Key terms you will use throughout this course

Read the vocabulary in groups

Digital-asset discussions often sound more complicated than they are because everyday words—wallet, address, confirmation, ownership, contract—are used with specialized meanings. A reliable reader checks context instead of memorizing isolated definitions. This lesson groups essential terms by what they describe: records, authorization, transactions, applications, and risks. It offers working definitions, not a substitute for the specific rules of any one protocol or jurisdiction.

Records and networks

A blockchain is a type of ledger in which records are grouped into blocks that reference preceding blocks using cryptographic data. Distributed ledger technology (DLT) is a broader category of technologies supporting shared and synchronized records, and not every distributed ledger is a blockchain. A block is a structured collection of data accepted under a protocol’s rules. A protocol is the agreed set of rules that software uses to communicate, verify and update shared state. A network is the connected set of participants and systems using those rules.

On-chain means recorded or processed within a blockchain’s rule-governed environment. Off-chain refers to information, actions, or agreements outside that ledger, including legal documents, customer identity checks, storage, and ordinary payment systems. Neither term is a quality grade. Some critical facts are off-chain even when token transfers occur on-chain. An oracle is an arrangement that supplies outside information to software, for example a measured event or reference value. Oracle design introduces dependence on the source and its controls.

An address is a network-specific identifier used to designate a destination or an account. It is not necessarily a verified human identity. A transaction is a submitted instruction or data object intended to produce a protocol-defined change. A transaction identifier, sometimes called a transaction hash, is a reference derived from its transaction data. A block explorer is a user-facing service for looking up published ledger information. Explorers can differ in interpretation, availability, and indexing even when examining the same underlying ledger.

Keys, wallets and authority

A private key is secret cryptographic material used, depending on the system, to authorize operations such as a digital signature. A public key is corresponding material that can be shared and used for verification. A digital signature allows recipients to check that an authorized key produced a particular signature over specified data; it is not proof of the signer’s real-world identity. A seed phrase or recovery phrase is a human-readable representation used by some wallets to recover cryptographic secrets. Because these credentials can convey control, organizations must treat them as sensitive.

A wallet is software or hardware for managing keys, signing operations, and interacting with a network or provider. A self-custodial wallet is one in which the user, rather than a service provider, generally controls the relevant credentials. In custodial arrangements, an intermediary holds or administers key material or assets for the customer. Multisignature, often shortened to multisig, means that more than one authorized signature can be required. These terms identify technical control patterns; they do not alone determine legal ownership or liability.

Units, contracts and services

A coin usually denotes a network’s native unit, whereas a token often denotes a unit created through applications or rules on top of an existing platform. Usage varies, so prefer the system’s precise documentation. A token standard specifies interoperable behaviors such as balance lookup or transfer requests. A smart contract is on-chain executable code; it is not inherently a legally binding contract. Decentralized application, or dApp, refers to an application that relies on decentralized or shared-ledger components, often combined with ordinary websites and servers.

A stablecoin is an industry term for a token designed to maintain a reference value, commonly relative to a currency. Different mechanisms may involve reserves, redemptions, collateral, or market incentives. Some laws use more specific categories, for example tokens that reference one official currency versus tokens that reference a basket of values. A non-fungible token (NFT) is a distinguishable token; non-fungibility does not by itself establish scarcity of related media or ownership of intellectual-property rights. Tokenization represents an asset or right by a digital token, subject to the underlying arrangements.

Execution, settlement and observable status

A fee is a charge associated with using a service or submitting transactions. A network fee is distinct from a custodian’s withdrawal charge or an exchange’s trading fee. Throughput describes how much activity a system can process over a period. Latency is elapsed time between an initiating event and a defined response. Confirmation is evidence that a transaction has been included or otherwise recognized under network rules. Finality is the point at which the relevant system treats a transaction as settled or no longer reversibly contestable, although technical and legal finality may differ.

A fork is a divergence in software rules or recognized histories, which may be temporary or sustained. A reorganization occurs when a node replaces a previously accepted segment of chain history with a different valid segment. These terms are introduced here so that later lessons can discuss them accurately; Lesson 1.5 explains their practical implications, while the next module covers how networks choose among competing histories. A pending transaction is not equivalent to a final settlement. A confirmed transaction may still face different kinds of risk depending on its system.

Security, control and governance

Permissionless means participation is generally open under public rules; permissioned means specific participants or actions require approval. Neither term alone tells you whether software is secure, whether governance is fair, or whether data is private. A smart-contract administrator may have authority to pause features or change parameters. Governance is the process through which rules, upgrades, and organizational decisions are proposed and accepted. Decentralization describes the distribution of authority or infrastructure across participants; it should be examined by dimension rather than assumed from a product name.

Precision in a meeting or report

Instead of writing “The money is in the wallet,” a careful report might say, “The interface displays a balance associated with this address as of the recorded observation time.” Instead of “The transaction is irreversible,” it might say, “The service reports inclusion in a block, but the applicable finality threshold and off-chain remedies have not been established.” Such wording may appear cautious, yet it keeps the evidence and inference separate. This is especially important for legal, compliance, audit, and public administration audiences.

Terminology can also vary by jurisdiction. FATF’s virtual asset and VASP definitions are designed for its financial-integrity standards, while national and regional laws define crypto-assets and service categories for their own regimes. When interpreting policy, start with the official definition that governs the activity. When describing technology, explain the operational feature. Avoid substituting industry shorthand for either analysis.

Exam focus: Use address, wallet, key, transaction, token, smart contract, confirmation, and finality precisely; distinguish technical identifiers from verified identities and contractual rights.