desks may trade as principal, quoting a firm price from their own inventory, or as agent, sourcing liquidity on the client's behalf. They are typically used for orders large enough that executing on an exchange would move the price. A corporate client should understand the desk's model, how it is compensated, how settlement works and how client assets are protected before trading.Read: What is a Bitcoin OTC desk? →
- Other comprehensive income (OCI)
- A section of the statement of comprehensive income for certain gains and losses that bypass the main profit or loss figure. Under IFRS, if a company applies the IAS 38 revaluation model to bitcoin, increases in value above cost are generally recorded in OCI and accumulated in a revaluation surplus within equity. Decreases are charged against that surplus first, then to profit or loss. On disposal, the surplus may be transferred within equity but is not recycled through profit or loss.Read: How Bitcoin is accounted for under IFRS →
- Output descriptor
- A short, standardised text string that fully describes how a wallet's addresses are built: the script type, the extended public keys involved, the derivation paths and, for multisig, the signing threshold. A descriptor lets any compatible software reconstruct and monitor the wallet. For a multisig custody set-up, keeping a secure backup of the descriptor is as important as backing up the keys, because without it recovery can be difficult even with enough keys.Read: Multisig Bitcoin custody for companies →
- Over-the-counter (OTC)
- Trading conducted directly between two parties rather than through an exchange's public order book. In Bitcoin, OTC trading is common for large institutional orders because it allows a negotiated price for the full size, more privacy and tailored settlement. The trade-off is that prices are not publicly displayed, so the client must compare quotes and assess the counterparty carefully. OTC trades are governed by bilateral terms covering pricing, settlement, default and dispute resolution.Read: OTC vs exchange: executing large Bitcoin orders →
P
- Partial fill
- An execution of only part of an order's quantity, with the remainder still open or cancelled. Partial fills are common with limit orders and in algorithmic execution. Treasury procedures should state how partial fills are handled, for example whether the remainder continues working, and how settlement is arranged when an order completes across several days.Read: What a Bitcoin execution report should contain →
- Partially signed Bitcoin transaction (PSBT)
- A standard file format, defined in BIP-174, for passing an unsigned or partly signed Bitcoin transaction between different devices and people. In a multisig set-up, one party builds the transaction, and each signer reviews and adds a signature in turn, often on an offline device. PSBTs let a company separate the roles of preparing, approving and signing a payment, which supports segregation of duties and a clean audit trail.Read: Multisig Bitcoin custody for companies →
- Passphrase (BIP-39)
- An optional extra word or phrase added to a BIP-39 seed phrase, sometimes called the '25th word'. The same seed with a different passphrase produces an entirely different wallet. A passphrase protects against someone who finds the seed words alone, but it also adds a new failure point: if the passphrase is lost, the funds cannot be recovered. Its storage must be planned as carefully as the seed's.Read: Key management and signing policies for corporates →
- Period-end cut-off
- The point in time that determines which transactions and prices belong to a reporting period. Because Bitcoin trades continuously, a company must define its cut-off precisely, including the time zone and the price source used for valuation. Trades executed before cut-off but settled afterwards, and transfers awaiting confirmation, need clear treatment in policy.Read: 24/7 Bitcoin markets and treasury operations →
- Permissionless
- Describes a system that anyone can use or join without approval from a gatekeeper. Anyone can run a Bitcoin node, mine or send a transaction, provided they follow the protocol rules. This is a property of the network, not of the companies built around it: exchanges, custodians and OTC desks still apply KYC, sanctions screening and other legal obligations to their customers.Read: Can governments ban Bitcoin? What history shows →
- Perpetual swap
- A derivative that tracks the price of an asset like a futures contract but has no expiry date. A funding rate paid between long and short holders keeps its price close to spot. Perpetual swaps are among the most traded instruments in digital asset markets and typically involve margin and borrowed exposure, which can lead to rapid liquidations. They are mainly trading instruments; most corporate treasury policies exclude them or restrict them to tightly defined hedging purposes.
- Phishing
- Fraudulent emails, messages or websites designed to trick people into revealing credentials, approving transactions or installing malware. Phishing aimed at Bitcoin holders often imitates exchanges, custodians or wallet providers. Controls include hardware security keys for log-in, bookmarked access to provider sites, training and a rule that seed phrases are never entered into any website.Read: Cybersecurity for finance teams holding Bitcoin →
- Physically settled contract
- A derivative that settles by delivering the underlying asset itself, so a long holder of a Bitcoin contract receives bitcoin at expiry. Physical settlement requires custody arrangements in place before expiry and introduces settlement logistics that cash-settled contracts avoid. It can be useful when the goal is to acquire bitcoin at a price fixed in advance.Read: Bitcoin futures and options for corporate treasuries →
- Policy engine
- Software within a custody platform that enforces rules on transactions before they can be signed: who may initiate and approve, which addresses are allowed, value limits, time windows and velocity limits. A well-configured policy engine turns a written signing policy into enforced controls. Changes to its rules should themselves require multi-person approval.Read: Key management and signing policies for corporates →
- Politically exposed person (PEP)
- An individual who holds or has held a prominent public function, such as a senior politician, judge or senior official, along with their close family and associates. PEPs present higher risk of corruption, so financial institutions apply enhanced due diligence when they are customers or beneficial owners. A company opening accounts with Bitcoin providers will be asked whether any directors or owners are PEPs.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Position sizing
- Deciding how large a holding should be relative to total assets, cash or risk capacity. For a corporate Bitcoin allocation, sizing typically considers liquidity needs, the potential drawdown the company can tolerate, covenant and rating implications, and investor expectations. Many policies express the size as a percentage of treasury assets or a maximum value, with limits on additions.Read: How much Bitcoin should a company hold? →
- Pre-funding
- Sending cash or bitcoin to a counterparty before a trade is executed or settled. Pre-funding is common in digital asset markets, but it creates counterparty risk: until the counterparty delivers, the company is an unsecured creditor for the amount sent. Treasury policies should limit pre-funding by size and duration, prefer counterparties offering delivery-versus-payment or custodian-based settlement, and require prompt withdrawal of purchased bitcoin to segregated custody once a trade completes.Read: Settlement and counterparty risk in Bitcoin trades →
- The amount by which a security trades above or below the value of its underlying assets. A spot Bitcoin ETF usually trades close to its NAV because authorised participants can create and redeem shares. A Bitcoin treasury company can trade at a sustained premium or discount, reflected in its mNAV, depending on investor demand, its capital structure, management and access to capital. Premiums can shrink quickly, so they should not be treated as a stable feature.Read: What is mNAV? The metric for Bitcoin treasury companies →
- Price discovery
- The process by which buyers and sellers, through their trading, settle on a market price. For Bitcoin, price discovery happens across many spot exchanges, futures markets and OTC trades, with arbitrage keeping prices broadly aligned. Where discovery mainly occurs can shift over time, for example towards futures markets or newly launched ETFs, and is a topic of academic study.Read: How is the Bitcoin price determined? →
- Pricing source
- The exchange, index or data provider a company uses to obtain the Bitcoin price for valuation. Under fair value accounting, the source should reflect the company's principal market, or most advantageous market if none, and be applied consistently. The policy should name the source, the time of day used and a fallback if it is unavailable.Read: Measuring Bitcoin fair value: principal market and ASC 820 →
- Prime broker
- A firm that provides a bundle of services to institutional clients from one relationship, typically trade execution across multiple venues, custody, financing, reporting and sometimes netting of positions. In digital asset markets, prime brokerage models differ widely in how client assets are held and whether they may be reused. Concentrating services with one provider can simplify operations but increases dependence on that firm. Due diligence should cover asset segregation, rehypothecation rights, insolvency protections and regulatory status.
- Principal execution
- A trading model in which a dealer trades directly with the client from its own book, quoting a firm price and taking on the market risk of the position. The client knows the price before agreeing to trade, and the dealer's compensation is built into that price rather than charged as a separate commission. Principal execution suits block trades where certainty of price matters. Its contrast is agency execution, where the broker works the order on the client's behalf and the client bears the market risk.Read: What is a Bitcoin OTC desk? →
- Principal market
- For fair value measurement, the market with the greatest volume and level of activity for the asset that the company can access. Fair value is measured using the price in the principal market or, if there is none, the most advantageous market. Bitcoin trades on many venues at slightly different prices, so companies must assess which markets they can access and which has the most activity. This choice, the price source and the time of measurement should be documented and applied consistently.Read: ASU 2023-08: fair value accounting for Bitcoin explained →
- Private key
- A secret number that authorises spending of bitcoin held at the related addresses. Whoever controls the private key controls the funds; there is no bank to reverse an unauthorised transaction. Protecting private keys is therefore the central task of custody. Corporate setups avoid any single person holding a complete key, using multisig, MPC or hardware security modules, combined with documented signing policies, secure backups and regular testing of recovery procedures, so that no single failure or individual can move or lose the company's bitcoin.Read: Corporate Bitcoin custody: the options explained →
- Proof of liabilities
- Evidence of the total amount a custodian or exchange owes its customers, often provided using a Merkle tree so each customer can check their balance is included. Proof of reserves shows assets; without proof of liabilities, it cannot show solvency. Even together, these proofs are snapshots and do not cover off-chain debts, so they complement rather than replace audited financial statements.Read: What is proof of reserves? →
- Proof of reserves
- A process by which a custodian or exchange demonstrates that it controls bitcoin at certain addresses, often by signing a message with the relevant keys or moving funds in a verifiable way. On its own, it shows assets at a point in time, not whether those assets exceed what is owed to clients, and assets could be borrowed temporarily. A meaningful proof of reserves pairs assets with liabilities, is repeated regularly and is checked by an independent party.Read: What is proof of reserves? →
- Proof of work
- The method Bitcoin uses to agree on the order of transactions. Miners repeatedly hash block data until they find a result below a target, which takes real computing effort but is easy for anyone to check. Because producing blocks is costly, rewriting history would require an attacker to outspend the rest of the network. Proof of work links Bitcoin's security to energy and hardware rather than to trusted intermediaries, and it is the reason confirmations become harder to reverse over time.
- Protective put
- A strategy of holding an asset and buying a put option on it, so that losses below the strike price are offset by gains on the put. It sets a floor on the value of the position for the life of the option, at the cost of the premium. Companies sometimes use protective puts around specific events, such as a reporting date or a planned use of funds.Read: Hedging a corporate Bitcoin position →
- Public key
- The half of a key pair that can be shared openly. It is derived mathematically from the private key, but the private key cannot be worked out from it. In Bitcoin, public keys are used to create addresses and to verify that a transaction was signed by the matching private key. Revealing a public key does not put funds at risk under current technology, though quantum computing research is monitored for long-term implications.Read: Public and private keys explained for companies →
- Purchasing power
- The quantity of goods and services a unit of money can buy. Inflation reduces the purchasing power of cash over time. Some companies cite preserving long-term purchasing power as a reason to hold scarce assets, including Bitcoin. Bitcoin's own purchasing power has been highly variable over short periods, so the argument depends heavily on time horizon.Read: Inflation, cash drag and the corporate Bitcoin case →
- Put option
- An option that gives its holder the right to sell the underlying asset at the strike price before or at expiry. Buying a put on Bitcoin works like insurance against a fall in price: if the market drops below the strike, the put gains value. The cost is the premium paid up front. Puts are a common building block in hedging programmes for corporate holdings.Read: Hedging a corporate Bitcoin position →
Q
- Qualified custodian
- A term from US investment adviser rules describing the types of institution, such as certain banks, trust companies and registered broker-dealers, that may hold client assets on behalf of registered advisers. In wider use, it refers to a regulated custodian subject to capital, audit and segregation requirements. Using a qualified custodian can satisfy regulatory or auditor expectations and add legal protections, but the term itself does not remove the need for due diligence on the specific provider and its controls.Read: Qualified custodian vs self-custody for companies →
- Quantitative easing (QE)
- A monetary policy in which a central bank buys large amounts of government bonds or other assets, increasing the money supply and lowering long-term interest rates. QE was used widely after 2008 and in 2020. Its effects on asset prices, including risk assets such as Bitcoin, are debated. The reverse process, shrinking the central bank's balance sheet, is called quantitative tightening.Read: Bitcoin and interest rates: what treasurers should watch →
- Quorum
- The minimum number of approvals or signatures required to authorise an action. In a 2-of-3 multisig wallet, the quorum is two keys out of three. Setting a quorum balances security against availability: a higher quorum makes theft harder, but more signers must be reachable to move funds. Corporate signing policies usually define who holds each key and how the quorum is assembled.Read: Multisig Bitcoin custody for companies →
- Quote validity
- The period for which a quoted price stays firm, often only a few seconds in fast-moving Bitcoin markets. If the client does not accept within that window, the dealer may requote at a different price. Validity is usually tied to a specific size and settlement terms. Corporate approval processes need to account for this: authorisation to trade within agreed limits should be in place before quotes are requested, so the team is not trying to obtain sign-off while a quote expires.Read: How request-for-quote (RFQ) pricing works for Bitcoin →
R
- Real interest rate
- The interest rate after subtracting inflation. When real rates are low or negative, holding cash or bonds loses purchasing power, which can make non-yielding assets like gold and Bitcoin relatively more attractive. When real rates rise, the opportunity cost of holding non-yielding assets increases. Real rates are one of several macroeconomic factors treasurers watch.Read: Bitcoin and interest rates: what treasurers should watch →
- Realised capitalisation
- An on-chain measure that values each bitcoin at the price when it last moved on the ledger, rather than at the current price, and sums the result. It is sometimes described as an estimate of the aggregate cost basis of all holders. Realised capitalisation tends to be steadier than market capitalisation. It relies on assumptions, for example that a coin moving reflects a change of ownership, which is not always true, so it is an analytical tool rather than an exact figure.
- Realised gain or loss
- The profit or loss recognised when bitcoin is actually sold or otherwise disposed of, calculated as proceeds minus the cost basis of the units disposed. Realised gains are often the trigger for tax in many jurisdictions. Under fair value accounting, much of the change in value may already have been recognised as unrealised gains in earlier periods, so the accounting and tax pictures can differ. Companies should track realised results separately to support tax filings and investor reporting.Read: How Bitcoin is taxed for companies: the principles →
- Realised volatility
- A measure of how much an asset's price has actually varied over a past period, usually calculated as the annualised standard deviation of daily returns. Bitcoin's realised volatility has historically been much higher than that of major currencies, government bonds or large equity indices, though it has varied over time. Treasurers use it to understand the likely range of value changes, size allocations and set expectations for reported earnings, while remembering that past volatility does not predict future volatility.Read: Bitcoin on the balance sheet: planning for drawdowns →
- Rebalancing
- Adjusting holdings to bring an allocation back within its target or limits after market movements. If bitcoin rises sharply, it may exceed its policy limit as a share of treasury assets, and rebalancing would mean selling some; a fall may take it below a target. A treasury policy should state whether rebalancing is required, permitted or at management's discretion, what tolerance bands apply and who decides. Rules set in advance avoid decisions being made under pressure during volatile markets.Read: How to set Bitcoin concentration limits for a company →
- Reconciliation
- Comparing two sets of records to confirm they agree and investigating any differences. For Bitcoin, typical reconciliations compare the general ledger with custodian statements, and custodian statements with on-chain balances. Differences can arise from timing, fees, pending transactions or errors. Regular, documented reconciliations are a core internal control and a key item auditors review.Read: Internal controls over Bitcoin for finance teams →
- Reference rate
- A published price, calculated from trades on a defined set of venues using a set methodology, intended to represent the Bitcoin price at a specific time. Reference rates are used to settle futures, to value ETFs and to provide a consistent pricing source for financial reporting. A company's accounting policy should state which price source it uses and why it is appropriate.Read: Measuring Bitcoin fair value: principal market and ASC 820 →
- Rehypothecation
- The reuse by a provider of assets a client has deposited or pledged, for example by lending them to other parties or using them as collateral. Rehypothecation can lower costs or earn yield, but it means the client's bitcoin may not be available when demanded, and losses at the provider can become the client's losses. Several failures in digital asset markets involved client assets that had been reused. Custody agreements should state clearly whether any reuse is permitted, and most corporate treasury policies prohibit it.Read: Choosing a Bitcoin custodian: a due diligence list →
- Remeasurement
- Updating the carrying amount of an asset or liability to a new value at a reporting date. Under ASU 2023-08, Bitcoin holdings are remeasured to fair value each reporting period, with the difference recognised in net income. The journal entry adjusts the asset and records a gain or loss. Frequency and timing should match the company's reporting calendar and price source policy.Read: Bitcoin journal entries: worked examples →
- Replace-by-fee (RBF)
- A method of speeding up an unconfirmed Bitcoin transaction by broadcasting a new version that spends the same inputs with a higher fee. Miners usually prefer the better-paying version, so the original is dropped. RBF is useful when fees rise suddenly after a payment has been sent. Because a replacement can also redirect funds, recipients typically wait for confirmation before treating an incoming payment as received.Read: How Bitcoin network fees work and how to budget for them →
- Request for quote (RFQ)
- A process in which a client asks one or more dealers for a firm price to buy or sell a specified amount, then chooses whether to accept. RFQ lets a company compare prices for its full size without placing visible orders on an exchange. Asking several dealers improves competition, but asking too many can leak information. A disciplined RFQ process records who was asked, what each quoted, the time of each quote and why the winning price was chosen, which supports best execution evidence.Read: How request-for-quote (RFQ) pricing works for Bitcoin →
- Reserve asset
- An asset held to preserve value and provide financial resilience over the long term, rather than for day-to-day liquidity. Central banks traditionally hold foreign currencies, government bonds and gold as reserves; companies hold cash and short-term instruments. Some companies hold bitcoin as part of their reserves because of its fixed supply and independence from any single issuer. Whether it fits depends on the company's liquidity needs, risk appetite and time horizon, which the board should assess explicitly.Read: Bitcoin as a corporate reserve asset →
- Revaluation model
- An IAS 38 option that allows an intangible asset to be carried at fair value, provided there is an active market for it. Revaluations must be made regularly enough that the carrying amount does not differ materially from fair value. Increases above cost generally go to other comprehensive income and a revaluation surplus; decreases below cost go to profit or loss. Some IFRS reporters holding bitcoin choose this model so the balance sheet better reflects market value, while profit or loss shows only decreases.Read: How Bitcoin is accounted for under IFRS →
- Rights and obligations assertion
- A management claim, tested by auditors, that the company holds or controls the rights to assets it reports and that liabilities are its obligations. For Bitcoin, auditors look for evidence that the company, not a third party, controls the keys or has a legal claim under its custody agreement, and that holdings are not pledged or lent without disclosure.Read: Bitcoin audit readiness: a checklist for finance teams →
- Risk appetite
- The amount and type of risk a company is willing to accept in pursuit of its objectives, set by the board. For a Bitcoin treasury, risk appetite might be expressed as a maximum allocation, a tolerable drawdown in reported value, limits on counterparty exposure and requirements on custody and liquidity. It translates into concrete policy limits and controls. A clearly stated risk appetite helps the board explain its decision to investors, and helps management act consistently when markets move.Read: The main risks of a corporate Bitcoin treasury →
- Risk budget
- The amount of risk an organisation is prepared to take, expressed in measurable terms such as maximum drawdown, value at risk or impact on earnings, and allocated across activities or assets. Framing a Bitcoin allocation as a share of a risk budget, rather than only as a share of cash, helps a board reflect the asset's volatility in its sizing decision.Read: How to set Bitcoin concentration limits for a company →
- Risk-based approach
- The principle, central to FATF standards, that firms should identify and assess their money laundering and terrorist financing risks and apply controls proportionate to those risks. Higher-risk customers, products or jurisdictions receive enhanced measures; lower-risk ones may receive simplified measures. Bitcoin providers apply a risk-based approach, which is why onboarding requirements differ between providers and clients.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Role-based access control
- Granting system permissions according to defined roles, such as initiator, approver, viewer or administrator, rather than to individuals ad hoc. On a custody or trading platform, role-based access supports segregation of duties by ensuring no single role can both create and approve a transfer. Role assignments should be reviewed regularly and updated promptly when staff change.Read: Internal controls over Bitcoin for finance teams →
- Roll-forward disclosure
- A reconciliation from the opening to the closing balance of an asset during a reporting period, showing additions, disposals, gains and losses. ASU 2023-08 requires a roll-forward for in-scope digital assets, including bitcoin, so readers can see how holdings changed through purchases, sales and fair value movements. Preparing it requires reliable records of every acquisition and disposal, with dates, quantities and cost basis, which is one reason good lot-level record-keeping matters from the first purchase.Read: ASU 2023-08: fair value accounting for Bitcoin explained →
S
- Sanctioned address
- A Bitcoin address identified in a government sanctions list, or attributed by blockchain analytics to a sanctioned person or entity. Sending funds to, or receiving funds from, such an address can breach sanctions law. Institutional providers screen addresses before and after transfers. Because attribution changes over time, screening should be repeated, not done only once.Read: Sanctions screening and blockchain analytics for corporates →
- Sanctions screening
- Checking clients, counterparties and transactions against government sanctions lists to ensure no funds are sent to or received from prohibited persons, entities or jurisdictions. In Bitcoin, screening covers names during onboarding and also wallet addresses, since some sanctioned parties' addresses are published. Blockchain analytics tools help identify links to sanctioned addresses. Breaching sanctions can bring serious penalties regardless of intent, so companies should ensure both they and their providers screen effectively.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Sarbanes-Oxley section 404
- The provision of the US Sarbanes-Oxley Act of 2002 requiring public company management to assess and report on the effectiveness of internal control over financial reporting, and, for larger companies, requiring the auditor to attest to that assessment. Companies holding Bitcoin must bring the related processes, systems and service providers within the scope of their SOX 404 testing.Read: Internal controls over Bitcoin for finance teams →
- Satoshi
- The smallest unit of bitcoin: one hundred-millionth of a bitcoin, or 0.00000001 BTC. Named after Bitcoin's pseudonymous creator, Satoshi Nakamoto, it is often shortened to sat. Network fees are usually quoted in satoshis per virtual byte of transaction data. For finance teams, satoshis matter in reconciliation and reporting, because balances, fees and settlement amounts should be recorded to the full eight decimal places to avoid rounding differences between internal records, custodians and the public ledger.Read: What is Bitcoin? A CFO's guide →
- Satoshi Nakamoto
- The pseudonym of the person or group who wrote the Bitcoin white paper in 2008 and released the first software in January 2009. Satoshi communicated by email and forum posts, handed the project to other developers, and stopped public communication around 2011. Their identity has never been confirmed. The absence of an active founder is often cited as one reason Bitcoin has no central figure who can change its rules.Read: Who created Bitcoin, and why no one controls it →
- Scarcity
- Limited availability relative to demand. Bitcoin's scarcity comes from its protocol-enforced supply cap and declining issuance schedule, which are public and verifiable. Scarcity alone does not determine value; demand must also exist and persist. Investors often compare Bitcoin's supply profile with gold's, which grows slowly through mining but has no fixed upper limit.Read: Bitcoin's 21 million supply cap explained →
- Scenario analysis
- Exploring the outcomes of a decision under several defined scenarios, such as a base case, an upside and a severe downside, rather than relying on a single forecast. Scenario analysis is well suited to Bitcoin because outcomes are wide. Presenting scenarios helps a board see what the company would do in each case and whether the allocation remains acceptable.Read: Bitcoin on the balance sheet: planning for drawdowns →
- Schnorr signature
- A digital signature scheme added to Bitcoin by the Taproot upgrade, alongside the older ECDSA scheme. Schnorr signatures have useful mathematical properties: several signers can combine their keys and produce a single signature that looks like one person signed. This makes certain multi-party custody arrangements more compact and more private on the blockchain. The security of keys does not change; what changes is how signatures can be constructed and verified.Read: Public and private keys explained for companies →
- Seed phrase
- A list of usually 12 or 24 words that encodes the master secret from which a wallet's private keys are generated. Anyone holding the seed phrase can recreate the wallet and move its funds, so it must be protected as carefully as the keys themselves. Corporate policies typically forbid storing seed phrases digitally, require geographically separated backups, and split responsibility so no single person holds a complete phrase. Recovery from the backup should be tested under controlled conditions before significant funds are held.Read: Key management and signing policies for corporates →
- Segregated account
- A custody arrangement in which a client's bitcoin is held at addresses or in wallets dedicated to that client alone, rather than pooled with other clients' assets. Segregation makes holdings directly verifiable on the ledger and can strengthen the client's legal position if the custodian fails, though the precise protection depends on the contract and applicable law. Segregated accounts may cost more than omnibus arrangements, and many corporate treasury policies require them for long-term holdings.Read: Qualified custodian vs self-custody for companies →
- Segregated Witness (SegWit)
- A soft-fork upgrade to Bitcoin activated in August 2017. It moved signature data (the 'witness') into a separate part of the transaction, which fixed a long-standing flaw called transaction malleability and introduced block weight, increasing effective capacity. SegWit transactions generally cost less in fees per payment. Addresses beginning with 'bc1q' are native SegWit addresses. For a treasury, using SegWit or newer address types usually reduces network fees and is supported by most institutional custodians.Read: What is a Bitcoin address? Address types and controls →
- Segregation of duties
- An internal control that divides responsibilities so no single person can initiate, approve, execute and record a transaction alone. For a Bitcoin treasury, it might mean one person proposes a trade, another approves it, a third confirms settlement and the finance team records it independently. Segregation of duties reduces the risk of error and fraud. In smaller companies, where full separation is hard, compensating controls such as board review, external custody approvals and independent reconciliations become more important.Read: How to write a Bitcoin treasury policy: a sample outline →
- Self-custody
- Holding bitcoin with private keys controlled directly by the company rather than by a third-party custodian. Self-custody removes reliance on a provider's solvency and controls, but places full responsibility for key generation, storage, backups, approvals and recovery on the company. It demands mature internal processes, trained staff and clear succession arrangements. Some companies use a collaborative model, holding some keys themselves and some with providers, to balance independence with professional support.Read: Qualified custodian vs self-custody for companies →
- Settlement
- The completion of a trade: the buyer receives the bitcoin and the seller receives payment. Settlement may happen within minutes or take longer when bank transfers are involved, and the sequence of the two legs determines who carries risk in between. For corporate trades, settlement terms should be agreed before execution: which leg moves first, timeframes, confirmation thresholds, destination addresses and what happens if a party fails to deliver. Settlement is where much of the operational risk in Bitcoin trading sits.Read: Settlement and counterparty risk in Bitcoin trades →
- Settlement risk
- The risk that one party delivers its side of a trade but does not receive the other side, because the counterparty defaults, delays or makes an error. It is sometimes called Herstatt risk, after a 1974 bank failure that left counterparties unpaid mid-settlement. In Bitcoin trades, settlement risk arises when cash and bitcoin do not move simultaneously. It is reduced through delivery-versus-payment arrangements, custodian-based settlement, smaller tranches, limits on pre-funding and careful counterparty selection.Read: Settlement and counterparty risk in Bitcoin trades →
- Settlement window
- The agreed period within which both sides of a trade must be delivered. For Bitcoin trades involving bank transfers, the window often depends on banking hours and payment cut-off times, even though the Bitcoin network runs continuously. A clear window lets each party know when a failure to deliver becomes a default. Treasury teams should align settlement windows with their own payment approval processes and with network conditions, so a trade agreed on a Friday afternoon does not leave exposures open over a weekend.Read: Settlement and counterparty risk in Bitcoin trades →
- SHA-256
- The hash function Bitcoin uses for proof of work, block hashes and transaction IDs. It was designed by the US National Security Agency and published as a federal standard, and it is widely used across banking and internet security. It produces a 256-bit output. Specialised mining machines, known as ASICs, are built to compute SHA-256 hashes as quickly and efficiently as possible.Read: Proof of work explained for CFOs →
- A company purchasing its own shares, returning cash to shareholders and reducing the share count. Buybacks are one of the main alternative uses of surplus cash that a board may weigh against a Bitcoin allocation. Some Bitcoin treasury companies have also bought back shares when their stock traded below the value of their bitcoin per share.Read: Funding a corporate Bitcoin purchase: cash, debt or equity →
- Sidechain
- A separate blockchain that runs alongside Bitcoin and to which bitcoin can be moved through a 'peg'. Coins are locked on Bitcoin and an equivalent is issued on the sidechain. Many sidechains rely on a group of operators to hold the locked bitcoin, which introduces counterparty and governance risk that does not exist when holding bitcoin directly. Treasury policies typically treat sidechain holdings as a distinct exposure.Read: Bitcoin vs other digital assets: why treasuries focus on Bitcoin →
- Signing policy
- The rules that govern who may approve a Bitcoin transaction and under what conditions: how many approvers are needed, which roles they must hold, value thresholds, permitted destinations, time delays and procedures for emergencies. A signing policy turns the treasury policy into specific controls applied by the custody platform or by the key holders. It should be documented, approved by management, tested regularly and updated when people change roles or leave the company.Read: Key management and signing policies for corporates →
- SIM swap
- An attack in which a criminal persuades a mobile carrier to transfer a victim's phone number to a new SIM card, then intercepts text messages used for log-in codes or password resets. Accounts relying on SMS for two-factor authentication are vulnerable. Finance teams should use authenticator apps or hardware security keys for any account connected to Bitcoin holdings.Read: Cybersecurity for finance teams holding Bitcoin →
- Slippage
- The difference between the expected price of a trade and the price actually achieved. Slippage occurs when the market moves between decision and execution, or when an order is large enough to consume several price levels. It can be positive or negative but, for large orders, is more often a cost. Companies limit slippage by using limit prices, RFQ or block trades with firm quotes, and algorithms that spread execution over time, and by measuring it consistently after each trade.Read: Slippage and market impact in Bitcoin trading →
- SOC 1 report
- An independent assurance report under US auditing standards on a service provider's controls relevant to its clients' financial reporting. For a custodian, it covers controls over recording and safeguarding client assets and producing accurate statements. A Type II report tests whether those controls operated effectively over a period. Auditors of companies holding bitcoin with a custodian often rely on the custodian's SOC 1 report, together with the complementary user controls the company itself must operate.Read: Choosing a Bitcoin custodian: a due diligence list →
- SOC 2 report
- An independent assurance report, under criteria set by the AICPA, on a service organisation's controls for security and, optionally, availability, processing integrity, confidentiality and privacy. A Type I report assesses control design at a point in time; a Type II report also tests whether controls operated effectively over a period, often six to twelve months. For a Bitcoin custodian, a recent SOC 2 Type II report is a common baseline in due diligence, though it should be read carefully, including any exceptions noted.Read: Choosing a Bitcoin custodian: a due diligence list →
- Manipulating people into revealing information or taking actions that compromise security, rather than attacking systems directly. Examples include impersonating an executive to request an urgent transfer, or posing as a custodian's support team. Because Bitcoin transfers are irreversible, finance teams should verify unusual requests through a separate, known channel and never bypass approval steps under time pressure.Read: Cybersecurity for finance teams holding Bitcoin →
- Soft fork
- A change to Bitcoin's rules that tightens what is valid, so blocks produced under the new rules are still accepted by nodes running older software. SegWit and Taproot were activated as soft forks. Because older nodes keep working, soft forks avoid splitting the network, provided most mining power enforces the new rules. They are the usual route for upgrading Bitcoin and tend to take years of public discussion before activation.Read: What is a Bitcoin node and should a company run one? →
- Source of funds
- The origin of the specific money used in a transaction, for example operating cash flow, a capital raise or the sale of an asset. Regulated Bitcoin trading desks and custodians ask companies to explain and evidence source of funds, especially for large or first-time trades. Typical evidence includes bank statements, financial statements and board resolutions. When selling bitcoin, the counterparty and receiving bank may ask how the bitcoin was acquired, which is why purchase records should be retained.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Source of wealth
- The origin of a customer's total assets, as distinct from source of funds, which concerns the money used in a particular transaction. For a company, source of wealth might be explained through audited accounts, funding history and ownership structure. Providers ask for it mainly in enhanced due diligence, such as for large transactions, high-risk profiles or PEP involvement.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Specially Designated Nationals (SDN) list
- The OFAC list of individuals, companies and other entities whose assets are blocked and with whom US persons are generally prohibited from dealing. Since 2018, some entries have included associated digital currency addresses. Institutional Bitcoin providers screen counterparties and addresses against the SDN list and other sanctions lists before and after transactions.Read: Sanctions screening and blockchain analytics for corporates →
- Specific identification
- A cost basis method in which the company identifies exactly which lots of bitcoin are being sold, using their actual cost. It offers the most flexibility, for example to choose higher-cost lots to reduce taxable gains where rules allow. It also demands the most rigorous records: the company must be able to show, at the time of sale, which units were disposed of. Whether it is permitted, and what evidence is required, depends on the jurisdiction, so companies should take their own tax advice.Read: Cost basis methods for corporate Bitcoin holdings →
- Spoofing
- Placing orders with the intention of cancelling them before execution, to mislead others about supply or demand and move the price. Spoofing makes visible order book depth less reliable. It is prohibited in many regulated markets, including US futures markets. For treasuries, it is one reason not to rely solely on displayed depth when planning large trades.Read: Reading Bitcoin market depth and the order book →
- Spot Bitcoin ETF
- An exchange-traded fund that holds bitcoin directly and issues shares that trade on a stock exchange. The US Securities and Exchange Commission approved the first US spot Bitcoin ETFs on 10 January 2024. They give companies and investors bitcoin price exposure through a brokerage account, with custody and administration handled by the fund. Trade-offs include management fees, trading limited to exchange hours and holding fund shares rather than bitcoin, which affects accounting, governance and flexibility.Read: Bitcoin ETFs vs holding Bitcoin directly →
- Spot market
- The market where an asset is bought or sold for immediate delivery, as opposed to delivery at a future date. Buying bitcoin outright and receiving it into custody is a spot transaction. Spot prices are the basis for fair value measurement and for most reference rates. Derivatives markets reference the spot price but involve different risks and settlement mechanics.Read: How is the Bitcoin price determined? →
- Spot price
- The current price at which bitcoin can be bought or sold for immediate settlement. There is no single official spot price; each venue has its own, and reference rates aggregate several. For accounting, a company identifies its principal market or most advantageous market to determine the spot price used for fair value at the reporting date.Read: How is the Bitcoin price determined? →
- Stablecoin
- A digital token designed to hold a steady value relative to a reference asset, usually the US dollar, typically backed by reserves of cash and short-term government debt held by the issuer. Stablecoins are widely used to settle Bitcoin trades quickly, outside banking hours. They carry their own risks: the quality and transparency of reserves, the issuer's redemption terms, regulatory treatment and the possibility of losing the peg. Treasury policies should state which stablecoins, if any, may be used and for how long they may be held.
- Stock-to-flow
- A ratio comparing the existing supply of an asset (stock) with new annual production (flow), used to describe scarcity; gold has a high ratio. Applied to Bitcoin, the ratio rises with each halving. Price models built on stock-to-flow became popular but have been widely criticised: they ignore demand, rely on few data points, and their predictions have not held reliably. It is best treated as a description of supply, not a forecast.Read: Bitcoin's 21 million supply cap explained →
- Stop order
- An order that becomes active only when the market reaches a trigger price, at which point it is sent as a market or limit order. A stop-loss order is used to limit losses by selling if the price falls to a set level. In fast markets, the execution price can be noticeably worse than the trigger, and a stop does not protect against price gaps when markets move sharply.Read: Hedging a corporate Bitcoin position →
- Store of value
- An asset that holds its purchasing power over time and can be saved and retrieved later. Gold, property and stable currencies have served this role. Bitcoin's fixed supply, portability and independence from any single issuer support the case for it as a long-term store of value, while its short-term volatility counts against it. Whether it fulfils the role is a matter of time horizon and judgement.Read: Bitcoin as a corporate reserve asset →
- Stress test
- An analysis of how a portfolio or company would fare under severe but plausible adverse conditions, such as a large price fall, a counterparty failure or a period of no market access. For a Bitcoin treasury, stress tests typically model historical drawdowns and their effect on the balance sheet, earnings, covenants and liquidity, helping the board set limits it can live with.Read: Bitcoin on the balance sheet: planning for drawdowns →
- Strike price
- The price at which an option holder can buy (for a call) or sell (for a put) the underlying asset. The relationship between the strike and the current price determines whether an option is in, at or out of the money. Choosing a strike is a trade-off: protection closer to the current price costs more in premium.Read: Bitcoin futures and options for corporate treasuries →
- Sub-custodian
- A third party to which a custodian delegates the safekeeping of some or all client assets. Sub-custody adds another entity to the chain of control and to the due diligence required. Companies should ask whether their custodian uses sub-custodians, where assets are held, how client assets are segregated at each level, and what happens if a sub-custodian fails.Read: Choosing a Bitcoin custodian: a due diligence list →
- Subledger
- A detailed record supporting a summary account in the general ledger. A Bitcoin subledger typically tracks each acquisition and disposal by lot, with date, quantity, price, fees and cost basis, and calculates realised gains and remeasurement adjustments. Many companies use specialist software for this, feeding summarised journal entries into the general ledger.Read: Bitcoin journal entries: worked examples →
- Supply chain attack
- An attack that compromises hardware or software before it reaches the user, for example by tampering with a hardware wallet in transit or inserting malicious code into a software update. Mitigations include buying devices directly from manufacturers, verifying packaging and firmware, using devices from more than one manufacturer in multisig, and controlling update processes.Read: Cybersecurity for finance teams holding Bitcoin →
- Suspicious activity report (SAR)
- A report that regulated financial institutions must file with the relevant authority when they suspect a transaction may involve money laundering, terrorist financing or other crimes. Names and terms vary by jurisdiction. Institutions are generally prohibited from telling the customer a report has been filed. Companies dealing with Bitcoin providers should understand that unusual activity can trigger these obligations.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
T
- Tail risk
- The risk of rare, extreme outcomes that sit in the far ends, or tails, of a distribution of possible results. Bitcoin's price history includes several very large drawdowns, so tail risk is central to sizing and governance. Measures that assume normal distributions tend to understate it; stress tests based on historical episodes give a clearer picture.Read: Bitcoin on the balance sheet: planning for drawdowns →
- Tainted coins
- Bitcoin that blockchain analytics links, directly or through a few hops, to illicit activity such as hacks, ransomware, darknet markets or sanctioned addresses. Exchanges and custodians may freeze or reject such coins. For institutions, buying from reputable counterparties and screening incoming funds reduces the risk of receiving coins that later cause compliance problems.Read: Sanctions screening and blockchain analytics for corporates →
- Taker
- A trader whose order executes immediately against orders already in the book, removing liquidity. Market orders and marketable limit orders are taker orders. Takers usually pay higher exchange fees than makers in return for immediate execution. A large taker order also bears the market impact of consuming several price levels.Read: OTC vs exchange: executing large Bitcoin orders →
- Taproot
- A soft-fork upgrade to Bitcoin activated in November 2021. It introduced Schnorr signatures and a new output type that lets complex spending conditions, such as multisig arrangements or recovery paths, look like an ordinary single-signature payment when spent the normal way. This improves privacy and can reduce fees. Taproot addresses begin with 'bc1p'. Adoption by custodians and wallet software has been gradual, so finance teams should confirm support before relying on it.Read: What is a Bitcoin address? Address types and controls →
- Taproot address (P2TR)
- An address type introduced by the Taproot upgrade, using an encoding called Bech32m. Taproot addresses begin with 'bc1p'. They can hold coins protected by a single key, by several keys combined into one, or by more complex conditions that stay hidden unless used. Support across custodians, exchanges and accounting tools has grown since 2021 but is not universal, so test transactions are advisable before first use.Read: What is a Bitcoin address? Address types and controls →
- Tax lot
- A record of a specific acquisition of an asset, with its date, quantity and cost. When bitcoin is sold, the method chosen to identify which lots are sold, such as FIFO or specific identification, determines the cost basis and therefore the taxable gain. Accurate lot records, including transfer fees, are needed for tax returns and supporting audit work.Read: Cost basis methods for corporate Bitcoin holdings →
- Test transaction
- A small transfer sent before a large one to confirm that the destination address is correct and that the recipient controls it. Once the recipient confirms receipt, the main amount is sent. Because Bitcoin transfers cannot be reversed, a test transaction is a simple safeguard against errors and some types of fraud, such as altered address details. Many treasury policies require test transactions for any new address, and the cost is small relative to the risk it reduces.Read: Key management and signing policies for corporates →
- Threshold signature
- A signature scheme in which a private key is split into shares held by different parties, and a set minimum number of them must cooperate to produce a valid signature. The full key is never assembled in one place. On the blockchain, the result looks like an ordinary single signature. Threshold signatures are a common basis for MPC custody platforms.Read: MPC vs multisig: custody models compared →
- Time-weighted average price (TWAP)
- An execution strategy that splits a large order into equal pieces traded at regular intervals over a set period, and the benchmark that measures the average price over that period. TWAP is simple to explain and spreads market impact evenly across time. It does not adjust for when trading volume is naturally higher or lower, so it may trade too much in quiet periods. It suits companies that want a disciplined, predictable buying pattern rather than trying to time the market.Read: TWAP and VWAP execution for large Bitcoin orders →
- Timelock
- A condition in a Bitcoin transaction or script that prevents coins from being spent until a specified block height, time, or number of blocks has passed. Absolute timelocks refer to a fixed point; relative timelocks count from when the coins were received. Custody designs use timelocks for recovery paths, for example allowing a backup key to spend only after a long period of inactivity, so the backup cannot be used for day-to-day withdrawals.Read: Multisig Bitcoin custody for companies →
- Timelocked recovery
- A custody design in which a backup key, or set of keys, can spend funds only after a defined period has passed without the primary keys moving them. It provides a route to recover funds if primary keys are lost, while preventing the backup from being used for routine withdrawals. It supports continuity planning, but the timelock must be monitored and refreshed before it expires.Read: Bitcoin succession and continuity planning for organisations →
- Tracking difference
- The gap between a fund's return and the return of the asset or index it follows over a period. For a spot Bitcoin ETF, fees are the main source of tracking difference, along with trading costs and cash held. Comparing tracking difference over time helps an investor understand the true cost of holding an ETF compared with holding bitcoin directly.Read: Bitcoin ETFs vs holding Bitcoin directly →
- Trade confirmation
- A formal record issued after a trade, setting out the date and time, asset, quantity, price, fees, counterparty and settlement instructions. It is the primary document the finance team uses to record the trade and reconcile settlement. Confirmations should be checked against the internal trade record promptly, with any differences resolved before settlement. Auditors will typically request trade confirmations, along with transaction IDs and bank records, to support the existence and cost of bitcoin holdings.Read: Bitcoin audit readiness: a checklist for finance teams →
- Transaction batching
- Combining several payments into one Bitcoin transaction with multiple outputs, instead of sending each separately. Because the fixed parts of a transaction are paid for only once, batching can significantly reduce total fees. Exchanges and payroll-style payouts commonly batch withdrawals. The trade-off is that payments wait to be grouped, and all recipients in the batch become visibly linked on the blockchain.Read: How Bitcoin network fees work and how to budget for them →
- Transaction cost analysis (TCA)
- The measurement of how much an execution cost compared with benchmarks such as arrival price, TWAP, VWAP or an index price. TCA separates explicit costs, such as fees and spread, from implicit costs such as market impact and delay. Regular TCA lets a company compare liquidity providers on evidence and supports a board's oversight of best execution.Read: Best execution for corporate Bitcoin trades →
- Transaction fee
- The amount a sender pays to have a Bitcoin transaction included in a block, collected by the miner who includes it. Fees depend on the size of the transaction in data, not on the value sent, and on how busy the network is, so moving a large amount can cost the same as moving a small one. Fees are usually quoted in satoshis per virtual byte. Companies should record network fees separately in the accounts and include them in total cost analysis for transfers.
- Transaction ID (TXID)
- The unique identifier of a Bitcoin transaction, produced by hashing its data. Anyone can look up a transaction ID on a block explorer or their own node to see its inputs, outputs, amount and confirmations. For finance teams, the transaction ID is the core piece of audit evidence: it links an internal record, such as a purchase, transfer or settlement, to the public ledger. Good practice is to store the transaction ID against every bitcoin movement in the accounting and treasury systems.Read: Bitcoin audit readiness: a checklist for finance teams →
- Transaction monitoring
- The ongoing review of customer transactions to detect patterns that may indicate money laundering, fraud or sanctions breaches. For Bitcoin, monitoring combines traditional checks on amounts and frequency with blockchain analytics on the source and destination of funds. Providers may ask corporate clients to explain unusual activity, so keeping records of the purpose of transfers helps.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Travel Rule
- FATF Recommendation 16 as applied to virtual assets: providers sending transfers on behalf of clients must pass on identifying information about the originator and beneficiary to the receiving provider. Many jurisdictions have implemented it, though thresholds and details vary. For companies, it means withdrawals and deposits through regulated providers may require details of the receiving or sending party, and transfers to self-hosted wallets may need proof of ownership. Planning for these requirements avoids settlement delays.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Travel Rule threshold
- The transfer value above which full originator and beneficiary information must be collected and shared between virtual asset service providers under the FATF Travel Rule. FATF suggests a low de minimis threshold, and some jurisdictions apply the rule to all transfers regardless of size. Thresholds therefore vary by jurisdiction, and providers may apply the stricter standard across all clients.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Treasury bill
- A short-term government debt security, typically maturing in one year or less, issued at a discount and repaid at face value. Treasury bills are a common home for corporate cash because they are highly liquid and backed by the issuing government. They are often the benchmark against which the return and risk of other treasury assets, including Bitcoin, are compared.Read: Bitcoin vs cash, T-bills and gold as treasury assets →
- Treasury management system (TMS)
- Software that centralises a company's cash positions, bank accounts, forecasts, payments, investments and risk reporting. Integrating Bitcoin holdings into a TMS, or into the general ledger alongside it, helps treasurers see total liquidity and exposures in one place. Many traditional systems do not natively support Bitcoin, so data often comes from custodian reports or an intermediate tool.Read: Bitcoin treasury reporting: KPIs for the board →
- Treasury policy
- The board-approved document that governs how a company manages its cash and other treasury assets. When bitcoin is added, the policy should cover objectives, maximum allocation, approved instruments, execution methods, approved counterparties, custody requirements, signing rules, concentration limits, rebalancing, accounting, reporting and review frequency. A good policy is specific enough to guide daily decisions and to be tested by auditors. It should be reviewed at least annually and after any significant change in markets or regulation.Read: How to write a Bitcoin treasury policy: a sample outline →
- Trust company
- A legal entity authorised to act as a fiduciary, holding assets on behalf of clients. Many institutional Bitcoin custodians are chartered trust companies under state or national regimes, which typically requires client assets to be held separately from the company's own. The legal protection this offers depends on the charter, the custody agreement and the applicable insolvency law.Read: Qualified custodian vs self-custody for companies →
- Two-way price
- A quote showing both a bid and an ask, without the dealer knowing whether the client wants to buy or sell. Requesting a two-way price can reduce information leakage and makes the dealer's spread visible. Some corporate treasuries ask for two-way prices in OTC requests to keep their intended direction private until they decide to trade.Read: How request-for-quote (RFQ) pricing works for Bitcoin →
U
- Unconfirmed transaction
- A Bitcoin transaction that has been broadcast to the network but not yet included in a block. It waits in the mempool until a miner selects it, which depends mainly on its fee rate. An unconfirmed transaction can still be replaced or fail, so it should not be treated as settled. Treasury procedures normally define how many confirmations are required before funds are recorded as received.Read: How Bitcoin network fees work and how to budget for them →
- Unhosted wallet
- A wallet whose keys are held by the user rather than by a regulated service provider, also called a self-hosted wallet. Transfers between a VASP and an unhosted wallet raise specific compliance questions, because there is no counterparty institution to exchange Travel Rule information with. Providers may ask companies to prove ownership of an unhosted wallet before sending funds to it.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Unit of account
- The standard measure in which prices, contracts and accounts are expressed. Companies use their functional currency as their unit of account, and accounts are prepared in it. Bitcoin is rarely used as a unit of account today; its value is usually expressed in fiat currency. The unit of account determines how a company's Bitcoin gains and losses appear in its reported results.Read: What backs Bitcoin? →
- Unrealised gain or loss
- A change in the value of bitcoin that is still held, measured against its cost or previous carrying amount. Under ASU 2023-08, unrealised gains and losses on in-scope bitcoin are recognised in net income each period. Under IFRS's IAS 38 cost model, unrealised gains are not recognised, while unrealised losses may lead to impairment. Unrealised results are usually not taxed until disposal in many jurisdictions, which can create deferred tax. Companies should explain these effects clearly to investors.Read: How Bitcoin appears on the balance sheet →
- UTXO
- Short for unspent transaction output: a discrete amount of bitcoin that has been received and not yet spent. A wallet's balance is the sum of its UTXOs, rather than a single account balance. When bitcoin is sent, whole UTXOs are used as inputs and any excess returns to the sender as change. UTXOs matter for treasury operations because many small UTXOs make transactions larger and more expensive, and because they can support detailed tracking of lots and history for cost basis and audit purposes.
- UTXO consolidation
- Combining many small unspent outputs into one larger output by sending them to an address the company controls. Consolidation is usually done when network fees are low, so that future payments need fewer inputs and cost less. The trade-off is a fee today and some loss of privacy, because the consolidated outputs become visibly linked on the blockchain.Read: How Bitcoin network fees work and how to budget for them →
V
- Value at risk (VaR)
- A statistical estimate of the maximum loss a portfolio might suffer over a set period at a given confidence level, based on historical or modelled price behaviour. VaR is widely used but can understate risk for assets with sudden, large moves, such as Bitcoin, because it says nothing about the size of losses beyond the confidence level. It is best combined with stress tests.Read: Bitcoin on the balance sheet: planning for drawdowns →
- Vault
- A general term for a highly secured storage arrangement for bitcoin, usually cold storage with multi-person approval, withdrawal delays and strict access controls. Custodians use the term for their most protected tier. In Bitcoin technical discussions, a vault can also mean a script design that forces withdrawals through a waiting period during which they can be cancelled.Read: Cold storage explained for corporate treasuries →
- Virtual asset service provider (VASP)
- A FATF term for a business that, on behalf of others, exchanges, transfers, safeguards or administers virtual assets, or provides related financial services. Trading desks, exchanges and custodians typically fall within the definition. VASPs are expected to be licensed or registered and to apply AML rules, including the Travel Rule. Before using a provider, companies should verify its registration or licensing status in the relevant jurisdictions, rather than relying on how the provider describes itself.Read: AML, KYC and Travel Rule checks to buy Bitcoin for a company →
- Virtual byte (vbyte)
- The unit used to measure the size of a Bitcoin transaction for fee purposes since SegWit. One virtual byte equals four weight units. Signature data counts for less than other data, so SegWit and Taproot transactions often have a smaller virtual size than their raw byte size. Fees are quoted in satoshis per virtual byte, which is why address type and input count affect cost.Read: How Bitcoin network fees work and how to budget for them →
- Volatility
- The degree to which an asset's price moves up and down over time, usually measured by the standard deviation of returns. Bitcoin is a volatile asset compared with cash, bonds and most equities. For a corporate treasury, volatility affects reported earnings under fair value accounting, the risk of breaching concentration limits, and how much of the treasury can sensibly be allocated. Volatility should be planned for in policy and board materials, not treated as an exception when it occurs.Read: Bitcoin on the balance sheet: planning for drawdowns →
- Volume-weighted average price (VWAP)
- The average price of an asset over a period, weighted by the volume traded at each price, and an execution strategy that aims to match it by trading in proportion to market activity. VWAP execution trades more when the market is busier and less when it is quiet, which can reduce impact. It is a common benchmark for judging whether an order was filled at a fair price. The result depends on which venues' volume is included, so the data source should be agreed in advance.Read: TWAP and VWAP execution for large Bitcoin orders →
W
- Wallet
- Software or hardware that manages private keys and creates, signs and tracks Bitcoin transactions. Despite the name, a wallet does not hold coins; the bitcoin are recorded on the ledger and the wallet holds the keys that control them. Wallets range from simple mobile apps to institutional platforms with multi-party approvals. A corporate wallet setup should reflect the treasury policy: who can initiate, who must approve, what limits apply, and how keys are backed up and recovered.Read: Corporate Bitcoin custody: the options explained →
- Warm wallet
- A wallet tier between hot and cold, typically with keys kept offline or in secured hardware but able to sign within hours rather than days. Warm wallets suit balances that may be needed at short notice, such as for planned trades or collateral top-ups. Many custodians offer hot, warm and cold tiers with different limits, approval steps and withdrawal times.Read: Corporate Bitcoin custody: the options explained →
- Wash trading
- Trading with oneself, or in coordination with others, to create a false impression of volume or price without any genuine change in ownership. Wash trading has been documented on some unregulated venues and can make reported volumes unreliable. Institutions usually rely on volume data from venues with surveillance and on independent data providers that filter suspect activity.Read: How is the Bitcoin price determined? →
- Watch-only wallet
- A wallet that holds only public information, such as an extended public key or output descriptor, so it can display balances and generate receiving addresses but cannot sign transactions. Watch-only wallets let finance staff, auditors or monitoring systems see holdings without any ability to move them, which supports segregation of duties.Read: Public and private keys explained for companies →
- Weighted average cost
- A cost basis method that assigns each unit sold the average cost of all units held, recalculated as new purchases are made. It smooths out the effect of buying at different prices and is simpler to apply than tracking individual lots, though lot records are still useful for audit. Some tax systems require or allow pooling of this kind, while others do not. The method chosen affects reported gains and losses, so it should be confirmed with tax and accounting advisers and applied consistently.Read: Cost basis methods for corporate Bitcoin holdings →
- Weighted average cost of capital (WACC)
- The average rate a company pays for its funding, weighting the cost of each source, such as equity and debt, by its share of total capital. WACC is used as a discount rate and a benchmark for investment decisions. Funding choices for a Bitcoin purchase can change the capital mix and therefore WACC, which boards may wish to understand before approval.Read: Funding a corporate Bitcoin purchase: cash, debt or equity →
- Withdrawal delay
- A deliberate waiting period between a withdrawal request and its execution, during which the request can be reviewed or cancelled. Delays give a company time to detect unauthorised or mistaken transfers before funds leave. They are common in cold and warm storage tiers and when adding new destination addresses. The delay length is a trade-off between security and speed.Read: Cybersecurity for finance teams holding Bitcoin →
- Working capital
- Current assets minus current liabilities: broadly, the cash, receivables and inventory a company has to fund its day-to-day operations, less what it owes in the short term. Treasury policies usually ring-fence the cash needed for working capital before considering any allocation to longer-term or more volatile assets such as Bitcoin.Read: How much Bitcoin should a company hold? →
- Wrapped Bitcoin
- A token on another blockchain that represents bitcoin held in reserve by a custodian or set of custodians. It allows bitcoin's value to be used in applications on other networks. The holder owns a claim on the custodian, not bitcoin itself, so it carries counterparty, smart-contract and redemption risk. For treasury purposes, wrapped bitcoin is generally treated as a separate asset with its own due diligence, not as a substitute for bitcoin.Read: Bitcoin vs other digital assets: why treasuries focus on Bitcoin →
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