Glossary - blockchain, wallets, smart contracts and escrow from A to Z

This is a reference: short definitions, with the details in the articles the links lead to. If you come across an unfamiliar word in another article or in the interface, look it up here. Terms are grouped by topic and run roughly in the order of study.

Blockchain basics

• Blockchain - a shared log of records that nobody controls alone; records cannot be changed secretly. More.
• Block - a batch of confirmed transactions with a link to the previous block.
• Node - a computer that stores a copy of the blockchain and checks the rules.
• Consensus - the way nodes agree on a single version of history. In Ethereum it is Proof of Stake.
• Finality - the moment a transaction becomes practically impossible to reverse.
• Hash - a fixed-length "fingerprint" of data; the slightest change in the data changes it completely. More.
• Cryptocurrency - digital money whose accounting is kept by a blockchain. More.
• Bitcoin and Ethereum - the two main networks; the first is "digital gold", the second a platform for programs. Comparison.

Wallets and keys

• Wallet - an app that stores keys and signs actions; it does not "hold coins". More.
• Private key - a secret number that gives the right to control an address. Never show it to anyone. More.
• Public key - the paired key from which the address is derived.
• Address - a public "account number" (in Ethereum it starts with 0x, 42 characters).
• Seed phrase - 12 or 24 words from which all of a wallet's keys are derived. How it works.
• Signature - a mathematical proof that the key's owner approved an action. More.
• ENS - readable names like name.eth in place of long addresses. More.
• Multisig - an address that can only be controlled by several keys together. More.

Networks and transactions

• Transaction - a signed action: a transfer or a contract call. More.
• Gas - a unit of computational work; a fee is paid for it. More.
• Gwei - a billionth of an ETH; the gas price is measured in these units.
• Nonce - an address's transaction sequence number; protects against replay.
• Mempool - the "queue" of unconfirmed transactions.
• Chain ID - a numeric network identifier (Ethereum - 1, Base - 8453, Polygon - 137, BNB Chain - 56). Choosing a network.
• Layer 2 (L2) - a network on top of Ethereum that is cheaper and faster. More.
• Bridge - a service for moving assets between networks. Risks.
• RPC - the address of the "gateway" through which a website and wallet talk to the blockchain.
• Block explorer - a website for viewing transactions and addresses. Guide.
• MEV - extra profit from choosing the order of transactions. More.

Tokens and DeFi

• Token - a record in a smart contract representing an asset. Overview.
• ERC-20 - the standard for fungible tokens. More.
• NFT - a unique token with its own number.
• Stablecoin - a token whose price is pegged to a currency (usually the dollar). More.
• Approve - permission for a contract to spend your tokens up to an amount.
• dApp - an application whose logic lives in smart contracts. More.
• DeFi - financial services without middlemen: swaps, lending and more.
• AMM - an automated exchange where a pool formula sets the price.
• Liquidity - how easily an asset can be sold without losing price.
• Slippage - the difference between the expected and actual price of a trade.
• Liquidation - the forced sale of collateral when its price falls.
• Oracle - a source of external data for a contract. The oracle problem.

Smart contracts and development

• Smart contract - a program on a blockchain executed by the network. More.
• Solidity - the main language for Ethereum contracts. Tour.
• EVM - the virtual machine that executes contracts. Internals.
• ABI - a description of a contract's functions and the format for calling them. More.
• Selector - the first 4 bytes of the hash of a function signature.
• Event - an entry in a transaction's log used to build history. More.
• Storage - a contract's persistent memory. Layout.
• CREATE2 - a way to get a predictable contract address. More.
• Proxy - a scheme in which a contract's logic can be replaced. More.
• Audit - an independent review of code for vulnerabilities. More.
• Foundry - a toolkit for development and testing. Tutorial.
• Contract verification - publishing source code that matches the code on the blockchain. How to check.

Security

• Phishing - deception to make you sign a malicious action yourself. More.
• Address poisoning - a trick where a scammer plants a lookalike address in your history.
• Reentrancy - the classic re-entry vulnerability. More.
• Bug bounty - a reward for those who find and honestly report a vulnerability.
• Cold wallet - keeping keys on a device without a permanent network connection. Checklist.

Coin-Trust terms

• Escrow - holding money with a third party until conditions are met. More.
• Offer - a proposed deal awaiting acceptance for 7 days. Lifecycle.
• Guarantor (arbiter) - the party who decides a dispute. How to choose.
• Terms hash - a fingerprint of the agreement text fixed in the contract. More.
• Base rate - the guarantor's reward when there are no disputes.
• Dispute rate - the guarantor's reward if they issue a ruling.
• Credit - a deferred payout that the recipient claims separately. More.
• Emergency exit - a 50/50 split after 30 days of guarantor silence. More.
• BPS - basis points: 1/100 of a percent. 100 bps = 1%.

What to read next

If you are just starting, follow the learning path: from blockchain to smart contracts and escrow. For practice, see escrow use cases.