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
- The address is the public-facing identifier that other people copy into their wallet software to direct a transfer. Because it is derived mathematically from a key pair, it can be shared openly.Ethereum.org: Glossary
- Anti-money laundering (AML)
- Laws, rules and controls aimed at stopping criminal proceeds from being hidden inside the financial system. Regulated businesses must check customers, watch activity and report suspicion. Often written AML/CFT to include terrorist financing.Financial Action Task Force guidance on virtual assets
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
C
- Capital gain
- The gain, in value terms, between what a holder received when disposing of a digital asset and what it originally cost. A loss is the reverse; tax treatment depends on the local tax authority's guidance.
- Capital gains tax
- A tax on gains realized when an asset leaves the owner's hands. Some jurisdictions use a flat rate, others add gains to a person's income. Reporting usually requires recording the date, value and cost of each transaction.Canada Revenue Agency guidance on calculating and reporting capital gains
- Cold wallet
- Also called a hardware wallet, this option stores signing keys on a device that never shares them with a computer or phone. Transactions are approved on the device itself before they leave it.Ethereum.org: Wallets
- Consensus mechanism
- The set of rules that lets the participants in a network agree on which transactions are valid and the order in which they are recorded, without a central authority.Ethereum.org: Consensus mechanisms
- Cryptocurrency
- Cryptocurrency is a form of money-like digital token whose ownership is proven with cryptographic keys rather than by a bank or government record. Many networks issue their own units.
- Cryptojacking
- A form of malware that secretly turns a victim's device into a source of computing power for a miner. The owner usually notices only hotter hardware, shorter battery life or sluggish performance.Ethereum.org security guidance
- 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.
- Customer due diligence (CDD)
- The broader process of understanding a customer before and during a business relationship. It goes beyond confirming a name and includes why the account exists, where its money comes from and how risky it is.Financial Action Task Force guidance on virtual assets
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
- Financial promotion
- Any advertisement, post or promotional content that encourages readers to commit money to crypto. Regulators look at whether it is fair, clear and not misleading, and whether the person behind it is authorized.
G
- Gas
- Gas is the measure of effort a blockchain spends on each operation, so complicated smart contracts require more of it. The amount needed changes with network demand.Ethereum.org: Gas
H
- Honeypot scam
- A fake token or contract that looks tradable but is built so that the scammer alone can withdraw funds. Victims can add money but find that selling is blocked, or that the only exit is taxed heavily.Ethereum.org smart contract security documentation
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
- Limit order
- An instruction to trade only at a set level or better, so the order may not be filled if the market does not reach that level.
- 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.
- Money transmission
- The activity of receiving value from a sender and delivering it to a recipient, which can be a regulated service in its own right. Crypto transfers may count if a business moves value on behalf of others.
N
- Node
- A computer that runs blockchain software, stores a copy of the ledger and checks new transactions against the network's rules. Nodes help keep the network independent.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
- Phishing
- Fake messages, websites or apps that imitate a trusted service to trick people into revealing logins, seed phrases or private keys. Phishing often creates urgency, such as warnings that an account will close.
- 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.
- 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
- Within a key pair this is the half kept secret; it is mathematically linked to a public key but cannot feasibly be derived from the public key. Its owner signs transactions with it.NIST Computer Security Resource Center: Glossary
- Proof of stake
- Instead of solving puzzles with computing power, validators commit their holdings as collateral. Misbehavior can lead to part of that collateral being removed, which discourages cheating.Ethereum.org: Proof-of-stake
- Proof of work
- A consensus method in which participants compete to solve computing puzzles, and the winner adds the next block to the chain. Solving the puzzle requires substantial computing work.Ethereum.org: Proof-of-work
- Public key
- A key that can be shared openly, used to verify digital signatures and derived from a private key. Holding a copy does not expose the owner's funds.NIST Computer Security Resource Center: Glossary
- 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.
S
- Seed phrase
- Also called a recovery phrase, it is usually a list of several words written down during setup. It lets the owner restore access if a device is lost or damaged.Ethereum.org: Wallets
- Smart contract
- Smart contracts are code that a blockchain executes exactly as written, with every node checking the same outcome. Because they can be upgradeable or flawed, careful review matters.Ethereum.org: Smart contracts
- 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
- Source of funds
- The activity that generated the funds in a payment, distinct from the account the funds come from. Firms record this information during onboarding and when unusual amounts arrive, to meet anti-money laundering duties.Financial Action Task Force guidance on virtual assets
T
- Tax residency
- A test used by tax authorities to decide whether a person owes tax on worldwide income. Crypto holdings and transactions are usually included, so people who move between countries should check their status.Canada Revenue Agency guidance on crypto-asset tax obligations
- Token
- A token is an entry in a ledger that is associated with an account or address. Some tokens are fungible and interchangeable, while others are unique.Ethereum.org: Glossary
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 common tax treatment under which a digital asset is taxed like other property rather than like money. Gains and losses on disposals usually count, and general property tax rules apply.
W
- Wallet
- Software or a device that holds the keys needed to access and authorize transfers of crypto assets. The assets themselves are recorded on the blockchain, not inside the wallet.Ethereum.org: Wallets