Crypto Glossary
If you’re new to the world of crypto, it’s easy to get lost in the sea of essential blockchain and cryptocurrency terms. This comprehensive crypto glossary explains the major cryptocurrency terms you should know when learning about digital currencies.
A
Address – A unique string of characters that represents a destination on a blockchain network where cryptocurrency can be sent or received.
Airdrop – Free distribution of cryptocurrency tokens to wallet addresses, often used as a marketing strategy or to reward loyal users.
Altcoin – Any cryptocurrency other than Bitcoin. Short for “alternative coin.”
API (Application Programming Interface) – A set of protocols and tools that allows different software applications to communicate with each other in the crypto ecosystem.
ASIC (Application-Specific Integrated Circuit) – Specialized hardware designed specifically for mining certain cryptocurrencies, particularly Bitcoin.
Atomic Swap – A smart contract technology that enables the exchange of one cryptocurrency for another without using centralized intermediaries.
B
Bitcoin (BTC) – The first and most well-known cryptocurrency, created by the pseudonymous Satoshi Nakamoto in 2009.
Blockchain – A distributed digital ledger that records transactions across multiple computers in a way that makes them difficult to alter retroactively.
Block – A collection of transaction data that gets added to the blockchain after being verified by network participants.
Block Height – The number of blocks that have been mined since the genesis block of a blockchain.
Bull Market – A period of rising cryptocurrency prices and optimistic market sentiment.
Bear Market – A period of declining cryptocurrency prices and pessimistic market sentiment.
C
Cold Storage – Keeping cryptocurrency private keys completely offline to protect them from hacking attempts.
Consensus Mechanism – The process by which a blockchain network agrees on the validity of transactions and maintains the integrity of the ledger.
Cryptocurrency – Digital or virtual currency secured by cryptography, making it nearly impossible to counterfeit or double-spend.
Centralized Exchange (CEX) – A trading platform operated by a central authority that facilitates cryptocurrency transactions.
Cross-chain – Technology that enables interoperability between different blockchain networks.
Custody – The safekeeping and management of cryptocurrency assets, often provided by specialized service providers.
D
DAO (Decentralized Autonomous Organization) – An organization governed by smart contracts and community voting rather than traditional management structures.
DApp (Decentralized Application) – An application that runs on a decentralized network, typically using blockchain technology.
DeFi (Decentralized Finance) – Financial services built on blockchain technology that operate without traditional intermediaries.
DEX (Decentralized Exchange) – A peer-to-peer trading platform that operates without a central authority.
Digital Asset – Any asset that exists in digital form, including cryptocurrencies, tokens, and NFTs.
Double Spending – The risk that a cryptocurrency can be spent twice, which blockchain technology prevents.
E
Ethereum (ETH) – The second-largest cryptocurrency by market capitalization and a blockchain platform for smart contracts and DApps.
ERC-20 – A technical standard for tokens on the Ethereum blockchain that defines a common set of rules.
Exchange – A platform where cryptocurrencies can be bought, sold, and traded for other digital assets or fiat currencies.
EVM (Ethereum Virtual Machine) – The runtime environment for smart contracts on the Ethereum blockchain.
F
Fiat Currency – Government-issued currency that is not backed by a physical commodity, such as USD, EUR, or JPY.
Fork – A change to a blockchain’s protocol rules, which can be either soft (backward-compatible) or hard (not backward-compatible).
FOMO (Fear of Missing Out) – The anxiety that drives investors to buy cryptocurrency during price surges to avoid missing potential profits.
FUD (Fear, Uncertainty, and Doubt) – Negative sentiment or misinformation spread to influence cryptocurrency prices or adoption.
G
Gas – The fee required to conduct transactions or execute smart contracts on the Ethereum network.
Genesis Block – The first block in a blockchain network.
GPU Mining – Using graphics processing units to mine cryptocurrencies.
Governance Token – A type of cryptocurrency that gives holders voting rights in protocol decisions.
H
Hash – A fixed-length string of characters generated by a mathematical algorithm, used to secure and verify blockchain data.
Hash Rate – The computational power used to mine and process transactions on a blockchain network.
HODL – A crypto slang term meaning to hold onto cryptocurrency investments long-term, originally a misspelling of “hold.”
Hot Wallet – A cryptocurrency wallet that is connected to the internet, making it convenient but potentially less secure.
I
ICO (Initial Coin Offering) – A fundraising method where new cryptocurrency projects sell tokens to investors.
Immutable – The characteristic of blockchain data that makes it extremely difficult to change once recorded.
Inflation – The increase in the supply of a cryptocurrency over time, or the decrease in purchasing power of fiat currency.
Interoperability – The ability of different blockchain networks to communicate and work together.
J
JOMO (Joy of Missing Out) – The satisfaction felt when avoiding risky cryptocurrency investments that later perform poorly.
K
KYC (Know Your Customer) – Verification processes required by regulated cryptocurrency exchanges to confirm user identities.
Key Pair – The combination of a public key (address) and private key used to secure cryptocurrency transactions.
L
Layer 1 – The base blockchain protocol, such as Bitcoin or Ethereum.
Layer 2 – Secondary protocols built on top of Layer 1 blockchains to improve scalability and speed.
Liquidity – The ease with which a cryptocurrency can be bought or sold without significantly affecting its price.
Lightning Network – A Layer 2 payment protocol designed to enable fast and cheap Bitcoin transactions.
M
Market Cap – The total value of a cryptocurrency, calculated by multiplying the current price by the total supply.
Mining – The process of validating transactions and adding new blocks to a blockchain, typically rewarded with cryptocurrency.
Mempool – The waiting area for unconfirmed transactions before they are added to a block.
Multisig (Multi-signature) – A security feature requiring multiple private keys to authorize a cryptocurrency transaction.
N
NFT (Non-Fungible Token) – A unique digital asset that represents ownership of a specific item or piece of content on a blockchain.
Node – A computer that participates in a blockchain network by maintaining a copy of the ledger and validating transactions.
Non-custodial – A wallet or service where users maintain control of their private keys and funds.
O
Oracle – A service that provides external data to blockchain networks and smart contracts.
On-chain – Transactions and data that are recorded directly on a blockchain.
Off-chain – Transactions and activities that occur outside of the main blockchain.
P
Private Key – A secret cryptographic key that gives the holder control over cryptocurrency associated with a specific address.
Public Key – A cryptographic key that can be shared publicly and is used to receive cryptocurrency transactions.
Proof of Work (PoW) – A consensus mechanism where miners compete to solve computational puzzles to validate transactions.
Proof of Stake (PoS) – A consensus mechanism where validators are chosen to create new blocks based on their stake in the network.
Q
QR Code – A type of barcode that can store cryptocurrency addresses for easy sharing and scanning.
R
Rug Pull – A type of scam where developers abandon a project and run away with investors’ funds.
Replay Attack – A network security attack where valid data transmission is maliciously repeated.
S
Satoshi – The smallest unit of Bitcoin, equal to 0.00000001 BTC, named after Bitcoin’s creator.
Smart Contract – Self-executing contracts with terms directly written into code on a blockchain.
Staking – The process of participating in a Proof of Stake network by locking up cryptocurrency to help secure the network and earn rewards.
Stablecoin – A type of cryptocurrency designed to maintain a stable value relative to a reference asset, usually the US dollar.
Seed Phrase – A series of words that can be used to recover a cryptocurrency wallet and its funds.
T
Token – A digital asset created on an existing blockchain platform, often representing a specific utility or asset.
Transaction Fee – The cost paid to miners or validators for processing a cryptocurrency transaction.
TVL (Total Value Locked) – The total amount of cryptocurrency locked in DeFi protocols.
TPS (Transactions Per Second) – A measure of how many transactions a blockchain network can process in one second.
U
UTXO (Unspent Transaction Output) – A model used by Bitcoin to track ownership of cryptocurrency.
V
Validator – A participant in a Proof of Stake network responsible for verifying transactions and creating new blocks.
Volatility – The degree of price fluctuation in cryptocurrency markets.
Vesting – A process where tokens or cryptocurrency are released gradually over time rather than all at once.
W
Whale – An individual or entity that holds a large amount of cryptocurrency, capable of influencing market prices.
Wallet – Software or hardware used to store, send, and receive cryptocurrency.
Web3 – The vision of a decentralized internet built on blockchain technology.
Whitepaper – A document that explains the technical details and vision of a cryptocurrency project.
X
Cross-chain Bridge – Technology that allows the transfer of tokens and data between different blockchain networks.
Y
Yield Farming – The practice of lending or staking cryptocurrency to generate returns through interest, fees, or token rewards.
YTD (Year to Date) – A measure of performance from the beginning of the current year to the present date.
Z
Zero-Knowledge Proof – A cryptographic method that allows one party to prove knowledge of information without revealing the information itself.
This glossary provides a foundational understanding of cryptocurrency and blockchain terminology. As the crypto space continues to evolve, new terms and concepts regularly emerge, making ongoing education essential for anyone participating in this dynamic ecosystem.