Crypto Payments Glossary

Account abstraction is a blockchain architecture upgrade that allows smart contracts to act as user accounts, removing the requirement for externally owned accounts (EOAs) to initiate transactions. It enables features like gasless transactions, session keys, social recovery, and batched operations. For crypto payments, account abstraction lets customers pay without holding native gas tokens — the merchant or payment provider sponsors the fee. This dramatically simplifies checkout.

A blockchain address is a unique alphanumeric identifier that represents a destination for sending or receiving cryptocurrency on a specific network. Addresses are derived from public keys using cryptographic hashing. Each blockchain has its own address format — Ethereum uses 0x-prefixed hexadecimal strings (42 characters), Bitcoin uses Base58 or Bech32 encoding, and Solana uses Base58. Merchants receive a unique deposit address per transaction to reconcile payments automatically.

An airdrop is the distribution of free cryptocurrency tokens to wallet addresses, typically used for marketing, community building, or rewarding early adopters of a protocol. Airdrops are common in DeFi and Web3 ecosystems. From a compliance perspective, airdropped tokens may have tax implications depending on jurisdiction, and merchants should be aware of tokens received in wallets used for payment processing.

Anti-money laundering refers to the set of laws, regulations, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. In crypto payments, AML compliance requires transaction monitoring, suspicious activity reporting, sanctions screening, and blockchain analytics. Payment providers implement AML controls including wallet screening, transaction velocity checks, and risk scoring to detect illicit activity. AML is a core requirement for any business processing crypto payments.

An API is a set of protocols and tools that allows different software applications to communicate with each other. In crypto payments, a payment API lets merchants programmatically create payment requests, check transaction status, process withdrawals, and receive webhook notifications. REST APIs are the most common format, using JSON payloads over HTTPS. SpacePay provides a REST API for merchants to integrate crypto payment acceptance into any platform.

An atomic swap is a peer-to-peer exchange of one cryptocurrency for another without using a centralised intermediary. It uses hash time-locked contracts (HTLCs) to ensure that either both parties receive their funds or neither does — making the trade trustless and irreversible only when completed. Atomic swaps enable cross-chain interoperability and are foundational to decentralised exchange technology used in payment settlement.

BEP-20 is the token standard used on BNB Chain (formerly Binance Smart Chain). It defines the rules for creating fungible tokens on the network, similar to ERC-20 on Ethereum. BEP-20 tokens benefit from lower transaction fees and faster block times compared to Ethereum mainnet. Stablecoins like USDT and USDC are available as BEP-20 tokens and are commonly used in crypto payment settlement due to their low fees.

A block is a data structure containing a batch of validated transactions that is permanently recorded on a blockchain. Each block includes a cryptographic hash of the previous block, creating an immutable chain. Block size and block time vary by network — Bitcoin produces a block roughly every 10 minutes, Ethereum every 12 seconds, and Solana every 400 milliseconds. In crypto payments, the number of block confirmations determines when a transaction is considered final.

A block confirmation occurs when a transaction is included in a block and that block is added to the blockchain. Each subsequent block mined on top of it adds another confirmation. More confirmations mean greater finality and lower risk of reversal. For payment processing, one confirmation is typically sufficient on proof-of-stake chains like Ethereum post-Merge, while Bitcoin transactions usually require three to six confirmations for high-value payments.

A block explorer is a web-based tool that allows users to search, browse, and verify transactions, addresses, blocks, and smart contracts on a blockchain. Examples include Etherscan (Ethereum), BscScan (BNB Chain), and Solscan (Solana). Merchants use block explorers to verify payment receipt, check transaction status, and audit wallet balances. Block explorers provide transparency that is impossible in traditional payment networks.

A blockchain is a distributed, immutable digital ledger that records transactions across a network of computers. Each transaction is grouped into blocks that are cryptographically linked in chronological order. Blockchains can be public (permissionless, like Ethereum) or private (permissioned). In payments, blockchain technology eliminates intermediaries, reduces settlement times from days to seconds, and provides cryptographic proof of every transaction. It is the foundational technology behind crypto payment gateways.

A blockchain bridge is a protocol that enables the transfer of tokens and data between two separate blockchain networks. Bridges lock tokens on the source chain and mint equivalent tokens on the destination chain. They enable multi-chain payment acceptance by allowing a customer paying on Polygon to settle on Ethereum, for example. Bridge security is critical — vulnerabilities in bridges have led to some of the largest exploits in DeFi history.

A chargeback is a forced reversal of a payment initiated by a cardholder's bank, typically due to fraud disputes or merchant disagreements. Chargebacks cost merchants an average of 2-3x the original transaction value when including fees and penalties. Crypto payments are chargeback-free by design — blockchain transactions are irreversible once confirmed. This eliminates friendly fraud and chargeback abuse, saving merchants billions annually. It is one of the primary advantages of accepting crypto payments.

A cold wallet is a cryptocurrency storage device or method that is not connected to the internet, providing maximum security against hacking and remote theft. Examples include hardware wallets (Ledger, Trezor) and paper wallets. Cold wallets are used for long-term storage of digital assets and are a critical component of institutional custody solutions. Payment providers use cold storage for reserve funds while keeping operational funds in hot wallets for faster transaction processing.

Confirmation time is the duration between a transaction being broadcast to a blockchain network and receiving its first block confirmation. It varies by network: Bitcoin averages 10 minutes, Ethereum approximately 12 seconds, Solana under one second, and Polygon around two seconds. For merchants, faster confirmation times mean faster checkout experiences. Layer 2 networks provide near-instant confirmations, making crypto payments as fast or faster than traditional card payments.

A consensus mechanism is the protocol by which a blockchain network agrees on the current state of the ledger. The two most common are Proof of Work (PoW), which uses computational puzzles (Bitcoin), and Proof of Stake (PoS), which uses staked collateral (Ethereum, Solana, Polygon). Consensus mechanisms determine a blockchain's security, speed, energy consumption, and finality — all of which directly affect payment processing reliability and confirmation times.

Cross-chain refers to the interoperability between two or more blockchain networks, enabling the transfer of assets, data, or messages across them. Cross-chain technology is essential for multi-chain payment acceptance — it allows a merchant to accept payment from any supported blockchain regardless of which chain is used for settlement. Cross-chain swaps, bridges, and messaging protocols like LayerZero and Wormhole enable this functionality.

A crypto payment gateway is software infrastructure that enables merchants to accept cryptocurrency payments from customers. It handles wallet connection, payment amount calculation, exchange-rate locking, blockchain transaction monitoring, confirmation tracking, and fiat or stablecoin settlement. Unlike traditional payment gateways (Stripe, Adyen), crypto gateways operate on blockchain rails and offer benefits including zero chargebacks, lower fees, instant cross-border settlement, and no intermediary banks. SpacePay is a crypto payment gateway that provides same-day fiat settlement and covers gas fees for customers.

A custodial wallet is a cryptocurrency wallet where a third party (such as an exchange or payment provider) holds and manages the private keys on behalf of the user. The user trusts the custodian with their funds. Custodial wallets offer convenience (password recovery, simplified UX) but introduce counterparty risk. Custodial arrangements may require regulatory licensing depending on jurisdiction.

Counter-terrorist financing refers to the regulatory framework and operational measures designed to prevent the flow of funds to terrorist organisations. In crypto payments, CTF obligations require screening transactions and wallet addresses against sanctions lists (OFAC, EU, UN), monitoring for suspicious patterns, and filing reports with financial intelligence units. CTF is a core pillar of compliance alongside AML and is mandatory for all payment service providers.

A DAO is an organisation governed by smart contracts and token-holder voting rather than traditional corporate structures. DAOs manage treasuries, protocol upgrades, and operational decisions through on-chain governance proposals. In the payments context, some payment protocols use DAO governance to set fee structures, approve integrations, and manage protocol parameters.

A dApp is a software application that runs on a blockchain or decentralised network rather than a centralised server. dApps interact with smart contracts and operate without a single point of failure. Payment dApps include decentralised exchanges, lending protocols, and checkout widgets that merchants embed on their websites to accept crypto payments directly from customer wallets.

Decentralised finance is the ecosystem of financial applications built on blockchain networks that operate without traditional intermediaries like banks. DeFi protocols provide lending, borrowing, trading, insurance, and yield farming through smart contracts. For crypto payments, DeFi infrastructure powers DEX aggregators used in payment routing, liquidity pools used for token swaps during settlement, and stablecoin protocols that underpin fiat-equivalent settlement.

A decentralised exchange is a peer-to-peer marketplace that allows users to trade cryptocurrencies directly from their wallets without depositing funds with a centralised intermediary. DEXs use automated market makers (AMMs) or order books powered by smart contracts. In crypto payment processing, DEX aggregators are used to convert received tokens into the merchant's preferred settlement currency at the best available rate across multiple liquidity sources.

A DEX aggregator is a protocol that sources liquidity from multiple decentralised exchanges to find the optimal swap route and best execution price for a token trade. Examples include 1inch, Paraswap, and 0x. In payment processing, DEX aggregators ensure merchants receive the best exchange rate when customer payments in various tokens are converted to the settlement currency, minimising slippage and maximising value.

A digital asset is any asset that exists in digital form and carries a distinct ownership right. In blockchain, digital assets include cryptocurrencies (Bitcoin, Ether), stablecoins (USDT, USDC), NFTs, and tokenised real-world assets. Digital assets are transferred via blockchain transactions and stored in wallets. The term is increasingly used in regulatory frameworks as a technology-neutral classification for anything recorded on a distributed ledger.

ERC-20 is the technical standard for creating fungible tokens on the Ethereum blockchain. It defines a common set of rules including transfer, approval, and balance-checking functions that all compliant tokens must implement. Most stablecoins (USDT, USDC, DAI) and utility tokens are ERC-20 tokens. The standard ensures interoperability — any ERC-20 token works with any ERC-20-compatible wallet, exchange, or payment gateway without custom integration.

Ethereum is a decentralised, open-source blockchain platform that supports smart contracts and decentralised applications. It is the most widely used blockchain for DeFi, NFTs, and crypto payments. Ethereum transitioned from Proof of Work to Proof of Stake in September 2022 (The Merge), reducing energy consumption by over 99%. Ethereum's native token is Ether (ETH). Most crypto payment gateways support Ethereum and its Layer 2 networks as primary payment rails.

In crypto payments, the exchange rate is the conversion price between a cryptocurrency and a fiat currency (or between two cryptocurrencies) at the moment of transaction. Exchange rates are sourced from centralised exchanges, DEXs, or oracle networks. Rate volatility is a key challenge — payment gateways typically lock the exchange rate for a short window (60-120 seconds) so the customer and merchant both know the exact amount being settled. Rate locking protects both parties from price swings during confirmation.

Fiat currency is government-issued money that is not backed by a physical commodity like gold. Examples include USD, EUR, GBP, and JPY. Fiat currencies derive their value from the issuing government and central bank monetary policy. In crypto payments, fiat is the settlement currency most merchants prefer — they accept crypto from customers but receive fiat in their bank account. The conversion from crypto to fiat is called off-ramping.

A fiat off-ramp is the mechanism by which cryptocurrency is converted into fiat currency and deposited into a traditional bank account. Off-ramping is the final step in the crypto payment flow for merchants who want to receive settlement in their local currency. Off-ramp providers are typically licensed VASPs or banking partners that handle the conversion and wire transfer. SpacePay provides same-day fiat off-ramping so merchants receive funds quickly without holding crypto exposure.

A fiat on-ramp is the process of converting traditional fiat currency into cryptocurrency. On-ramps allow users to purchase crypto using bank transfers, credit cards, or other traditional payment methods. For payment ecosystems, on-ramps enable customers to fund their wallets before making purchases. On-ramp providers include exchanges, fintech apps, and embedded widget services.

Finality is the guarantee that a blockchain transaction cannot be reversed, altered, or cancelled once confirmed. Different blockchains offer different levels of finality — probabilistic finality (Bitcoin, where deeper confirmations reduce reversal risk) versus absolute finality (chains with BFT consensus where a transaction is final after one confirmation). For merchants, finality determines when a payment can be considered safely received. Faster finality means faster checkout and lower fraud risk.

A flash loan is an uncollateralised loan in DeFi that must be borrowed and repaid within a single blockchain transaction. If the loan is not repaid in the same transaction, the entire operation reverts. Flash loans are used for arbitrage, liquidations, and collateral swaps. They are not directly relevant to merchant payments but are important in the DeFi infrastructure that underpins liquidity and pricing for payment settlement.

Gas is the unit of measurement for computational work required to execute transactions and smart contract operations on Ethereum and EVM-compatible blockchains. Each operation (transfer, swap, contract call) consumes a specific amount of gas. Gas is priced in gwei (one billionth of an ETH). Gas costs fluctuate with network congestion — during peak demand, gas prices spike and transactions become expensive. This is why Layer 2 networks and gasless transaction solutions are critical for payment adoption.

A gas fee is the cost paid to validators for processing a transaction on a blockchain network. Gas fees are the product of gas used multiplied by the gas price. On Ethereum mainnet, a simple token transfer costs approximately 21,000 gas units. At high congestion, this can cost several dollars. Layer 2 networks like Polygon, Arbitrum, and Base reduce gas fees to fractions of a cent. SpacePay covers gas fees for customers, removing the friction of needing native tokens to complete a purchase.

A gasless transaction is a blockchain transaction where the end user does not pay the gas fee directly. Instead, a third party (such as a payment provider or dApp) sponsors the gas cost using meta-transactions or account abstraction. The user signs the transaction, and a relayer submits it on-chain and pays the gas. Gasless transactions are essential for mainstream crypto payment adoption because they remove the requirement for customers to hold ETH, MATIC, or other native gas tokens just to make a purchase.

A hardware wallet is a physical device designed to securely store cryptocurrency private keys offline. It signs transactions internally without exposing private keys to internet-connected devices, protecting against malware and remote hacking. Leading hardware wallets include Ledger and Trezor. Hardware wallets are used by merchants and institutional holders for secure long-term storage of digital assets.

A hash is a fixed-length alphanumeric string produced by a cryptographic hash function from variable-length input data. Hashes are one-way — you cannot reverse-engineer the original data from the hash. In blockchain, every transaction and block has a unique hash that serves as its identifier. Transaction hashes (TxHash or TxID) are used to track and verify payments on block explorers. Hashing ensures data integrity across the entire blockchain.

A hot wallet is a cryptocurrency wallet connected to the internet, enabling quick and convenient access for frequent transactions. Hot wallets include browser extensions (MetaMask), mobile apps (Trust Wallet), and exchange wallets. Payment processors use hot wallets for operational liquidity — the portion of funds needed to process daily settlements. Hot wallets are faster but less secure than cold wallets, so best practice is to keep only operational amounts in hot storage.

A hash time-locked contract is a smart contract mechanism that requires the recipient to acknowledge receiving a payment within a set time window by providing a cryptographic proof (preimage of a hash). If the time expires, the funds are returned to the sender. HTLCs enable trustless cross-chain atomic swaps and are the foundation of payment channel networks like Bitcoin's Lightning Network.

Idempotency in payment APIs means that making the same request multiple times produces the same result as making it once. It prevents duplicate charges caused by network retries, timeouts, or client-side errors. Payment APIs implement idempotency using unique keys — if a request with the same idempotency key is sent twice, the server returns the original response instead of processing a duplicate payment. This is critical for reliable payment integration.

Immutability is the property of a blockchain that prevents recorded data from being altered or deleted after it has been confirmed. Once a transaction is included in a block and subsequent blocks are built on top of it, modifying that transaction would require re-computing every subsequent block — which is computationally infeasible on secure networks. Immutability provides merchants with an unalterable receipt of every payment, eliminating disputes about whether a transaction occurred.

Interoperability is the ability of different blockchain networks to communicate, exchange data, and transfer assets between each other. Interoperability is achieved through bridges, cross-chain messaging protocols (LayerZero, Axelar, Wormhole), and standardised interfaces. For crypto payments, interoperability means a customer can pay from any supported chain and the merchant receives settlement on their preferred chain — the infrastructure handles the cross-chain routing transparently.

JSON-RPC is a remote procedure call protocol encoded in JSON, used to communicate with blockchain nodes. It allows applications to send transactions, query balances, read smart contract state, and subscribe to events. Most Ethereum-compatible blockchains expose a JSON-RPC interface. Payment backends use JSON-RPC to monitor incoming transactions, verify confirmations, and submit settlement transactions programmatically.

Key management is the process of generating, storing, distributing, and revoking cryptographic keys used to access and control cryptocurrency wallets. Proper key management is the foundation of blockchain security — whoever controls the private key controls the funds. Enterprise key management solutions include hardware security modules (HSMs), multi-party computation (MPC), and threshold signature schemes (TSS). Payment providers implement institutional-grade key management to secure merchant funds.

Know Your Business is the compliance process of verifying the identity and legitimacy of a business entity before establishing a commercial relationship. KYB includes verifying company registration, identifying directors and ultimate beneficial owners (UBOs), checking sanctions and PEP lists, and assessing business risk. Crypto payment gateways perform KYB on every merchant they onboard to comply with anti-money laundering regulations and prevent illicit use of payment infrastructure.

Know Your Customer is the regulatory process of verifying the identity of individual users before allowing them to access financial services. KYC typically involves collecting government-issued ID, proof of address, and biometric verification. In crypto payments, KYC requirements vary by jurisdiction and transaction volume. Payment providers implement risk-based KYC — lighter verification for low-value transactions and enhanced due diligence for high-risk customers.

Layer 1 refers to the base blockchain network — the foundational protocol that processes and finalises transactions independently. Examples include Ethereum, Bitcoin, Solana, and BNB Chain. Layer 1 blockchains provide the security and consensus guarantees that all higher layers rely on. In crypto payments, Layer 1 networks handle the actual settlement of transactions, though many payment providers route through Layer 2 networks for lower costs and faster confirmations.

Layer 2 is a secondary protocol built on top of a Layer 1 blockchain to improve scalability, reduce fees, and increase throughput. L2 solutions process transactions off the main chain and periodically settle batches back to L1. Types include rollups (Optimistic and ZK), state channels, and sidechains. For crypto payments, Layer 2 networks like Polygon, Arbitrum, Optimism, and Base are game-changers — they reduce transaction costs from dollars to fractions of a cent while maintaining L1 security guarantees.

Liquidity is the ease with which a cryptocurrency can be bought or sold without significantly affecting its price. High liquidity means large trades can be executed with minimal price impact (slippage). In payment processing, liquidity determines the quality of exchange rates during settlement — deeper liquidity pools mean better rates and less slippage when converting customer payments into the merchant's preferred currency.

A liquidity pool is a smart contract containing paired token reserves that enables decentralised token swapping. Liquidity providers deposit equal values of two tokens and earn trading fees from swaps. Pools power automated market makers (AMMs) on DEXs like Uniswap, SushiSwap, and PancakeSwap. In payment settlement, liquidity pools provide the on-chain liquidity needed to convert received crypto into the merchant's settlement currency.

Mainnet is the production version of a blockchain network where real transactions with real economic value occur. It is distinct from testnets, which use valueless tokens for development and testing. Payment integrations are first built and tested on testnets (Sepolia, Mumbai) before being deployed to mainnet. Going live on mainnet means processing real customer payments with real cryptocurrency.

The mempool (memory pool) is a holding area for unconfirmed transactions waiting to be included in the next block. When a user broadcasts a transaction, it enters the mempool where validators select transactions to include based on gas price (priority fee). During high network congestion, mempools fill up and low-fee transactions wait longer. Payment providers monitor mempool status to set appropriate gas prices and provide accurate confirmation time estimates.

In crypto payments, a merchant is any business that accepts cryptocurrency as payment for goods or services. Merchants integrate with crypto payment gateways via API, SDK, or hosted checkout to receive crypto payments from customers. They can choose to settle in fiat currency, stablecoins, or hold crypto. Merchant onboarding typically requires KYB verification and configuration of settlement preferences, webhook endpoints, and payment parameters.

Multi-chain refers to the support for multiple blockchain networks within a single application or service. A multi-chain payment gateway accepts payments from Ethereum, Polygon, BNB Chain, Arbitrum, Solana, and other networks simultaneously. Multi-chain support maximises customer reach — customers can pay from whichever chain their funds are on without needing to bridge assets first. SpacePay supports payments across multiple blockchain networks.

Multi-signature is a security mechanism requiring multiple private keys to authorise a transaction. A common setup is "2 of 3" — where any two of three designated signers must approve a transaction for it to execute. Multisig wallets are used by businesses and DAOs to protect treasury funds, prevent single points of failure, and enforce operational controls. Payment providers often use multisig for securing merchant settlement wallets.

A network fee is the cost charged by a blockchain network to process a transaction. It compensates validators for their computational work and network resources. Network fees vary by blockchain — Bitcoin and Ethereum mainnet charge higher fees, while Layer 2 networks and alternative L1s (Solana, Polygon) charge significantly less. In crypto payment processing, network fees are either absorbed by the merchant, passed to the customer, or sponsored by the payment provider.

A node is a computer that participates in a blockchain network by maintaining a copy of the ledger, validating transactions, and propagating data to other nodes. Full nodes store the entire blockchain history, while light nodes store only headers. Payment providers run their own nodes (or use RPC providers like Alchemy, Infura, or QuickNode) to submit transactions, monitor confirmations, and query blockchain state with minimal latency.

In blockchain, a nonce is a sequential number assigned to each transaction sent from a wallet address. It ensures transactions are processed in order and prevents replay attacks. If a transaction with nonce 5 is pending, a transaction with nonce 6 cannot be confirmed until nonce 5 is processed. Payment systems manage nonces carefully to avoid stuck transactions and ensure reliable sequential processing of merchant settlements.

An off-ramp is any service or mechanism that converts cryptocurrency into fiat currency. Off-ramps are essential for merchants who want to accept crypto but receive traditional money in their bank accounts. Off-ramp methods include centralised exchanges, OTC desks, licensed payment providers, and peer-to-peer platforms. The speed, cost, and regulatory compliance of off-ramping vary by provider. Same-day off-ramping is a key feature for merchant adoption of crypto payments.

On-chain refers to transactions and data that are recorded directly on a blockchain and are publicly verifiable. On-chain transactions are immutable, transparent, and auditable by anyone with a block explorer. In contrast, off-chain transactions occur outside the blockchain (e.g., within a centralised exchange). For payments, on-chain settlement provides a provable, tamper-proof record of every transaction — a level of transparency impossible with traditional payment rails.

An on-ramp is a service that converts fiat currency into cryptocurrency, enabling users to enter the crypto ecosystem. On-ramps accept bank transfers, credit cards, and other traditional payment methods. They are the entry point for customers who want to fund crypto wallets for purchases. Embedded on-ramp widgets allow merchants to offer fiat-to-crypto conversion directly in their checkout flow.

A blockchain oracle is a service that provides external real-world data to smart contracts, which cannot natively access off-chain information. Oracles deliver price feeds, weather data, sports scores, and other external data on-chain. In crypto payments, price oracles (like Chainlink) provide real-time exchange rates used to calculate payment amounts and settlement values. Oracle accuracy and freshness directly affect the precision of crypto-to-fiat conversion.

OTC trading is the direct exchange of cryptocurrency between two parties without using a public exchange order book. OTC desks handle large-volume trades (typically $100K+) with minimal market impact and negotiated pricing. In payment infrastructure, OTC desks are used by off-ramp providers to convert large volumes of received crypto into fiat for merchant settlement without moving the market price.

A payment channel is an off-chain mechanism that allows two parties to conduct multiple transactions without recording each one on the blockchain. Only the opening and closing transactions are settled on-chain, drastically reducing fees and increasing throughput. The Lightning Network (Bitcoin) and state channels (Ethereum) are payment channel implementations. They enable micro-payments and high-frequency transactions that would be prohibitively expensive on-chain.

A payment gateway is the technology that facilitates the transfer of payment information between a customer, merchant, and payment processor. In crypto, a payment gateway connects customer wallets to merchant systems, handles currency conversion, monitors blockchain confirmations, and triggers settlement. A crypto payment gateway replaces the traditional card network stack (Visa/Mastercard, acquiring bank, issuing bank) with blockchain-based rails that are faster, cheaper, and globally accessible.

Peer-to-peer refers to direct interaction between two parties without an intermediary. Blockchain is inherently P2P — transactions flow directly from sender to receiver without a bank or payment processor in the middle. P2P payments eliminate intermediary fees, reduce settlement times, and enable permissionless global transfers. Crypto payment gateways add merchant tooling (invoicing, webhooks, settlement) on top of this P2P foundation.

A private key is a cryptographic secret that gives the holder full control over a blockchain address and the ability to sign transactions. It must be kept absolutely secure — anyone with the private key can move all funds from the associated address. Private keys are typically 256-bit numbers represented as 64 hexadecimal characters or encoded as seed phrases (12-24 words). Losing a private key means permanently losing access to the associated funds.

Proof of Stake is a consensus mechanism where validators lock (stake) cryptocurrency as collateral to participate in block production and validation. Validators are selected to propose blocks based on the amount staked and other factors. Dishonest validators risk having their stake slashed (destroyed). PoS is more energy-efficient than Proof of Work and is used by Ethereum, Solana, Polygon, Cardano, and most modern blockchains. PoS chains generally offer faster block times and lower fees — both critical for payment processing.

Proof of Work is a consensus mechanism where miners compete to solve computationally intensive puzzles to validate transactions and produce new blocks. The first miner to solve the puzzle earns the block reward and transaction fees. Bitcoin uses PoW. While extremely secure, PoW is energy-intensive and produces slower block times (10 minutes for Bitcoin), making it less ideal for point-of-sale payment scenarios where speed matters.

A public key is the cryptographic counterpart to a private key, used to derive a wallet address and verify digital signatures. Public keys can be shared openly — they allow others to send funds to the associated address and verify that transactions were signed by the corresponding private key holder. The public-private key pair is the foundation of blockchain identity and transaction authorisation.

A QR code payment is a transaction initiated by scanning a Quick Response code that encodes payment information — typically a wallet address, amount, and network. QR codes are the most common method for in-person crypto payments at point-of-sale terminals. The customer scans the merchant's QR code with their wallet app, confirms the transaction, and the payment is broadcast to the blockchain. QR code payments are faster than manually entering addresses and reduce the risk of sending funds to the wrong address.

A rollup is a Layer 2 scaling solution that executes transactions off-chain and posts compressed transaction data (or validity proofs) back to the Layer 1 blockchain. There are two types: Optimistic Rollups (Arbitrum, Optimism) assume transactions are valid unless challenged, and ZK-Rollups (zkSync, StarkNet) use zero-knowledge proofs for instant validity. Rollups inherit the security of the underlying L1 while dramatically reducing fees and increasing throughput — making them ideal for high-volume payment processing.

RPC is a protocol that allows an application to execute functions on a remote server. In blockchain, RPC nodes provide the interface for submitting transactions, querying balances, and reading smart contract state. RPC providers (Alchemy, Infura, QuickNode) offer scalable, reliable node infrastructure so payment applications do not need to run their own blockchain nodes. RPC reliability directly affects payment processing uptime and transaction confirmation speed.

Same-day settlement means that a merchant receives the fiat equivalent of a crypto payment in their bank account on the same business day the payment was made. This is significantly faster than traditional card payments, which typically settle in 2-5 business days. Same-day settlement is possible because blockchain transactions confirm in seconds to minutes, and off-ramp providers can process fiat payouts within hours. SpacePay provides same-day settlement for merchants accepting crypto payments.

Sanctions screening is the process of checking wallet addresses, transaction counterparties, and entities against international sanctions lists to prevent prohibited transactions. Lists include OFAC (US), EU sanctions, UN Security Council lists, and HMT (UK). In crypto payments, screening is performed using blockchain analytics tools that trace wallet history, identify sanctioned addresses, and flag high-risk transactions. Sanctions screening is a legal obligation for all payment providers.

An SDK is a collection of pre-built code libraries, tools, documentation, and examples that simplify the integration of a service into an application. A crypto payment SDK allows developers to add payment acceptance to their website or app with minimal code — typically a few lines to initialise the widget and handle callbacks. SDKs abstract the complexity of wallet connection, blockchain interaction, and transaction monitoring into simple function calls.

Self-custody means the user holds their own private keys and has sole control over their cryptocurrency — no third party can access, freeze, or seize the funds. Self-custody wallets include hardware wallets, browser extensions (MetaMask), and mobile apps with local key storage. The principle of self-custody is fundamental to blockchain's value proposition: "not your keys, not your crypto." Self-custodial payment flows let customers pay directly from wallets they fully control.

Settlement is the final, irrevocable transfer of funds from buyer to seller that completes a financial transaction. In traditional payments, settlement occurs 1-5 business days after the transaction through batch processing by banks and card networks. In crypto payments, on-chain settlement occurs within seconds to minutes when a blockchain transaction is confirmed. This speed advantage is one of the primary reasons merchants adopt crypto payment processing — faster access to revenue with cryptographic proof of payment.

A sidechain is an independent blockchain that runs parallel to a main chain (Layer 1) and uses a two-way bridge to transfer assets between them. Sidechains have their own consensus mechanisms, block parameters, and security assumptions. Polygon PoS is a well-known sidechain (now evolved into a broader ecosystem). Sidechains offer faster transactions and lower fees but may have different security properties than the parent chain.

Slippage is the difference between the expected price of a trade and the price at which the trade actually executes. In crypto payments, slippage occurs during token swaps when market conditions change between the time a payment is initiated and when it settles. High slippage means the merchant receives less than expected. DEX aggregators and slippage tolerance settings help minimise this. Low-slippage execution is critical for accurate payment settlement.

A smart contract is a self-executing program stored on a blockchain that automatically enforces the terms of an agreement when predefined conditions are met. Smart contracts eliminate the need for intermediaries — the code is the contract. In crypto payments, smart contracts handle escrow, automated settlement, revenue splitting, subscription billing, and conditional payments. They execute exactly as programmed, without downtime, censorship, or third-party interference.

A stablecoin is a cryptocurrency designed to maintain a stable value by pegging to a reserve asset, typically the US dollar. The three types are fiat-backed (USDT, USDC — reserves held in bank accounts), crypto-backed (DAI — overcollateralised with crypto), and algorithmic (using supply/demand mechanics). Stablecoins are the backbone of crypto payment settlement because they eliminate price volatility — a merchant knows that 100 USDC will always be worth approximately $100. Over $150 billion in stablecoins are in circulation globally.

A swap is the exchange of one cryptocurrency for another, executed either on a centralised exchange or a decentralised exchange. In payment processing, swaps convert the customer's payment token (e.g., ETH) into the merchant's preferred settlement currency (e.g., USDC). Smart contract-based swaps on DEXs are atomic — they either complete entirely or revert, ensuring no funds are lost during conversion.

A testnet is a separate blockchain network used for development and testing that mirrors the functionality of the mainnet but uses valueless tokens. Developers deploy and test smart contracts, payment integrations, and transaction flows on testnets before going live. Popular testnets include Sepolia (Ethereum), Amoy (Polygon), and Devnet (Solana). Testing on testnets is free and prevents costly errors on mainnet. Every production payment integration should be thoroughly tested on testnet first.

A token is a digital asset created on an existing blockchain using a smart contract standard (ERC-20, BEP-20, SPL). Unlike native coins (ETH, BTC, SOL) which are integral to the blockchain protocol, tokens are built on top of these networks. Tokens can represent currencies (USDC), governance rights (UNI), utility access, or real-world assets. In payments, customers can pay with any supported token, and the payment gateway converts it to the merchant's settlement preference.

Tokenisation is the process of representing a real-world asset (property, equity, commodities, invoices) as a digital token on a blockchain. Tokenised assets inherit blockchain properties — they can be transferred globally, fractionated, traded 24/7, and programmed with smart contract logic. In payments, tokenisation extends the range of assets that can be used for settlement and enables new payment models like fractional ownership and programmable money.

A transaction fee is the cost associated with processing a payment, combining network fees (gas) and service fees (charged by the payment provider). Traditional card transactions charge 1.5-3.5% per transaction. Crypto payment gateways typically charge 0.5-1.5%, with lower network fees on Layer 2 chains. The total fee structure is a major competitive advantage of crypto payments over traditional payment methods, especially for cross-border transactions where traditional fees can exceed 5%.

A transaction hash is a unique identifier generated when a transaction is broadcast to a blockchain network. It is a hexadecimal string (e.g., 0x123abc...) that can be used to look up transaction details on a block explorer — including sender, receiver, amount, gas fee, block number, and confirmation status. Transaction hashes provide irrefutable proof of payment and are used for reconciliation, dispute resolution, and audit trails.

The Travel Rule is a regulatory requirement originating from FATF Recommendation 16 that obligates financial institutions and VASPs to share sender and receiver identification information for transactions above certain thresholds. In crypto, this means payment providers must collect and transmit originator and beneficiary data for qualifying transfers. Travel Rule compliance solutions include TRISA, Notabene, and Sygna. The rule aims to prevent money laundering and terrorist financing in cross-border crypto transactions.

Total Value Locked is the total amount of cryptocurrency deposited in a DeFi protocol's smart contracts, measured in USD. TVL indicates the scale of adoption and trust in a protocol. Higher TVL in DEX liquidity pools means deeper liquidity for token swaps, which directly affects the quality of exchange rates during payment settlement. TVL is tracked by analytics platforms like DeFiLlama and DeFi Pulse.

USDC (USD Coin) is a fiat-backed stablecoin issued by Circle, pegged 1:1 to the US dollar. Each USDC is backed by cash and short-term US Treasury securities held in regulated financial institutions. USDC is available on Ethereum, Polygon, Arbitrum, Solana, Base, Avalanche, and other networks. It is one of the most widely used stablecoins for crypto payment settlement due to its regulatory transparency, regular attestation reports, and deep liquidity across chains.

USDT (Tether) is the largest stablecoin by market capitalisation, pegged to the US dollar and issued by Tether Limited. USDT is available on virtually every major blockchain and is the most traded cryptocurrency by volume globally. It is extensively used in crypto payment processing, OTC trading, and cross-border remittances. While widely adopted, USDT has faced scrutiny over the transparency of its reserve backing compared to competitors like USDC.

Unbanked refers to individuals who do not have access to traditional banking services — no bank account, no credit card, no access to conventional payment infrastructure. Approximately 1.4 billion adults globally are unbanked. Crypto payments provide financial inclusion for unbanked populations because blockchain wallets require only a smartphone and internet connection — no bank account, credit history, or government ID needed for basic transactions. This makes crypto payments a powerful tool for emerging markets.

A validator is a node operator that participates in a Proof of Stake blockchain's consensus by staking cryptocurrency and voting on the validity of proposed blocks. Validators earn rewards for honest participation and face slashing (loss of staked funds) for malicious behaviour. The validator set secures the network and determines transaction finality. More validators generally means greater decentralisation and security, which underpins the reliability of crypto payment settlement.

A VASP is any business that offers services involving virtual assets (cryptocurrency) including exchanges, custodians, payment processors, and wallet providers. The term was defined by the Financial Action Task Force (FATF) and is used in global AML/CTF regulations. VASPs are required to implement customer due diligence, transaction monitoring, Travel Rule compliance, and suspicious activity reporting. Crypto payment gateways are classified as VASPs in most jurisdictions.

Volatility is the degree of price fluctuation of a cryptocurrency over time. Bitcoin and Ether can experience 5-10% daily price swings. For merchants, volatility creates risk — a $100 payment in ETH could be worth $95 or $105 by the time it settles. Crypto payment gateways mitigate volatility by locking exchange rates at the moment of payment and immediately converting to stablecoins or fiat. This ensures the merchant receives the exact amount quoted, regardless of subsequent price movement.

A cryptocurrency wallet is software or hardware that stores private keys and enables users to send, receive, and manage digital assets on blockchain networks. Wallets do not actually store cryptocurrency — the funds exist on the blockchain, and the wallet holds the keys that control them. Types include hot wallets (internet-connected: MetaMask, Trust Wallet, Coinbase Wallet), cold wallets (offline: Ledger, Trezor), and smart contract wallets (Safe, Argent). In crypto payments, the customer's wallet is the equivalent of a bank account — it is where they hold and spend their funds.

WalletConnect is an open protocol that enables secure communication between decentralised applications and mobile wallets. It allows users to connect their wallet to a website or dApp by scanning a QR code or clicking a deep link, then approve transactions on their phone. WalletConnect supports hundreds of wallets and is a standard integration for crypto payment checkout flows — it ensures customers can pay from any compatible wallet without installing browser extensions.

Web3 is the vision for a decentralised internet built on blockchain technology, where users own their data, identity, and digital assets rather than relying on centralised platforms. Web3 applications use smart contracts, tokens, and decentralised protocols instead of traditional servers and databases. Web3 payments are a core use case — they enable permissionless, borderless, programmable money transfers without intermediaries. SpacePay operates at the intersection of Web3 infrastructure and merchant payment acceptance.

A webhook is an HTTP callback that delivers real-time event notifications from one system to another. In crypto payments, webhooks notify the merchant's server when a payment is received, confirmed, expired, or settled. Instead of the merchant polling the payment API for status updates, the payment gateway pushes notifications to a configured URL. Webhooks are essential for automated order fulfilment, inventory management, and accounting integration. Webhook payloads are typically signed for verification.

A wrapped token is a cryptocurrency token pegged to the value of another asset and usable on a different blockchain. For example, Wrapped Bitcoin (WBTC) is an ERC-20 token on Ethereum backed 1:1 by Bitcoin held in custody. Wrapped tokens enable cross-chain liquidity — a Bitcoin holder can use WBTC in Ethereum DeFi protocols and payment flows without selling their Bitcoin. Wrapping and unwrapping is handled by custodians or decentralised bridges.

A zero-knowledge proof is a cryptographic method that allows one party to prove they know a value (or that a statement is true) without revealing the value itself. ZKPs enable privacy-preserving verification — proving you have sufficient funds for a payment without exposing your total balance, for example. ZK-Rollups (zkSync, StarkNet, Polygon zkEVM) use zero-knowledge proofs to compress thousands of transactions into a single proof verified on Layer 1, enabling massive scalability with inherited security.

Zero gas fees for end users means the blockchain transaction fee is paid by someone other than the customer — typically the merchant or payment provider. This is achieved through meta-transactions, gas sponsorship, or account abstraction, where a relayer submits the transaction on behalf of the user and covers the gas cost. Zero gas fees remove a major friction point in crypto payments — customers should not need to hold ETH or MATIC just to make a purchase. SpacePay covers gas fees for customers, making crypto checkout as simple as a card payment.