Crypto Glossary
51% Attack
This happens when a single person or group of cryptocurrency miners controls more than half of the network’s total computing power. If they control this much power, they could potentially disrupt the network, for example, by preventing new transactions from being confirmed or by reversing past transactions.1,2,3
A
Absolute Advantage
This is an economic idea where one party is simply better at producing or providing a specific good or service more efficiently than another party.1,3
Account Abstraction
This is about making it easier for users to interact with blockchains by allowing customization of smart contract accounts, simplifying how people use cryptocurrency.1
Address
In cryptocurrency, an address is a string of letters and numbers that acts like a unique location or identifier for a digital wallet on the blockchain. It’s where you can send and receive cryptocurrency.1
AdTech
Short for “advertising technology,” AdTech refers to the systems and software used to create, deliver, manage, and improve digital advertising campaigns. Blockchains are increasingly being used in AdTech to make exchanges between buyers and sellers of digital ad space more direct, secure audience data, and use smart contracts based on ad performance, helping to fight fraud in the industry.4
Airdrop
An airdrop is a marketing strategy where free cryptocurrency tokens are sent to a public audience. This can be done to promote a new coin or simply to reward active users on a blockchain.1,2
Algorithm
At its core, an algorithm is a set of clear instructions that a computer follows to solve a problem or perform a task. In blockchains and cryptocurrencies, algorithms are crucial for things like creating new currency and keeping transaction records updated. Blockchains often use “consensus algorithms” like “Proof of Work” and “Proof of Stake” for tasks such as hashing, signing, verifying, and mining.4,1,2
Algorithmic Stablecoin
This type of stablecoin is designed to keep its value pegged to a traditional currency (like the U.S. dollar) using special software and rules. When its price goes up, the algorithm can create more coins, and when it falls, it can buy coins off the market to stabilize the price.2
All or None Order (AON)
This is a type of trading order that must be completely filled, meaning you either buy or sell the entire specified amount, or the order is not executed at all. This prevents partial trades.1
Allocation
This refers to a portion of tokens or ownership set aside or earned by a specific investor, team, or group.1
Altcoin
An altcoin is any cryptocurrency that is not Bitcoin. Many altcoins have been created since Bitcoin, often with improvements or different features, such as supporting digital contracts.5,6,2
AML (Anti-Money Laundering) Regulations
These are laws and rules put in place by governments to stop financial crimes like tax evasion, fraud, and money laundering. They include “Know Your Customer” (KYC) rules, which require financial organizations to verify customer identities to prevent illegal activities.4
Application Programming Interface (API)
An API is a software intermediary that allows different applications to communicate and interact with each other, such as letting users programmatically execute features of a service like an exchange.2
Application-Specific Integrated Circuit (ASIC)
ASICs are powerful and expensive computer chips designed to do a very specific task, often used for mining cryptocurrencies (like calculating hashes for Bitcoin’s Proof-of-Work).6,2
Arbitrage
Arbitrage trading is a legal way to make a profit by taking advantage of price differences for the same asset on different exchanges or markets. Traders buy an asset where it’s cheap and sell it where it’s more expensive.2
ASIC-Resistant
This term describes cryptocurrencies that have been designed so that it’s either impossible or not very beneficial to mine them using specialized ASIC machines, allowing regular computers with GPUs to remain competitive.2
Ask Price
The lowest price a seller is willing to accept for an asset on an exchange.1
Atomic Swap
An atomic swap is a direct, secure exchange of different cryptocurrencies between users’ wallets, without needing a centralized exchange. These swaps use smart contracts to ensure that if one party doesn’t complete their part of the trade within a set time, the coins are returned to their original owners.4
Automated Liquidity Protocol
This is a method used by decentralized exchanges (DEXs) to improve how easily assets can be traded. Instead of relying on traditional order books (which need many buyers and sellers), these protocols use “liquidity pools” where users lock up their funds to create a continuous supply of cryptocurrency, making trading smoother.1
Automated Market Maker (AMM)
AMMs are decentralized exchanges that use special mathematical formulas and liquidity pools (where users contribute funds) to maintain the value of assets and reduce large price swings during trades. This removes the need for traditional order books and allows for constant trading.4
B
Basic Attention Token (BAT)
An Ethereum-based token created in 2017 by Brendan Eich (co-founder of Mozilla). It’s used within the Brave browser for publishers, advertisers, and users.4
Bear Market
A bear market is when prices in a market are generally going down, and people feel negative about the market’s future.5
Bitcoin (BTC)
The first, largest, and most well-known cryptocurrency.6
Blockchain
A blockchain is a decentralized way of storing data. It’s essentially a shared, complete record of transactions duplicated and distributed across a network of computers. This design, often managed by miners or validators, removes the need for a central authority and makes it nearly impossible to change past records.5,6
Blockchain Protocol
This refers to the set of rules and systems that control how a blockchain operates. It’s the framework that dictates how computers in the network communicate and add new blocks of information to the shared record.4
Block
Blockchains are made up of a growing list of transactions organized into “blocks.” Each new block links cryptographically to the one before it, ensuring the history of the blockchain cannot be altered.5
Block Reward
When new blocks are created (either by miners or validators), a “block reward” is issued. This is new cryptocurrency given as an incentive to those who help keep the blockchain running.5
Bull Market
A bull market describes a period when market prices are generally increasing, and people feel positive about the market’s future.5
Buy the Dip
An investment strategy where you purchase an asset after its price has dropped, hoping to profit when its price increases again.6
C
Centralized Exchange (CEX)
A centralized exchange is a platform that acts as a middleman for cryptocurrency trading. Users deposit their crypto onto the exchange, which then holds the funds for them, making trading easier but also requiring users to trust the exchange with their assets.4
Circulating Supply
The number of cryptocurrency coins or tokens that are currently available to the public and actively being traded.1
Cold Storage/Cold Wallet
This refers to storing cryptocurrencies offline, disconnected from the internet. This is typically done using hardware wallets (like USB drives), offline computers, or paper wallets, offering a higher level of security against online attacks.6
Collateral
Any asset that a lender accepts as security for a loan, meaning if the borrower doesn’t repay, the lender can take this asset.1
Coin
A common, informal term for a cryptocurrency.6
Coinbase (in mining)
In mineable cryptocurrencies, this is the number of new coins created and awarded to miners for successfully adding a new block to the blockchain. The “coinbase transaction” is the very first transaction in a new block, where the miner receives these new coins and any transaction fees.4
Consensus
In cryptocurrency, consensus refers to the agreement reached by participants in a blockchain network. This agreement is crucial for verifying new transactions and blocks, ensuring the integrity and security of the decentralized system.5
Cryptography
This is a method of keeping information secret and secure by scrambling it into codes that can only be read with a specific key. It’s fundamental to how cryptocurrency transactions are verified and recorded securely.6
D
dApp (Decentralized Application)
A dApp is an application that runs on a decentralized network, like a blockchain, rather than on a single centralized server. This means it’s not controlled by any one entity.6
DeFi (Decentralized Finance)
DeFi is a movement that promotes alternatives to traditional, centralized financial services. It aims to recreate financial systems (like lending, borrowing, and trading) using blockchain technology, removing the need for intermediaries like banks.4
Decentralized Exchange (DEX)
A DEX is a cryptocurrency exchange that allows users to trade directly from their own crypto wallets without needing a centralized company to hold their funds. This can be safer because it reduces the risk of theft from hacks, but it can also be more complex to use.4
Decryption
The process of converting encrypted (coded) data back into a readable format.4
Delegated Proof of Stake (DPoS)
A type of consensus algorithm where cryptocurrency holders “stake” their coins to vote for delegates. These elected delegates are then responsible for validating new blocks on the blockchain. Both the delegates and the voters share in the network’s rewards.4
Digital Gold
This term is often used to describe Bitcoin because, like traditional gold, it is seen as a store of value due to its limited supply and resistance to inflation.4
Digital Signature
A digital signature is like a digital fingerprint used to prove the authenticity of a message or transaction and confirm that it hasn’t been tampered with.4
E
ERC-20
This is a technical standard used for creating fungible (interchangeable) tokens on the Ethereum blockchain. Most tokens issued on Ethereum follow this standard.4
Ethereum (ETH)
A major cryptocurrency and blockchain platform that supports smart contracts and decentralized applications.4
F
Fiat Currency
Government-issued money (like the US dollar or Euro) that is not backed by a physical commodity like gold but by the government’s promise.4
Fungible Token
A fungible token is a type of cryptocurrency token that is interchangeable with another token of the same type, meaning each unit has the same value as another. For example, one Bitcoin is interchangeable with any other Bitcoin.4
G
Gas
In the context of the Ethereum blockchain, “gas” is a unit that measures the computational effort needed to perform actions or execute smart contracts. Users pay a “gas fee” for these operations.4
H
Halving
A “halving” (or “halvening”) event, primarily seen in Bitcoin, is when the reward for mining new blocks is cut in half. This reduces the rate at which new coins are created and helps control inflation.4
Hard Fork
A hard fork is a major upgrade to a blockchain’s software that creates a new, separate version of the blockchain. It’s like a split where the old rules are no longer compatible with the new rules, leading to two distinct networks.4
Hash
In simple terms, a hash is a unique, fixed-length code generated from any input data. Even a tiny change in the original data will produce a completely different hash. Hashes are used in blockchains to ensure data integrity and security.4
Hash Rate/Hashpower
This refers to the total computational power used by a cryptocurrency network to process transactions and mine new blocks. A higher hash rate generally means a more secure network.4
Hot Wallet
A cryptocurrency wallet that is connected to the internet. While convenient for quick transactions, hot wallets are generally considered less secure than cold wallets due to their online nature.4
Hybrid Blockchain
A type of blockchain that combines features of both public and private blockchains. This allows for flexibility, offering elements of privacy and control while also potentially leveraging the transparency of public networks.4
I
Initial Coin Offering (ICO)
Similar to a traditional stock market IPO, an ICO is a fundraising method where companies or individuals raise money for new blockchain projects or cryptocurrencies by selling new digital tokens to investors.4
Invest
To put money into a financial scheme with the aim of making a profit.1
Investment Vehicles (Crypto-tied)
These are types of assets in which investors put their money, hoping to increase the value of their holdings in the future, specifically linked to cryptocurrencies.4
IOU
An acronym for “I owe you,” an IOU is a document acknowledging a debt.1
K
Know Your Customer (KYC)
KYC is a common practice used by financial organizations to verify the identity of their customers (using things like photo ID and proof of address) to prevent illegal financial activities such as money laundering and fraud.4
L
Lending Protocol
A system that enables users to borrow and lend crypto assets. It involves a smart contract where lenders provide funds and earn interest, and borrowers can get loans by providing collateral.1
Leverage
In trading, leverage means using borrowed money to increase your potential returns from an investment. While it can magnify profits, it also significantly increases the risk of losses.1
Liquidation
In cryptocurrency trading, liquidation occurs when an investor’s position (especially a leveraged one) is automatically closed by the exchange due to a sudden drop in the collateral’s value, preventing further losses.1
Liquidity
In financial markets, liquidity refers to how easily an asset can be bought or sold without causing a significant change in its price. High liquidity means it’s easy to trade.1
Liquidity Pool
A collection of cryptocurrency funds locked in a smart contract, providing liquidity for trading pairs on decentralized exchanges. Users who provide assets to these pools are called liquidity providers.1
Long/Long Position
A “long” position in trading means you are buying an asset with the expectation that its price will increase. You profit if the price goes up.1
M
Mainnet
The “mainnet” is the fully developed and operational blockchain network where actual transactions take place, and the cryptocurrency has real-world value. It’s the “live” version of a blockchain.1
Market Capitalization (Market Cap)
Market cap is the total value of all circulating coins of a particular cryptocurrency. It’s calculated by multiplying the current price of a single coin by the total number of coins in circulation.1
Market Cycle
A market cycle describes the different phases that financial markets go through over time, including periods of expansion, peak, contraction, and trough.1
Mining
In Proof-of-Work blockchains, mining is the process where powerful computers solve complex mathematical problems to verify and add new transactions to the blockchain. Miners are rewarded with new cryptocurrency for their efforts.4
N
Non-Fungible Token (NFT)
An NFT is a unique digital asset that represents ownership of a specific item (like art, music, or collectibles), and unlike cryptocurrencies, each NFT is unique and cannot be replaced by another identical one.4
Node
A node is any computer connected to a blockchain network that helps to maintain and secure the network by storing a copy of the blockchain, verifying transactions, and contributing to the network’s consensus.4
O
Off-Chain
“Off-chain” refers to transactions or activities that happen outside the main blockchain network. These transactions are often processed faster and with lower fees, and their results are eventually settled on the main chain.4
On-Chain
“On-chain” refers to transactions or activities that occur and are recorded directly on the blockchain’s public ledger. These transactions are transparent and secure but can be slower and more expensive than off-chain transactions.4
Open-Source
Open-source software is software whose original code is made freely available to everyone. This means anyone can view, modify, and distribute the code, promoting transparency and community development.4
Oracle
In the context of blockchains, an oracle is a third-party service that provides real-world data to smart contracts. Smart contracts on their own cannot access outside information, so oracles act as a bridge, feeding them external data to trigger actions.4
P
Peer-to-Peer (P2P)
A peer-to-peer network allows individuals to interact directly with each other without needing a central authority or intermediary. In cryptocurrency, this means transactions happen directly between users.4
Phishing
Phishing is a type of cyberattack where criminals try to trick individuals into revealing sensitive information (like passwords or private keys) by impersonating a trustworthy entity in electronic communications.4
Private Key
A private key is a secret, unique code that gives you access to your cryptocurrency and allows you to spend it. It’s crucial to keep your private key secure, as anyone with access to it can control your funds.4
Proof of Stake (PoS)
A consensus mechanism used by some blockchains where participants “stake” (lock up) a certain amount of their cryptocurrency to be eligible to validate new blocks and earn rewards. The more they stake, the higher their chance of being chosen.4
Proof of Work (PoW)
The original consensus mechanism used by Bitcoin and other cryptocurrencies. In PoW, miners compete to solve complex computational puzzles to validate transactions and add new blocks to the blockchain. This process requires significant energy and computational power.4
Public Key
A public key is a cryptographic code that is derived from your private key and can be openly shared. It acts as your cryptocurrency address, allowing others to send you funds, but it doesn’t give them access to spend your crypto.4
Pump and Dump (P&D)
A pump and dump scheme is a form of market manipulation where the price of a cryptocurrency is artificially inflated (“pumped”) through misleading positive statements, and then quickly sold off (“dumped”) by the manipulators, causing the price to crash and leaving other investors with losses.4
R
Replay Attack
A type of network security attack where communication between a sender and receiver is intercepted and then maliciously re-sent to trick the system.1
Rewards
In cryptocurrency, rewards are incentives given to participants for their contributions to a blockchain network, such as validating transactions or providing liquidity.1
S
Satoshi Nakamoto
The pseudonymous creator (or group of creators) of Bitcoin, whose true identity remains unknown.4
Segregated Witness (SegWit)
An upgrade to the Bitcoin protocol that changes how data is stored in transactions, making blocks more efficient and allowing for more transactions to fit into each block.1
Short/Short Position
A “short” position in trading means you are selling an asset with the expectation that its price will decrease. You profit if the price goes down.1
Smart Contract
A smart contract is a self-executing agreement stored directly on a blockchain. The terms of the agreement are written into code, and once activated, the contract automatically executes when specific conditions are met, without the need for intermediaries.4
Smart Contract Audit
A security check performed by cybersecurity experts to ensure that the code behind a smart contract is free of errors or security weaknesses.1
Stablecoin
A cryptocurrency designed to maintain a stable value, usually by being “pegged” to a traditional currency like the U.S. dollar, or to a commodity like gold. This helps reduce price volatility.4
T
Terahash
A measure of the rate at which a computer or network can perform one trillion hash calculations per second, typically when mining cryptocurrency.6
Token
An individual cryptocurrency, especially one that operates on a specific blockchain (e.g., XRP on the Ripple blockchain).6
Total Supply
The total number of coins that exist for a particular cryptocurrency, excluding any that have been permanently removed (burned).1
Total Value Locked (TVL)
This represents the total amount of assets that are currently deposited or “staked” within a specific decentralized finance (DeFi) protocol.1
TradFi (Traditional Finance)
Refers to the conventional financial system and institutions, such as banks, stock exchanges, and traditional investment firms.1
Trading Bot
A computer program designed to automatically trade cryptocurrency assets on behalf of a trader, based on predefined rules and strategies.1
Transaction (TX)
The act of exchanging cryptocurrencies on a blockchain.1
Transaction Fee
A payment made for using the blockchain network to process a transaction.1
Transaction ID (TXID)
A unique identification number assigned to each transaction on a blockchain.1
V
Validators
In Proof-of-Stake blockchain networks, validators are participants who verify incoming transactions and help maintain the security and integrity of the blockchain. They are chosen by the network based on the amount of cryptocurrency they have “staked”.5,6
Volatility
This refers to how much and how quickly an asset’s price tends to change. High volatility means frequent and unpredictable price swings.5,6
Volume
The total amount of a cryptocurrency being traded in the open market, typically measured over a 24-hour period.6
W
Wallet
A digital tool or location used by cryptocurrency holders to manage their private keys and make transactions. Wallets can be software-based (online) or hardware-based (offline) and can be “custodial” (where a third party holds your keys) or “non-custodial” (where you retain full control of your keys).5,6
Wei
The smallest unit of the cryptocurrency Ether (ETH). One Ether is equal to 1,000,000,000,000,000,000 wei.6
Whale
A slang term used to describe a person or entity with a very large amount of cryptocurrency, often enough to influence market prices.5
White Paper
A technical document typically released with new crypto projects. It explains the project’s technology, how it works, its purpose, and its potential. White papers help potential users or investors understand the product or service.5,6,2
Wick
On a candlestick chart (used for tracking prices), a “wick” is a line that extends from the main body of the candle, showing the highest and lowest prices an asset reached during that period, in relation to its opening and closing prices.1
Win Rate
In financial markets, win rate is a measure of how often a trader makes a profitable trade.1
Wrapped Ether (WETH)
An ERC-20 token that represents Ether (ETH) at a 1:1 ratio. It allows users to trade ETH on decentralized platforms that only support ERC-20 tokens.1
Wyckoff Method
A trading and investing approach created by Richard Wyckoff in the 1930s, which has significantly influenced modern technical analysis.1
X
XRP
A cryptocurrency token that operates on the Ripple blockchain.6
Y
Yield
The return on an investment, usually expressed as a percentage.6
Yield Farming
A high-risk practice in decentralized finance (DeFi) where investors lock up their crypto assets to provide liquidity, lend, or stake them in order to earn rewards or interest.1,2
Z
Zero Confirmation Transaction
Another term for an “unconfirmed transaction,” meaning a transaction that has been broadcast to the network but has not yet been included in a block.6,2
Zero-Knowledge Proofs (ZKP)
A cryptographic method that allows one party (the prover) to prove they know a specific piece of information or that a transaction is valid, without revealing any of the actual details of that information or transaction to the other party (the verifier). This provides privacy while maintaining legitimacy. Cryptocurrencies use ZKPs to improve privacy by allowing verifiable transactions where details like sender, receiver, or amount can remain hidden.4,1,3,2
ZK Coprocessor
A ZK Coprocessor functions as an auxiliary processing unit that operates alongside a blockchain’s main network. Its primary role is to execute complex computations off-chain and subsequently generate zero-knowledge proofs that attest to the correctness of these computations.3
Zk-rollup
Zk-rollup is a layer-2 scaling solution designed to increase the transaction throughput of blockchain networks without compromising on security.1
zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge)
A specific and advanced type of zero-knowledge proof that allows for quick verification of hidden information without any back-and-forth communication between the prover and verifier. This is important for maintaining good blockchain performance, especially in large networks.4,1,3,2
zk-STARKs
Another type of zero-knowledge proof that enables one party to share validated data or execute computations with a third party without revealing the data or analysis to the other party involved in the verification.1,3
zkApps
Applications that use zero-knowledge proofs (especially zk-SNARKs and zk-STARKs) to offer possibilities beyond what traditional blockchain applications can do.3
ZKML (Zero-Knowledge Machine Learning)
This technology combines zero-knowledge proofs with machine learning, allowing for the verification of ML models while keeping the data used private.3,2
zkOracle
An advanced concept in blockchain technology that combines the features of oracles (which provide external data to blockchains) with zero-knowledge proofs. This creates a secure, private, and cost-effective way for data to be passed to blockchains.3,2
zkSharding
A concept for scaling blockchains by dividing the network into smaller parts (shards) that can process transactions in parallel, with security ensured by zkEVM proofs.3
zParachain
An approach used in the Polkadot blockchain ecosystem where a special blockchain is used specifically to connect to networks outside of Polkadot.3