Terms you will hear

A block is a permanent historical record of a group of confirmed transactions. Once added, it cannot be changed or deleted and always references what came before it.

A shared record that multiple organizations maintain together, with no single party in control. It's an infrastructure layer, just as the internet is infrastructure, with email and websites built on top of it. Cryptocurrency is one thing built on blockchain, not another word for it.

Financial services that use blockchain infrastructure but operate through centralized institutions rather than autonomous smart contracts. A crypto exchange where a company holds your assets is CeFi. It sits between TradFi and DeFi.

The sequence of blocks linked together in permanent, chronological order. Each block contains a reference to the previous block, making the record tamper-resistant. Changing one block would require changing every block that follows it.

A digital currency that operates on a blockchain network. Not issued or controlled by any central bank or government, but rather by computer code and a decentralized network of participants. Bitcoin (BTC) and Ethereum (ETH) are the most widely known. Cryptocurrency is one type of digital asset - but digital assets are a much broader category.

The absence of a single controlling authority. In a decentralized system, no single organization owns the record, makes the rules unilaterally, or can change the history. Control is distributed across all participants.

A parallel financial system built on public blockchain networks. It replicates the functions of traditional finance - lending, borrowing, trading, using code instead of institutions. No bank required to participate.

Any asset that exists in digital form on a blockchain. This includes cryptocurrencies, tokenized real-world assets, stablecoins, and other instruments. A token is the specific mechanism through which a digital asset is represented and transferred. Digital assets are the broader category.

The digital equivalent of a signature. It proves that the right person authorized a transaction and that nothing has been altered since, without revealing private information.

The broader category that blockchain belongs to. A distributed ledger is any record-keeping system shared and maintained across multiple participants rather than held centrally by one. Despite blockchain being a type of DLT, you may hear the terms used interchangeably.

The process of converting information into a coded form that can only be read by someone with the correct key. Blockchain uses encryption to protect the contents of transactions and verify the identity of participants.

The property of being interchangeable with another unit of the same type. A dollar bill is fungible. BTC is fungible. NFTs are not fungible because each one is unique.

A unique digital fingerprint generated from a piece of data. Every block, transaction and linkage on a blockchain has a hash. If anything in the block changes, the hash changes entirely. This is how the network detects tampering.

Once something is recorded on a blockchain, it cannot be changed or deleted without the agreement of the network. Every entry is permanent, timestamped, and traceable from the moment it is created.

The ability of different blockchain networks to communicate with each other and with existing systems. Most networks today operate as separate environments that cannot easily exchange information.

The time it takes for a transaction to be confirmed and recorded on the blockchain. Low latency means near-instant confirmation. High latency means waiting. A key consideration for any use case where speed of settlement matters.

The foundational infrastructure on which everything else is built. Bitcoin, Ethereum, and Avalanche are layer 1 networks. Layer 1 sets the core rules: how transactions are validated, how blocks are added, and how security is maintained.

A separate blockchain built on top of a Layer 1 that processes transactions independently. It relies on the Layer 1 for security and final settlement, but operates outside of what the Layer 1 itself directly handles.

A record of transactions and events. While all financial institutions have ledgers, in blockchain the ledger is shared across all participants. The information is visible to everyone connected to the network, but no individual has control over it.

The process by which some blockchain networks confirm transactions and add new records. Participants compete to earn the right to add the next block. Most institutional blockchain applications do not use mining.

A token that represents ownership of a unique item cannot be exchanged on a like-for-like basis with another token because each one is distinct. Most public attention has focused on digital art, but the underlying mechanism has institutional applications in title records and unique asset ownership.

Any organization or system connected to a blockchain network. When something is added to the shared record, every node receives the same update at the same time. Each participant has one. Think of it as a seat at the table.

An oracle is how a smart contract knows what happened in the real world. Without it, a contract can only see information that already exists on the blockchain. An oracle brings in external information, such as a price, a delivery confirmation, or a weather reading, so the contract can act on it.

A secret code that proves ownership and authorizes transactions on a blockchain. Only the holder of the private key can initiate activity from their account. Losing it means losing access permanently.

A way of establishing trust through financial commitment instead of work. This is an alternative to proof of work. Participants put up collateral to participate. Less energy-intensive than PoW.

A way of establishing trust through effort. To participate, you have to do real work. The more work the network requires, the harder it is for anyone to alter records dishonestly. Used by Bitcoin. Most institutional blockchain applications do not use this method.

The set of rules that governs how a blockchain network operates - who can participate, how transactions are validated, and how conflicts are resolved. Every participant follows the same protocol, and that shared rulebook is what makes the system work without a central authority enforcing it.

A code derived from the private key that can be shared openly. It serves as an address for others to send assets or information to you. Knowing someone's public key does not give access to their account.

A physical or traditional financial asset like property, infrastructure, bonds, or private credit that has been tokenized and represented on a blockchain. One of the most actively discussed institutional applications of blockchain.

The ability of a blockchain network to handle increasing volumes of transactions without degrading in speed or increasing in cost. One of the central engineering challenges in blockchain.

The property of a smart contract that causes it to carry out its terms automatically when conditions are met, without requiring any party to manually initiate or approve the action. Self-execution removes the gap between agreement and performance.

A single version of information that all participants in a network can see and contribute to simultaneously. Currently, organizations maintain their own versions of events and reconcile differences after the fact.

A set of rules written directly into a blockchain that execute automatically when predefined conditions are met. If X happens, then Y follows without anyone needing to trigger it manually or trust the other party to follow through.

A type of cryptocurrency designed to maintain a stable value by being backed by reserves or other mechanisms that keep its price tied to an asset like the U.S. dollar. Used to move value using blockchain rails, without exposure to price volatility. One of the most actively adopted blockchain instruments in institutional contexts.

The volume of transactions a blockchain network can process at any given moment. The higher the throughput, the more activity the network can support simultaneously.

A digital unit that represents something of value on a blockchain. A token can represent a currency, an asset, a right, or access to something. It is the basic unit through which value moves on a blockchain network.

The process of representing a real-world asset, like a property, a bond, or a fund share, as a digital record on a blockchain. Tokenization does not change what the asset is. It changes how ownership is recorded, transferred, and verified.

The existing financial system of banks, brokerages, exchanges, clearing houses, custodians, and the regulatory infrastructure around them. Used in blockchain conversations to distinguish the established system from decentralized alternatives. It's simply a shorthand for the incumbent infrastructure.

Transactions are the basic unit of activity on a blockchain. Any event is a transaction: a transfer of an asset, the execution of a contract, the update of a record.

The degree to which participants in a blockchain network can see the record. On a public blockchain, the entire record is visible to anyone. On a private or permissioned blockchain, visibility is controlled.

The specific event or threshold that causes a smart contract to execute. The contract does nothing until the trigger occurs. When it does, the contract automatically takes effect.

Before anything is added to the shared record, participants confirm it is accurate. That confirmation process is called validation. The moment when enough participants agree is called consensus. No single party decides alone.