The world of cryptocurrencies is a large and complex one. It can be intimidating to newcomers with abridgment and jargon-filled terms.
If you’re looking to start dabbling in crypto or simply want to understand the basics better, read our comprehensive guide to the most common terms.
51% attack: A hypothetical situation where more than half of the computing power on a blockchain network is controlled by one person or group. They can decide which transactions are verified.
Airdrop: An event where a blockchain project distributes free tokens or coins to the community.
Altcoin: Any cryptocurrency that is an alternative to Bitcoin.
AML: Anti-Money Laundering, a legal framework that governments use to stop financial crimes like money laundering, terrorist financing, fraud, and more.
ATH: All-Time High, the highest value an asset reaches at any point in its history.
Bag holder: A derogatory term to describe investors still holding certain assets that have dropped significantly in value since their purchase price.
Bear market: A market in which prices fall, and negative sentiment is rife.
Bitcoin: The first decentralized cryptocurrency released in 2009.
Bitcoin maximalist: A person who believes or defends bitcoin against all other crypto assets.
Blockchain: A type of decentralized public ledger which contains records/transactions and forms the basis for how many cryptocurrencies work, using cryptography to link together blocks in a chain so that each block is connected with the previous one chronologically.
Block reward: A monetary incentive provided by cryptocurrencies whenever an individual mines a block successfully.
Bollinger bands: A technical indicator used by traders to measure market volatility consisting of three lines plotted at standard deviation levels above and below a center line.
BTD: Buy The Dip; this means buying coins/tokens when the price drops and they’re cheap.
Bull market: A market in which prices rise, and investors expect even better returns.
Crypto-art: A product with a piece of art embedded on the front and private keys to an address holding a digital currency or another token.
Cryptocurrency: A digital asset that uses cryptography as its primary security measure to control the creation of additional units and verify transactions on its decentralized network.
Crypto derivatives: A financial instrument that derives value from an underlying asset. They are usually contracts traded between two parties based on the price of a particular item, rate, or index at a future date.
Dead coin: A failed digital currency.
Decentralized: When something has no central control but operates independently through peer-to-peer networks and consensus algorithms, transactions cannot be reversed once confirmed on blockchains with no central authority or place of residence since they are decentralized.
Decentralized applications (DApps): DApps are software programs built and hosted on blockchain technology, providing users with various functions through peer-to-peer action rather than depending on traditional intermediaries such as governments or banks. Decentralized apps are frequently used to execute decentralized finance operations.
Decentralized autonomous organization (DAO): A company or business run by smart contracts and governed by its token-holding community.
Decentralized exchange (DEX): A system that allows for the trustless, peer-to-peer trading of cryptocurrencies without a third party or intermediary taking fees along the way.
Decentralized finance (DeFi): Pushes the development of alternative decentralized blockchain-based financial applications to enable peer-to-peer transactions without third parties. DeFi apps include lending platforms, exchanges, prediction markets, and many more solutions built on top of various protocols like Ethereum or Bitcoin.
Distributed ledger: A type of database spread across several nodes in different locations to remain decentralized and transparent to those keeping records. Every single node will hold a complete copy updated regularly through consensus algorithms when new transactions occur. This also allows for faster processing since multiple copies are already available rather than one central authority who has to distribute them from scratch if something goes wrong. It should not be confused with distributed computing, though both use similar techniques. Ledgers record data while computations perform actions based on said data. Distributed ledger technology (DLT) is another term used for this concept.
Double-spend: When someone tries to send a transaction but ends up sending it twice since they did not wait for the first one to be confirmed on-chain; this is often done by those with malicious intent and can lead to losing all of your funds if you fall victim to it.
Digital gold: Different cryptocurrencies are sometimes compared to actual gold based on storage and appreciation. Bitcoin is sometimes referred to as digital gold.
Dumping: Offloading large quantities of coins onto exchanges all at once to drive down prices through the excessive supply of said coins.
DYOR: Do Your Own Research; this means that all crypto investors should do their research on a project before investing in it.
Entry and exit points: These are the points at which an investor decides to buy or sell a particular coin/token.
ERC-20: A technical standard for smart contracts on the Ethereum blockchain. It ensures all tokens and transactions comply with specific rules (such as how many decimal points to use).
Ethereum Virtual Machine (EVM): A Turing complete virtual machine that helps run smart contracts on Ethereum’s blockchain by keeping track of their state and allowing them to be executed simultaneously across the entire network through consensus. It also calculates gas prices before transactions are conducted. It prevents users from spamming it with infinite loops or useless code, making it incredibly difficult for others to use since every computational step requires a fee in Ether.
Etherscan: A web tool that lets you explore transactions, wallets, and other aspects of Ethereum’s blockchain. It also provides various charts to visualize said data and a list for those who want to track specific activity on the network.
Exchange: Platforms that allow users to buy, sell, or trade cryptocurrencies for other digital currencies or traditional currencies like US dollars or euros. Cryptocurrency exchanges are a vital part of the crypto ecosystem, providing users access to crypto funds.
Fear and greed index: A technical indicator that measures market sentiment based on the prices of seven different assets.
Fiat currency: A legal tender declared by the government; it can be backed by its economy and has an institution regulating it (a central bank). For example, the Great British Pound (GBP) and the United States Dollar (USD) are fiat currencies.
Fiat gateways: A cryptocurrency exchange that allows users to deposit fiat currencies such as the dollar or euro into their accounts for trading purposes.
Flippening: A moment when a cryptocurrency’s market capitalization (or the total value of its tokens in circulation) surpasses that of another crypto.
FOMO: Fear Of Missing Out; the acronym coined to describe a phenomenon when investors buy or sell an asset out of fear of missing out on perceived opportunities.
Fork: A software update backward-incompatible with previous versions of the same cryptocurrency protocol, creating an entirely new branch from block 0.
FUD: Fear, Uncertainty, and Doubt; the acronym coined for crypto-sphere discussions.
Futures: A contract to buy or sell an asset later with the price agreed upon today. Investors use these as both a hedge against risk and a tool for profit.
Gas: The name given to the transaction cost of running smart contract functions on Ethereum. It is payable in units called Gwei, which are a billionth of an Ether.
Genesis block: The first block in the Blockchain, usually hardcoded into the coin’s system, which is used to bootstrap its network.
Halving: The process by which Bitcoin mining rewards are reduced by 50% every four years; this is done to create scarcity and control the total supply (since no more than 21 million Bitcoins can ever be mined).
Hard fork: A backward-incompatible software update with previous versions of the same cryptocurrency protocol. It creates an entirely new blockchain branch.
Hardware wallet: Also known as cold storage/wallet, it’s essentially a USB stick that one uses for offline transactions and keeping your private keys safe. It’s more secure than most other wallets since they’re harder to access if you lose them. There are different types, including paper and digital ones, but each has pros and cons.
Hash function: A specific algorithm that maps data of any size to a fixed size output, also referred to as a cryptographic function. Computation alone cannot decipher it. Hashing takes an input string/file/document and outputs the same ‘hash’ every time so long as its original content has not been altered. This process is irreversible, making the discovery of the original data nearly impossible unless someone had access to the private key associated with each transaction on blockchain networks containing these hashes written into their blocks instead. Every cryptocurrency’s hash algorithm must meet specific requirements before being approved for existence.
Hedging: Using two strategies to cancel out the risks involved with each of them. For example, you could hedge by taking a long position and shorting it simultaneously; this would result in your exposure being less than if you just went long or short on that particular asset/trade alone.
HODL: The mistyped word “hold” originally posted by an anonymous user on the Bitcointalk forum. The crypto community later turned it into slang for the long-term keeping of a cryptocurrency despite market volatility.
Hot wallet: Any cryptocurrency wallet connected to the internet. As such, it is at a higher risk of being hacked. They’re not recommended for long-term storage but rather as a way of sending/receiving funds where necessary.
ICO: Initial Coin Offering. The first offering for public purchase and sale of tokens or digital assets for a newly born blockchain project.
IDO: Initial decentralized offering. It is similar to an ICO but lets users interact with the project before it goes live.
IEO: Initial Exchange Offering: This is when a coin is sold for the first time via a digital currency exchange.
KYC: Know Your Customer. It implies obtaining and verifying personal identification information from customers for business purposes before allowing them access to services or products.
Lambo: A slang term for Lamborghini used to indicate how quickly someone expects to become rich given the current market conditions. It’s also often used ironically to convey the opposite idea.
Lightning network: A proposed solution that aims to speed up transactions on the Bitcoin blockchain by moving them off the main chain. The network is a decentralized system of pre-funded channels where people can make transfers without waiting for global consensus and confirmation from miners, thus allowing faster settlement times.
Limit order: An instruction an investor gives when placing a buy or sell order on the market; it sets the maximum price they are willing to pay (for buy orders) or the minimum amount for which they will agree to sell (orders).
Market order: A limit order placed without specifying the execution price.
Memecoin: A digital currency with no inherent value used for social media purposes or just for fun.
Miner: An individual or group of people who use their computing power to confirm transactions on the blockchain network, receiving rewards in exchange for this service.
Mining: The process of creating new cryptocurrency units by solving complex mathematical problems, which are then verified and added to the blockchain network; miners usually receive a reward for their work in the form of these coins they mine.
Mining difficulty: The process in which miners must use their computing power to solve complex cryptographic puzzles before verifying transactions and earning mining rewards. The difficulty level serves as an indicator of how competitive mining is at any given moment in time.
Mining rigs: Special computers mining cryptocurrencies such as Bitcoin, Litecoin, etc. These are custom-built machines designed specifically for mining coins through finding solutions to complex mathematical problems so they can be added to public ledgers. They tend to have multiple graphics cards and specially designed processors and cooling systems, which helps them mine better than your average computer can do alone.
Moon: A slang term to describe a crypto price going up astronomically.
NFT: Short for non-fungible tokens. They are unique digital assets and can’t be replaced by generic items like coins or diamonds.
Node: A connected computer that is a part of a network, the Blockchain in this case. All nodes are equal and can broadcast messages across the entire system.
On-chain governance: A system in blockchain technology where token holders vote and make decisions on proposed changes or upgrades to improve the network’s performance without compromising its security.
Peer-to-peer: A system where two parties can conduct financial transactions without involving a third party, like a bank. The Blockchain is an example since it connects nodes in its network directly to one another and allows them to share data/transactions freely.
Permissioned ledger: A distributed ledger where only certain members are allowed access; this is usually determined by a set of rules or an access control layer.
Proof of authority (PoA): A consensus mechanism where validators are required to demonstrate the possession of a certain amount or type of stake. Various blockchain networks employ this mechanism, including POA Networks based on Ethereum and Oyster Pearl (based on IOTA Tangle): to name a few.
Proof of stake (PoS): A type of validation that requires members/nodes to prove ownership over a certain amount of cryptocurrency to guarantee their right to vote on transaction validation.
Proof of work (PoW): The consensus algorithm used to validate transactions on the blockchain, which requires users to solve complex computational puzzles to add new blocks onto the chain.
Public key: A cryptographic key that allows a user to receive cryptocurrency from another user but cannot be used to send funds. It is unique and usually contains 64 characters to encrypt your wallet or make digital signatures.
Pump and dump: Buying and selling a coin on the market to raise its price and attract other users, followed by profit-taking.
Private key: A cryptographic key that allows users to send cryptocurrency from their wallet but cannot be used to receive funds. It is unique and usually consists of 64 characters which you use for decrypting your wallet or making digital signatures.
Regulation: Rules created by a government to enforce compliance with laws and standards for particular businesses or industries.
Rekt: A slang term used to describe an investor becoming “wrecked” by losing all their money due to trading or other factors within the market.
Return on investment (ROI): The percentage of investment returns over an initial investment. It’s often used to measure the performance of a particular cryptocurrency or trading strategy, where higher numbers indicate better results.
Rugpull: A fraudulent cryptocurrency strategy in which crypto developers desert a project and flee with investors’ money.
Satoshi Nakamoto: The pseudonym of the creator(s) behind Bitcoin, their true identity remains a mystery despite several attempts to solve this ongoing riddle.
Scalability: The capability of a system, network, or process to handle a growing amount of work, be it products being sold online by an e-commerce store or increased transaction volume on a blockchain network, without compromising safety/integrity or performance/speed requirements in any way from its original form when it was first created.
Scalping: Buying and selling a coin/token multiple times on the same day within short timeframes to profit from small price fluctuations over that period. These often occur when there is low volume, but many exchanges have daily limits for how much you can trade, so some traders will try to take advantage of these periods by making repeated trades throughout them.
Shilling: a type of hype where someone heavily promotes a cryptocurrency by using their social media influence with little regard for the quality of the coin.
Sidechain: A separate but interoperable blockchain that runs parallel to the main chain to enable asset transfer between the two. Usually, it allows for faster transactions with lower costs since they aren’t included in the primary network.
S**t coin: A derogatory term used to describe cryptocurrencies that are poor in value and likely to fail.
Smart contract: A piece of code executed on the blockchain under certain conditions. It allows developers to create decentralized applications without building the blockchain from scratch.
Soft fork: An upgrade to a blockchain protocol where only previously valid transactions are made invalid.
SPAC: Special purpose acquisition companies (SPACs). They are a type of securities created by fusing multiple asset classes. For example, SPACs can be used for registering an initial public offering (IPO) where the company itself doesn’t exist yet but will in the future once it’s become profitable enough to go through with its plans and meet all requirements needed before doing so.
Stablecoin: A cryptocurrency designed to minimize price volatility, usually by pegging its value or supply against a physical asset such as fiat currencies like the US dollar or metals like silver and gold.
Staking: When you stake coins, you lock them in a digital wallet to maintain the network. You get more coins/tokens in the process as a reward, but it also means that you cannot trade these coins while they’re locked up.
Stop order: An investor’s instruction when placing a buy or sell order on the market. It sets up a condition in which they will automatically close their position (when the market reaches a specific rate).
Tokenomics: The study of how different variables within an economy impact each other and affect the decision-making process. It is a branch of economics that looks at how different classes of assets, which have a monetary value, affect the dynamics within an economy.
Tokens: A unit of value used for various purposes within a crypto ecosystem. Tokens can represent any asset, from commodities like gold or coffee beans to loyalty points, real estate, or even other cryptocurrencies.
Token sale: The process of selling digital tokens or coins to raise funds for a blockchain project before it goes live and generates revenue.
Total value locked (TVL): The total value of coins locked in a master node divided by the number of existing master nodes at that point. Since there is no way of knowing the number of created/destroyed coins, TVL provides a rough estimate. It can give some indication as to what projects are undervalued and overvalued. That being said, it’s important to note that TVL is not a perfect indicator and is recommended with a pinch of salt.
Transaction fee: The money paid to miners to confirm transactions into blocks and add them to the Blockchain network. It isn’t part of the amount being transferred but rather an additional charge set by users sending tokens via smart contracts (which send tokens automatically). In other words, this is how much you pay your miner when making a cryptocurrency transfer over any given timeframe.
Transaction pool: The central component of nodes within a blockchain where all pending/unconfirmed transactions are stored until they’re mined into blocks. It is usually done one at a time but can happen concurrently depending on how many transactions are pending.
Trustless: A term used to describe a system that doesn’t require trust in any party because it uses encryption and consensus mechanisms for security.
Two-factor authentication (2FA): A method of confirming a user’s claimed identity in which two separate components are required. Usually, something they know (password) and possess (security token).
Virtual Automated Market Makers (vAMMs): A variant of programmable smart contracts designed to automatically create their market for cryptocurrencies. They do this by placing limit orders to buy or sell tokens at specific prices, thus providing liquidity in the market when there are no active buyers/sellers.
Volatile market: A market where prices fluctuate rapidly, so it’s harder to predict what will happen next.
Wallet: A digital location that stores crypto funds by storing private and public keys that provide access to your cryptocurrency holdings.
Wallet address: The public key of a cryptocurrency wallet used to receive funds.
Wallet seed phrase: This is a list of words used to generate deterministic keys for wallets. It is a sort of private password or PIN for your crypto funds. You must keep them safe since they can easily withdraw all your tokens if someone has access.
Weak hands: A slang term for individuals who are easily scared by market fluctuations and sell when prices drop, causing further drops in value.
Whale: A slang term for an investor who has a substantial amount of capital to invest, typically one looking to make significant investments.
Whale watching: A slang term for analyzing investors’ activity for clues on the future pump or dump of coins.
Zero-knowledge proof: Evidence confirming a specific statement is valid without revealing it. It makes it possible to prove possession of knowledge or secret keys while keeping them hidden.
Zk-SNARKs: A type of zero-knowledge cryptography which allows someone to prove that they know something without giving away any additional information apart from the fact that it’s true.