Crypto Vocabulary Glossary: Every Term Explained

Every term you’re likely to meet using a crypto wallet, defined in a sentence or two without assuming you already know the other terms. Grouped by topic; each definition stands on its own.

Jump to: Wallets and custody - Keys and recovery - Transactions and fees - Solana - Tokens and assets - Security and risk

Wallets and custody

Wallet

Software or hardware that stores the private key controlling funds on a blockchain. The wallet does not hold the money itself, the money is recorded on the blockchain, and the key is what proves you can move it.

Custodial wallet

A wallet where a company holds the private keys. Your balance is a claim against that company, much like a bank deposit. They can restore your access, and they can also freeze or lose your funds.

Non-custodial wallet

A wallet where you hold the private keys and no third party can move, freeze or restore your funds. Also called self-custody. See what a non-custodial wallet is.

Self-custody

Holding your own private keys rather than relying on a company to hold them for you. The defining property of a non-custodial wallet.

Hot wallet

A wallet that keeps the private key on an internet-connected device such as a phone or browser. Convenient for spending, more exposed to malware and phishing.

Cold wallet

A wallet that keeps the private key on a device that never connects to the internet. Far more resistant to remote attack, less convenient for everyday use. Also called cold storage.

Hardware wallet

A dedicated physical device that stores a private key and signs transactions internally, so the key is never exposed to a connected computer. The most common form of cold storage.

Tangem card

A hardware wallet in the shape of a bank card. A certified secure element chip generates the key on the card at activation, and transactions are signed by tapping the card to a phone over NFC. The key never leaves the chip.

NFT-backed wallet

A wallet whose ownership is recorded on-chain as a non-fungible token, making the wallet and any rights attached to it transferable as a single asset. See what an NFT-backed wallet is.

Multi-signature (multisig)

An arrangement requiring more than one key to authorise a transaction - for example, two of three signers. Used for shared treasuries and for reducing the risk of a single compromised key.

Keys and recovery

Private key

The secret number that controls funds at an address. Anyone holding it can move the funds. Everything else in wallet security exists to protect this.

Public key

A value derived from the private key, from which the public address is generated. Safe to share; it cannot be used to reverse-engineer the private key.

Public address

The identifier you give someone so they can send you funds. Safe to share publicly, and visible on the blockchain along with its full transaction history.

Seed phrase

A list of 12 or 24 common words encoding a wallet’s master private key, standardised as BIP-39. Anyone with the phrase controls the wallet completely; anyone who loses it loses access permanently. Also called a recovery phrase or mnemonic.

BIP-39

The 2013 standard defining how a private key is encoded as a word list drawn from a fixed 2,048-word dictionary, including a checksum so a mistyped word is detected rather than silently producing an empty wallet.

Threshold

The number of guardians required to complete a social recovery, such as three of five. Set too low it weakens security; set too high it risks locking you out.

Multi-party computation (MPC)

A cryptographic technique that splits key material into shares which cooperate to produce a signature, so a complete private key never exists in any single place - not on a server, not on your device.

Passkey / WebAuthn

A phishing-resistant login standard where a private credential stays on your device and authentication is proved cryptographically rather than by typing a password.

Transactions and fees

Transaction

An instruction to move value or change state on a blockchain, authorised by a signature from the relevant private key.

Signature

Cryptographic proof, produced using a private key, that the holder authorised a specific transaction. Verifiable by anyone against the public address, without revealing the key.

Confirmation

The point at which a validator has included your transaction in a block. Distinct from finality.

Finality

The point at which a block is effectively irreversible because enough of the network has built on top of it. On Solana this is conventionally around 12-13 seconds, though most consumer payments are treated as settled at confirmation. The Alpenglow upgrade, targeted for mainnet around October 2026, aims to reduce this to roughly 150 milliseconds.

Settlement

The moment money actually and irrevocably changes hands. Card payments authorise in seconds but settle in days; on-chain payments do both at once.

Gas

The fee paid to a network to process a transaction, compensating validators for computation. Called a transaction fee on Solana, where it is a small fixed amount rather than a percentage.

Lamport

The smallest unit of SOL, equal to one billionth of a SOL. Named after computer scientist Leslie Lamport. Solana’s base transaction fee is 5,000 lamports per signature.

Priority fee

An optional additional fee on Solana, specified per compute unit, paid to have a transaction included sooner when the network is busy. See Solana transaction fees.

Rent

A refundable minimum SOL balance an account must hold in proportion to the data it stores, preventing the network from filling with abandoned state. Returned when the account is closed.

Irreversibility

The property that a completed on-chain transaction cannot be undone. Protects merchants from chargebacks and removes a protection consumers have with cards.

Chargeback

A card payment reversed by the issuing bank, typically after a customer dispute. Has no equivalent in on-chain settlement.

Interchange

The largest component of a card transaction fee, paid to the cardholder’s issuing bank and set by the card network rather than negotiated. Largely funds card rewards programmes.

Solana

Solana

A high-throughput public blockchain using proof of stake, targeting block times of roughly 400 milliseconds and very low transaction fees. The network DYNK is built on.

SOL

Solana’s native token, used to pay transaction fees and to stake with validators.

SPL token

A token issued on Solana under the Solana Program Library standard, the equivalent of an ERC-20 on Ethereum.

Validator

A computer participating in the network by verifying transactions and producing blocks, earning fees and staking rewards in return.

Proof of stake

A consensus mechanism where validators are selected in proportion to the stake they commit, rather than by expending computation as in proof of work. Substantially less energy-intensive.

Slot

A time interval in which a validator may produce a block. Solana targets roughly 400 milliseconds per slot.

Tokens and assets

Token

A unit of value issued on a blockchain. Fungible tokens are interchangeable, like currency; non-fungible tokens are unique.

Utility token

A token whose purpose is to provide access to functions of a network; Settlement, exchange, governance, in-app commerce rather than to represent equity, dividends or a share of profits.

NFT

A non-fungible token: a unique, individually identifiable token on a blockchain. Useful for representing membership, rights or ownership of a specific item.

Stablecoin

A token designed to hold a stable value, usually pegged to a fiat currency such as the US dollar. Commonly used by merchants to avoid volatility while still settling on-chain.

Hard cap

A maximum token supply fixed permanently in a smart contract and unable to be increased. A cap is only meaningful once it is deployed on-chain and the mint authority has been burned, until both are true, the supply can still change.

Immutable

Unable to be changed after deployment. An immutable smart contract’s rules cannot be altered by anyone, including its creator.

Governance

The process by which holders influence a protocol’s direction, typically by creating and voting on proposals.

Tokenomics

The economic design of a token - its supply, distribution, issuance schedule and the mechanisms governing how it is used within a network.

Security and risk

Phishing

Tricking someone into revealing credentials or approving a malicious transaction, usually via a fake site or message impersonating a legitimate service. The most common cause of crypto loss.

Approval / allowance

Permission granted to a smart contract to move tokens on your behalf. A malicious approval can drain a wallet, which is why unfamiliar “connect wallet” prompts warrant caution.

Chain analysis

The practice of tracing activity across a public blockchain to link addresses and identify patterns. A mature industry, and the reason self-custody is not the same thing as anonymity.

Audit

An independent review of smart contract code for vulnerabilities. An audit reduces risk; it does not eliminate it.

Counterparty risk

The risk that a party holding your assets fails, freezes access, or is compromised. Self-custody removes it and replaces it with personal-access risk.

New to all of this?

Start with the beginner’s guide, learn what a wallet actually is, and the handful of mistakes worth avoiding.

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