The Crypto Book

Glossary

Terms, abbreviations and explanations with reference.

Airdrop

Distribution of new tokens to existing holders or users, often as marketing or reward. Common in DeFi projects. [mintos](https://www.mintos.com/blog/cryptocurrency-for-beginners/)

AML – Anti-Money Laundering

Rules designed to prevent money laundering and terrorist financing. Crypto exchanges in the EU/USA must have AML routines (KYC, transaction monitoring, reporting). [sqmagazine.co](https://sqmagazine.co.uk/micaeffect-on-crypto-taxation-policies-statistics/)

Altcoin

All cryptocurrencies other than bitcoin – from major projects (Ethereum, Solana) to small, speculative coins. [en.wikipedia](https://en.wikipedia.org/wiki/Bitcoin)

API – Application Programming Interface

Technical interface through which you or tools (e.g. tax apps, trading bots) can retrieve data or place orders with an exchange. Important for export/traceability. [money](https://money.com/best-crypto-exchanges/)

ASIC – Application-Specific Integrated Circuit

Specialised hardware for mining e.g. bitcoin extremely efficiently compared with ordinary CPU/GPU. [pontem](https://pontem.network/posts/the-evolution-of-bitcoin-mining)

BIS – Bank for International Settlements

The “central bank of central banks”: international organisation producing reports on e.g. crypto, CBDCs and financial stability. [sqmagazine.co](https://sqmagazine.co.uk/micaeffect-on-crypto-taxation-policies-statistics/)

Bitcoin (BTC)

The first and largest cryptocurrency. Designed as a digital, decentralised “cash system” and often described as “digital gold”. The network started on 3 January 2009 with the genesis block. [en.wikipedia](https://en.wikipedia.org/wiki/History_of_bitcoin)

Bitcoin genesis block

The first block in Bitcoin’s blockchain, mined by Satoshi on 3 January 2009. Contains a newspaper headline about bank bailouts as an embedded comment. [unchainedcrypto](https://unchainedcrypto.com/the-bitcoin-genesis-block-was-mined-15-years-ago-what-is-it-and-why-is-it-significant/)

Block

Collection of transactions grouped, validated and added to the blockchain. Each block contains a reference (hash) to the previous block. [spydra](https://www.spydra.app/blog/decoding-blockchain-immutability-what-keeps-networks-unchangeable)

Block reward

New coins created when a miner/validator produces a valid block. In Bitcoin combined with transaction fees. [phemex](https://phemex.com/academy/bitcoin-genesis-block)

Blockchain

A chain of blocks, where each block contains a hash of the previous one. Forms an immutable, distributed ledger of transactions. [geeksforgeeks](https://www.geeksforgeeks.org/computer-networks/immutability-in-blockchain/)

CBDC – Central Bank Digital Currency

State digital currency such as the e-krona or digital euro: digital central bank money for the public, often built on some form of distributed ledger/blockchain-like technology. [coingeek](https://coingeek.com/eu-kicks-off-2026-with-new-digital-asset-tax-reporting-rules/)

Cold storage

Storage of crypto keys offline (e.g. hardware wallet). Reduces the risk of online attacks. An important measure of an exchange’s security. [bingx](https://bingx.com/en/learn/article/top-10-safest-crypto-exchanges-how-to-choose-the-best-crypto-trading-platform)

Coin vs token

Coin: native currency on its own chain (e.g. BTC on Bitcoin, ETH on Ethereum).

CPU/GPU mining

Early ways of mining crypto with the computer’s processor (CPU) or graphics card (GPU), before ASICs took over in e.g. Bitcoin. [pontem](https://pontem.network/posts/the-evolution-of-bitcoin-mining)

Cypherpunks

Loose movement of cryptography enthusiasts from the 80s/90s who advocated strong encryption, digital privacy and private digital money. Hal Finney and other early Bitcoin pioneers came from this milieu. [lablockchainsummit](https://lablockchainsummit.com/introduction-to-blockchain/key-figures-in-blockchain-history)

DAC8 (EU)

EU directive extending information exchange on digital assets. Forces platforms to report crypto transactions to tax authorities from 2026. [hexn](https://hexn.io/local-updates/new-tax-season-in-the-eu-what-changes-for-crypto-taxes-in-2026-sdk7dg5u5e1tzscdjmcjnsar)

DeFi – Decentralised Finance

Financial services built on blockchains (loans, exchanges, derivatives) without traditional intermediaries. Uses smart contracts instead of banks. [shardeum](https://shardeum.org/blog/what-are-the-features-of-blockchain/)

Derivatives (crypto)

Financial instruments deriving value from underlying crypto: futures, options, perpetuals. Often with leverage; high risk. [phemex](https://phemex.com/blogs/top-crypto-exchanges-in-2026)

Digital euro

Planned/evaluated CBDC from the ECB. Purpose: a digital complement to cash and bank money in the euro area. [bitmarkets](https://bitmarkets.com/en/insights/article/how-crypto-taxation-changes-in-europe-from-2026)

e-krona

The Riksbank’s project for a Swedish CBDC – digital kronor as a complement to cash in an almost cashless society. [skatteverket](https://skatteverket.se/privat/skatter/vardepapper/andratillgangar/kryptovalutor.4.15532c7b1442f256bae11b60.html)

ERC20

Standard for fungible tokens on Ethereum. Defines how tokens behave so that wallets, exchanges and contracts can handle them uniformly. [kraken](https://www.kraken.com/learn/crypto-coins-tokens-difference)

Ethereum (ETH)

Programmable blockchain launched in 2015. Enables smart contracts and decentralised applications (dApps). ETH is the native currency/gas. [gemini](https://www.gemini.com/cryptopedia/ethereum-blockchain-smart-contracts-dapps)

FI – Finansinspektionen (Sweden)

Swedish supervisory authority for banks, securities and now registration of certain crypto services. [skatteverket](https://www.skatteverket.se/privat/skatter/vardepapper/andratillgangar/kryptovalutor.4.15532c7b1442f256bae11b60.html)

Fork (hard/soft)

Change of protocol rules. Hard fork: incompatible chain split. Soft fork: backwards-compatible rule change. [en.wikipedia](https://en.wikipedia.org/wiki/Bitcoin)

Genesis block

See “Bitcoin genesis block”.

Hal Finney

Cryptographer and early Bitcoin pioneer. First known recipient of a bitcoin transaction (10 BTC from Satoshi). [en.wikipedia](https://en.wikipedia.org/wiki/History_of_bitcoin)

Hardware wallet

Physical device (e.g. Ledger, Trezor) that stores private keys offline and signs transactions securely. [youtube](https://www.youtube.com/watch?v=YfkjnWXzc-Y)

Hash / hash function (e.g. SHA256)

Mathematical functions creating a “fingerprint” of data. In blockchains, hashes are used to link blocks and verify integrity. Bitcoin uses SHA256. [spydra](https://www.spydra.app/blog/decoding-blockchain-immutability-what-keeps-networks-unchangeable)

Halving

Planned reduction of Bitcoin’s block reward roughly every four years. Reduces the rate of new issuance, reinforces scarcity. [en.wikipedia](https://en.wikipedia.org/wiki/Bitcoin)

Immutability

Property of blockchains whereby it is in practice impossible or extremely expensive to alter historical blocks. [blockchainmagazine](https://blockchainmagazine.net/understanding-the-core-concepts-of-decentralization-consensus-and-immutability-in-blockchain-world/)

K4 (Sweden)

The Tax Agency’s form for declaring capital gains/losses on e.g. cryptocurrencies (“other assets”). [koinly](https://koinly.io/guides/crypto-tax-sweden/)

Chain

See blockchain.

Koinly / Divly etc.

Specialised tax tools helping Swedish users calculate crypto tax according to the Tax Agency’s rules and generate K4 data. [divly](https://divly.com/en/guides/sweden)

KYC – Know Your Customer

Regulated process whereby financial services must verify the customer’s identity (ID, address, sometimes source of income). Mandatory at serious exchanges. [tradersunion](https://tradersunion.com/ratings/crypto/common/regulated-crypto-exchanges/)

L1 / L2 (layer 1 / layer 2)

L1: main chain (Bitcoin, Ethereum).

Ledger / distributed ledger

Collection of transactions/ownership data, spread over several nodes. A blockchain is a specific type of distributed ledger. [shardeum](https://shardeum.org/blog/what-are-the-features-of-blockchain/)

Lightning Network

Second-layer protocol for bitcoin enabling fast and cheap micro-payments via payment channels, with periodic settlement on the chain. [blockchainmagazine](https://blockchainmagazine.net/understanding-the-core-concepts-of-decentralization-consensus-and-immutability-in-blockchain-world/)

MiCA – Markets in Crypto-Assets (EU)

EU framework for crypto assets setting rules for stablecoin issuers, exchanges and other services. Aims at consumer protection and harmonisation. [hexn](https://hexn.io/local-updates/new-tax-season-in-the-eu-what-changes-for-crypto-taxes-in-2026-sdk7dg5u5e1tzscdjmcjnsar)

Mining

The process of creating new blocks in e.g. Bitcoin through proof of work: nodes compete to find a valid hash through computation. [pontem](https://pontem.network/posts/the-evolution-of-bitcoin-mining)

Nonce

Random number changed in the block header until the hash value meets the difficulty requirement in proof of work. [geeksforgeeks](https://www.geeksforgeeks.org/computer-networks/immutability-in-blockchain/)

On-ramp / off-ramp

Services converting fiat ↔ crypto (e.g. Safello, Trijo, Coinbase “buy crypto”). On-ramp: into crypto. Off-ramp: out to a bank account. [cryptowinrate](https://www.cryptowinrate.com/best-exchanges-sweden/)

Order book / centralised exchange (CEX)

Trading venue where buy/sell orders are matched in a common order book. Run by a company (Coinbase, Kraken, OKX etc.). [beelaa](https://www.beelaa.com/en/okx/okx-2025-overview)

Pseudonymity

Identities represented by addresses (keys) instead of names. The link to a real person often exists in the background (KYC, bank data). [21bitcoin](https://21bitcoin.app/en/blog/bitcoin-and-anonymity)

Ponzi scheme

Fraudulent set-up where “returns” to earlier participants are paid with deposits from new ones, without any real underlying activity. Common in crypto with USDT/USDC deposits + referrals. [coinlaw](https://coinlaw.io/rug-pulls-amp-ponzi-schemes-in-crypto-statistics/)

Proof of reserves

Method whereby exchanges publish cryptographic proof (or audited reports) that they hold client funds 1:1 in reserves. [coinledger](https://coinledger.io/learn/is-okx-safe)

Proof of stake (PoS)

Consensus where validators stake their coins to get to create blocks and receive rewards, instead of computation-heavy proof of work. Ethereum moved to PoS in 2022. [gemini](https://www.gemini.com/cryptopedia/ethereum-blockchain-smart-contracts-dapps)

Proof of work (PoW)

Consensus where nodes must expend measurable computing power (“work”) to create blocks. Used in Bitcoin. [spydra](https://www.spydra.app/blog/decoding-blockchain-immutability-what-keeps-networks-unchangeable)

Rug pull

When developers or owners of a DeFi/token project drain the liquidity or sell off the entire holding, leaving investors with worthless tokens. [chainalysis](https://www.chainalysis.com/blog/crypto-scams-2026/)

Satoshi Nakamoto

The pseudonym of the creator/group behind Bitcoin. Wrote the white paper in 2008, launched the network in 2009, disappeared from public view around 2010–2011. [unchainedcrypto](https://unchainedcrypto.com/the-bitcoin-genesis-block-was-mined-15-years-ago-what-is-it-and-why-is-it-significant/)

Seed phrase (recovery phrase)

List of 12–24 words representing private keys in many wallet systems. Whoever controls the seed can recreate and empty the wallet. Must be stored safely offline. [youtube](https://www.youtube.com/watch?v=zAytWdIqE1g)

Security token / tokenised security

Token representing a regulated financial asset (share, bond, fund unit). Legally like a security; the chain is merely the bookkeeping layer. [gemini](https://www.gemini.com/cryptopedia/cryptocurrencies-vs-tokens-difference)

Smart contract

Program code running on a blockchain (above all Ethereum). Can hold funds, enforce rules, executed deterministically by all nodes. [youtube](https://www.youtube.com/watch?v=4cRXEGduA-o)

Stablecoin (USDT, USDC, EURC etc.)

Token whose value is tied to a fiat currency (usually 1:1 against USD/EUR). Used for trading, remittances, DeFi. The issuer must hold reserves to back the value. [walletinvestor](https://walletinvestor.com/magazine/how-stablecoins-are-revolutionizing-global-remittances)

Swish / BankID (Sweden)

Swish: mobile payment system linked to bank accounts.

Tether (USDT)

One of the largest stablecoins (USD-pegged). Issued by Tether Ltd. Often the focus of debate about reserves and transparency. [tether](https://tether.io/news/tether-and-the-city-of-lugano-commit-chf-5-million-to-advance-plan-b-phase-ii-positioning-lugano-as-a-global-hub-for-digital-infrastructure/)

Tokenomics

Economic design of a token: total supply, inflation/deflation mechanisms, distribution between team/investors/users, incentives. [fiatrepublic](https://fiatrepublic.com/what-you-need-to-know-about-digital-tokens-today/)

UTXO – Unspent Transaction Output (Bitcoin model)

Model where each transaction consumes previous outputs and creates new ones. Your balance is the sum of your UTXOs. [en.wikipedia](https://en.wikipedia.org/wiki/Bitcoin)

Utility token

Token granting usage rights within an ecosystem (discounts, access, governance) without any necessary link to cash flows. [n26](https://n26.com/en-eu/blog/what-is-token)

Validator (PoS)

Node in a proof-of-stake system that validates blocks and transactions against staked capital. Receives rewards and risks slashing on cheating. [shardeum](https://shardeum.org/blog/what-are-the-features-of-blockchain/)

Wallet

Software or hardware managing your private keys and addresses. Often divided into “hot” (online/mobile) and “cold” (offline/hardware). [youtube](https://www.youtube.com/watch?v=SPP81mGYeZw)