Digital assets in Scots private law: consultation

Glossary

Bitcoin: The first decentralised cryptocurrency using blockchain technology. It uses open-source, peer-to-peer technology to operate with no central authority of banks. Instead, managing transactions and the issuing of bitcoins is carried out collectively by the network.

Blockchain: A method of recording data in a structured way. Data (which might be recorded on a distributed ledger or structured record) is usually grouped into timestamped “blocks” which are mathematically linked or “chained” to the preceding block, back to the original or “genesis” block.

Cryptocurrency: A digital currency, using some form of Distributed Ledger Technology, in which value is transferred, stored or traded electronically on a decentralised system using cryptography, and not any central bank or actor. A cryptocurrency is a subset of crypto assets.

Digital Asset: Any asset that is represented digitally or electronically. There are many different types of digital assets, not all of which will be capable of being classed as moveable property. In this context, it is used in a broad sense.

Distributed Ledger: A digital store of information or data. A distributed ledger is shared (that is, distributed) among a network of computers (known as nodes) and may be available to other participants. Participants approve and eventually synchronize additions to the ledger through an agreed consensus mechanism.

Distributed Ledger Technology: Technology systems that enable the operation and use of a distributed ledger. DLT systems and processes allow computers to update records in a synchronized way across a DLT network.

Equity securities: Also referred to as 'stocks' or 'shares', these represent ownership usually in the form of shares of capital stock, which includes both common and preferred stock.

Fungible: A subjective quality of things that parties are willing to accept as mutually interchangeable with other things of a similar kind, quality, and grade. For example, pound coins are generally treated as a class of fungible things because one pound coin is generally accepted by counterparties as equivalent to and interchangeable with another pound coin.

Non-Fungible Token (NFT): These are crypto assets that represent the proof of title to a unique digital asset. They are digital tokens that are the equivalent of certificates of ownership for virtual (and sometimes physical) assets, such as works of art, collectibles, or music.