Bitcoin Terms Beginning with P

Partially Signed Bitcoin Transaction is a bitcoin standard which facilitates the portability of unsigned transactions. This allows multiple parties to easily sign the same transaction.

Pay-to-Public-Key (P2PK) is a type of script which sends bitcoin to a public key. This means that the bitcoin can only be spent by the owner of the private key corresponding to the public key provided.

Pay-to-Public-Key-Hash (P2PKH) is a type of transaction which spends bitcoin to the hash of a public key. A public key hash is also known as an address, and P2PKH is the most common transaction type.

Pay-to-Script-Hash (P2SH) is a type of transaction which allows for the spending of bitcoin based on the satisfaction of any script provided by the sender. P2SH is used for multisig and SegWit transactions.

Pay-to-Taproot (P2TR) is a type of ScriptPubKey which locks bitcoin to a script that can be unlocked by a public key or a Merkle tree of alternative scripts, any of which can be used to spend the bitcoin at a later time.

Pay-to-Witness-Public-Key-Hash (P2WPKH) is a type of ScriptPubKey which is used to lock bitcoin to a SegWit address.

A Pay-to-Witness-Script-Hash (P2WSH) is a type of transaction similar to a P2SH transaction in most ways, except that it uses SegWit.

PayJoin, also known as Pay-to-Endpoint (P2EP), is a special type of privacy preserving Bitcoin transaction where both the sender and receiver contribute inputs in order to break the common input ownership heuristic.

A payment rail is a network or platform that facilitates digital transactions. Payment rails are measured in terms of transaction security, volume, and settlement time.

A peer-to-peer network is one in which members can interact directly with one another without relying on third parties for approval or support.

A peg is the practice of tying the value of one asset to the value of another asset. This is most commonly used by countries to stabilize the value of their currency.

A pegged-to-market order is an algorithmic trading strategy. This strategy optimizes for both speed and price.

A penalty transaction allows an one party to a Lightning channel to reclaim funds that were stolen during the dishonest close of a Lightning channel.

A perpetual swap allows individuals and institutions to buy and sell the value of an underlying asset.

Phishing is a digital attack where a bad actor looks to trick an individual into clicking on a suspicious link, downloading software, or hosting a familiar website in the hopes of obtaining their data.

Physical settlement is the delivery of an underlying asset associated with an options or futures contract on a specified delivery date, as opposed to the asset being traded out with offsetting contracts or cash delivery.

A Point Time Locked Contract (PTLC) is a Bitcoin transaction which locks bitcoin to a point on Bitcoin’s elliptic curve.

Portability is a necessary condition of money, wherein the money can be easily transported across borders and long distances. A good money is one that can be adopted by many, and portability is necessary for widespread adoption.

A preimage is the data that is input into a hash function to calculate a hash. Since a hash function is a one-way function, the output, the hash, cannot be used to reveal the input, the preimage.

Present value is the current value of future cash flows. This is found by discounting the cash flows based on a discount rate and the time until they will be realized.

Price discovery is the process of determining an asset’s price. This happens naturally as traders place orders.

A prime broker provides services to hedge funds and other large investment financial institutions, including facilitating and coordinating the borrowing of securities or money for investments, trade execution, and money management.

Principal is the amount of money invested or borrowed, or a party relying on an insured bond.

The principal model of trading involves a brokerage acting as the counterparty to their customer’s desired trade using their own inventory of assets. Principal trading allows brokers to profit from the bid-ask spread.

A private key is used to send bitcoin which was received by the corresponding public key. While a private key can generate a public key, the reverse is not true.

Probate is the legal process in which the validity of a will is approved and accepted as a public document in a court of law. Probate also resolves any disputes over claims to property.

Bitcoin miners must submit Proof-of-Work in the form of a valid hash in order to have their block be considered valid.

The Bitcoin protocol uses a blockchain based on Proof-of-Work and a token (bitcoin) in order to establish a peer-to-peer monetary network.

A pseudonym is a fake name used by individuals to protect their identity. In Bitcoin addresses and public keys serve as pseudonyms on the blockchain.

A public key is used to receive bitcoin. When bitcoin is sent to a public key, only the owner of the corresponding private key will be able to spend it.

A put option is a contract that gives the buyer the right but not the obligation to sell an asset for a specified price.