Blockchain, Cryptocurrency and Digital Assets Glossary of Terms

51% Attack

A single person, or group of people, with more than 50% of the mining rate (hash rate or node power) on the network create a single entity to overrule the network through consensus, giving them complete control and the potential to negatively affect a cryptocurrency by stopping or changing transactions, double-spending coins or other nefarious acts.

Address / Public Key 

An alphanumeric character string used for transacting.

Air-Gapping

A method in which the device does not connect to the internet or any other open networks. Method is commonly used for cold storage of digital assets.

Airdrop

A method used to send cryptocurrency or tokens to wallet addresses. Often used for marketing purposes.

Altcoin

Alternatives to Bitcoin.

Anti-Money Laundering (AML)

International laws enacted to reduce the potential for criminal organizations or individuals to launder money. AML regulations require financial institutions to report on suspicious financial actiivity.

Audit

An independent review of a concept, system, process, company, or product to find and analyze weaknesses for optimization.

Arbitrage

Simultaneous purchase and sale of the same asset in different markets to profit from tiny differences in the asset's listed price. See yield farming.

Bitcoin / bitcoin (BTC)

The first decentralized digital currency to use encryption techniques to secure and verify transactions that exist on a peer-to-peer network.

Block

A blockchain is a decentralized ledger built across a network to record transactions on blocks, which serve as records for that ledger.

Blockchain

A distributed ledger system which utilizes sequence of blocks, or units of digital information, that are stored consecutively in a public format. Each block is connected using a cryptographic signature. The underlying basis for cryptocurrencies.

Brain Wallet

A "brainwallet" refers to a private key in the form of a seed phrase or a passphrase that the user memorizes.

Centralized Finance (CeFi)

For cryptocurrency, centralized Finance (CeFi) works by running transactions through centralized cryptocurrency exchanges, businesses, or organizations that have a physical address. Different from decentralized finance (DeFi), as CeFi still requires an intermediary to manage transactions.

Centralized Exchange (CEX)

A centralized exchange (CEX) works as an online platform where users can buy and sell cryptocurrencies.

Collateralization

Collateralization is the use of an asset as insurance for securing a loan.

Coin

In cryptocurrency, coins represent a digital value that is created using its own blockchain platform.

Cold wallet / cold storage

A wallet never connected to the internet.

Consensus

The process to achieve the necessary agreement to prove the validity of a transaction on a blockchain network. Used by a group of nodes or peers on a blockchain network, two commonconsensus mechanisms are Proof of Work (POW) and Proof of Stake (POS).

Crypto-compliance

Referring to compliance with applicable regulations and laws for cryptocurrency projects.

Cryptoeconomics

Economic analysis of decentralized finance.

Cryptoassets

A term covering on-chain assets like cryptocurrencies and NFTs.

Crypto Native

Companies and organizations that originate business operations using cryptocurrencies and are based on blockchain technology.

Cryptography

The underlying security of blockchain technology allowing transactions to be recorded using encrypted data.

Cryptocurrency

A digital form of currency represented as a digital coin or token, transferred via a blockchain and protected by encryption.

Decentralized Application (dApp)

A “dApp” is a decentralized app using a decentralized network using a graphical interface and smart contracts. Similar to apps we know from mobile phone app markets.

Decentralized Autonomous Organization (DAO)

A decentralized autonomous organization (DAO) is governed and operated by a set of computer-defined rules and blockchain-based smart contracts.

Decentralized Finance (DeFi)

A financial ecosystem consisting of various financial tools, apps and services utilizing blockchain technology. Examples of DeFi functionality are banking services in the form of stablecoins, decentralized exchanges, derivatives, prediction markets, or lending and borrowing systems. Decentralized Finance platforms typically run smart contracts based on the Ethereum blockchain.

Decentralized Exchange (DEX)

A decentralized exchange (DEX) is a peer-to-peer network where users buy and sell directly with each other using the DEX as the middleman running smart contracts.

Decentralization

Transfer of control of a central authority to several local authorities in an effort to disperse functions and powers.

Digital asset

A term to describe any asset in digital form. In the world of blockchain technology and defi, the terminology is used broadly to refer to cryptocurrencies, stablecoins, altcoins, NFTs and crypto-assets.

Digital Identity

A set of credentials and attributes used online by an individual, organization or device.

Digital Signature

An electronically transmitted document and code generated by a public key encryption used to verify contents of a document.

Distributed Denial of Service (DDoS) Attack

A method of overloading software or hardware on a blokchain in an effort to render the site or service unusable for bad actors to exploit their vulnerability.

Distributed Ledger

A database replicated, synchronized and shared between participants.

Double Spend

A potential flaw using digital cash where the same funds can be sent to two recipients at the same time.

ERC-20 Token Standard

A standard, or set of rules, used to create and issue smart contracts within the Ethereum Blockchain.

ERC-721 Token Standard

Similar to ERC-20 Standard, the ERC-721 standard refers to standards used on the Ethereum Blockchain when working with a non-fungible token (NFT).

Ether (Eth)

Native currency of the Ethereum blockchain network.

Ethereum

A blockchain with smart contract functionality. Uses a native cryptocurrency called Ether (ETH)

Exchange

A place to trade cryptocurrency.

Fiat Currency

Government-issued currency.

Fork

A significant change to a network's protocol that reverses the validity of previous blocks and transactions. A fork requires all nodes to adopt to the latest version of the protocol.

Flash Loan

Loans used in DeFi that are not backed with collateral. Creates ability for users to instantly borrow without the need for collateral.

Gas

The cost to perform a transaction on a network which equates to a fee.

Gas Limit

The gas limit is the maximum amount users are willing to pay for any given transaction to go through the Ethereum network.

Gas Price

A value set by miners based on supply and demand and the computational power needed to process transactions and any corresponding smart contracts.

Genesis Block

The originating block in a blockchain.

Hard Fork

A significant change in the code of the blockchain. Splits the blockchain in two making the earlier blocks incompatible with the new version.

Hash

Referring to the output of a function used to convert input values into a fixed size of alphanumeric value.

Hierarchical Deterministic (HD) Wallet

A wallet used to store digital keys for cryptocurrency hodlers.

Hot Wallet/Hot Storage

A wallet directly connected to the internet at all times.

HODL

An ackronym for “hold on for dear life”, HODL has become an inside joke amongst cryptocurrency investors and the larger cryptocurrency community. Used to refer to investors who refuse to sell their digital assets.

Immutability

Not susceptible or able to change. The condition of being unchangeable. Foundations of blockchain technology and it’s ‘trustless’ nature are due to the fact that blockchain is immutable.

Initial Coin Offering (ICO)

Initial Coin Offerings occur when a company is looking to rais funds for products and services. Similar to an IPO.

Know Your Customer (KYC)

In banking, Know Your Customer (KYC) refers to a mandatory process of verifying the identity of a new client when opening an account, and periodic checks to validate this information over time.

Liquidity Pools

A collection of tokens or cryptocurrencies locked into smart contracts for the purpose of decentralized lending or trading.

Liquidity Providers

Cryptocurrency owners who facilitate trading by lending crypto assets to a pool and are paid on the transaction fees based on the trades they enabled.

Lending Protocol

DeFi platforms with automated processes executed via smart contracts.

Market Cap

Short for “market capitalization.” Refers to the total value of a cryptocurrency based on all coins that have been mined.

Metaverse

The metaverse is the concept of a centralized virtual world that can be used for a variety of purposes, such as conducting business, playing video games, socializing, online shopping, and more. It is a form of virtual reality internet.

Mining

The creation of cryptocurrency by using Proof of Work (POW) through computational power to generate a winning code before anyone else. Rewards are in newly minted cryptocurrency.

Multi Signature (MultiSig)

A wallet used to store cryptocurrencies that requires multiple signatures to access. All parties to this wallet are required to approve a transaction before gaining access to the wallet.

Node

Any device or computer on a blockchain. These nodes form the blockchain infrastructure and store blocks of data.

Non-Fungible Token (NFT)

A unique digital asset. NFTs allow ownership of digital works, rights, or property without the ability of duplication.

Nonce

Abbriviation of “number only used once.” Typically used as a counter during cryptocfurrency mining.

Peer-to-Peer (P2P)

Enabled by a decentralized platform, Peer-to-Peer (P2P) refers to two parties interacting directly, without the need for a third party.

Permissioned Ledger

Also known as a private ledger, permissioned ledgers require all parties to be known and authorized for use or activity on a blockchain network.

Proof of Stake (PoS)/Proof of Work (PoW) Hybrid

A hybrid consensus model where blocks are validated from not only miners, but also voters – or stakeholders – to form a balanced network governance.

Private Blockchain

A blockchain or distributed ledger with a closed network where participants are controlled by a single entity.

Private Currency

A token or digital unit of value issued by a private individual or firm with limited use on a specific network. Similar to casino chips or tokens at an arcade.

Private Key

The alphanumeric string of data corresponding to a single specific account in a wallet. Corresponds to a public key.

Proof of Authority (PoA)

In private blockchains, a consensus mechanism used to grant a single private key the authority to validate transactions or generate all of the blocks.

Proof of Stake (POS)

A consensus mechanism allowing for an individual or “validator’ to validate blocks or transactions.

Proof of Work (PoW)

A consensus mechanism in which each block is ‘mined’ by a group of individuals or nodes on the network.

Protocol

A set of rules dictating how data is exchanged or transmitted.

Public Blockchain

A completely decentralized network allowing anyone to join. All nodes on a public blockchain have equal access to the blockchain, ability to create new blocks and validate blocks.

Public Key

One part of a two-part key system, the public key allows message encryption and checking the legitimacy of a digital signature. Typically stoared on a public key infrastructure.

Seed Phrase/Secret Recovery Phrase

A list of words generated in a specific order which allows users to restore balances of a lost or stolen wallet.

Smart Contracts

Smart contracts are computer-coded terms of an agreement executed autonomously once predefined conditions are satisfied.

Soft Fork

A change to the software protocol where small changes are made but the rules of the blockchain remain the same. Used to implement new features or functionality.

Stablecoin

Stablecoins are tokens or cryptocurrencies attempting to have a minimized volatility of its price by maintaining the stable price of a related asset. Stablecoins may be backed by the related asset (such as fiat currencies or precious metals) or replicated using smart contracts.

Staking

A process of growing crypto holdings through yields gained by lending cryptocurrency to borrowers.

Token

A token is a unit of value developed on top of a project or created by blockchain organizations using existing blockchain networks. Different from cryptocurrencies.

Wallet

A place to store your cryptocurrencies with an address to receive and send funds. A wallet keeps a private key used to validate transactions when making purchases.

Web3/Web 3.0

Referring to the “decentralized web” and a new iteration of the world wide web which will be based on blockchain.

Yield Farming

Similar to traditional lending or loans, yield farming allows cryptocurrency holders to earn interest in decentralized finance markets.