Glossary of terms

Glossary of Blockchain Terms.pdf

Glossary of Blockchain Terms

3 pages summary of most important terms in blockchain

also see details below.



Altcoin –  any cryptocurrency other than Bitcoin. Altcoin: The term altcoin refers to all cryptocurrencies other than Bitcoin and, for some, Ethereum. These alternative cryptocurrencies come in various types, each designed for different purposes. While the future value of altcoins is unpredictable, as long as the blockchain they were designed for continues to be used and developed, the altcoins will continue to exist. It's important to note that while many altcoins offer potential investment opportunities, some are scams or have lost developer and community interest

ASIC – Application-Specific Integrated Circuit. An ASIC is a powerful and expensive computing device used for mining cryptocurrency (see ‘mining’).



Bitcoin – the original, largest and best-known cryptocurrency. Bitcoin: Bitcoin, often, described as a crxptocurrency, a virtual currency or a digital currency, is a type of m o n e y that is completely virtual. It's like a n online version of cash. You can use it to buy products and services, but not many shops accept Bitcoin yet and some countries have banned it altogether. Bitcoin was the first cryptocurrency and remains the most important in the market. It was invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto

Buy the dip – the notion of buying cryptocurrencies when prices have fallen in order  to reap the benefits when they rise again.

Blockchain – the underlying technology on which cryptocurrencies operate. A blockchain is essentially a complete ledger of transactions held simultaneously by several people on a computer network. Read more about blockchain here.



Censorship Resistance: Censorship resistance refers to the ability of a system or platform to resist censorship. or control by centralized authorities. In Web3, blockchain-based platforms provide censorship resistance by decentralizing control and allowing users to have ownership and control over their data and transactions. This enables freedom of expression and protects against arbitrary censorship or manipulation.

Coin – a colloquial term for a cryptocurrency. See also: altcoin, memecoin.

Cold wallet – a physical storage device such as a flash drive, hard drive or solid state drive used to store cryptocurrency offline.

Consensus Mechanism: A consensus mechanism is a protocol or algorithm used to achieve agreement among participants in a distributed network. Consensus mechanisms ensure that all nodes in a blockchain network agree on the validity of transactions and the order in which they are added to the blockchain. Examples include Proof of Work (PoW) and Proof of Stake (PoS).

Cryptocurrency – a digital form of money that can be traded for goods, services or other currencies. Records of cryptocurrency transactions are validated and maintained on a decentralised ledger by ordinary people using a computer technology called cryptography, rather than by a centralised authority such as a bank.

Cryptography – a computer science method of keeping information secret and secure by scrambling it into indecipherable information. The information can only be decrypted and read with the necessary key.

Cross-Chain:  Crosschain refers to transfer assets or data between different blockchain networks. It involves interoperability and allows users to move assets seamlessly across different blockchains, facilitating increased liquidity and expanding the possibilities for decentralized applications. 



Decentralization - Decentralization refers to the distribution of control and decision-making across a network, rather than being held by a central authority. In the context of Web3 and blockchain, decentralization is a key principle that aims to eliminate the need for intermediaries and allows participants to have more control over their data and transactions.

Decentralized Exchange (DEX): A decentralized exchangekejs-can/typeuöf cryptocurrency/exchange that operates on a blockchain network without the need for intermediaries or a central authority. DEXs allow users to trade cryptocurrencies directly with each other, using smart contracts for order matching and execution. They provide increased privacy, security, and control over assets compared to centralized exchanges.

Decentralized Files Storage: Decentralizedufile storage refers to the storage of data on a distributed network of nodes, rather than relying on a centralized server or provider. Blockchain-based decentralized file storage systems, such as IPFS (InterPlanetary File System) or Filecoin, allow users to store and retrieve data in a secure, distributed, and censorship-resistant manner.

dApp – a decentralised application (dApp) is one that isn’t controlled by a central authority. Twitter is an example of a centralised app, with users relying on it as an intermediary to send and receive messages. As such, users play by the rules it enforces and the algorithm it uses to control content.

A dApp is distributed on a blockchain, with users able to send and receive data directly without the need for an intermediary. Peepeth is a Twitter-like dApp. It claims that as an app it doesn’t optimise for advertising revenues, an issue it says users of centralised apps suffer from.

Defi – short for decentralised finance. Finance is traditionally centralised because it relies on intermediaries. For example, if you want to send money to a friend or relative, you rely on your bank to send it to the recipient’s bank. Defi requires no intermediaries, with participants able to send and receive assets directly. In theory, this makes transactions faster and cheaper. Decentralized Finance refers to the use of blockchain technology and smart contracts to recreate traditional financial systems in a decentralized manner. DeFi aims to ovide financial services such as lending, borrowing, and trading without the need for intermediaries like banks. It enables greater accessibility and transparency in financial transactions.

DAO – decentralised autonomous organisation. A DAO is a group of people who work together towards a shared goal and abide by rules written into the project’s self-executing computer code. Bitcoin (the project, not the currency) is an example of a DAO. Decentralized Autonomous Organization (DAO): A Decentralized Autonomous Organization (DAO) is an organization that operates through smart contracts on a blockchain. It is governed by a set of predefined rules and decisions are made through voting by token holders. DAOs aim to eliminate the need for traditional hierarchical structures and allow for decentralized decision-making.

Distributed ledger – in traditional finance, an organisation such as a bank holds a ledger of all its customers’ transactions. In defi, the ledger is shared and synchronised among users in different locations around the world. A blockchain is an example of a distributed ledger. Distributed Ledger Technology (DLT): Distributed Ledger Technology (DLT) is a broader term that encompasses blockchain technology. It refers to a decentralized and distributed database that records and stores transactions across multiple nodes or  computers. Blockchain is a specific type of DLT.

Double spend – If you handed a shopkeeper £5 for a sandwich, you would no longer own the £5 and couldn’t spend it again, and sophisticated anti-counterfeit measures prevent people from making copies of physical currency. Even with digital transactions, central authorities such as banks can secure and check their ledgers to verify the legitimacy of a payment.

However, digital information can be copied. In theory, a single Bitcoin could be copied 100 times and spent 100 times. A distributed ledger such as blockchain prevents this. 

When you send a Bitcoin to someone, you destroy your version of it and create a new version for the recipient. Both destruction and creation are recorded on everyone’s copy of the ledger, preventing you from claiming you still own the spent coin and trying to spend it again. 



Exchange – A website or app that allows users to buy and sell crypto assets.

Ethereum–The second biggest cryptocurrency by market capitalisation, after Bitcoin. (See market capitalisation.) Ethereum: Ethereum is an open-source, blockchain- based platform that enables developers to build and deploy decentralized applications (dApps). It was proposed by Vitalik Buterin in late 2013 and development was crowdfunded in 2014. Ethereum's blockchain is fundamentally different from Bitcoin's blockchain. While Bitcoin's blockchain is used to track ownership of digital currency (bitcoins), the Ethereum blockchain focuses on running programming code of any decentralized application

Encryption – The process of making digital information into a form that prevents unauthorised access. If you use a password to access a website, the site should be encrypting it so that it is of no use to hackers if stolen.



Fiat – refers to traditional, state-backed currencies like Sterling, euro and US Dollar.

Fork – a fork occurs when a community makes a change to its blockchain’s governing protocols. The change marks a forking-off from the previous iteration of the blockchain in a new direction. 

Soft forks involve iterative changes to the blockchain’s rules that can be considered as an update only. Hard forks are when changes are so significant that the new version is incompatible with the old version and stands apart from it.



Gas – Transactions on the Ethereum network carry a fee. For every transaction, users must pay an amount of the native Ethereum currency ether (ETH). This fee is referred to as gas. Gas is used to reward Ethereum ‘miners’ (see ‘mining’) for the energy they use validating transactions. Gas also serves as a deterrent against malicious users. Gas: Gas refers to the unit of measurement for the computational effort required to execute transactions or smart contracts on the Ethereum blockchain. Gas is paid in Ether (ETH) and helps prevent spam and abuse by requiring users to pay for the computational resources they consume.

Graphics card – Verifying a transaction on a blockchain involves solving a cryptographic problem. Solving these problems requires significant computing power, which in turn uses significant amounts of energy. High-end graphics cards used in PC gaming have the kinds of processing power needed to validate transactions.



Hard Fork A-hardfork is a type ofteurogradeior change to a blockchain protocol that is not backward compatible with older versions. It requires all participants in the network to upgrade to the new version in order to continue participating. Hard forks can result in a split in the blockchain, creating two separate chains with different rules and potentially leading to the creation of a new cryptocurrency.

Hash – A hash is the result of a piece of data being put through a special algorithm. A hashing algorithm essentially compresses data of any size down into an almost-unique alphanumeric string of text.

For example, a hash of the word ‘Forbes’ using SHA-256 (more on that later) reads: ADD913C2C3CF3F4A0628B58B505BC09C6C3797F2EE7DEE86AD9F701A191E6E93.  The lyrics to Tom Jones’ 1965 hit ‘It’s Not Unusual’ are expressed as: 8E58EFDE840DF7CEC1872DE2B48222F2C3844646E0EAE4F4E6DD6CC7FE183E50.

Change just one letter in the word Forbes, or one word in the song’s lyrics and you’ll get a different hash. This can be useful for identifying when some data has been changed. 

This is important in crypto because a blockchain is an immutable record of transactions. Cryptographic hashing will flag attempts to change something, even when there are huge amounts of data.

If someone tried to alter a transaction in a block on the blockchain, they’d have to alter every consecutive transaction too, since each transaction refers to its predecessors. This makes cheating practically impossible.

Different cryptocurrencies use different hashing algorithms.

Halving: Halving is an event that occurs in some cryptocurrencies, such as Bitcoin, where the block reward for miners is reduced by half after a certain number of blocks are mined. This event is programmed into the cryptocurrency's protocol and is designed to control the issuance of new coins and create scarcity over time.

Hashing Algorithm: Hashing is a process used in computingditongénerate a uniquetanonfixedsize string of characters (hash) from input data of any size. In the context of blockchain, hashing is used to create a digital fingerprint of data, such as transactions or blocks, ensuring their integrity and allowing for easy verification. Hashes are used to confirm the completeness and validity of blockchain transactions.

HODL –This meme became the rallying cry of crypto holders who wanted to encourage others to keep the faith as prices fell. It stems from a misspelling made by a Bitcoin forum user in 2013, in which they declared: “I AM HODLING”. The term has been retrospectively turned into the acronym Holding On for Dear Life.

Hot wallet – Online storage for cryptocurrencies, provided either by an exchange or a third party. Since storage is online and accessed with passwords, hot wallets are a target for hackers. However, hot wallet operators can help users regain access to their assets if they lose their access codes.

I, J


ICO – an Initial Coin Offering (ICO) is the cryptocurrency equivalent of an Initial Public Offering (IPO). It offers investors the opportunity to back a new crypto project. ICO: ICO stands for Initial Coin Offering and it's often used as a fundraiser for new projects. This is where a company looking to raise money to create a new coin, app, or service launches an ICO as a way to raise funds. People who buy into the ICO receive a certain number of tokens in return. ICOs are often compared to IPOs (Initial Public Offerings), but there are some significant differences

Interoperability: Interoperability refers to the ability of different blockchain networks or systems to communicate and interact with each other seamlessly. It is important for enabling data and asset transfer between different blockchains and ensuring compatibility between various chains.

Immutable Ledger: An immutable ledger refers to a blockchain's characteristic of being tamper-resistant and unchangeable once data is added to it. Once a transaction or data is recorded on the blockchain, it becomes part of a permanent and transparent history that cannot be altered or deleted. This property ensures the integrity and trustworthiness of the data stored on the blockchain.

imPULSE - An imPULSE is a sudden, often strong desire or inclination to do something. imPULSEs are typically brief and may be difficult to resist. They can be triggered by various factors, such as emotions, external stimuli, or unconscious motivations.

imPULSEs can be positive or negative, depending on their consequences. Positive imPULSEs may lead to actions that are helpful or beneficial, while negative imPULSEs may lead to actions that are harmful or risky. It is important for individuals to be aware of their imPULSEs and to consider the potential consequences before acting on them.

While imPULSEs can sometimes lead to spontaneous and enjoyable experiences, they can also lead to problems if they are not properly managed. Impulsive behavior can lead to poor decision-making, financial problems, and even harm to oneself or others. It is important for individuals to learn how to manage their imPULSEs and make informed, thoughtful decisions. This may involve developing self-control and discipline, seeking support from friends or loved ones, or seeking help from a mental health professional if necessary.


Jager – the smallest denomination of the Binance cryptocurrency.

K, L


Know Your Customer (KYC) – exchanges are obliged to carry out certain identity checks on their customers under ‘Know Your Customer’ rules.


Ledger –  a record of transactions, including times, dates, senders and recipients.

Layer 2 Scaling: Layer 2 scaling solutions are techniquesdinop/in/protöcols built won.cotopsouof existing blockchains to improve scalability and increase transaction throughput. They aim to handle a larger number of transactions off-chain or in a more efficient manner, reducing congestion and lowering transaction costs. Examples of layer 2 scaling solutions include state channels and sidechains.



Market Capitalisation/Cap – the total value of a cryptocurrency. At the time of writing, all cryptocurrencies combined had a market cap of $1.3 trillion.

Mining – crypto mining is the process of verifying cryptocurrency transactions using computer hardware. Bitcoin miners are volunteers motivated by the chance to earn an amount of newly minted Bitcoin. In doing so, they collectively validate transactions on the blockchain and prevent double spending.

Mining involves guessing (as closely as possible) a 64-character hash, of which there are trillions of possible combinations. The more computing power you have, the more guesses you can make within each ten-minute timeframe and the greater your chances of earning new Bitcoin.

Mining requires graphics cards or ASICs. The amount of computing power necessary to mine crypto increases over time, and is now so immense that it’s no longer practical for home PC users. Instead, mining is now the preserve of companies dedicated to it.

Memecoin – An altcoin based on a meme, which is a kind of inside joke in the form of an image that’s repeatedly altered and shared online. Dogecoin is a memecoin based on this meme.



Node – A computer or device connected to other computers or devices that all hold a copy of a blockchain. Each node supports the network of nodes by sharing information and validating transactions.

NFT – A Non-Fungible Token is a digital collectible that uses the same underlying technology as cryptocurrencies. Read our guide to Non-Fungible Tokens. Non-Fungible Token (NFT) is a unique digital asset that represents ownership or proof of authenticity of a specific item or piece of content. NFTs have gained popularity in the art and collectibles space. Each NFT has a unique identifier and cannot be exchanged on a one-to-one basis like cryptocurrencies.


On-chain – a transaction that is recorded on a blockchain.

On-ledger currency – a token that is both minted by and used on a blockchain, such as Bitcoin.

Orphan block – a block that has been solved but not accepted by the network and isn’t added to the blockchain.

Oracles: Oracles are services or mechanisms that provide external data to smart contracts on the blockchain. They act as bridges between the blockchain and the real world, enabling smart contracts to interact with off-chain data sources, such as APIs, to make informed decisions and trigger actions based on real-time information.



P2P – Peer to peer. Refers to a transaction between two people without an intermediary or central authority involved.

Permissionless: Permissionless refers to the openness and accessibility of a blockchain network or protocol. In a permissionless network, anyone can participate, validate transactions, and contribute to the network without requiring explicit permission. This characteristic is a fundamental aspect of many blockchain networks, enabling anyone to join and interact with the network without needing approval from a central authority.

Private key – A private key is essentially the password to your crypto holdings. It’s an impossibly long number that’s practically impossible to guess. You authorise a transaction by signing it with a hash of your private key that only you know. Your corresponding public key can be used by others to verify the authenticity of a transaction. Private Key: In cryptocurrencies, a private key allows a user to gain full access to their wallet. The person who holds the private key fully controls the coins in that wallet. For this reason, it should be kept secret. Formally, a private key for Bitcoin (and many other cryptocurrencies) is a series of 32 bytes

Public key – The public-facing address of your crypto wallet. To receive funds into your account, you have to share your public key. If a private key is like a password, a public key is like an email address or an account number. Public Key: In the world of cryptocurrencies, a public key represents a point on a particular Elliptic Curve (EC) defined in secp256k1. Public keys contain an identification byteysai32-byte X coordinateinand a 32- byte Y coordinate. They are used in Bitcoin and other cryptocurrencies for generating addresses where funds can be seen

Proof of work (PoW) – Proof that you’ve done the computational work to guess the 64-character hash necessary to add a block to the blockchain. Broadcasting your solution allows other nodes to quickly verify that your hash is correct and that you must have carried out the work required to get it. Consensus mechanism where miners solve complex puzzles to validate transactions, ensuring security and immutability by making tampering computationally expensive.

Proof of stake (PoS) – Rather than proving you’ve done the computational legwork to guess the hash (see proof of work), proof of stake shows you’ve staked a certain amount of coins for a chance to become a validator. The more coins you stake, the better your chances of becoming a validator. Consensus mechanism where validators create blocks based on staked cryptocurrency, promoting e n e r g y efficiency, scalability, and faster block validation without intensive computational puzzles.

Should you spend your way into the position in order to deliberately approve a fraudulent transaction, you risk losing your stake – so there’s a disincentive to cheat. 

PoS is better for the environment since it requires less computing power and uses less energy, but favours users who have more money to stake and makes them richer as they are more likely to reap the rewards of validation.

Q, R


Quantum computing – a field of computer science that uses principles of quantum physics to process much larger data sets at much greater speeds than traditional, binary-based computing. 


Regulated – a market in which players are obliged to follow certain rules of risk fines and/or the loss of their operating licenses. For example, financial services is regulated in the UK.

RWA - real world asset. Real world assets (RWA) refer to physical assets that exist in the real world, such as buildings, land, machinery, and equipment. These assets are tangible and can be seen and touched, unlike financial assets such as stocks and bonds, which are intangible. RWA can be bought, sold, and traded like financial assets, but they have different risk and return characteristics. They are typically used as collateral for loans and are considered to be a safer investment compared to financial assets because they have an intrinsic value and are not dependent on the performance of a company or the broader financial market. RWA can be owned by individuals, corporations, or governments, and they play an important role in the economy by providing the necessary infrastructure and resources for businesses to operate. The value of RWA is affected by factors such as supply and demand, economic conditions, and government policies.



Satoshi Nakamoto – The anonymous creator(s) of Bitcoin.

Satoshi – A Satoshi is to Bitcoin as a penny is to a pound.

Smart contract – A programme that executes itself on a blockchain when certain conditions are met, without the need for human intervention or an intermediary. Once executed, the contract cannot be changed or undone. For example, account 1 will release asset X  to account 2 once it receives asset Y. A smart contract is a self-executing contract with the terms of the agreement directl written into code. Smart contracts are deployed on blockchain platforms and automatically execute predefined actions when certain conditions are met. They enable trustless and transparent interactions

SHA-256 – a hashing algorithm that compresses data of any size into an alphanumeric string that cannot be reverse engineered, keeping the original data secret and secure while being useful for validating input data. It was developed in part with the US National Security Agency (NSA) and is used by Bitcoin.

Seed (phrase) – a random series of 12-24 words generated by your crypto wallet and used to gain access to it.

Stablecoin – a cryptocurrency such as Tether, whose value is tied to another currency, commodity or financial instrument. Stablecoin: Stablecoins are a type of cryptocurrency designed to minimize volatility, a common issue with cryptocurrencies like Bitcoin. They achieve this stability by pegging their market value to an external reference, usually a fl a t l i k e c u r r e n c y the US dollar. or a commodity like gold. Some stablecoins maintain reserve assets as collateral, while others use algorithmic formulas to control supply. The primary purpose of stablecoins is to provide a more suitable option for common transactions.

T, U


Tether – a stablecoin pegged to the US Dollar

Terahash (per second) – the rate at which a computer or network can guess one trillion hashes per second when mining cryptocurrency.

Token – in crypto, a token is a unit of cryptocurrency other than Bitcoin or Ethereum – which are technically also tokens. Specifically, it’s a way to refer to a currency that runs on a particular blockchain. For example, XRP is a token on the Ripple blockchain.

Token Standards: Token standards are specific protocols or sets of rules that define the functionality and behavior of tokens on a blockchain. Examples of token standards include ERC-20 for fungible tokens, ERC-721 for non-fungible tokens (NFTs), and ERC-1155 for multi-token standards. Token standards ensure interoperability and compatibility between different tokens and enable developers to build applications that interact with tokens in a standardized way.

Tokenomics: Tokenomics refers to the economic design and structure of a cryptocurrency or token ecosystem. It encompasses factors such as token supply, distribution, utility, governance mechanisms, and incentives. Tokenomics aims to create a sustainable and balanced ecosystem that aligns the interests of token holders, users, a n d other stakeholders in the network.


Unregulated – Financial services in the UK are regulated, which means providers have to abide by strict rules designed to protect consumers’ interests. Crypto is unregulated in the UK, which means investors get no legal protection.

V, W


Volume – the total amount of currency traded in a 24-hour period

Validator – someone who pays for the chance to validate transactions and earn crypto on a proof of stake blockchain (see proof of stake). 

Volatile – a market in which prices frequently and unpredictably rise and fall


Wallet – a digital storage device or location for keeping crypto assets secure. Wallets can be online (see hot wallet) or offline (see cold wallet).

Wei – a Wei is to Ether as a penny is to a pound.

Whitepaper – a technical document released alongside new crypto projects that explains how the system works.

Web3.0 - Web3.0, also known as Web3, refers to the next generation of the internet that incorporates decentralized technologies such as blockchain, cryptocurrencies, and peer-to-peer networks. Web3.0 aims to empower users with more control over their data, privacy, and online interactions. It envisions a more open, transparent, and user-centric internet.

X, Y, Z


XRP – XRP is a kind of cryptocurrency token that runs on the Ripple blockchain.


Yield – a return on investment, expressed as a percentage.


Zero confirmation – a transaction that has been confirmed but has yet to be recorded on a blockchain.

Zero-knowledge proofs (ZKPs): ZKPs a r e cryptographiem/grotocols that allöwomon@urparty (the prover) to prove the knowledge of a certain piece of information to another party (the verifier) without revealing the actual information itself. The goal of zero- knowledge proofs is to convince the verifier of the truthfulness of a statement without disclosing any additional information beyond the validity of the statement.