Crypto glossary: blockchain terms A–Z

0–9

51% attack

An attempt by someone who controls most of a network's block-producing power to rewrite recent history, for example to reverse their own payment. Card: 51% attack

A

Account (Ethereum)

An entry in Ethereum's state with a balance and a transaction counter. Externally owned accounts are controlled by keys; contract accounts are controlled by their code. Card: Address

Address

A short public identifier, derived from a public key or a script, that marks where value is recorded on a blockchain. Card: Address

AML

Anti-money-laundering rules: legal duties for certain businesses to identify customers, monitor activity and report suspicious transactions. Card: Travel rule

Asset-referenced token (ART)

A MiCA category for a crypto-asset that aims to keep a stable value by referring to another value or right, or a combination of them, including several currencies. Card: MiCA

B

Base fee

On Ethereum since EIP-1559, the protocol-set minimum fee per unit of gas. It rises and falls with demand and is destroyed rather than paid to anyone. Card: Gas

BIP

Bitcoin Improvement Proposal: a public design document describing a proposed change or standard for Bitcoin.

Block

A bundle of transactions plus a header, added to the chain as one unit. Card: Block

Block explorer

A website that reads a public blockchain and displays its blocks, transactions and addresses in a human-readable form.

Block header

The compact summary at the top of a block. It holds the previous block's hash, the Merkle root of the transactions, a timestamp and the fields used by consensus. Card: Block header

Block height

The position of a block in the chain, counted from the genesis block, which has height zero. Card: Genesis block

Block time

The typical interval between blocks. Bitcoin aims for about ten minutes; Ethereum uses fixed twelve-second slots. Card: Block

Blockchain

A record made of blocks in which each block contains the hash of the one before, so the order cannot be changed quietly. Card: Block

Bridge

A system that moves information about tokens between two different blockchains, usually by locking units on one side and issuing matching units on the other. Card: Layer 2

Byzantine fault tolerance

The ability of a distributed system to keep agreeing correctly even when some participants fail or deliberately lie. Card: Finality

C

CASP

Crypto-asset service provider: under MiCA, a company authorised to provide services such as custody or exchange of crypto-assets in the EU. Card: MiCA

CBDC

Central bank digital currency: a digital form of a country's money issued by its central bank. Most designs do not use a public blockchain. Card: Stablecoin

Checksum

A few extra characters calculated from data so that typing mistakes can be detected. Many address formats and recovery phrases include one. Card: Address

Coinbase transaction

The first transaction in a Bitcoin block, created by the block producer, which issues the new units and collects the fees. Unrelated to any company of a similar name. Card: Block

Confirmation

A block added on top of the block that contains a transaction. More confirmations make reversal less likely. Card: Finality

Consensus mechanism

The set of rules by which nodes agree which blocks are valid and in what order they come. Card: Proof of work

Custodial

An arrangement in which a company holds the keys on a user's behalf. Card: Private key

D

DAO

Decentralised autonomous organisation: a group whose rules and voting are carried out by smart contracts. Card: Smart contract

Decentralisation

Spreading control over a system across many independent participants instead of one operator. Card: Node

DeFi

Decentralised finance: a general name for financial-style applications built from smart contracts. It describes a phenomenon, not a safe or regulated service. Card: Smart contract

Difficulty

In proof of work, a measure of how hard it is to find a valid block. Bitcoin readjusts it every 2,016 blocks. Card: Proof of work

Digital signature

Data made with a private key that proves who approved a message and that the message has not been altered. Card: Digital signature

DLT

Distributed ledger technology: the wider family of shared, replicated records, of which blockchains are one kind. Card: Peer-to-peer network

Double spending

Using the same digital value twice. Blockchains prevent it by agreeing on one order of transactions. Card: Transaction

E

E-money token (EMT)

A MiCA category for a crypto-asset that aims to keep a stable value by referring to a single official currency. Card: Stablecoin

ECDSA

Elliptic Curve Digital Signature Algorithm, a standard signature method used by Bitcoin and Ethereum. Card: Digital signature

EIP

Ethereum Improvement Proposal: a public design document for a change or standard on Ethereum.

Elliptic-curve cryptography

Public-key cryptography based on the mathematics of elliptic curves. It allows short keys with strong security. Card: Public key

Encryption

Scrambling data with a key so that only someone with the right key can read it. Different from hashing, which cannot be reversed. Card: Hash function

Epoch

A fixed period in a protocol. On Ethereum, one epoch is 32 slots of 12 seconds, or 6.4 minutes. Card: Finality

ERC-20

The common interface standard for fungible tokens on Ethereum, defined in EIP-20. Card: Token

EVM

Ethereum Virtual Machine: the shared computing environment in which Ethereum smart contracts run. Card: Smart contract

F

Finality

The point after which a transaction can no longer be reversed under the protocol's rules. Card: Finality

Fork

A split in a chain's history or rules, temporary or permanent. Card: Fork

Full node

A node that downloads and checks every block and transaction against the rules itself. Card: Node

G

Gas

Ethereum's unit for measuring computational work; every operation has a fixed gas cost. Card: Gas

Gas limit

The most gas a transaction is allowed to use, or the most gas all transactions in one block may use together. Card: Gas

Genesis block

The very first block of a blockchain, written into the software rather than mined or proposed. Card: Genesis block

H

Hard fork

A rule change that older software rejects, so all nodes must upgrade or end up on a separate chain. Card: Fork

Hash function

A function that turns any input into a fixed-length fingerprint; tiny changes in the input give an unrelated output. Card: Hash function

Hash rate

How many hash calculations a proof-of-work network performs per second in total. Card: Proof of work

Hexadecimal

A way of writing numbers with sixteen symbols (0–9 and a–f). Hashes and keys are usually shown in hexadecimal. Card: SHA-256

I

Immutability

The practical difficulty of changing recorded data, because every later block depends on it. Card: Block

K

Keccak-256

The hash function Ethereum uses. It is closely related to, but not identical with, the standardised SHA3-256. Card: SHA-256

KYC

Know your customer: the identity checks that regulated businesses must carry out before serving a customer. Card: Travel rule

L

Layer 1

A base blockchain with its own consensus, such as Bitcoin or Ethereum. Card: Layer 2

Layer 2

A system that handles transactions away from a base chain and relies on that chain for security or final settlement. Card: Layer 2

Light client

Software that follows a blockchain by checking block headers and proofs instead of every transaction. Card: Node

M

Mainnet

The live public network of a blockchain, as opposed to a test network.

Mempool

A node's waiting area for valid transactions that are not yet in a block. Card: Mempool

Merkle root

The single hash at the top of a Merkle tree, stored in the block header. Card: Merkle tree

Merkle tree

A tree of hashes that sums up many items in one value and allows short proofs that an item is included. Card: Merkle tree

MiCA

The EU Markets in Crypto-Assets Regulation, Regulation (EU) 2023/1114. Card: MiCA

Mining

In proof of work, the repeated hashing done to find a valid block. Card: Proof of work

Multisignature

An arrangement that requires several independent signatures, for example two out of three keys, to approve a transaction. Card: Digital signature

N

NFT

Non-fungible token: a token whose every unit has its own identifier, defined on Ethereum by the ERC-721 standard. It records ownership of an identifier, not of the image or object it points to. Card: Token

Node

A computer that runs a blockchain's software, keeps a copy of the data and passes information to its peers. Card: Node

Nonce

A number used once. In proof of work, the field miners change to get a new block hash; on Ethereum, also the counter of an account's transactions. Card: Nonce

O

Oracle

A service that feeds information from outside a blockchain, such as exchange rates or weather data, into smart contracts. Card: Smart contract

P

Payment channel

A layer-2 arrangement in which two parties exchange many signed updates off-chain and only record the opening and closing on the base chain. Card: Layer 2

Peer-to-peer network

A network in which computers connect to each other directly, without a central server. Card: Peer-to-peer network

Phishing

Tricking people into revealing secrets or approving actions by imitating someone they trust. Card: Phishing

Private key

A secret number that creates digital signatures and therefore controls what is assigned to its address. Card: Private key

Proof of stake

A consensus method in which validators lock a deposit and can lose part of it for breaking the rules. Card: Proof of stake

Proof of work

A consensus method in which adding a block requires costly computation that others can check instantly. Card: Proof of work

Public key

A number derived from a private key that can be shared and used to check signatures. Card: Public key

R

Recovery phrase

A list of 12 to 24 ordinary words that encodes the secret from which a wallet's keys are derived. Card: Recovery phrase

Rollup

A layer-2 design that executes transactions off the base chain and posts compressed transaction data and a commitment to the result back to it. Card: Layer 2

S

SHA-256

A hash function from the SHA-2 family, standardised by NIST, that produces a 256-bit output. Card: SHA-256

Slashing

In proof of stake, the protocol's removal of part of a validator's deposit as a penalty for provable misbehaviour. Card: Validator

Smart contract

A program stored on a blockchain that runs exactly as written when a transaction calls it. Card: Smart contract

Soft fork

A rule change that only tightens the rules, so blocks under the new rules remain valid to old software. Card: Fork

Stablecoin

A token designed to keep a steady value against something else, usually one national currency. Card: Stablecoin

T

Testnet

A separate copy of a blockchain network used for testing, whose units have no value.

Timestamp

A record of when something happened. Each block header carries one, and nodes accept it only within certain limits. Card: Block header

Token

A unit recorded and managed by a smart contract on an existing blockchain. Card: Token

Transaction

A signed instruction asking the network to change the shared record. Card: Transaction

Transaction fee

The amount a sender attaches to a transaction to have it included in a block. On Ethereum it is calculated from gas. Card: Gas

Travel rule

A rule that requires providers to send identifying information about the sender and recipient along with a transfer. Card: Travel rule

U

UTXO

Unspent transaction output: in Bitcoin, a piece of value created by one transaction that a later transaction can use exactly once. Card: Transaction

V

Validator

In proof of stake, a participant with a deposit who proposes and votes on blocks. Card: Validator

W

Wallet

Software or a device that manages keys and creates signatures. The value itself is recorded on the blockchain. Card: Private key

Whitepaper

A document describing the design of a system. The Bitcoin whitepaper was published on 31 October 2008. Card: Genesis block

Z

Zero-knowledge proof

A cryptographic proof that a statement is true which reveals nothing beyond the fact that it is true. Card: Layer 2