REFERENCE
A working glossary
The terms that appear everywhere and are almost never defined — each in one sentence, without a second piece of jargon inside it.
The ones that matter most
Private key — A very large secret number; whoever knows it can move the associated funds, and nothing else can.
Public key — Derived from the private key by a one-way operation, and safe to share.
Address — A short string derived from a public key, used to receive funds; publishing one costs you nothing.
Seed phrase / recovery phrase — Twelve or twenty-four words from a fixed public list, from which every key in a wallet is derived; it is the wallet rather than a backup of it.
Wallet — Software or hardware that stores keys and signs transactions; it holds no coins.
Custodial — Someone else holds the keys and you hold a claim against them.
Non-custodial / self-custody — You hold the keys, and there is no one to appeal to.
Moving value
Transaction — A signed instruction to change ledger entries; a request, not a settlement.
Confirmation — Inclusion in a block, after which reversing it becomes progressively harder.
Gas / fee — What you pay for inclusion; when the network is busy, a low fee means waiting or being dropped.
Mempool — The queue of broadcast-but-unconfirmed transactions.
Nonce — A counter that prevents the same transaction being replayed.
UTXO — The "unspent output" model used by Bitcoin, where a balance is the sum of received chunks rather than a single number.
Where things go wrong
Approval — Permission granted to a contract to move your tokens later; the most commonly abused signature in the subject.
Phishing — Any attempt to obtain your credentials by impersonating something legitimate.
Dusting — Sending tiny amounts to many addresses to study how they move and cluster.
Rug pull — Those who created a token removing its liquidity, leaving holders unable to sell.
Slippage — The difference between the price you expected and the price you got.
Structures and places
Exchange — A venue for trading; centralised ones are companies, decentralised ones are contracts.
Smart contract — Code deployed to a chain that executes on its own terms; bugs in it are permanent in a way bugs elsewhere are not.
Stablecoin — A token designed to track another asset's price, usually a currency; the design holding it to that price is the thing worth understanding.
Layer 2 — A system that settles to a main chain while doing most of its work elsewhere, usually for lower fees.
Bridge — Software moving value between chains, and historically the single most-exploited category of infrastructure in the field.
Cold / hot storage — Keys kept offline, versus keys on a device connected to the internet.
Things people confuse
Coin vs token — A coin is native to its own chain; a token is issued on someone else's. The distinction matters because a token inherits every risk of the chain and contract beneath it.
Wallet vs exchange account — A wallet holds keys you control; an exchange account is a record of what a company owes you.
Blockchain vs ledger — The ledger is the record of who holds what; the blockchain is one particular way of agreeing on that record.
Mining vs staking — Two different methods of deciding who appends the next block; one spends electricity, the other locks up capital.
Anonymous vs pseudonymous — Public chains are pseudonymous: activity is tied to an address rather than a name, and addresses are routinely linked to names by analysis.
Decentralised vs distributed — Distributed means the machines are in many places; decentralised means the decisions are. A system can easily be the first without being the second.
Words that signal marketing rather than mechanism
Utility — Usually asserts that a token has a use without describing one.
Community-driven — Describes who is exposed to the downside, not who makes decisions.
Deflationary — Describes supply, which says nothing about demand and therefore nothing about price.
Audited — Means someone reviewed the code, not that the code is safe; ask who, when, and what they found.
Backed by — Only meaningful with a stated mechanism and a way to verify the backing exists.
Process and governance
Fork — A change to the rules; contentious ones split a chain into two that share a history.
Consensus mechanism — The rule deciding which version of the ledger counts as real.
Validator — A participant that proposes or attests to blocks under a staking system.
Finality — The point past which a transaction is treated as irreversible; some systems give it explicitly, others only probabilistically.
Governance token — A token conferring votes on a protocol's parameters; the concentration of holders usually matters more than the mechanism.
Multisig — An arrangement requiring several keys to authorise a transaction, useful for shared control and for reducing single-point failure.
Time lock — A condition preventing funds from moving until a stated time or block height.
Fees, keys and storage, in the words people actually use
Seed vs phrase vs mnemonic — Three names for the same twelve or twenty-four words.
Derivation path — The route from a seed to a particular key; two wallets using different paths can show different balances from the same phrase, which is a common source of panic and almost never a loss.
Passphrase (25th word) — An optional extra secret on top of the phrase; it creates a genuinely separate wallet, and forgetting it is as final as losing the phrase.
Air-gapped — Kept permanently off any network.
Watch-only wallet — Loaded with public keys so it can show balances without being able to spend.
Sweep vs import — Sweeping moves funds to a new key you control; importing merely adds an old key to a wallet, leaving any copy of it still able to spend.
Replace-by-fee — Re-broadcasting a stuck transaction with a higher fee so it can be confirmed.
Terms you can safely ignore
Most of what appears in marketing is either a brand name for something on this list or a claim dressed as a category. If a term cannot be defined without using two other undefined terms, that is usually a sign that it exists to sound like something rather than to mean something.
Last reviewed: 11 September 2026