Glossary
Every term someone is likely to use on you, translated into what it actually means. Unfamiliar vocabulary is not a sign that something is sophisticated — it is frequently the point.
- Address
- The destination a transfer goes to — a long string of letters and numbers. Like an account number, except there is no name attached and no bank to ask.
- Atomic swap
- A trade where both halves complete or neither does, enforced by code rather than trust. If someone describes a deal as atomic but you must send first, it is not atomic.
- Blockchain
- A public record of transactions that anyone can read and no single party controls. Its strength and its danger are the same thing: no one can alter it, including to help you.
- Block explorer
- A free website for looking up any transaction or address on a public blockchain. Use one you navigated to yourself, never a link you were sent.
- Cold wallet / cold storage
- Keys kept on a device that never exposes them to the internet. How serious holdings are stored.
- Confirmation
- A block added on top of the one containing your transaction, making reversal progressively infeasible. Not a review period — nobody is checking your intent.
- Custody
- Who is holding the asset. Ranges from a regulated trust company to a person with a spreadsheet. The word alone tells you nothing; the named custodian and their licence do.
- DVP (delivery versus payment)
- A settlement structure where both legs move together, so neither party is ever exposed. The professional answer to 'who sends first'.
- Dusting
- Sending a tiny amount to an address to plant something in its history — usually so a lookalike address appears there and gets copied later.
- Escrow
- A neutral third party holding both sides until both have arrived. Only meaningful if the escrow agent is genuinely independent and identifiable.
- Gas / network fee
- The fee paid to the network for processing a transaction. Paid automatically by the sender from their own wallet. Nobody can invoice you for it.
- Hash (transaction ID)
- The unique identifier of a transaction. Your receipt, and the thing an investigator needs first.
- Honeypot
- A token you can buy but cannot sell, because the contract forbids selling. The chart looks excellent until you try to exit.
- Hot wallet
- A wallet whose keys are on an internet-connected device. Convenient; exposed to whatever compromises that device.
- KYC (know your customer)
- Identity verification a regulated firm must perform. Its absence is not privacy — it means no regulator is supervising, and no record exists to subpoena later.
- Liquidity pool
- A shared pot of two assets that lets people trade between them automatically. Real mechanism; the phrase is heavily borrowed by frauds.
- Mainnet / testnet
- The real network, versus a free practice copy. A testnet transaction looks genuine and moves nothing of value.
- Mixer / tumbler
- A service that pools funds to break the trail. Once proceeds enter one, tracing usually ends.
- OTC desk
- A venue arranging large trades directly between two parties rather than on a public order book. Real ones onboard you, document the trade, and settle simultaneously or through escrow.
- Private key
- The secret that authorises moving funds. Whoever holds it owns the funds, with no appeal.
- Seed phrase / recovery phrase
- Twelve or twenty-four words that generate your private key. It is not a password to an account — it is the account. Never share it with anyone, for any reason.
- Settlement
- The moment a transfer becomes final. On a blockchain this is seconds to minutes, and final means final.
- Smart contract
- A program on the blockchain that runs automatically. It does exactly what it was written to do, including things its author intended and you did not read.
- Stablecoin
- A token intended to hold a fixed value, issued by a company — USDT by Tether, USDC by Circle. Because there is an issuer, there is someone who can freeze a specific address.
- Token approval
- Permission you grant a contract to move your tokens. Malicious approvals are how wallets are drained without the seed phrase ever being shared.
- Wallet
- Software or hardware holding your keys. It does not hold coins; the coins are entries on the ledger.