Digital assets & tokenisation glossary

Asset-Referenced Token (ART) 
Under EU's MiCA regulation, a crypto-asset that maintains stable value by referencing multiple fiat currencies, commodities, or a basket of crypto-assets.

Atomic settlement
Simultaneous and irrevocable exchange of a tokenised asset and its corresponding payment, ensuring that both transfers occur together or not at all. By making use of blockchain and smart contracts, it eliminates settlement risk and enables secure, near real-time Delivery-versus-Payment (DvP).

Bitcoin (BTC) 
The first and most widely recognised cryptocurrency, created in 2009 by an anonymous person or group using the pseudonym Satoshi Nakamoto. Bitcoin operates on a decentralised peer-to-peer network and uses proof-of-work consensus to validate transactions.

Blockchain 
A distributed, immutable ledger technology that records transactions in sequential blocks linked through cryptographic hashes. Each block contains a timestamp, transaction data, and a reference to the previous block, creating an unchangeable chain of records.

CBDC (Central Bank Digital Currency) 
A digital form of fiat currency issued and regulated by a central bank. Unlike cryptocurrencies, CBDCs are centralised and represent sovereign currency.

Cold Wallet/Cold Storage 
A cryptocurrency wallet that is not connected to the internet, providing enhanced security against hacking. Examples include hardware wallets and paper wallets.

Consensus Mechanism 
The protocol by which blockchain network participants agree on the current state of the distributed ledger. Common mechanisms include Proof of Work (PoW), Proof of Stake (PoS), and Delegated Proof of Stake (DPoS).

Crypto-Asset 
Under EU’s MiCA regulation, a digital representation of value or rights that can be transferred and stored electronically using distributed ledger or similar technology. 

Cryptocurrency 
A digital or virtual currency that uses cryptography for security and operates on a decentralised network based on blockchain technology.

Custodial Wallet 
A digital wallet where a third party (custodian) holds and manages the private keys on behalf of the user.

Digital Asset 
A broad term encompassing any asset that exists in digital form and has value. In the crypto context, this includes cryptocurrencies, tokens, NFTs, tokenised securities, and other blockchain-based assets.

Distributed Ledger Technology (DLT) 
A database architecture that allows multiple participants to maintain a synchronised copy of data across different locations without a central administrator. Blockchain is the most well-known type of DLT, but other forms exist (e.g., Directed Acyclic Graphs).

E-Money Token (EMT) 
Under EU's MiCA regulation, a crypto-asset that maintains stable value by referencing a single fiat currency. These tokens are designed to be used as a means of payment.

ERC-20 
A technical standard for fungible tokens on the Ethereum blockchain. It defines a common set of rules that Ethereum tokens must follow.

ERC-721 
A technical standard for non-fungible tokens (NFTs) on the Ethereum blockchain, allowing each token to be unique.

Ethereum (ETH) 
A decentralised, open source blockchain platform that enables smart contracts and decentralised applications. Ethereum is the second-largest cryptocurrency by market capitalisation after Bitcoin.

Fiat-Backed Stablecoin 
A stablecoin backed by reserves of fiat currency held in bank accounts, typically maintaining a 1:1 peg with the reference currency (e.g. Tether, Circle)

Fork 
A change to a blockchain's protocol. A "hard fork" creates a permanent divergence from the previous version, while a "soft fork" is backward-compatible.

Fungible Token 
A digital token where each unit is interchangeable and identical to every other unit, like traditional currency. Cryptocurrencies like Bitcoin and Ethereum are fungible.

Gas Fee 
Transaction fees paid to validators/miners for processing transactions on a blockchain network, most commonly associated with Ethereum.

Genesis Block 
The first block in a blockchain, also known as Block 0 or Block 1.

Hash/Hash Function 
A cryptographic function that converts input data of any size into a fixed-size string of characters. Hash functions are one-way (cannot be reversed) and deterministic (same input always produces same output).

Hash Rate 
The computational power used to mine and process transactions on a proof-of-work blockchain, typically measured in hashes per second (H/s). Higher hash rates indicate more network security and mining competition. For Bitcoin, this is often expressed in exahashes per second (EH/s).

Hot Wallet 
A cryptocurrency wallet connected to the internet, providing convenient access but with increased security risks compared to cold storage.

Immutability 
A key property of blockchain whereby recorded data cannot be altered or deleted once confirmed, ensuring transaction permanence.

Interoperability 
The ability of different blockchain networks and systems to communicate, share data, and work together seamlessly.

Layer 1 (L1) 
The base blockchain architecture (e.g., Bitcoin, Ethereum) that processes and finalises transactions on its own network.

Layer 2 (L2) 
Secondary protocols built on top of Layer 1 blockchains to improve scalability and transaction speed (e.g., Lightning Network for Bitcoin, Arbitrum for Ethereum).

Liquidity 
The ease with which an asset can be bought or sold in the market without affecting its price. Higher liquidity indicates more active trading and tighter bid-ask spreads.

Liquidity Pool 
A collection of tokens locked in a smart contract that provides liquidity for decentralised exchanges and DeFi protocols.

Mempool 
The waiting area for unconfirmed transactions before they are added to a block on the blockchain.

MiCA (Markets in Crypto-Assets Regulation) 
The European Union's comprehensive regulatory framework for crypto-assets, providing harmonised rules across EU member states for issuers, service providers, and trading platforms.

Mining 
The process of validating transactions and adding new blocks to a proof-of-work blockchain by solving complex cryptographic puzzles. Miners are rewarded with newly created cryptocurrency and transaction fees.

Multi-Signature (Multisig) Wallet 
A cryptocurrency wallet that requires multiple private keys to authorise a transaction, enhancing security.

NFT (Non-Fungible Token) 
A unique digital token that represents ownership of a specific asset or piece of content. Unlike fungible tokens, each NFT is distinct and cannot be exchanged on a one-to-one basis.

Node 
A computer that connects to a blockchain network and maintains a copy of the distributed ledger. Nodes validate and relay transactions and blocks.

Non-Custodial Wallet 
A cryptocurrency wallet where users control their own private keys and have full ownership of their assets without relying on third parties.

Oracle 
A service that provides external, real-world data to smart contracts on the blockchain, enabling them to interact with information outside their native network.

Off-Chain 
Activities or transactions that occur outside the blockchain but may be recorded on-chain later, often used to improve scalability.

On-Chain 
Transactions and data that are recorded directly on the blockchain and are publicly verifiable.

Peer-to-Peer (P2P) 
Direct interaction between parties without intermediaries, a fundamental principle of blockchain technology.

Private Key 
A secret cryptographic code that proves ownership of blockchain assets and allows the holder to authorise transactions. Must be kept secure and confidential.

Proof of Stake (PoS) 
A consensus mechanism where validators are selected to create new blocks based on the amount of cryptocurrency they hold and are willing to "stake" as collateral.

Proof of Work (PoW) 
A consensus mechanism requiring participants to perform computational work (solve cryptographic puzzles) to validate transactions and create new blocks. Used by Bitcoin.

Public Key 
A cryptographic code derived from a private key that can be shared publicly and serves as an address to receive cryptocurrency.

RWA (Real World Asset) 
Physical or traditional financial assets that have been tokenised on a blockchain, including real estate, commodities, bonds, and other securities.

Security Token 
A digital token that represents ownership in a real-world asset or company, subject to securities regulations. Security tokens typically confer rights such as equity, dividends, or profit-sharing.

Smart Contract 
Self-executing code stored on a blockchain that automatically enforces the terms of an agreement when predetermined conditions are met, without requiring intermediaries.

Stablecoin 
A cryptocurrency designed to maintain a stable value by being pegged to a reserve asset (typically fiat currency like USD) or through algorithmic mechanisms. Stablecoins aim to combine the benefits of cryptocurrency with price stability.

Staking 
The process of locking cryptocurrency in a network to support operations (like validating transactions) in exchange for rewards, primarily used in proof-of-stake blockchains.

Token 
A digital asset created on an existing blockchain (as opposed to having its own blockchain like a coin). Tokens can represent various assets, utilities, or rights.

Tokenisation 
The process of converting rights to an asset into a digital token on a blockchain. This can apply to physical assets (real estate, art), financial instruments (stocks, bonds), or digital goods.

Token Standard 
A set of rules and protocols that define how tokens are created and function on a specific blockchain (e.g., ERC-20, ERC-721 on Ethereum).

Transaction Fee 
The cost paid to network validators for processing and confirming a transaction on the blockchain.

TRAVEL Rule 
A FATF (Financial Action Task Force) recommendation requiring virtual asset service providers to share originator and beneficiary information for transactions above a certain threshold.

Utility Token 
A digital token that provides holders with access to a product or service within a specific ecosystem, rather than representing ownership or investment.

Validator 
A participant in a proof-of-stake blockchain network responsible for verifying transactions and creating new blocks in exchange for rewards.

VASP (Virtual Asset Service Provider) 
Under FATF guidelines, any entity that conducts virtual asset activities or operations on behalf of customers, including exchanges, custodians, and wallet providers.

Volatility 
The degree of variation in the price of an asset over time. Cryptocurrencies are typically more volatile than traditional assets.

Wallet 
A software application or hardware device that stores private and public keys and interacts with blockchains to enable users to send, receive, and manage their cryptocurrency.

Wallet Address 
A unique identifier (derived from the public key) used to send and receive cryptocurrency, similar to a bank account number.

Web3 
The vision of a decentralised internet built on blockchain technology, where users control their own data and digital assets.

Whale 
An individual or entity that holds a large amount of a particular cryptocurrency, capable of influencing market prices through their trading activity.

Whitepaper 
A technical document that explains the purpose, technology, and roadmap of a cryptocurrency or blockchain project.

Wrapped Token 
A tokenised version of a cryptocurrency from one blockchain that can be used on another blockchain (e.g., Wrapped Bitcoin - WBTC on Ethereum).