Glossary of Bitcoin, privacy and KYC
This glossary defines, in one sentence each, the terms that appear most often in content about buying bitcoin without KYC.
Which terms do you need to know?
| Term | Definition |
|---|---|
| KYC | Know Your Customer: the set of procedures by which a company collects documents and personal data before allowing use of a service. |
| P2P | Direct trade between two people, with no exchange holding both sides' funds. |
| Escrow | Mechanism that locks bitcoin during a trade and releases it only when the agreed conditions are met. |
| Lightning | Payment network built on top of Bitcoin that enables instant, low-cost transfers. |
| Self-custody | A setup where only you control your wallet's private keys, with no third party involved. |
| UTXO | An unspent unit of bitcoin; UTXO management directly affects transaction privacy. |
| Tor | Network that routes traffic through multiple nodes to hide the originating IP address. |
| Lightning address | An identifier shaped like name@domain that lets you receive Lightning payments without manually creating an invoice. |
| On-chain | A transaction recorded directly on the Bitcoin blockchain, with a mining fee and block confirmations. |
| Coinjoin | A collaborative transaction that merges inputs from several people to hinder chain analysis. |
In what order should you study them?
- Start with KYC and self-custody, which frame the problem and the answer.
- Move on to P2P and escrow, which describe how a purchase happens.
- Then look at Lightning and Lightning address, tied to daily usage.
- Finally study UTXO, coinjoin and Tor, tied to advanced privacy.
How to Buy Bitcoin Anonymously — See the book on Amazon
Frequently asked questions
- KYC?
- Know Your Customer: the set of procedures by which a company collects documents and personal data before allowing use of a service.
- P2P?
- Direct trade between two people, with no exchange holding both sides' funds.
- Escrow?
- Mechanism that locks bitcoin during a trade and releases it only when the agreed conditions are met.
- Lightning?
- Payment network built on top of Bitcoin that enables instant, low-cost transfers.