Crypto Glossary

2FA (Two-Factor Authentication)

A security process that requires users to provide two different authentication factors to verify themselves. Often used in protecting accounts on digital platforms, including crypto exchanges.

51% Attack

A type of attack on a blockchain where an individual or group gains control of more than 50% of the network's mining hashrate or stake, enabling them to disrupt the network by double spending coins or preventing new transactions from confirming.

ASIC Miner

Specialized hardware designed specifically for mining cryptocurrency. ASICs (Application-Specific Integrated Circuits) are known for their high processing power and energy efficiency compared to general-purpose hardware.

Address

A unique identifier that represents a destination for a cryptocurrency payment, typically consisting of a string of letters and numbers.

Airdrop

A distribution of a cryptocurrency token or coin, usually for free, to numerous wallet addresses. Airdrops are primarily implemented as a way of gaining attention and new followers, resulting in a larger user-base and a wider disbursement of coins.

Altcoin

Any cryptocurrency other than Bitcoin. Altcoins are created by diverging from Bitcoin consensus rules (the fundamental rules of the blockchain) or by developing a new cryptocurrency from scratch.

Atomic Swap

A technology that enables the exchange of one cryptocurrency for another without the need for traditional intermediaries, such as exchanges.

Bear Market

A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining.

Bitcoin

The first decentralized digital currency that works without a central bank or single administrator. It was invented in 2009 by an unknown person or group of people using the name Satoshi Nakamoto.

Blockchain

A distributed ledger technology that maintains a continuously growing list of records, called blocks, which are linked and secured using cryptography.

Bull Market

A market condition in which the prices of securities are rising or are expected to rise.

Cold Storage

The storage of cryptocurrencies offline, e.g., in a hardware wallet or paper wallet, to protect from hacking and other forms of cyber theft.

Consensus

The agreement reached among network nodes on the validity of transactions. Different blockchain networks use different consensus mechanisms to agree on ledger states.

Cryptocurrency

Digital or virtual currency that uses cryptography for security, making it extremely difficult to counterfeit or double-spend.

DAO (Decentralized Autonomous Organization)

An organization represented by rules encoded as a computer program that is transparent, controlled by organization members and not influenced by a central government.

DApp (Decentralized Application)

An application run by many users on a decentralized network with trustless protocols.

DEX (Decentralized Exchange)

A cryptocurrency exchange which operates in a decentralized way, without a central authority.

DeFi (Decentralized Finance)

Financial services with no central authority that operates entirely on blockchain technology.

Digital Signature

A mathematical scheme for verifying the authenticity of digital messages or documents. A valid digital signature gives a recipient reason to believe that the message was created by a known sender and that it was not altered in transit.

Double Spending

The risk that a digital currency can be spent twice. This is a potential problem unique to digital currencies because digital information can be reproduced relatively easily by savvy individuals who understand the blockchain network.

ERC-20

A technical standard used for smart contracts on the Ethereum blockchain for implementing tokens. ERC-20 defines a common list of rules that an Ethereum token has to implement.

Ethereum

A decentralized platform that enables developers to build and deploy smart contracts and decentralized applications (DApps) without third-party interference.

Exchange

A platform where cryptocurrencies are traded. Exchanges can be either fiat-to-crypto or crypto-to-crypto.

FUD (Fear, Uncertainty, Doubt)

A disinformation strategy used in sales, marketing, public relations, politics, and propaganda. In crypto, it's often used to influence perceptions by spreading negative, misleading, or false information.

Faucet

A website or app that provides small amounts of cryptocurrencies for free to encourage adoption.

Fiat

Government-issued currency that is not backed by a physical commodity, like gold or silver.

Fork

A change to the protocol of a blockchain network that results in two separate versions, one that follows the old rules and one that follows the new rules. This can be a "hard fork" or a "soft fork."

Gas

A fee paid to conduct transactions and execute smart contracts on the Ethereum network; essentially, it's the "fuel" for the operations.

Genesis Block

The very first block in a blockchain.

HODL

Originally a typo for "hold," it's now a backronym for "Hold On for Dear Life." It refers to a passive investment strategy in which you hold onto your investments despite market fluctuations.

Halving

A 50% reduction in the block reward given to Bitcoin miners, scheduled to occur every 210,000 blocks (approximately every four years), to control inflation.

Hard Fork

A type of fork that renders previously invalid transactions valid, and vice versa. This requires all nodes or users to upgrade to the latest version of the protocol software.

Hash

A function that converts an input (or 'message') into a fixed-size string of bytes. The output is typically a 'digest' that represents concisely the original set of data.

Hash Rate

The speed at which a compute is completing an operation in the Bitcoin code. A higher hash rate is better when mining as it increases the opportunity of finding the next block and receiving the reward.

ICO (Initial Coin Offering)

A fundraising mechanism where new projects sell their underlying crypto tokens in exchange for bitcoin and ether.

IEO (Initial Exchange Offering)

Similar to an ICO, an IEO is conducted on the platform of a cryptocurrency exchange. IEOs are administered by an exchange on behalf of the startup that seeks to raise funds with its newly issued tokens.

KYC (Know Your Customer)

The process of a business verifying the identity of its clients. It's a standard practice in the investment and financial services industry to prevent fraud.

Layer 1

The underlying main blockchain architecture. Ethereum and Bitcoin are examples of layer 1 blockchains.

Layer 2

A secondary framework or protocol that is built on top of an existing blockchain system. The main goal of these protocols is to solve the transaction speed and scaling issues.

Ledger

A physical or digital log used to record transactions made in bitcoin or other cryptocurrencies.

Liquidity

The ability to buy or sell assets in the market without causing a significant price change.

Liquidity Pool

A collection of funds locked in a smart contract, used to facilitate trading by providing liquidity on decentralized exchanges.

Mainnet

A blockchain protocol that has been fully developed and deployed, where actual transactions take place on a distributed ledger.

Market Cap

The total value of all coins of a particular cryptocurrency that have been mined. It's calculated by multiplying the current price by the total supply.

Market Order

An order to buy or sell a cryptocurrency immediately at the best available current price.

Mining

The process of adding transaction records to Bitcoin's public ledger of past transactions or any other blockchain's past transactions.

Mnemonic Phrase

A list of words used in sequence to access or restore your cryptocurrency assets. It's fundamentally the backup of a wallet.

Multisignature (Multi-Sig)

A digital signature scheme which requires that another user or users sign a transaction before it can be broadcast onto the blockchain.

Node

Any active participant in a blockchain network, involved in creating or validating blocks.

Non-Fungible Token (NFT)

A type of cryptographic token on a blockchain that represents a unique asset. These can be fully digital assets or tokenized versions of real-world assets.

Off-Chain

Transactions that occur outside the blockchain and are not recorded on the blockchain itself.

On-Chain

Transactions that occur on the blockchain and are recorded on the blockchain itself.

Oracle

A bridge between the real world and the blockchain by providing data to smart contracts for execution of said contracts under specific conditions.

Order Book

A list of buy and sell orders for a specific currency pair or security, organized by price level.

P2P (Peer-to-Peer)

A decentralized communications model in which each party has the same capabilities and either party can initiate a communication session.

Pair

Refers to a trade between one type of cryptocurrency and another.

Paper Wallet

A form of cold storage where a public and private key are printed together, typically in QR form, for security.

Permissioned Blockchain

A private blockchain where access needs to be granted either by the network starter or by a set of rules put into place by the network starter.

Permissionless Blockchain

A public blockchain that anyone can join and participate in, such as Bitcoin.

Private Key

A secret number that allows bitcoins to be spent and is saved in the wallet of the user.

Proof of Stake (PoS)

A type of algorithm by which a cryptocurrency blockchain network aims to achieve distributed consensus. Unlike the proof of work (PoW) where the algorithm rewards participants who solve mathematical problems with the goal of validating transactions and creating new blocks, in PoS, the creator of a new block is chosen in a deterministic way, depending on its wealth, also defined as stake.

Proof of Work (PoW)

A system that ties mining capability to computational power. Blocks must be hashed, which is a functionally difficult process.

Public Key

A number that corresponds to a private key, but does not need to be kept secret. A public key can be freely shared and is what the Bitcoin network uses to ensure you are the owner of an address that can send funds.

Pump and Dump

A form of market manipulation in which investors inflate the price of an owned stock (or cryptocurrency) and then sell off once the price has risen following the surge in interest as a result of the initial buying.

Rekt

Slang for "wrecked", describing a bad loss in value, typically used when a trader suffers a heavy loss by making a poor trading decision.

Roadmap

A timeline of a project's goals and planned development, used to track progress and expectations.

Rug Pull

A scam where developers abandon a project and leave with investors' funds.

Satoshi

The smallest unit of Bitcoin, named after its pseudonymous creator, Satoshi Nakamoto. One Satoshi is one hundred millionth of a Bitcoin.

Scalability

The ability of a blockchain network to handle a large number of transactions in a short period of time.

Seed Phrase

A series of words generated by your cryptocurrency wallet that give you access to the cryptocurrencies associated with that wallet.

SegWit (Segregated Witness)

An implemented protocol upgrade intended to provide protection from transaction malleability and increase block capacity.

Sharding

A database partitioning technique used by blockchain companies to scale networks, it involves splitting the network into smaller pieces, or shards, each capable of processing separate transactions concurrently.

Sidechain

A separate blockchain that is attached to its parent blockchain using a two-way peg.

Slippage

The difference between the expected price of a transaction and the price at which the transaction is executed.

Smart Contract

A self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code.

Smart Contract Audit

An inspection of the code in a smart contract to ensure it is secure and will behave as expected.

Soft Cap

The minimum amount of funds that an ICO aims to gather. If the ICO cannot raise that minimum amount, it may be canceled, and the collected funds returned to participants.

Soft Fork

A change to the cryptocurrency protocol that is backward compatible; old nodes will recognize new blocks as valid, so a soft fork is backwards-compatible.

Solidity

A programming language for writing smart contracts, primarily associated with Ethereum.

Staking

Participating in a proof-of-stake (PoS) system by holding funds in a wallet to support network operations.

Supply Cap

The maximum number of coins or tokens that will ever exist in the lifetime of the cryptocurrency.

Swap

An exchange of one cryptocurrency for another, typically facilitated by automated market making (AMM) on decentralized exchanges.

Testnet

A blockchain used for testing new technologies or upgrades before they are released on the main network.

Throughput

The amount of transactions a network can process in a certain time frame.

Time Lock

A feature in some cryptocurrencies that prevents the spending of some coins until a specified future date or block height.

Token

A unit of value issued by a tech or crypto project, representing a stake in the entity or utility for a product or service.

Token Sale

The event in which a new cryptocurrency project sells part of its cryptocurrency tokens to early adopters and enthusiasts in exchange for funding.

Tokenomics

The economics of a token; includes things like its distribution, supply and demand dynamics, and how incentives are structured within the token's ecosystem.

Total Supply

The total amount of coins in existence right now (minus any coins that have been verifiably burned).

Transaction Fee

A fee that is included with your transaction to be taken by miners. This fee ensures that a transaction will be processed by the blockchain network and added to the blockchain.

Trustless

Describes interactions on a blockchain, where trust is not necessary between parties due to the cryptographic nature of the technology.

Validator

A participant in the network who is responsible for verifying and validating new entries into the blockchain.

Volatility

The measurement of price movements over time for a traded financial asset, which can be high in cryptocurrencies, indicating big price swings.

Wallet

A digital wallet stores the public and/or private keys for cryptocurrency transactions.

Web 3.0

An idea for a new iteration of the World Wide Web based on blockchain technology, which incorporates concepts such as decentralization and token-based economics.

Whale

A term used to describe an individual or entity that holds a significant amount of cryptocurrency.

Whitepaper

A document produced by developers that provides information about the cryptocurrency and its technology.

Wrapped Tokens

Tokens from one blockchain that are hosted on another blockchain with a price pegged to the original token.

Yield Farming

The practice of staking or lending cryptocurrency tokens to generate high returns or rewards in the form of additional cryptocurrency.

Zero-Knowledge Proof

A method by which one party can prove to another party that they know a value (e.g., a secret key), without conveying any information apart from the fact that they know the value.