Coincover provides digital asset protection that addresses the biggest barrier to mainstream adoption: trust. For years security issues and the ever-changing threat landscape have monopolised the global perception of digital assets. Coincover challenges this perception by providing businesses, infrastructure providers, and consumers with access to products that proactively protect them from hackers and human error.
We’re on a mission to build and grow customer confidence in digital assets so that everyone can benefit from the future of finance. To help you navigate the digital asset ecosystem and better understand how cryptocurrencies and the blockchain can benefit you as a consumer or business, we’ve compiled a jargon buster that makes crypto terms as easy to digest as possible.
ACL - Access Control List
A list of users authorised to request a recovery or add or remove members of the ACL. A majority of ACL members must participate in a video call to verify their identities before we can carry out a recovery. The minimum number of ACL members is three.
Altcoin – Alternative Coin
In simple terms an altcoin is any cryptocurrency other than Bitcoin. ‘Alt’ = alternative to Bitcoin.
AML - Anti-Money Laundering
Refers to the activities and checks financial institutions must perform to comply with regulations requiring them to monitor and report suspicious activities.
Bitcoin is a cryptocurrency, a virtual currency designed to act as money and a form of payment outside the control of any one person, group or entity, removing the need for third-party involvement in financial transactions. As the original cryptocurrency, Bitcoin is still the largest by market cap (a cryptocurrency’s current total value). Bitcoin was created by Satoshi Nakamoto (thought to be a pseudonym) and launched in 2009.
A blockchain is a distributed database or ledger that is shared among the nodes of a computer network. A blockchain stores information electronically in digital format. Best known for their role in cryptocurrency systems for maintaining a secure and decentralised record of transactions in blocks linked together in a chain. It’s an immutable database, meaning records can’t be modified or deleted.
Nearly always web-based and are usually provided by centralised crypto exchanges. A custodian provides storage solutions for digital assets like cryptocurrency. They are responsible for keeping people’s assets safe by holding their keys and ensuring they can’t be accessed by anyone else. Examples of custodians are Coinbase and Uphold (one of our customers. Customers benefit from the peace of mind that a lost or forgotten password won’t result in the loss of funds.
There’s a common saying in crypto, “not your keys, not your crypto”, which essentially means whoever holds the private key is the only verifiable owner to the funds. Non-custodial (aka self-custody) wallets give users complete control over their private keys (and crypto). The user is responsible for protecting their assets. Some non-custodial wallets are browser-based, but there are other types available such as; software wallets that store and encrypt private keys on a computer hard drive and hardware wallets that resemble a USB thumb drive and are only online when connected to a computer or mobile device..
Coincover is NOT a custodian; we hold the backup of keys, not the keys themselves.
DeFi - Decentralised finance
An emerging financial technology based on secure distributed ledgers similar to those used by cryptocurrencies. De-Fi uses the blockchain to make transactions without going through a centralised financial institution like a bank or broker. De-Fi eliminates fees that banks and other financial companies charge for using their services.
A digital asset is generally anything that is created and stored digitally, is identifiable and discoverable, and has or provides value. Digital assets have grown in popularity and value as technological advances become integrated into our everyday lives. In short, digital assets is the generic term for all assets created, traded and stored in a digital format. Cryptocurrency, NFTs and tokens are examples.
DLT - Distributed ledger technology
DLT refers to the technological infrastructure and protocols that allows simultaneous access, validations and record updating. These updates are immutable across a network that spread across multiple entities or locations. More commonly known as blockchain technology, DLT is all about decentralisation rather than the conventional centralised mechanism.
Founded by Vitalik Buterin and launched in 2015. Ethereum is an open source blockchain network that allows people to build decentralised apps and organisations like gaming and supply chain management systems. Rather than using Ethereum to create and transfer cryptocurrency like Bitcoin, Ethereum is programmable so you can build and deploy decentralised applications on its network. Ethereum also uses smart contracts to facilitate transactions.
Ethereum’s native cryptocurrency is called ETH and is the second largest by market cap.
The technical standard for fungible tokens created using the Ethereum blockchain. The Ethereum network is a platform other tokens can run on and the ERC 20 provides a way for different smart contract enabled tokens to be exchanged. When creating tokens, developers must comply with this standard when creating tokens on the network to ensure that they can be exchanged. There are over 750,000 token contracts, according to Etherscan.
A type of currency that is declared as legal tender by a government but has no intrinsic or fixed value and is not backed by a tangible asset such as gold or silver. The value of fiat currency is guaranteed by the issuing government, who can also control the supply of money in response to economic fluctuations.
FCA - Financial Conduct Authority
The FCA is a financial regulatory body in the United Kingdom, operating independently of the Uk government. Its role includes protecting customers, keeping the industry stable and promoting healthy competition between financial service providers.
FinTech - Financial Technology
Refers to ways of making financial processes and traditional financial services more accessible with the use of new technology. FinTech can include software, apps, and products all built with the aim of improving traditional processes. FinTech companies are those that employ technology to adapt, improve or totally automate financial services. Think about the technology that has turned your phone into a payment mechanism!
FOMO - Fear of missing out
FOMO is a common acronym that can be used in any social or business setting. Fomo in reference to the crypto industry specifically refers to an intense feeling that you are missing out on the next big crypto development, and more importantly the opportunity to make big profits. For example, FOMO could be used when investors think there’s going to be a price movement that could make them money so they make an emotional investment decision to buy or sell based on unverified information..
FUD – Fear, uncertainty and doubt
Refers to the general mindset of pessimism about a particular asset or market, as well as the manipulation of investor or consumer emotions so they succumb to FUD. This manipulation can include spreading negativity online to create uncertainty or fear about a particular coin or token so the price drops.
Fungible tokens are those that can be interchanged with one another, normally on an exchange, whereas the well-known non-fungible tokens (NFTs) are not interchangeable.
HODL - Hold on for dear life
The clue is in the name, to HODL is an encouragement to other crypto investors not to sell when prices fall. Considered as more of a mentality than an investment strategy, the HODL approach has been rewarding long-term investors in Bitcoin, Ether and other leading cryptocurrencies.
One of the central features of the blockchain, once it’s on there, data can’t be changed, manipulated or replaced.
Infosec - Information security
A set of security processes and tools that protect sensitive business information and data from unauthorised access, misuse, disruption, or destruction by mitigating risks.
Our customers often ask us if we comply with any infosec frameworks. We are ISO27001 certified and are working towards SOC2 (more info below).
An internationally recognised standard for information security. It provides a framework to help organisations protect their information using an Information Security Management System (ISMS). The ISMS equips organisations with a set of rules and policies that they follow to maintain both online and physical security.
Coincover is ISO27001 certified, we’ve been audited, and our security controls are robust and meet the ISO standard. When customers do due diligence on us, they expect us to have an information security certification, and we provide them with our ISO27001 certificate.
Like a password, a private key is a secure code that allows users to access their crypto wallets, make transactions and prove ownership of their assets. Bitcoin as an example features a 256-bit string displayed as a combination of letters and numbers. It’s stored in the user's crypto wallet, enabling them to access their Bitcoin whenever they want.
Unlike the private key, the public key is designed to be shown to other crypto users so they can send cryptocurrency to your wallet (think account number or IBAN). The public key is a cryptographic code used to facilitate transactions and receive crypto into your account, although a Bitcoin address can also be used for transactions as it’s essentially a compressed version of the public key.
You’re issued a private and public key when you start a transaction. The private key is used to digitally sign a transaction, and the public key proves the digital signature came from your private key. The crypto is only sent to the recipient’s public address once the transaction is verified.
KYC - Know your customer
Standards designed to protect financial institutions against fraud. To meet KYC requirements, clients must provide proof of the identity and address, such as ID card verification, face verification, biometric verifications and/or document verification. These checks must be completed by exchanges and trading platforms and involve separate steps to establish identity, understand the nature of customers activities and qualify that source of funds is legitimate.
Coincover also carries out KYC checks on customers’ ACL members and confirms their identities before carrying out a recovery.
The process of creating digital coins. The process is quite complicated and involves solving complex puzzles, validating cryptocurrency transactions and adding newblocks to their retrospective distributed ledger, ultimately, verifying transactions.
A vast network of computers validates the transactions and creates the blocks using either ‘proof of work’ or ‘proof of stake’. Miners are paid for doing this in the crypto native to the chain they are mining on.
MPC - Multi-party computation
Multiple parties are needed to authorise transactions. Each party holds part of a private key stored on different devices, and the other parties can’t see them. MPC is a subfield of cryptography with the goal of creating methods for parties to jointly approve an action, while keeping their inputs private.
Fireblocks use this approach. The private key to one of their workspaces is created in multiple parts (key shares or shards). The key is never combined as a whole, the customer holds one shard in their mobile signing device, and Fireblocks hold the others in the cloud. Coincover holds the backup to the shards.
Multisig – Multi-signature
A multisig wallet is a digital wallet that operates with multi-signature addresses. As an additional layer of security, more than one key is needed to authorise transactions, or in some cases several different keys are required to generate a signature for a transaction.
Nodes in cryptocurrency are usually associated with the blockchain, that exist with the purpose of verifying each transaction on the blockchain, or distributed ledger, before it’s permanently stored on the block. Nodes are made up of computers on the blockchain that validate transactions and store transaction histories.
NFT - Non-fungible token
A non-fungible token (NFT), is something that is unique and cannot be replaced. This is the opposite from physical money and cryptocurrency, which are fungible, and can be traded or exchanged for one another. Every NFT is a cryptographic asset that sits on the blockchain with unique ID codes and metadata that distinguishes it from other NFTs. These digital assets could be photos, videos, audio files or other digital formats. NFT examples include artwork, comics, sports collectibles, trading cards, games and more.
PoS - Proof of Stake
A system for processing and validating transactions to create new blocks in the blockchain. This consensus mechanism is a method for validating entries into a distributed database and keeps the database secure. Like Proof of Work (PoW), this method determines who can add new blocks. Users stake their tokens as collateral so they can validate transactions, validating block transactions based on the number of staked coins. It’s worth noting that PoS uses far less electricity than PoW, and was designed to reduce network congestion and environmental concerns surrounding the PoW protocol.
PoW - Proof of Work
The process behind mining and determining which miner can add new blocks to the blockchain. Miners must solve a mathematical problem to confirm a transaction, and the fastest miner gets rewarded in crypto. This method uses enormous amounts of electricity, leading to environmentalists' criticism.
PoS and PoW use consensus-based mechanisms where nodes determine which transactions are valid. The consensus mechanism helps protect networks and make sure their records are correct.
P2P - Peer-to-peer
A decentralised transaction method that allows sharing data on a network directly between two parties without needing a server.
Transferring money between fiat and crypto is known as “on-ramping” and “off-ramping”. On-ramps and off-ramps act as links between the two types of currencies.
On ramps let users convert fiat currencies, or traditional currencies into crypto.
Off ramps are where crypto is swapped for fiat, like cashing out chips at a casino.
If a customer experiences a disaster (e.g., loses their private key or whoever holds the key leaves the business), a recovery is the process of helping a customer regain access to their assets.
Lists people, groups, companies, regimes and countries subject to restrictive measures under domestic and international sanctions regimes. Sanctions lists are created to stop illegal activity, including the financing of terrorism, drug trafficking and money laundering.
Coincover carries out sanctions screening on our customers and suppliers to comply with AML regulations. It is part of our due diligence process and is managed by our Legal and Customer Support departments.
Breaking up data into smaller segments so it can be processed in parallel. Sharding creates shards, each of which has its own data. It enables blockchain companies to process more transactions per second.
Fireblocks’ customers’ private keys are split into three shards, and we store the encrypted backup of all three.
Programmes, founded on the Ethereum network, that are stored on the blockchain technology and run automatically when predetermined conditions are met. They are typically used to automate the execution of an agreement so all involved participants can be immediately certain of an outcome. Smart contracts eliminate the need for an intermediary to verify or execute a transaction and are traceable on the blockchain.
Similar to ISO27001, SOC 2 is an international cybersecurity compliance framework which focuses on:
- Availability (of systems)
- Processing integrity.
Cryptocurrencies whose value is ‘pegged’, or tied, to another currency, commodity, or financial instrument, for example, the US dollar. Stablecoins aim to provide an alternative to the high volatility of most popular cryptocurrencies by maintaining reserve assets as collateral or through algorithms to control supply.
A way of earning rewards for holding certain cryptocurrencies. You stake (lock-in) your assets to participate in running the blockchain and maintaining its security. Only a few cryptocurrencies allow staking including Ether, Tezoz, Cosmos, Solana and Cardano - you stake some of your assets and earn a percentage-rate reward over time. The reason you earn rewards while your assets are staked is because they are put to work, under PoS (see above), where they are used to ensure all transactions are verified and secure without a bank or payment processor in the middle.
Theft Protection/transaction checker
Our transaction monitoring technology protects businesses and their end users by screening and identifying suspicious transactions in real-time. Using our crypto threat intelligence database with machine learning models, we continuously monitor transactions to prevent theft, hacks, and scams.
Tokens are digital currencies that hold value and can be bought and sold by investors and users on blockchain and crypto exchanges. They are generally created on existing blockchains, so creating a token is much faster and cheaper as developers don’t need to build an entirely new blockchain.
A crypto wallet stores your public and/or private key, keeping your crypto safe and accessible. They allow you to store, receive and send your cryptocurrencies..
Are web-based wallets, mobile wallets and desktop wallets that are connected to the internet, and private keys are stored online. The main benefit of hot wallets is ease-of-use. Because they are always online, transactions can be created and recorded automatically without any human intervention. They are the easiest and quickest way to trade crypto, for example many people use their mobile hot wallets to trade or make purchases with cryptocurrency..
Warm wallets function like hot wallets, keys are stored online, and transactions can be created automatically. The main difference is that they are usually software that is downloadable, unlike hot wallets that are offered by most exchanges. Moreover, warm wallets require the use of 12-digit passcodes or PIN for authentication. Essentially, transactions must be signed and sent to the blockchain by a person rather than automatically.
The most secure wallet as your keys are stored offline. Stealing from a cold wallet usually would require physical possession of access to a cold wallet, as well as any associated PINs or passwords that are required to access funds. Hardware wallets are designed to be immune to hacking, even when connected to your computer or mobile. You need to sign each transaction to record it on the blockchain. Hardware wallets are less convenient than hot wallets because they must be turned on and then connected to the internet, so live trading would generally be too slow.
In the crypto ecosystem, whitelists relate to either withdrawal addresses or Initial Coin Offerings (ICO).
For withdrawal addresses, a whitelist is a list of cryptocurrency addresses that users identify as trustworthy. They would only be able to withdraw funds from their exchange account to addresses that have been whitelisted.
With ICOs, potential investors effectively pre-register to take part in the initial sale of a token. Then, when the new token is launched, verified whitelisted users can take part in the initial sale.