Digital Assets Jargon Buster
We’ve created a clear and accessible glossary to explain digital asset terminology, helping you to better understand the terms and language used.
Glossary
| Term | Definition | Simplified Definition |
| Bitcoin | The first blockchain based currency, introduced in 2009 by the pseudonymous creator Satoshi Nakamoto. | The first and biggest cryptocurrency, created in 2009. |
| Blockchain | A decentralised ledger system that is shared across a network, storing transactions in order and making them visible to all participants, while keeping the accounts involved anonymous. | A shared online bookkeeping record, which everyone can see and which no single person controls. |
| Consensus | The collective agreement among blockchain participants on the accuracy and validity of recorded transactions. | Agreement among participants in the network about the blockchain’s state. |
| Consensus Algorithm | A set of rules that allow blockchain participants to agree on the validity of transactions and the state of the ledger. | Rules that help blockchain users agree on what’s valid. |
| Cryptocurrency | A form of digital currency secured by cryptographic methods, designed to function without reliance on a central authority. | Digital money that works without banks or any other central authority. |
| Cryptography | The science of encoding information to protect data and secure communications, essential for blockchain systems. | Using maths to keep information safe and private. |
| Decentralisation | The distribution of authority and control across multiple participants rather than a single governing body. | Spreading control across many people instead of one authority. |
| Ethereum | A blockchain network that supports programmable contracts and decentralised applications through its native token, Ether. | A blockchain that lets people build apps and smart contracts. |
| Gas fee | A payment made to compensate for the computational effort required to process transactions or smart contracts on Ethereum. | A payment to run transactions or contracts on Ethereum. |
| ICO (Initial Coin Offering) | A fundraising mechanism where new blockchain projects sell tokens to investors in exchange for established cryptocurrencies. | Selling new tokens to raise money for a project. |
| Ledger | The blockchain’s continuously updated record of all transactions, accessible to every participant in the network. | The blockchain’s record of all transactions. |
| Mining | The computational process of verifying blockchain transactions and adding them to the ledger, often rewarded with new coins. | Using computers to check transactions and add them to the blockchain. |
| Native token | The primary cryptocurrency of a blockchain, typically used to pay fees and sometimes to support governance (e.g., Bitcoin or Ether). | The main coin of a blockchain (like Bitcoin or Ether). |
| Node | A computer that connects to a blockchain network, helping to validate, store, and distribute transaction data. | A computer that helps run the blockchain network. |
| On chain | Any activity or transaction that is permanently recorded on the blockchain itself. | Activity that happens directly on the blockchain. |
| On ramping | Converting fiat currency into digital assets. | Turning cash into crypto. |
| Off ramping | Exchanging digital assets back into fiat currency. | Turning crypto back into cash. |
| Permissioned blockchain | A blockchain network where access is restricted to approved participants, often used in enterprise contexts. | A blockchain where only approved people can join. |
| Permissionless blockchain | A blockchain network open to anyone, allowing unrestricted participation in validation and transactions. | A blockchain open to anyone, no approval needed. |
| Private key | A confidential string of characters that grants control over cryptocurrency funds linked to a blockchain address. | A secret code that lets you access and spend your crypto. |
| Proof of Work (PoW) | A consensus method where participants solve complex mathematical problems to validate transactions and secure the network. | A system where people use their computers to solve puzzles to confirm transactions. Whoever solves it first gets rewarded. |
| Proof of Stake (PoS) | A consensus method where validators are chosen based on the amount of cryptocurrency they commit as collateral. | A system where people lock up their tokens to help confirm transactions. Whoever offers to lock up the most tokens will be the validator. |
| Public key | A cryptographic identifier that can be shared openly to receive funds. | A code you share so others can send you crypto. |
| Smart contract | Computer code stored on a blockchain that automatically executes agreements when predefined conditions are met, removing the need for external systems to enforce an agreement. | Code on a blockchain that runs automatically when conditions are met. |
| Token | A digital unit created on a blockchain that can represent value, ownership, or rights depending on its design. | A digital voucher that exists on a blockchain. The voucher can be for many different things: money, ownership of something, or even a right to vote. |
| Wallet | Software or hardware that manages blockchain addresses and keys, enabling users to store and transact cryptocurrencies. | An app or tool to store and use cryptocurrencies. |
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