Crypto Glossary
A
51% ATTACK:
When a single entity gains control of more than 50% of a blockchain’s mining or staking power, potentially allowing them to manipulate transactions.
ADDRESS:
A unique string of letters and numbers representing a cryptocurrency wallet where assets can be sent or received.
AIRDROP:
A distribution of free tokens to wallet addresses, often used for marketing or rewarding users.
ALGORITHMIC STABLECOIN:
A stablecoin that maintains its peg using smart contracts and algorithms instead of reserves.
ALTCOIN:
Any cryptocurrency other than Bitcoin.
AMM (AUTOMATED MARKET MAKER):
A type of decentralized exchange (DEX) system that uses liquidity pools instead of order books to facilitate trading.
AML (ANTI-MONEY LAUNDERING):
Regulations designed to prevent cryptocurrencies from being used for illicit activities.
APR (ANNUAL PERCENTAGE RATE):
The return earned on staked or lent crypto assets, expressed as a percentage.
APY (ANNUAL PERCENTAGE YIELD):
The compound return on staked or lent assets over a year
ARBITRAGE:
A trading strategy that exploits price differences of the same asset across different markets.
ASIC (APPLICATION-SPECIFIC INTEGRATED CIRCUIT):
Specialized hardware designed for mining cryptocurrencies efficiently.
ATOMIC SWAP:
Smart contracts that allow users to exchange cryptocurrencies from different blockchains in a single transaction.
B
BEAR MARKET:
A prolonged period of declining prices in the crypto market.
BITCOIN (BTC):
The first and most well-known cryptocurrency, created by Satoshi Nakamoto.
BLOCK:
A batch of transactions recorded on a blockchain.
BLOCKCHAIN:
A decentralized, immutable ledger that records transactions securely.
BLOCK REWARD:
The incentive miners receive for adding a new block to the blockchain.
BRIDGE:
A protocol that enables the transfer of assets between different blockchain networks.
BULL MARKET:
A prolonged period of rising prices in the crypto market.
BURNING:
The permanent removal of tokens from circulation, often done to reduce supply and increase value and scarcity.
C
CEFI (CENTRALIZED FINANCE):
Traditional financial institutions offering crypto services, such as exchanges like Coinbase, Kraken, or Blockfi.
COLD WALLET:
A cryptocurrency wallet that is not connected to the internet, providing enhanced security.
COLLATERALIZED DEBT POSITION (CDP):
A DeFi concept where users lock up crypto as collateral to mint stablecoins.
CONSENSUS MECHANISM:
The method by which transactions are validated and recorded on a blockchain (e.g., Proof of Work, Proof of Stake).
CRYPTO WALLET:
A digital tool for storing, sending, and receiving cryptocurrency.
CUSTODIAL WALLET:
A wallet where a third party holds private keys on behalf of the user.
CEX (CENTRALIZED EXCHANGE):
A cryptocurrency exchange operated by a centralized entity, such as Binance or Gemini.
CROSS-CHAIN:
The ability of different blockchain networks to communicate and interact with each other.
CRYPTO LENDING:
The act of lending cryptocurrency to earn interest.
CRYPTOGRAPHIC HASH FUNCTION:
A mathematical algorithm that converts data into a fixed-length string, ensuring security and integrity.
D
DAPP (DECENTRALIZED APPLICATION):
An application that runs on a blockchain without a central authority.
DAO (DECENTRALIZED AUTONOMOUS ORGANIZATION):
A community-led organization governed by smart contracts and token holders.
DEGEN:
Short for “degenerate,” referring to traders who engage in high-risk speculative crypto investments.
DEFI (DECENTRALIZED FINANCE):
A blockchain-based financial ecosystem that operates without traditional intermediaries.
DEX (DECENTRALIZED EXCHANGE):
A peer-to-peer exchange that allows direct cryptocurrency trading without a central authority.
DERIVATIVES:
Financial contracts whose value is derived from an underlying crypto asset.
DOUBLE-SPENDING:
The risk of a digital currency being spent more than once due to security flaws.
DUSTING ATTACK:
A method where small amounts of crypto (dust) are sent to wallets to try and track or deanonymize users.
DYOR (DO YOUR OWN RESEARCH):
A phrase encouraging investors to research before making crypto decisions.
E
ETHEREUM (ETH):
A decentralized blockchain that enables smart contracts and dApps.
EIP (ETHEREUM IMPROVEMENT PROTOCOL):
A proposal for upgrades or changes to the Ethereum protocol.
EVM (ETHEREUM VIRTUAL MACHINE):
A computation engine that processes smart contracts on Ethereum and compatible networks.
ERC-20:
A standard for fungible tokens on the Ethereum blockchain.
ERC-721:
A standard for non-fungible tokens (NFTs) on Ethereum.
ERC-1155:
A multi-token standard that supports both fungible and non-fungible tokens in a single contract.
EXCHANGE:
A platform where users can buy, sell, and trade cryptocurrencies.
EPOCH:
A specific period used in blockchain networks, particularly in staking and consensus mechanisms.
F
FIAT CURRENCY:
Government-issued currency, such as USD, EUR, or BRL.
FLASH LOAN:
An unsecured loan in DeFi that must be repaid within the same transaction.
FOMO (FEAR OF MISSING OUT):
The anxiety of missing a profitable investment opportunity.
FORK:
A split in a blockchain that creates two separate chains with different rules.
FRACTIONALIZED NFT (F-NFT):
A single NFT split into multiple tokens, allowing shared ownership.
FUD (FEAR, UNCERTAINTY, AND DOUBT):
Negative sentiment spread to manipulate the market.
G
GAS FEES:
Transaction fees paid to miners or validators for processing transactions on a blockchain.
GAS WARS:
A situation where users bid high gas fees to secure transactions, often during high-demand NFT drops.
GENESIS BLOCK:
The first-ever block recorded on a blockchain.
GOVERNANCE TOKEN:
A token that gives holders voting power in a blockchain protocol or DAO.
H
HALVING:
A programmed event which the reward for mining a cryptocurrency is cut in half, reducing new supply (e.g. Bitcoin halving every ~4 years).
HODL (HOLD ON FOR DEAR LIFE):
A term for holding onto crypto assets long-term despite market fluctuations.
HASH RATE:
The processing power of a blockchain network or mining hardware.
HOT WALLET:
A cryptocurrency wallet connected to the internet, making it convenient but less more vulnerable to hacks.
HARD FORK:
A permanent split in a blockchain that creates a new version incompatible with the old one.
I
IMPERMENANT LOSS:
The temporary loss of funds that occurs when providing liquidity in DeFi due to price fluctuations.
IPFS (InterPlanetary File System):
A decentralized storage system used for hosting NFT metadata and Web3 applications.
K
KYC (KNOW YOUR CUSTOMER):
The process of verifying a user’s identity before granting access to financial services, common on centralized exchanges.
L
LAYER 1:
The base blockchain protocol, such as Ethereum or Bitcoin.
LAYER 2:
A scaling solution built on top of Layer 1 blockchains to improve transaction speed and reduce fees (e.g., Optimism, Arbitrum).
LIQUIDITY:
The ease with which an asset can be bought or sold without impacting its price.
LIQUIDITY POOL:
A pool of funds locked in a smart contract to facilitate trading on decentralized exchanges.
LP TOKENS:
Tokens received in exchange for providing liquidity to a decentralized exchange.
LIGHTNING NETWORK:
A Layer 2 solution designed to facilitate fast, low-cost Bitcoin transactions.
M
MEV (MAXIMAL EXTRACTABLE VALUE):
Profits miners or validators can make by reordering, including, or excluding transactions in a block.
MULTISIG (MULTI-SIGNATURE):
A security feature requiring multiple private keys to approve transactions.
N
NFT (NON-FUNGIBLE TOKENS):
A digital asset representing ownership of unique items like art, collectibles, or virtual land.
O
OFAC LIST:
A U.S. government list of sanctioned addresses/entities that are blocked from financial transactions.
ORACLES:
Services that bring external data (like real-world prices) onto a blockchain for smart contracts.
P
PUMP & DUMP:
A trading scheme where insiders artificially inflate the price of an asset before selling it off.
R
REHYPOTHECATION:
The practice of reusing collateral in DeFi lending protocols to maximize capital efficiency (can lead to risks).
ROLLUPS:
A Layer 2 solution that batches multiple transactions and submits them to the main blockchain to improve scalability.
S
SATOSHI (SAT):
The smallest unit of Bitcoin, equivalent to 0.00000001 BTC.
SMART CONTRACT:
A self-executing program on the blockchain that automates transactions based on predefined rules.
T
TOKENOMICS:
The economic structure of a cryptocurrency, including supply mechanisms, incentives, and distribution.
TRAVEL RULE:
Regulation requiring crypto exchanges to share user transaction data for large transfers.
W
WRAPPED TOKEN:
A tokenized version of another asset that operates on a different blockchain.
WHALE WATCHING:
The act of tracking large crypto transactions made by influential investors (whales).
Y
YIELD FARMING:
Process of earning rewards by staking or lending crypto assets in DeFi platforms.
Z
ZERO-KNOWLEDGE PROOFS (ZKPs):
A cryptographic method that allows verification of information without revealing the actual data, enhancing privacy.