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
- A public website that lets anyone look up transactions, addresses and blocks recorded on a blockchain. It reads the public record and does not hold any user funds.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
- Capital gain
- The profit made when an asset is sold, exchanged or otherwise disposed of for more than its cost. Many tax systems tax this profit, and the rules for working out the cost and the timing differ between countries.
- Capital gains tax
- A tax charged on the profit from selling or otherwise disposing of certain assets. Many countries apply it to crypto assets, often with an annual allowance below which no tax is due.Canada Revenue Agency guidance on calculating and reporting capital gains
- Consensus mechanism
- A consensus method is how a decentralized system reaches agreement on one shared history. Nodes follow a common procedure, so every honest copy of the ledger ends up identical.Ethereum.org: Consensus mechanisms
- Crypto-Asset Reporting Framework (CARF)
- An international standard, set by a multilateral tax body, under which crypto service providers collect information on their users and report it to tax authorities. Countries adopt it on their own timelines.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
- 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
- The spreading of control and decision-making across many independent participants rather than one operator. In a decentralized network, no single party can change the rules alone.Ethereum.org: Glossary
- Derivative
- A contract whose value depends on an underlying asset, such as a futures or option contract. The holder gains or loses according to movements in that asset's value.
E
- 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
- 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
- Hash
- A cryptographic hash turns an arbitrary amount of data into a short string of fixed size. The result is effectively impossible to reverse, which makes it useful for verifying data integrity.NIST Computer Security Resource Center: Glossary
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 mule
- A person who moves money for criminals, often by receiving funds into a personal bank or crypto account and forwarding them elsewhere. Mules are sometimes recruited through job offers and may face legal consequences.Financial Action Task Force guidance on virtual assets
- Money services business (MSB)
- A category, used in some countries, for businesses that transfer money or exchange currency for others. Such businesses usually must register with a regulator and meet anti-money laundering duties.
- 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
P
- Phishing
- An attack in which a criminal poses as a bank, exchange, support team or friend to get a victim to click a link, approve a request or share secret information. Crypto users are frequent targets.
- Politically exposed person (PEP)
- An individual who holds, or has recently held, a prominent public function, such as a senior government or military role, or a close family member or associate of such a person. Such people carry a higher corruption risk.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.
- 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 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
- 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.
- 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
- Social engineering
- Manipulating people, rather than code, to reveal secrets or take actions. Attackers may pretend to be support staff, invent urgency or build trust over time to get passwords, codes or access.
- 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
- 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
- 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 unit recorded on a blockchain that can represent a currency, a right of access or a claim on something. Tokens are created and transferred according to the rules of their code.Ethereum.org: Glossary
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