Glossary of blockchain and crypto terms
Short, plain-language explanations of common blockchain and crypto terms. The entries are general education and do not describe any particular product or service.
A
- Address
- A string of characters derived from a public key that serves as the destination when someone sends crypto assets to a wallet. It identifies where transfers go.Ethereum.org: Glossary
- Airdrop scam
- A fraud that uses the promise of free tokens. Victims are asked to connect a wallet, sign a request, or enter a seed phrase to claim an allocation that never arrives, and their funds are taken instead.
B
- Block explorer
- Users enter a transaction ID, an address or a block number into this search tool to see its details. The information comes straight from the chain itself, so anyone can check it independently.Ethereum.org: Glossary
- Blockchain
- Think of it as an append-only ledger that anyone in the network can read, with new entries added in batches. Changing an earlier entry would break the links that follow it, which makes tampering visible.NIST Computer Security Resource Center: Glossary
C
- Cold wallet
- A wallet whose private keys are kept offline, usually on a dedicated physical device that is not connected to the internet. Offline storage reduces exposure to online attacks.Ethereum.org: Wallets
- Consumer protection
- Laws and public agencies that set minimum standards for how businesses sell to the public. They cover honest advertising, clear terms, complaint routes and, in many places, refund rights for people who were misled.
- Cryptojacking
- The unauthorized use of someone else's computer, phone or browser to mine cryptocurrency. It is often done through hidden scripts in a website or a malicious download, and it slows the device and raises power use.Ethereum.org security guidance
- Custodial wallet
- With this arrangement, a custodian safeguards the cryptographic keys, so account recovery may depend on that firm's procedures. Terms and regulatory protections depend on where the provider operates.Ethereum.org: Wallets
- Custody
- The safekeeping of crypto assets by a firm on behalf of its clients, which can carry specific regulatory duties. Holding someone else's assets is treated as a distinct activity.
D
- Decentralization
- A system is decentralized when its data, validation and governance are shared among many separate computers and people. Removing one participant rarely stops the system from running.Ethereum.org: Glossary
- Digital asset reporting
- Rules that require platforms and intermediaries to report certain digital asset sales and transfers to tax authorities. Reporting forms, thresholds and start dates are set by each country and change over time.
- Digital signature
- Signing mathematically binds a message to a particular key pair, so a valid signature shows the message came from that key and was not altered. Verification uses only public information.NIST Computer Security Resource Center: Glossary
E
- Enhanced due diligence (EDD)
- Extra checks applied to customers or relationships that present higher money laundering or terrorist financing risk. Examples include deeper source-of-funds questions, senior management approval and closer monitoring of activity.Financial Action Task Force guidance on virtual assets
- Exchange
- An exchange is a marketplace, whether centralized or decentralized, where crypto assets are traded against one another or against fiat money. Where it is regulated, the rules depend on the country and the services offered.
F
- Fork
- When developers disagree about a protocol change, the network can split into two chains, each following different rules. Such a divergence is often described as a contentious fork.Ethereum.org: Glossary
H
- Honeypot scam
- A trap that lures people into depositing assets into a contract they cannot later reclaim. The contract is usually promoted as a route to quick gains, and the code hides the rule that blocks outgoing transfers.Ethereum.org smart contract security documentation
- Hot wallet
- A wallet whose keys are stored on a device connected to the internet, such as a phone, a computer or a browser extension. It is convenient for frequent use.Ethereum.org: Wallets
K
- Know your customer (KYC)
- A standard identity check that financial and crypto businesses run before opening an account. It asks who the customer is, confirms the details with evidence, and keeps that evidence on file for a set period.Financial Action Task Force guidance on virtual assets
L
- Layer 2
- A network built on top of a base blockchain that processes transactions off the main chain and then reports results back to it. It aims to increase throughput.Ethereum.org: Glossary
- Limit order
- A limit order names the most a participant will pay or the least it will accept per unit. The trade executes only if the market reaches that threshold.
- Liquidity
- Liquidity describes depth in a market: how much can be traded at close to the current level before the level shifts noticeably. Thin markets are less liquid.
M
- Market order
- An instruction to trade immediately at the most favorable level currently available in the market, at whatever level that turns out to be. It prioritizes speed of execution over the specific level.
- Multisignature
- Multisig wallets need approval from a set number of keys before funds can move, which reduces the risk that one compromised key drains the account. Setup and recovery are more involved.Ethereum.org: Glossary
N
- Node
- Every full node independently verifies the history it receives, rejecting blocks that break the protocol. Some nodes run on ordinary personal hardware while others run in data centers.Ethereum.org: Glossary
- Non-custodial wallet
- Also called self-custody, this model puts the entire responsibility for keys and recovery phrases with the owner. Losing the keys generally means losing access to the assets.Ethereum.org: Wallets
P
- Pig butchering
- A long-running scam in which a fraudster builds a friendly relationship with the victim, often online, and then persuades them to send crypto to a fake investment platform that appears to show gains.
- Politically exposed person (PEP)
- A label used in anti-money laundering rules for people in powerful public positions, and their relatives and close associates, because they are more exposed to bribery and misuse of public funds. Firms apply extra checks.Financial Action Task Force guidance on virtual assets
- Pooling
- A way of tracking holdings of the same token as one balance with a single average cost. Each sale reduces that balance and the matching share of cost, which keeps records simple for many holders.
- Private key
- A secret number that authorizes transactions from an address. Anyone who holds it can control the funds it protects, so it must never be shared with anyone.NIST Computer Security Resource Center: Glossary
- Proof of work
- Miners use specialized hardware to make repeated guesses until one meets the network's target. Verifying the winning answer is fast, so other nodes can check the result easily.Ethereum.org: Proof-of-work
- Pump-and-dump
- A type of market manipulation in which insiders or coordinated groups hype a token with false or misleading claims, then exit while newcomers are left holding a token that falls sharply.
R
- Recovery scam
- A targeted scam in which victims are contacted after a loss and told that a firm can trace or reclaim their assets. The request for payment or access to a wallet is the warning sign.
S
- Sanctions screening
- A control that stops a business from dealing with people or entities subject to government sanctions. Screening runs at onboarding and on each payment, and a positive match usually means freezing the funds and reporting.
- Securities (concept)
- A legal category that determines which investor protections and registration duties apply to an offering. Tests for crypto assets differ between countries, so one token can be treated differently in two places.
- Smart contract exploit
- An attack that uses a coding flaw or unexpected behavior in a smart contract to take funds or tokens it holds. Exploits can come from logic errors, weak access controls or flawed integration with other contracts.Ethereum.org smart contract security documentation
- Stablecoin
- A token designed to hold a steady value against a reference asset, often a fiat currency. How it is backed and regulated varies from one issuer to another.Ethereum.org: Stablecoins
T
- Tax residency
- The status that decides which country can tax a person's income and gains, usually based on where they live, how long they stay and where their main economic ties are. It can differ from citizenship.Canada Revenue Agency guidance on crypto-asset tax obligations
V
- Virtual asset service provider (VASP)
- The international term for a business that exchanges, transfers, safekeeps or administers virtual assets on behalf of others. Such businesses are normally expected to meet anti-money laundering rules.Financial Action Task Force guidance on virtual assets
- Virtual currency as property
- A tax authority's position that crypto is an asset rather than currency for tax purposes. Income from mining, staking or payments may be taxed separately, and selling or spending can create a taxable event.
W
- Wallet
- A wallet is better understood as a manager of cryptographic keys than as a container of coins. Its main job is to sign transactions that move assets recorded on a public ledger.Ethereum.org: Wallets