The Book of Jargon® – Cryptocurrency & Blockchain Technology

An interactive glossary of the acronyms, slang, and terminology of the cryptocurrency and blockchain technology industry

The Book of Jargon® – Cryptocurrency & Blockchain Technology is one in a series of practice area and industry-specific glossaries published by Latham & Watkins. 

The definitions provide an introduction to each term and may raise complex legal issues on which specific legal advice is required. The terms are also subject to change as applicable laws and customary practice evolve. 

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The information contained herein is not legal advice and should not be construed as such. 

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  • Accidental Fork:
    typically occurs when two or more Miners discover a Block at almost the same time, Forking the chain. Thanks to Consensus, Accidental Forks are usually quickly identified and resolved (i.e., one chain becomes longer than the other, and the network eventually abandons the Blocks that are not in the longer chain).
    Account Tree:
    a core component of the “Mini-Blockchain” scheme that was proposed by J.D. Bruce in order to solve the Blockchain scalability problem. An Account Tree is a self-contained balance sheet that acts as a database for all non-empty Addresses. The arboreal component of this term’s name comes from the Hash tree structure of the database.
    Address:
    a unique identifier of alphanumeric characters that represents a virtual destination for accepting and sending a Blockchain transaction.
    Administrator:
    “a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency.” The Administrator is considered to be an MSB (in the absence of an applicable exemption) if the Virtual Currency in question is Convertible Virtual Currency.
    Reference: FinCEN, FIN-2013-G001, Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies (March 18, 2013).
    Agreement Ledger:
    Distributed Ledger used by two or more parties to negotiate and reach an agreement.
    Airdrop:
    a giveaway of Tokens to the Wallets (Software) of users, typically for marketing purposes and increasing awareness of a particular Cryptocurrency. Airdrops are usually either free or occur in return for the user’s efforts to generate publicity, such as subscribing, posting, or sharing information about the Cryptocurrency on social media. Airdrops are basically the crypto-equivalent of Oprah’s famous giveaway moment: “You get some Coins! You get some Coins! Everybody gets some Coins!"
    Algorithm:
    a system for solving a specific class of problems. Algorithms are the step-by-step instructions given to a computer in order to produce a desired outcome. In the Cryptocurrency world, each Consensus model follows a certain Algorithm.
    Altcoin:
    short for “alternative coin,” Altcoin initially referred to any Cryptocurrency other than Bitcoin, though more recently it has been used to refer to any Cryptocurrency other than the group of the most popular Cryptocurrencies, which includes Bitcoin and Ether.
    Alternative History Attack:
    an attack in which a person submits for Consensus a transaction to pay a seller while simultaneously MiningFork of the same Blockchain that includes a transaction returning the payment to the attacker. The seller in this case will not receive the payment if the length of the chain on which the transaction is confirmed is shorter than the alternative chain released by the attacker.
    AML:
    acronym for Anti-Money Laundering.
    AML Officer:
    the designated person responsible for managing an entity’s AML Program and ensuring compliance with the AML Program and the BSA, and, often, training other employees on their obligations under the BSA. The AML Officer can be held personally liable for failure to comply with the obligations of the role. Every entity subject to the requirements of the BSA and its implementing regulations must have an AML Officer (also known as a BSA Officer).
    AML Program:
    the policies and procedures that must be developed, implemented, and maintained by entities subject to the BSA to ensure compliance with the BSA and its implementing regulations. An AML Program must be appropriately tailored to the entity’s business model and risk profile.
    Anti-Money Laundering (AML):
    a set of laws and regulations designed to ensure that financial services companies do not aid in criminal and/or terrorist enterprises, aka the rules in place to deter the next Breaking Bad car wash. Efforts to combat money laundering and terrorism finance include KYC requirements, Suspicious Activity Reports, and Currency Transaction Reports, all of which require financial institutions to investigate and report any customers or transactions that could be furthering a criminal enterprise. AML obligations can be burdensome, but failure to comply can result in heavy criminal and civil penalties. Global AML obligations differ by jurisdiction.
    API:
    acronym for Application Program Interface
    Application Program Interface:
    software code that enables communication between independent systems, such as computer programs and applications, in the form of a request-response message. For example, travel aggregators submit flight date, departure location, and destination through the APIs of airlines’ websites and receive prices for flights meeting those specifications in response.
    Application-Specific Integrated Circuit (ASIC):
    computer hardware that is designed for one particular function, such as running the Hash Algorithms used to Mine a specific cryptocurrency like Bitcoin or Litecoin.
    Arbitrage:
    the trading of an Asset in order to take advantage of price discrepancies for the Asset, such as when the Asset is trading on different markets or exchanges.
    Asset:
    an item, object, or thing of value, whether tangible or intangible, that can be transferred from one person or location to another person or location.
    Asset Token:
    a category of Tokens that represent a “real world” asset or product — such as a Commodity (e.g., gold, diamonds, oil) or Currency — as opposed to Utility Tokens, which provide the holder with access to or the ability to do something on a relevant network. An Asset Token is also known as an Asset-Backed Token.
    Asymmetric-Key Cryptography:
    an encryption technique that uses a Public Key and a Private Key, either of which can be used to encrypt or decrypt data. Asymmetric-Key Cryptography can be used in the following ways:
    Scenario 1: The intention is to ensure only Andy can read messages from Bertha and Charlie, since they trust him. Bertha and Charlie each use a Public Key (which is known to everyone) to encrypt their messages before sending them to Andy. Andy uses a Private Key (which is known only to himself) to decrypt the messages. Bertha and Charlie are assured that their messages are secured, since only the Private Key can decrypt their messages, and only Andy holds the Private Key.
    Scenario 2: The intention is to ensure only Andy can send messages to Bertha and Charlie, since they trust him. This time, Andy uses the Private Key to encrypt his messages before sending them to Bertha and Charlie. Bertha and Charlie use the Public Key to decrypt the messages. Bertha and Charlie are assured that it is Andy who is the sender, since only the Private Key can encrypt such messages, and only Andy holds the Private Key.
    Asymmetric-Key Cryptography is also known as Public-Key Cryptography. Contrast this technique with Symmetric-Key Cryptography, in which the same key is used to both encrypt and decrypt data.
    And you thought your anti-virus software was complicated …
    Atomic Swap:
    Smart Contract that enables the simultaneous P2P exchange of one Digital Asset for another without using a Centralized Exchange, which can occur Off-Chain or Cross-Chain.
    Attestation Ledger:
    the little black book of Cryptocurrency that is distributed among all participants of a network, providing evidence of every individual transaction, agreement, commitment, and statement that takes place.
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