A 51% attack on a blockchain refers to an event where a group of miners attempts to take over more than 50% of a network’s mining power. If successful, they can manipulate the transactions made on-chain. They can either prevent the entry of new transactions or confirm inaccurate ones for their own gains.
Air-gapped is a term used in computer networking to imply a non-internet-connected computer. In the cryptocurrency world, air-gapped computing devices increase the security of digital currency wallets.
Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT) is a joint global initiative that aims to fight terrorism and money laundering, which involves a set of decrees for businesses and organizations to comply in order to prevent serious economic consequences and violence against civilians globally. The AML/CFT initiative is supported by a large number of countries, as well as government organizations and agencies, including the UN, EU, FATF, IMF, etc.
Bitcoin was the first cryptocurrency invented, and has maintained its position as the leading and most popular virtual asset since its inception. It was originally designed to be used as peer-to-peer electronic cash that would enable anyone to conduct online money transfers no matter where they are in the world at any given time. It was created back in 2009 by an unknown developer/s under the pseudonym Satoshi Nakamoto.
A blockchain is a decentralized immutable ledger composed of a series of blocks that store a set of data on transactions made in a particular network of computers, which are called nodes. Each node holds a copy of the blockchain and confirms the validity of the transactions made in it in a process called mining, or in other cases, staking.
Blockchain cybersecurity refers to the security function of a network powered by a distributed group of computers, also called “nodes,” that store information in blocks, which is also known as “distributed ledger technology.
Blockchain fees refer to the transaction fees that users pay whenever they perform cryptocurrency transactions. These fees are essential for blockchain networks to maintain operation since they incentivize miners/stakers to do their jobs in validating transactions and securing the network.
A blockchain network refers to the whole system that supports a distributed ledger and its series of smart contracts. It is analogous to a bank’s ledger, only that it ensures its integrity by encryption, decentralized validation, and permanent record instead of simply being based on trust.
A blockchain node refers to a computer or a server that stores data in a blockchain network, and is interconnected with other nodes. Each time a new version of a blockchain is confirmed, each node updates its copy with the latest version. Some nodes only store a portion of the blockchain in their storage, but there are also full nodes that keep the whole blockchain history.
Business wallets are like regular digital wallets, only more scalable. These wallets are designed to handle high-volume cryptocurrency transactions on specific blockchain networks.
A Central Bank Digital Currency or CBDC refers to a type of centralized digital asset issued by governments, specifically central banks, and is considered a hybrid of crypto and fiat since some CBDCs use blockchain technology to create a digitized form of national currencies.
Crypto custody is the act of storing cryptocurrencies on behalf of another party for a fee. It removes the technical bit of digital currency storage from a user and transfers that responsibility to a third-party custodian.
A cryptocurrency exchange is a virtual asset service provider (VASP) that functions as a platform for the trading of digital assets. Through these platforms, users can also purchase and withdraw their digital currencies.
Decentralized finance (DeFi) refers both to the blockchain movement aimed at making traditional financial products and services accessible to everyone globally, as well as the innovative blockchain-powered financial applications designed to make financial intermediaries obsolete.
Digital asset custody refers to the safekeeping of a platform user’s digital assets. To ensure the security of an owner’s assets, digital asset custodians implement safe key management solutions. This means that they implement security measures that maintain the confidentiality of a client’s private keys and ensure that it cannot be accessed by unauthorized parties.
Digital asset security refers to cryptocurrency protection systems that keep malicious actors from stealing or taking control of someone’s digital assets. Through hardware security modules (HSM), digital asset security solutions can ensure that no unauthorized access to one’s wallet can happen.
Enterprise-grade vaults are cryptocurrency storage services that offer high-quality and reliable end-to-end security features in both its hardware and software layers. These kinds of vaults are designed to facilitate real-time transactions without compromising its function of keeping the private keys of its users safe.
Ethereum is a blockchain platform designed to support the execution of smart contracts that run various kinds of decentralized applications (dapps) like personal identity systems, supply chain trackers, voting mechanisms, cryptocurrency exchanges, and many more. But like Bitcoin, it can also be used as a peer-to-peer medium of exchange.
Ethereum 2.0 is an upgrade of the Ethereum network, ushering their move to a purer proof of stake (PoS) consensus model, which is more decentralized. Through the Beacon Chain, Ethereum 2.0’s PoS chain launched in December 2020, the network will be able to establish a new system that will address its problems of scalability, gas fees, and transaction speed.
An ERC20 token is a digital asset that is created and hosted on the Ethereum network and follows a set of ERC20 standards, or Ethereum’s standard for Fungible Tokens. ERC20 tokens make it easier for anyone to create their own tokens, which can be transferred or stored on-chain. They are also much faster to create because developers only need to follow the blueprint prepared in the ERC20 standard, which is open source.
The Financial Action Task Force (FATF) adopted a new data-sharing requirement for virtual asset service providers (VASPs) in June 2019. The Recommendation 16 update, referred to as the FATF Travel Rule in recognition of its close resemblance to the U.S.’ BSA Travel Rule, covers cross-border and domestic wire transfers, with the objective of addressing the emerging use of cryptocurrencies in money laundering and terrorism financing. Through the travel rule, law enforcement agencies can more effectively monitor those who facilitate illicit activities through digital assets.
Flash loan attacks refer to a smart contract exploit where an attacker takes out a flash loan from a DeFi protocol, uses the capital that they’ve borrowed, and pays it back in the same transaction. In a flash loan attack, hackers arbitrage the money that they have borrowed from a DeFi pool, then return the capital quickly right after they have made a profit from the money, which will be left to them as soon as they repay their flash loans.
A hard fork is a phenomenon where a blockchain network undergoes a radical change in its protocols that triggers a split, birthing two separate chains, the original network, and the “fork” network. A hard fork may be intentional or come off as an accident. Oftentimes, forks happen whenever developers encounter differences in the way they want a project to move forward or when its community feels that the protocol should follow a different direction.
Hardware Security Modules (HSM) are security solutions powered by either a hardware or cloud storage platform that is designed to keep digital keys for future transaction verification. Typically, HSMs function through external storage devices that can be plugged into a computer or network servers.
Insured vaults are special offline vaults where users can keep their private keys and are also secured by insurance coverages. The insurance policy on such vaults covers situations that could cause the loss of someone’s digital assets stored in the vault, such as theft, hacking, etc.
An institutional vault is a crypto cold storage system employed by institutions offering cryptocurrency custody services or exchanges securing customer funds. It can support single or multiple virtual currencies depending on the target market.
Know-Your-Customer (KYC) is a regulatory guideline and procedure that obligates financial institutions as part of their customer due diligence (CDD) process to screen and verify the identities of all their customers periodically in order to ensure that they are true and accurate. Banks, centralized exchanges, and other financial service providers implement KYC procedures in order to prevent cases of identity theft, money laundering, terrorism financing, and other illicit transfer of funds.
Malware is an umbrella term for most computer viruses including ransomware, scareware, spyware, trojans, worms, and other variations of malicious software created to exploit any device and harvest personal information, steal money, blackmail, or damage other people’s files.
A man-in-the-middle (MitM) attack refers to a strategy where a hacker secretly taps a communication line between two individuals to either eavesdrop or divert their line. An MitM is a common tactic among malicious actors who intend to steal their victim’s personal data, sabotage their line, or simply spy on them.
Markets in Crypto-assets (MiCA) is a proposal made to the European Commission in 2020 (as part of a much broader Digital Finance package) that is aimed at streamlining the development of distributed ledger technology (DLT) and virtual asset regulation in the European Union (EU). It also covers the aim of the Commission to protect cryptocurrency users and investors.
Multiparty computation (MPC) is a cryptography technique that allows multiple parties to conduct a transaction without compromising privacy. Basically, it looks like this: an individual in a group adds his data to the computation without revealing it to the other group members.
Multi-factor authentication (MFA) is a security function that utilizes two blockchain networks to prevent attackers from easily gaining control over a user’s digital assets. MFA systems provide authentication to someone’s website or program by way of granting two independent log-in credentials.
Multisignature refers to a digital signature that can be formed only through the fusion of several other unique digital signatures. Cryptocurrency wallets utilize multisignature to provide a complex layer of security that requires two or more signatures before any transaction is authenticated.
Phishing refers to a criminal activity where malicious actors use suspicious emails, phone calls, or fake websites to steal user information such as banking details, passwords, and other personal data. These swindlers tend to impersonate accounts or websites to lure their victims to give out their information and increase their likelihood of pulling off a scam.
A private key, or a secret key, refers to a series of alphanumeric data that is assigned to a crypto wallet as soon as it is activated. A private key is inviolably necessary to access a wallet’s digital assets, and hence, should not be lost or exposed to other parties. Doing so may result in the loss of all funds attached to that wallet address. If a user happens to lose access to his private key, he or she cannot recover their assets anymore.
A recovery seed, also known as a seed phrase, refers to a randomized list of words prompted to users during the initial setup of a cryptocurrency wallet. A recovery seed is provided to make sure that in the event that users lose access to their wallets, they can still be able to recover their crypto assets.
A replay attack is a security threat where an attacker intercepts the communication between a network sender and receiver, then either delays the message or re-transmits it. A replay attack is a technique used by hackers to deceive a receiver into doing what they want.
Ransomware is malware programmed to compromise a person’s device in order to allow an attacker to perform various intimidating tactics on their victims and demand ransom. A ransomware attack can be done by either locking out users from their computers or putting passwords on a user’s files.
A smart contract is a self-executing agreement that contains defined parameters involving the transaction of its participants and carry out specific functions on its own as soon as the agreed-upon standards or terms of a contract between interested parties are fulfilled. This ensures that transactions can happen without the need for an executor or third-party to facilitate them.
A stablecoin is a novel category of cryptocurrencies whose value is equal to an asset it seeks to emulate or peg to, which is typically the US dollar. A stablecoin is backed by a reserve asset and is designed to remain relatively stable, enabling cryptocurrency holders to perform daily transactions in the extremely volatile crypto market without the high risk of massive price swings.
A security token offering (STO) is a public fund-raising event that involves the sale of tokenized digital securities or security tokens. An STO allows startups to tokenize real-world assets and issue them in order to sell to investors. A security token can be backed by the asset that it is designed to represent digitally, such as a company, a physical asset, or any other form of investment.
Staking refers to the act of locking one’s cryptocurrencies on smart contracts in order to maintain the validation process of a proof of stake blockchain to receive compensation paid in transaction fees and block rewards. Staking is an alternative consensus mechanism to mining, where miners earn cryptocurrency rewards by solving a mathematical puzzle.
A threshold signature system (TSS) is a unique public-key cryptography scheme that aims to take away the need for single private keys securing a user’s assets all by itself. It functions by distributing secret keys to multiple users, called their ‘secret share.’
A transaction signature refers to the digital information used in cryptocurrency transactions to verify the identity of its participants. Through advanced cryptography, transaction signatures are formed from a combination of public and private keys. Every transaction is assigned a unique transaction signature to ensure that once a signature is already used to verify a particular transaction, there won’t be any duplicates.
A turnkey solution refers to a series of functionalities that can be readily implemented on any business operations conveniently without causing disruption. This removes the need for enterprise owners to perform expensive in-house oriented solutions to adapt to customer demands.
Virtual Asset Service Providers (VASP) refer to platforms or entities that facilitate financial activities involving transactions made in digital assets. These include money transfers, the exchange of assets from virtual assets to fiat currencies, and the storage and sale of these assets.
Warm wallets are digital asset storage systems that function like “hot wallets.” Their main difference is that they are usually software that is downloadable, unlike the hot wallets offered by most exchanges.
A cryptocurrency wallet management system is a program designed to facilitate the management of multiple virtual currency wallets from a single interface. Institutional or retail crypto investors can use it.
YubiKey authentication refers to the hardware-based access authorization tool for devices and networks. This works through the YubiKeys, which are like flash drives that can be plugged into USB-A or USB-C ports. The device is manufactured by a company called YubiCo.
Zero-trust security refers to a security model backed by rigorous identity authentication tools. It aims to limit access to applications and data to only a certain group of authenticated and authorized users. This can also provide high-level security to users and applications from malicious actors online.