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
- Address poisoning
- A trick in which a scammer sends a very small transaction from an address that looks almost identical to one the victim used before, hoping the victim later copies the wrong address.Ethereum.org accounts documentation
- 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
- Beneficial owner
- The individual who benefits from a business, trust or account, regardless of whose name appears on the paperwork. Checking this helps a firm see who is really in control and whether that person may be a sanctioned party.Financial Action Task Force guidance on virtual assets
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
- Cost basis
- The original cost of an asset, including the amounts paid to acquire it and certain related costs, used as the starting point when working out a gain or loss on disposal.
- Crypto-Asset Reporting Framework (CARF)
- A reporting model for exchanging tax information on crypto transactions between countries. Platforms holding customer data gather details such as identity and transaction totals, which are then shared automatically with the relevant authorities.OECD Crypto-Asset Reporting Framework and amendments to the Common Reporting Standard
- Cryptocurrency
- A digital asset that uses cryptography to secure transfers, and that usually records them on a distributed ledger. Its units are not issued by a central bank.
- 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
- Custodial wallet
- A wallet in which a third party, such as a service provider, holds the private keys on the user's behalf. The user logs in to access their holdings, but does not control the keys directly.Ethereum.org: Wallets
- Customer due diligence (CDD)
- The checks a regulated firm carries out on a customer's identity, the purpose of the relationship and the level of risk. Checks are repeated over time so that records stay up to date.Financial Action Task Force guidance on virtual assets
D
- Digital asset
- Anything that exists electronically and can be transferred or recorded using distributed-ledger or similar technology. The term is broad and covers many different kinds of holdings.
- Digital asset reporting
- A tax-compliance duty placed on businesses that hold customer assets or broker trades. They send the relevant transaction records to the tax authority, which helps taxpayers complete their own returns accurately.
- 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
F
- Fork
- A change to a blockchain's rules. A soft fork stays compatible with earlier software, while a hard fork does not and requires all participants to upgrade.Ethereum.org: Glossary
G
- Gas
- A unit that measures the computing work needed to process a transaction or run a smart contract on certain networks. Users pay for it in the network's native token.Ethereum.org: Gas
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
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
- Layer 2 solutions handle activity away from the base layer to ease congestion, then post summary data back to the underlying chain for security. Users usually interact with them through separate apps.Ethereum.org: Glossary
M
- Market maker
- Market makers stand ready to take the other side of trades, so a seller often has a counterparty even when few other people are active. Their role is one of supplying liquidity.
- Money services business (MSB)
- A regulatory label for money transmitters and currency dealers. Firms in this group are expected to keep records, verify customers and report suspicious transactions to the authorities.
- Multisignature
- An arrangement that requires more than one key to approve a transaction, such as two of three signers. It spreads control across several people or devices.Ethereum.org: Glossary
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
- 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
- Ponzi scheme
- A scheme that pays earlier investors with money from later investors rather than from genuine earnings. It needs a steady flow of new participants, and it collapses when recruitment slows or withdrawals rise.
- 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
- Pump-and-dump
- A scheme in which people artificially promote an asset to raise its value, then sell their holdings at the inflated level, leaving later arrivals with losses. Coordinated social media messages are a common tool.
S
- Sanctions screening
- Checking customers, owners and transactions against official lists of restricted people, companies and countries. Regulated firms must do this under sanctions law and must act on any match.
- Securities (concept)
- A financial instrument such as a share or bond, or a contract that represents an investment in a common enterprise. Whether a crypto asset counts as a security depends on the facts and on the law of each country.
- Source of funds
- The origin of the money or assets used in a particular transaction, such as salary, a sale of property or an inheritance. Regulated firms ask about it to check that funds are legitimate.Financial Action Task Force guidance on virtual assets
- Spread
- The bid-ask spread is an implicit cost of trading, because a trade usually happens at the less favorable side of the gap. Narrow spreads signal a deep, competitive market where trades happen readily.
- 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
- Suspicious activity report (SAR)
- A report that a regulated business files with the authorities when it suspects a transaction or activity may be linked to crime. Filing is usually confidential, and the customer is normally not told.Financial Action Task Force guidance on virtual assets
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
- Transaction monitoring
- Ongoing checks on what customers do after onboarding. Systems compare activity with the expected profile, flagging sudden spikes, many small transfers or links to high-risk locations for human review.Financial Action Task Force guidance on virtual assets
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
- Volatility
- The measure of how much and how quickly the value of an asset moves up and down over a given period. Higher volatility means larger swings in either direction.
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
- Wash trading
- Trades that do not change beneficial ownership, placed to make trading volume look higher than real demand. It is a form of market manipulation and can mislead other participants about activity.