Glossary of crypto security terms

Glossary

Short definitions of the words you meet when you secure crypto. Each term has its own page with a longer explanation.

2-of-3 wallet: A 2-of-3 wallet is a multisig with three keys in which every transaction needs signatures from any two of them. Losing one key doesn't lock the funds, and one stolen key isn't enough to steal them.
BIP-39: BIP-39 is a standard that turns a random number into a list of 12–24 words from a fixed 2,048-word list. A wallet uses that list to rebuild the seed, from which it derives all keys.
Certificate of succession (akt poświadczenia dziedziczenia): The certificate of succession is a Polish notarial document that confirms who inherits from the deceased. Once registered, it has the effect of a final court ruling confirming the acquisition of an estate.
Custodial: Custodial is a model in which a firm, such as an exchange, holds the private keys on the client's behalf, and the client sees only a balance and the right to request a withdrawal.
Hardware wallet: A hardware wallet is a separate device that stores private keys and signs transactions inside itself, so the keys never reach a computer or phone.
Hot wallet and cold storage: A hot wallet is a wallet whose keys live on an internet-connected device. Cold storage keeps keys offline, on a device or medium with no permanent network access.
Multisig (multi-signature wallet): Multisig is a multi-signature wallet: spending requires signatures from a set number of keys out of several fixed at creation, for example two of three.
Non-custodial: Non-custodial describes a wallet or service that doesn't hold the user's private keys and has no technical ability to dispose of the user's funds.
Notarial deposit (depozyt notarialny): A notarial deposit is when a Polish notary accepts documents, data carriers, money or securities for safekeeping, with a protocol stating to whom and on what terms they're to be handed over.
Passphrase (25th word): A passphrase, often called the 25th word, is an extra password combined with the recovery phrase. The same phrase with different passphrases gives entirely different wallets, and a wrong one raises no error.
Payable-on-death instruction (dyspozycja na wypadek śmierci): A payable-on-death instruction is a written order to a Polish bank to pay a set sum to named relatives after the account holder dies. The rule covers selected bank accounts only.
Private key: A private key is a secret number the owner uses to sign crypto transactions. Whoever has it can spend the funds tied to the linked addresses; whoever doesn't can't move a single coin.
PSBT (partially signed bitcoin transaction): A PSBT, or partially signed bitcoin transaction, is a standard file format in which a transaction travels between software and signing devices, collecting signatures along the way.
Seed phrase (recovery phrase): A seed phrase, or recovery phrase, is a list of usually 12 or 24 words from which a crypto wallet restores all its private keys. Whoever knows the phrase has full access to the funds.
Self-custody: Self-custody is holding crypto yourself: only the owner manages the private keys, and no company can either withdraw or freeze the funds.
SLIP-39 (Shamir Backup): SLIP-39 is a standard for splitting a wallet backup into several shares using Shamir's method. A set number of shares is needed to rebuild the key, and a single share reveals nothing.
Timelock: A timelock is a rule in a bitcoin transaction or script under which funds can't be spent before a set time or number of blocks has passed.
UTXO (unspent transaction output): A UTXO, or unspent transaction output, is a single bitcoin deposit that hasn't been spent yet. A wallet's balance is the sum of all its UTXOs.
Wallet address: A wallet address is a string of characters that others send crypto to. It's derived from a public key, it's safe to share, and it doesn't let anyone spend the funds.
xpub (extended public key): An xpub is a wallet's extended public key. It lets you derive all receiving addresses and watch the balance, but it can't spend a single coin.