80 terms
Crypto glossary
Plain-language definitions of 80 essential crypto terms, from blockchain basics to DeFi, trading and regulation. Each entry gives a short definition, a worked example, related terms and our latest coverage of the topic.
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A
- Airdrop An airdrop is a free distribution of crypto tokens to wallet addresses, usually to reward early users of a protocol or to spread ownership of a new token.
- Altcoin An altcoin is any cryptocurrency other than bitcoin, from large networks such as Ethereum and Solana to small tokens with little trading volume.
- AML (anti-money laundering) AML, or anti-money laundering, is the set of laws and controls requiring financial and crypto firms to detect and report attempts to launder illicit funds.
- AMM (automated market maker) An AMM, or automated market maker, is a smart contract that prices and executes token swaps from a pool of reserves instead of an order book.
- APY (annual percentage yield) APY, or annual percentage yield, is the yearly return on a deposit including the effect of compounding, used to quote staking, lending and farming yields.
- ATH (all-time high) ATH, short for all-time high, is the highest price an asset has ever reached since it started trading, a common reference point in crypto markets.
B
- Bear market A bear market is a prolonged period of falling prices and weak sentiment, commonly defined as a decline of at least 20% from a recent peak.
- Blockchain oracle A blockchain oracle is a service that feeds outside data, such as asset prices or event results, into smart contracts that cannot access it on their own.
- Blockchain A blockchain is a shared digital ledger, copied across many computers, that records transactions in linked blocks that are very hard to alter.
- Block A block is a batch of confirmed transactions added to a blockchain and linked to the block before it by a cryptographic hash.
- Bull market A bull market is a prolonged period of rising prices and strong investor confidence, commonly defined as a gain of at least 20% from a recent low.
C
- CBDC (central bank digital currency) A CBDC, or central bank digital currency, is a digital form of a country's official money, issued and backed directly by its central bank.
- CEX (centralized exchange) A CEX, or centralized exchange, is a company-run platform such as Coinbase or Binance that holds customer funds and matches crypto trades on its books.
- Circulating supply Circulating supply is the number of coins or tokens of a cryptocurrency that are publicly available and tradable, excluding locked or unissued units.
- Cold wallet A cold wallet keeps crypto private keys offline, usually on a hardware device or on paper, so they cannot be reached by online attackers.
- Consensus mechanism A consensus mechanism is the set of rules that lets a blockchain's independent nodes agree on which transactions are valid and in what order.
- Cross-chain bridge A cross-chain bridge is a protocol that moves tokens or data between two blockchains, usually by locking assets on one chain and issuing them on the other.
- Crypto wallet A crypto wallet is software or hardware that stores the keys to your cryptocurrency and lets you send, receive and manage digital assets.
D
- DAO (decentralized autonomous organization) A DAO, or decentralized autonomous organization, is a group that manages a shared treasury and makes decisions through smart contracts and token votes.
- dApp (decentralized application) A dApp, or decentralized application, is software whose core logic runs on smart contracts on a blockchain instead of on a company's private servers.
- DCA (dollar-cost averaging) DCA, or dollar-cost averaging, is an investing strategy of buying a fixed amount of an asset at regular intervals, regardless of its price at the time.
- DeFi (decentralized finance) DeFi, or decentralized finance, covers lending, trading and saving services that run on blockchain smart contracts instead of banks or brokers.
- DEX (decentralized exchange) A DEX, or decentralized exchange, is a platform where users swap crypto directly from their own wallets through smart contracts, with no custodian.
E
- ERC-20 ERC-20 is the technical standard for fungible tokens on Ethereum, defining common functions so wallets and exchanges can handle any token the same way.
- ETF (exchange-traded fund) An ETF, or exchange-traded fund, is an investment fund traded on a stock exchange; a spot crypto ETF holds the actual coins and tracks their price.
F
- FDV (fully diluted valuation) FDV, or fully diluted valuation, is a token's price multiplied by its maximum supply, as if every token that will ever exist were already circulating.
- FOMO (fear of missing out) FOMO, or fear of missing out, is the urge to buy an asset after its price has already surged, driven by the worry of missing further gains.
- FUD (fear, uncertainty and doubt) FUD, short for fear, uncertainty and doubt, describes negative news, rumors or claims that push investors toward panic selling in crypto markets.
G
- Gas fee Gas is the unit that measures the computing work needed to run a transaction on Ethereum and similar blockchains, paid in the network's native token.
- Governance token A governance token is a cryptocurrency that gives holders voting rights over a protocol's decisions, such as fees, upgrades and treasury spending.
H
- Halving The halving is the scheduled cut, roughly every four years, that halves the number of new bitcoins miners earn for each block they add.
- Hard fork A hard fork is a change to a blockchain's rules that is not backward compatible, so nodes that do not upgrade split off from the network.
- Hashrate Hashrate is the total computing power used to mine and secure a proof-of-work blockchain, measured in hash calculations performed per second.
- HODL HODL is crypto slang for holding an asset for the long term instead of selling during price swings, born from a misspelled 2013 forum post.
- Hot wallet A hot wallet is a crypto wallet whose private keys are kept on a device connected to the internet, making it convenient but more exposed to hacks.
I
- ICO (initial coin offering) An ICO, or initial coin offering, is a fundraising method in which a project sells newly created tokens to the public, usually before its product exists.
- Impermanent loss Impermanent loss is the shortfall a liquidity provider suffers versus simply holding the tokens when their relative prices change inside an AMM pool.
K
- KYC (Know Your Customer) KYC, or Know Your Customer, is the process financial firms and crypto exchanges use to verify a customer's identity before letting them use their services.
L
- Layer 1 (L1) A layer 1 is a base blockchain, such as Bitcoin, Ethereum or Solana, that processes and finalizes transactions on its own network with its own consensus.
- Layer 2 (L2) A layer 2 is a network built on top of a blockchain that handles transactions off the main chain to make them cheaper and faster.
- Leverage Leverage is the use of borrowed funds to open a trading position larger than your own capital, multiplying both potential gains and potential losses.
- Lightning Network The Lightning Network is a layer 2 payment network on Bitcoin that enables near-instant, low-cost transfers through payment channels opened off-chain.
- Liquid staking Liquid staking lets users stake proof-of-stake tokens and receive a tradable token in return, so the staked value can still be used in DeFi.
- Liquidation A liquidation is the forced closure of a leveraged position or loan when the trader's collateral no longer covers potential losses on the position.
- Liquidity pool A liquidity pool is a reserve of tokens locked in a smart contract that traders swap against, funded by users who earn a share of the trading fees.
M
- Market cap (market capitalization) Market cap, short for market capitalization, is a cryptocurrency's price multiplied by its circulating supply, used to compare the size of crypto assets.
- Memecoin A memecoin is a cryptocurrency inspired by an internet joke, animal or celebrity whose price depends mainly on community hype rather than any utility.
- Mempool The mempool is the waiting area where valid but unconfirmed transactions sit until a miner or validator includes them in a block.
- MEV (maximal extractable value) MEV, or maximal extractable value, is the profit that can be captured by deciding which transactions go into a block and in what order they appear.
- MiCA (Markets in Crypto-Assets Regulation) MiCA, the Markets in Crypto-Assets Regulation, is the European Union's single legal framework for crypto-asset issuers and service providers.
- Mining Mining is the process by which computers on a proof-of-work blockchain validate transactions, add new blocks and earn newly created coins.
- Multisig (multi-signature) Multisig is a wallet setup that requires several private keys to approve a transaction, such as any 2 of 3 or 3 of 5 designated signers.
N
- NFT (non-fungible token) An NFT, or non-fungible token, is a unique blockchain token that records ownership of a specific item such as digital art, a collectible or a ticket.
- Node A node is a computer that runs a blockchain's software, keeps a copy of its ledger, and checks and relays transactions and blocks to other peers.
P
- Perpetual futures Perpetual futures are derivative contracts with no expiry date that let traders bet on a crypto asset's price, usually with leverage, without owning it.
- Private key A private key is a secret number that proves ownership of crypto funds and signs transactions; whoever holds it controls the assets.
- Proof of stake (PoS) Proof of stake (PoS) is a consensus mechanism in which validators lock up coins as collateral for the right to propose and confirm new blocks.
- Proof of work (PoW) Proof of work (PoW) is a consensus mechanism in which miners compete to solve a costly computational puzzle for the right to add the next block.
- Public key A public key is the shareable half of a cryptographic key pair, used to derive wallet addresses and to verify that the owner signed a transaction.
R
- Rollup A rollup is a layer 2 that executes transactions off-chain, bundles them together and posts the data to a base blockchain such as Ethereum for security.
- Rug pull A rug pull is a scam in which a crypto project's creators suddenly drain its funds or liquidity and disappear, leaving token holders with worthless assets.
- RWA tokenization (real-world assets) RWA tokenization is the process of representing real-world assets, such as government bonds, funds, real estate or credit, as tokens on a blockchain.
S
- Satoshi (sat) A satoshi, or sat, is the smallest unit of bitcoin: one hundred-millionth of a coin, so 1 BTC is equal to 100,000,000 satoshis.
- Seed phrase A seed phrase is a list of 12 or 24 words that encodes a wallet's master key and can restore all its accounts and funds on a compatible wallet.
- Self-custody Self-custody means holding your own crypto private keys in a wallet you control, rather than leaving assets with an exchange or other third party.
- Slippage Slippage is the difference between the price a trader expects when submitting an order and the price at which the trade is actually executed.
- Smart contract A smart contract is a program stored on a blockchain that runs automatically when predefined conditions are met, with no intermediary involved.
- Stablecoin A stablecoin is a cryptocurrency designed to hold a steady value, usually one US dollar, backed by reserves such as cash, Treasury bills or other crypto.
- Staking Staking is locking up cryptocurrency to help secure a proof-of-stake blockchain, in exchange for rewards paid in that network's native token.
T
- Token burn A token burn permanently removes tokens from circulation by sending them to an address no one can spend from, reducing the total supply.
- Token unlock A token unlock is a scheduled release of previously locked tokens, usually held by teams or investors, into the circulating supply of a project.
- Tokenomics Tokenomics is the economic design of a crypto token: its supply, how it is issued and distributed, what it is used for and what drives demand for it.
- TVL (total value locked) TVL, or total value locked, is the dollar value of all crypto assets deposited in a DeFi protocol or blockchain's smart contracts at a given moment.
V
- Validator A validator is a participant in a proof-of-stake blockchain that locks up tokens as collateral to propose and confirm new blocks in return for rewards.
- Vesting Vesting is a schedule that releases tokens allocated to a team, investors or advisers gradually over time instead of all at once at launch.
W
- Web3 Web3 is the idea of an internet built on blockchains, where users own their assets and data through crypto wallets instead of relying on big platforms.
- Whale A whale is an individual or entity holding a large enough amount of a cryptocurrency that its trades can noticeably move the market price.
- Wrapped token A wrapped token is a token on one blockchain that represents an asset from another chain or standard, backed 1:1 by the original held in reserve.
Y
- Yield farming Yield farming is the practice of moving crypto between DeFi protocols to earn interest, trading fees and token rewards on deposited assets.
Z
- Zero-knowledge proof (ZK proof) A zero-knowledge proof is a cryptographic method that lets one party prove a statement is true without revealing the underlying data behind it.
