Blockchain & Crypto glossary

Here are some of the key terms you should know:

  • Bitcoin: The first cryptocurrency, introduced in 2009. There’s a finite supply of 21 million bitcoins, which is stipulated in Bitcoin’s source code. Bitcoin is often abbreviated as BTC.
  • Blockchain: A distributed, public ledger that can record transactions between parties without a central clearing authority. The ledger is immutable and extremely difficult to hack because of its decentralized nature. This enables secure, verifiable transactions, which are validated by cryptographic algorithms. Blockchain underpins networks like Bitcoin and Ethereum but has numerous applications outside of crypto, such as voting and supply chain management.
  • Crypto Wallet: This is the foundational component of crypto custody. Think of it as a bank account that holds crypto assets. 
  • Crypto Address: Every crypto wallet has its own address. It’s like an account number with a mix of unique letters and numbers.
  • Private Key: Every crypto address has a unique private key that can be thought of as a password. The holder of the key has access to the crypto address—and wallet. By fulfilling authentication requirements without requiring people to provide their personal information, private keys are a core component of crypto custody.
  • Custodial Wallet: A wallet in which the private keys are stored by a third party. Companies like Paxos handle crypto transactions for their users using a custodial wallet.
  • Multisignature Wallet: Multisignature, or “multisig”, wallets require two or more private keys to enable a transaction, offering heightened security.
  • Self-custody: This type of wallet enables people to have sole control of their private keys but depends on the individual user to keep the keys and wallet secure.
  • Hot Wallet: These are used to custody cryptographic keys online; they’re connected to the internet, and transactions are executed digitally through secure algorithms. Hot wallets are considered more vulnerable to hacks and theft than cold storage methods and can have their value capped. 
  • Cold Wallet: These are used to custody cryptographic keys offline in a physically secure location that can’t be accessed through the internet. Withdrawals are slower, since they’re processed manually in batch loads. 
  • Multi-Party Computation (MPC): In the context of crypto, MPC enables multiple parties to conduct a computation (and enable a transaction) using their combined data sets without revealing any private data to each other. 
  • Mining: The process of creating more bitcoins and other cryptocurrencies through computers that solve complex math problems. It’s a high-cost endeavor that may not end up being profitable due to the huge amount of electricity and expensive computers required.
  • Stablecoin: A new class of digital asset backed by stable, real-world assets like U.S. dollars.
  • Money Transmitter Licenses (MTLs): A way for companies to obtain state licensure for providing crypto services. MTLs have to be obtained on a state-by-state basis, which can be onerous.
  • Trust Charter: Trust status is the highest standard for regulatory licensing, offering the safest, most comprehensive coverage for buying, selling and storing crypto. 
  • BitLicense: A business license permitting regulated virtual currency activities, issued by the New York State Department of Financial Services.
  • Bankruptcy Remote: When a financial services provider keeps customer assets separate from company operations in order to protect them from bankruptcy proceedings. It’s a feature of how trust companies custody crypto and other assets.


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