Crypto Glossary
Plain-English definitions of the crypto terms every beginner runs into.
56 terms
- Address
- A unique string of letters and numbers that identifies a wallet on a blockchain, used to send and receive crypto. It is similar to an email address or bank account number.
- Airdrop
- A distribution of free tokens to many wallet addresses, often used to promote a new project or reward early users. You usually receive them without paying anything.
- Altcoin
- Any cryptocurrency other than Bitcoin. The name is short for "alternative coin".
- AMM
- An Automated Market Maker is software that lets people trade tokens automatically using pools of funds instead of a traditional buyer-and-seller order book. It sets prices using a math formula.
- APY
- Annual Percentage Yield is the total amount of interest or rewards you earn on your crypto over a year, including compounding. A higher APY means more potential earnings, but often more risk.
- Bear Market
- A period when prices are falling and most investors expect them to keep dropping. The mood is usually pessimistic.
- Bitcoin
- The first and most well-known cryptocurrency, created in 2009. It lets people send digital money directly to each other without a bank.
- Block
- A group of transactions bundled together and added to the blockchain. Each block links to the one before it, forming a chain.
- Blockchain
- A shared digital ledger that records transactions across many computers so the data cannot be easily changed. It is the technology behind most cryptocurrencies.
- Bridge
- A tool that lets you move tokens from one blockchain to another. It helps different networks work together.
- Bull Market
- A period when prices are rising and most investors expect them to keep climbing. The mood is usually optimistic.
- CEX
- A Centralized Exchange is a company-run platform where you buy and sell crypto, such as Coinbase or Binance. The company holds your funds and manages trades for you.
- Cold Wallet
- A wallet that stores your crypto keys offline, away from the internet, to keep them safer from hackers. It is often a physical device.
- Consensus
- The process by which the computers in a blockchain network agree that a set of transactions is valid. It keeps everyone's copy of the ledger the same.
- Custodial
- A custodial service holds your private keys for you, meaning a third party controls access to your crypto. It is convenient but means you must trust that company.
- DAO
- A Decentralized Autonomous Organization is a group that runs using rules written in code, where members vote on decisions instead of relying on a central boss. Voting power often comes from holding the group's tokens.
- DApp
- A Decentralized Application is software that runs on a blockchain instead of a single company's servers. Once launched, no single party can fully control it.
- DeFi
- Decentralized Finance refers to financial services like lending, borrowing, and trading built on blockchains without banks or middlemen. Users interact directly through software.
- DEX
- A Decentralized Exchange lets you trade crypto directly with others through software, without a company holding your funds. Trades happen automatically using smart contracts.
- Ethereum
- A popular blockchain that can run programs called smart contracts, not just send money. Its native coin is called Ether (ETH).
- Fiat
- Government-issued money like the US dollar, euro, or yen that is not backed by a physical commodity. It is the regular money used in everyday life.
- Fork
- A change to a blockchain's rules that creates a new version of the network. Sometimes it splits into two separate blockchains.
- Gas
- The fee you pay to make a transaction or run a program on a blockchain like Ethereum. It compensates the network for the computing work involved.
- Gwei
- A tiny unit of Ether used to measure gas fees on Ethereum. One Gwei equals one-billionth of an Ether.
- Halving
- An event where the reward miners receive for adding new blocks is cut in half, which happens roughly every four years for Bitcoin. It slows the creation of new coins.
- Hash
- A unique fixed-length code produced from any piece of data by a math function. Even a tiny change in the data creates a completely different hash, which helps secure the blockchain.
- HODL
- A slang term meaning to hold onto your crypto for the long term instead of selling during price swings. It came from a misspelling of "hold".
- Hot Wallet
- A wallet connected to the internet, such as a phone app or browser extension, that makes spending crypto quick and easy. It is convenient but more exposed to hackers than a cold wallet.
- Immutable
- Describes data that cannot be changed or deleted once it is recorded. Blockchain transactions are immutable, which makes records trustworthy.
- KYC
- Know Your Customer is a process where a platform verifies your identity, usually with an ID document, before you can use its services. It is required by law in many countries to prevent fraud.
- Layer 2
- A separate network built on top of a main blockchain to make transactions faster and cheaper. It handles activity off the main chain and then settles back to it.
- Ledger
- A record of all transactions. In crypto, the blockchain itself acts as a public ledger that anyone can inspect.
- Liquidity Pool
- A collection of tokens locked in a smart contract that lets people trade on a decentralized exchange. People who add tokens to the pool can earn a share of the trading fees.
- Market Cap
- The total value of a cryptocurrency, found by multiplying its price by the number of coins in circulation. It gives a rough sense of a coin's size.
- Mining
- The process of using computer power to validate transactions and add new blocks to certain blockchains, earning crypto rewards. Bitcoin uses mining to stay secure.
- Mint
- To create a new token or NFT and record it on the blockchain for the first time. The word comes from how physical coins are made.
- Mnemonic / Seed Phrase
- A list of usually 12 to 24 simple words that act as the master backup for your wallet. Anyone who has these words can access your funds, so they must be kept secret.
- Node
- A computer that connects to a blockchain network and helps keep a copy of its records. Nodes work together to keep the network running and honest.
- Non-Custodial
- A non-custodial wallet or service lets you hold your own private keys, so only you control your crypto. It offers more control but also more personal responsibility.
- NFT
- A Non-Fungible Token is a unique digital item recorded on a blockchain, such as art, collectibles, or game items. Unlike regular coins, each NFT is one of a kind.
- Private Key
- A secret code that proves you own crypto and lets you spend it. It must never be shared, because anyone who has it can take your funds.
- Proof of Stake
- A method of securing a blockchain where validators lock up their own coins for the chance to confirm transactions and earn rewards. It uses far less energy than mining.
- Proof of Work
- A method of securing a blockchain where computers compete to solve hard math puzzles to add new blocks. It is secure but uses a lot of electricity, and Bitcoin relies on it.
- Public Key
- A code derived from your private key that can be shared safely and is used to create your wallet address. Others use it to send you crypto.
- Rug Pull
- A scam where the creators of a crypto project suddenly take investors' money and disappear. It leaves holders with worthless tokens.
- Satoshi
- The smallest unit of Bitcoin, equal to one hundred-millionth of a Bitcoin. It is named after Bitcoin's mysterious creator.
- Smart Contract
- A program stored on a blockchain that automatically runs when set conditions are met, without needing a middleman. For example, it can release payment once a task is confirmed.
- Stablecoin
- A cryptocurrency designed to keep a steady value, usually pegged to a currency like the US dollar. It helps people avoid the wild price swings of other crypto.
- Staking
- Locking up your crypto to help support and secure a blockchain, earning rewards in return. It is a common way to earn passive income in proof-of-stake networks.
- Token
- A digital asset created and managed on an existing blockchain, often representing value, ownership, or access to a service. Many tokens live on networks like Ethereum.
- Tokenomics
- The study of how a crypto token's supply, distribution, and incentives are designed to affect its value. Good tokenomics can make a project more sustainable.
- Transaction Hash
- A unique code that identifies a specific transaction on the blockchain, also called a TxID. You can use it to look up and confirm a transaction's details.
- Validator
- A participant in a proof-of-stake network who checks transactions and adds new blocks, earning rewards for honest work. Validators usually must lock up coins as a guarantee.
- Wallet
- A tool, app, or device that stores the keys you need to access and manage your crypto. It does not hold coins directly but the keys that prove you own them.
- Web3
- A vision of the internet built on blockchains where users own their data and assets instead of big companies. It aims to give people more control online.
- Whale
- A person or group that holds a very large amount of a cryptocurrency. Their big trades can noticeably move the market.