Crypto Glossary
A comprehensive dictionary of blockchain and cryptocurrency terms
A
Address
A unique identifier that serves as a virtual location where cryptocurrency can be sent to and from. Similar to a bank account number but for cryptocurrencies.
Airdrop
A distribution of cryptocurrency tokens to numerous wallet addresses, usually for free. Airdrops are often used for marketing purposes, to bootstrap a new cryptocurrency, or to reward users of a platform.
Altcoin
Any cryptocurrency other than Bitcoin. The term is an abbreviation of "alternative coin."
AMM (Automated Market Maker)
A type of decentralized exchange protocol that uses a mathematical formula to price assets. Instead of using an order book like a traditional exchange, assets are priced according to a pricing algorithm.
APR (Annual Percentage Rate)
The annual rate of return on an investment, without accounting for the effect of compounding.
APY (Annual Percentage Yield)
The annual rate of return on an investment, accounting for the effect of compounding interest.
B
Bear Market
A market condition in which prices are falling and widespread pessimism causes the negative sentiment to be self-sustaining.
Block
A collection of transactions that are bundled together and added to the blockchain. Each block contains a reference to the previous block, creating a chain of blocks (hence, "blockchain").
Block Explorer
An online tool that allows you to search and navigate through a blockchain, viewing transaction histories and balances of addresses.
Block Height
The number of blocks in the chain between a given block and the first block in the blockchain (the genesis block).
Block Reward
The cryptocurrency awarded to a miner when they successfully add a block to the blockchain.
Bull Market
A market condition in which prices are rising or expected to rise, encouraging buying.
C
Centralized Exchange (CEX)
A cryptocurrency exchange that is operated by a company that maintains custody of users' funds and facilitates trading through a centralized order book.
Cold Wallet
A cryptocurrency wallet that is not connected to the internet, making it less vulnerable to hacking. Examples include hardware wallets and paper wallets.
Consensus Mechanism
The method by which a blockchain network agrees on the current state of the blockchain and validates transactions. Common consensus mechanisms include Proof of Work (PoW) and Proof of Stake (PoS).
Cryptocurrency
A digital or virtual currency that uses cryptography for security and operates on a decentralized network based on blockchain technology.
D
DAO (Decentralized Autonomous Organization)
An organization represented by rules encoded as a computer program that is transparent, controlled by the organization members, and not influenced by a central government.
dApp (Decentralized Application)
An application that runs on a decentralized network, combining a smart contract and a frontend user interface.
DeFi (Decentralized Finance)
A movement that aims to create an open-source, permissionless, and transparent financial service ecosystem that is available to everyone and operates without any central authority.
DEX (Decentralized Exchange)
A cryptocurrency exchange that operates in a decentralized way, without a central authority, allowing for direct peer-to-peer cryptocurrency transactions.
Double Spending
A potential flaw in a digital cash scheme in which the same single digital token can be spent more than once. Blockchain technology solves this problem.
E
EIP (Ethereum Improvement Proposal)
A design document providing information to the Ethereum community, describing a proposed new feature or process for Ethereum.
ERC (Ethereum Request for Comment)
A standard for Ethereum tokens. The most well-known is ERC-20, which is used for fungible tokens, and ERC-721, which is used for non-fungible tokens (NFTs).
Ethereum
A decentralized, open-source blockchain with smart contract functionality. Ether (ETH) is the native cryptocurrency of the platform.
EVM (Ethereum Virtual Machine)
The runtime environment for smart contracts in Ethereum. It is completely isolated from the network, which means that code running inside the EVM has no access to the network, file system, or other processes.
F
Fiat Currency
Government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it.
Flippening
A hypothetical scenario where Ethereum (ETH) overtakes Bitcoin (BTC) as the largest cryptocurrency by market capitalization.
FOMO (Fear Of Missing Out)
The apprehension that one might miss an opportunity for profit, especially when acting on impulse due to anxiety rather than logic.
Fork
A change to the software of a cryptocurrency that creates two separate versions of the blockchain with a shared history. Forks can be either hard (non-backward compatible) or soft (backward compatible).
G
Gas
A unit that measures the amount of computational effort required to execute operations on the Ethereum network. Each operation requires a specific amount of gas.
Gas Fee
The fee paid to miners or validators for processing transactions on the Ethereum network. It is calculated as gas used × gas price.
Genesis Block
The first block of a blockchain. It is the only block that does not reference a previous block.
Governance Token
A token that gives holders voting rights in a decentralized protocol or organization.
H
Halving
A feature in some cryptocurrencies where the block reward is cut in half after a certain number of blocks have been mined. Bitcoin undergoes halving approximately every four years.
Hardware Wallet
A physical device that securely stores private keys offline, protecting them from online threats.
Hash
The output of a hash function, which converts an input of arbitrary length into a fixed-length string of bytes. Hashing is a one-way function, meaning it is infeasible to reverse the process.
HODL
A term derived from a misspelling of "hold" in a Bitcoin forum. It refers to the strategy of buying and holding cryptocurrency for the long term, regardless of market fluctuations.
Hot Wallet
A cryptocurrency wallet that is connected to the internet, making it more convenient for transactions but potentially more vulnerable to hacking.
I-J
ICO (Initial Coin Offering)
A fundraising method where a new cryptocurrency project sells a portion of its tokens to early investors, similar to an IPO in the stock market.
Immutability
The property of blockchain data that prevents it from being altered or deleted once it has been recorded.
Interoperability
The ability of different blockchain systems to exchange and make use of information.
K-L
KYC (Know Your Customer)
A process by which businesses verify the identity of their clients, often required by cryptocurrency exchanges to comply with anti-money laundering regulations.
Layer 1
The base blockchain architecture, such as Bitcoin or Ethereum. It refers to the main blockchain network and its underlying protocol.
Layer 2
A secondary framework or protocol built on top of an existing blockchain system to improve its scalability and efficiency. Examples include Lightning Network for Bitcoin and Optimism for Ethereum.
Liquidity Pool
A collection of funds locked in a smart contract, used to facilitate decentralized trading, lending, and other financial activities.
M
Market Cap
The total value of a cryptocurrency, calculated by multiplying the current price by the total supply of coins or tokens.
Mempool
A waiting area for unconfirmed transactions before they are added to the blockchain.
Merkle Tree
A data structure used in blockchain to efficiently verify the integrity of large datasets. It allows for quick verification of whether a specific transaction is included in a block.
Mining
The process of validating transactions and adding them to the blockchain by solving complex mathematical problems. Miners are rewarded with cryptocurrency for their efforts.
Multisig (Multi-signature)
A security feature that requires multiple signatures (private keys) to authorize a transaction, enhancing security by distributing control among multiple parties.
N
Node
A computer that connects to a blockchain network and maintains a copy of the blockchain. Nodes validate and relay transactions.
NFT (Non-Fungible Token)
A unique digital asset that represents ownership of a specific item or piece of content. Unlike cryptocurrencies, NFTs are not interchangeable with each other.
Nonce
A number used once in cryptographic communication, often used in proof-of-work systems to find a valid hash for a block.
O-P
Oracle
A service that provides external data to a blockchain, allowing smart contracts to interact with information outside the blockchain.
P2P (Peer-to-Peer)
A decentralized network where participants can interact directly with each other without the need for intermediaries.
Private Key
A secret code that allows access to cryptocurrency holdings. It is used to sign transactions and should be kept secure.
Proof of Stake (PoS)
A consensus mechanism where validators are chosen to create new blocks based on the number of coins they hold and are willing to "stake" as collateral.
Proof of Work (PoW)
A consensus mechanism where miners compete to solve complex mathematical problems to validate transactions and create new blocks.
Public Key
A cryptographic code that is derived from a private key but does not need to be kept secret. It is used to receive cryptocurrency.
Q-R
Rollup
A layer 2 scaling solution that performs transaction execution outside the main blockchain but posts transaction data on layer 1.
S
Satoshi Nakamoto
The pseudonymous person or group of people who created Bitcoin and authored the Bitcoin whitepaper.
Scalability
The ability of a blockchain network to handle an increasing amount of transactions efficiently.
Smart Contract
Self-executing contracts with the terms of the agreement directly written into code. They automatically execute when predetermined conditions are met.
Stablecoin
A type of cryptocurrency designed to maintain a stable value by pegging it to a reserve asset like the US dollar or gold.
Staking
The process of actively participating in transaction validation on a proof-of-stake blockchain by locking up a certain amount of cryptocurrency.
T
Token
A digital asset that is created on an existing blockchain, representing a particular asset or utility.
Transaction Fee
A fee paid to miners or validators for processing a transaction on a blockchain network.
TVL (Total Value Locked)
The total value of cryptocurrency assets deposited in a DeFi protocol, often used as a metric to measure the growth and adoption of DeFi platforms.
U-V
Validator
A participant in a proof-of-stake blockchain who is responsible for verifying transactions and maintaining the blockchain.
Volatility
The degree of variation in trading price over time. Cryptocurrencies are known for their high volatility compared to traditional assets.
W-Z
Wallet
A digital tool that allows users to store, send, and receive cryptocurrencies. It contains private keys that give access to the funds.
Whale
An individual or entity that holds a large amount of a particular cryptocurrency, enough to potentially influence the market price.
Whitepaper
A document released by a cryptocurrency project that explains its technology, goals, and roadmap.
Zero-Knowledge Proof
A cryptographic method that allows one party to prove to another that a statement is true without revealing any additional information beyond the validity of the statement itself.