Cryptocurrency Exchanges and Searchable Symmetric Encryption Lecture Notes

This set of vocabulary flashcards covers the key concepts of cryptocurrency trust structures, centralized versus decentralized exchanges, and the technical mechanisms and risks associated with Searchable Symmetric Encryption (SSE).

Centralized Exchanges

Platforms like Binance, Coinbase, or BitSum where users trust a central company and its internal systems rather than the blockchain directly.

Off-chain system

An internal database used by centralized exchanges to record user balances and trades instantly instead of recording every transaction on the blockchain.

Bitsum Bitcoin error

A case study from February 2026 where a South Korean exchange mistakenly credited $620,000$ Bitcoin (worth approximately $84,000,000,000$ dollars) to users due to human error.

Gas fees

Transaction fees paid in blockchain systems to reward validators or miners for processing transactions.

On-chain

Transactions, such as deposits and withdrawals, that are recorded directly on a public blockchain ledger.

Proof of reserve

A safety check used to verify whether a cryptocurrency exchange actually holds the assets it claims to have.

Stablecoin

A cryptocurrency designed to keep a stable value by reaching its value to a real-world currency like the US dollar.

Libra

A project by Facebook (later called DM) to create a global stablecoin that faced strong resistance from governments.

DEX (Decentralized Exchange)

A platform where users trade directly from their own wallets through smart contracts without a central internal database.

Self-custody

A practice where users manage their own private keys, giving them full control over their assets but also total responsibility for recovery.

Searchable Symmetric Encryption (SSE)

A type of encryption that allows users to store encrypted data on a server and perform secure searches without the server knowing the data content or the search queries.

Keyword space (W)

A fundamental set of searchable terms used in symmetric encryption algorithms to generate indices and trapdoors.

Lambda ($\lambda$)

A security parameter, often a randomly selected or predetermined number, that indicates how difficult an encryption system is to break.

Trapdoor

A token generated on the client side using a secret key and a keyword, allowing the server to search the encrypted index.

Lossy return

A result in searchable encryption where a search may return false positives if different keywords result in the same hash, often used to increase speed.

SSE-1

A deterministic searchable symmetric encryption structure first developed in 2006 that uses a lookup table and array chaining for searching.

Padding

The practice of pairing empty strings with files in an array to prevent a server from guessing data patterns based on file counts.

File injection attack

An active attack where a server plants a file containing specific keywords into the database to deduce the plaintext of user search queries.

Leakage problem

The security risk where a server deduces plaintext by observing access patterns and the frequency of search queries over a long period.

Oblivious RAM (ORAM)

A technology used to hide access patterns from a server by constantly shuffling how data is accessed.

Frequency smoothing

A solution to leakage where dummy files are returned for infrequent keywords so that all searches appear to have a similar frequency to the server.