Crypto Glossary
A searchable reference for cryptocurrency and blockchain terminology.
106 terms
Address
A unique string of characters that identifies a specific location on a blockchain, used to send and receive cryptocurrency. Similar to a bank account number.
Airdrop
A distribution of free tokens or cryptocurrency to wallet addresses, often used for marketing, rewarding early users, or decentralizing token ownership.
Altcoin
Any cryptocurrency other than Bitcoin. The term combines 'alternative' and 'coin'. Examples include Ethereum, Solana, Cardano, and Dogecoin.
AMM (Automated Market Maker)
A type of decentralized exchange protocol that uses mathematical formulas (liquidity pools) rather than order books to price and execute trades automatically.
APR (Annual Percentage Rate)
The annualized return on an investment not accounting for compounding. Used alongside APY to express staking and yield farming returns.
APY (Annual Percentage Yield)
The real rate of return on a crypto investment over one year, taking into account compound interest. Used to compare staking and DeFi yields.
Base Fee
The minimum fee required for a transaction to be included in a block on Ethereum (introduced with EIP-1559). The base fee is burned, not paid to validators.
BFT (Byzantine Fault Tolerance)
The ability of a distributed system to continue functioning correctly even if some participants behave maliciously or fail. A core property of robust blockchain consensus mechanisms.
Bitcoin
The first decentralized cryptocurrency, created in 2009 by the pseudonymous Satoshi Nakamoto. Bitcoin introduced the blockchain concept and operates without a central authority.
Block
A container in a blockchain that holds a batch of verified transactions, a timestamp, and a reference to the previous block, creating the chain.
Block Reward
The new cryptocurrency given to a miner or validator as an incentive for successfully adding a new block to the blockchain. In Bitcoin, this halves approximately every four years.
Blockchain
A distributed digital ledger that records transactions in linked, cryptographically secured blocks. Once recorded, data is extremely difficult to alter without changing all subsequent blocks.
Bridge
A protocol that allows the transfer of assets or data between two different blockchains. Bridges enable interoperability but have historically been targets for security exploits.
Burn
Permanently removing cryptocurrency tokens from circulation by sending them to an unspendable address (burn address). Used to reduce supply, often to counter inflation.
Censorship Resistance
The property of a blockchain that makes it extremely difficult for any entity to prevent valid transactions from being included in the blockchain.
Circulating Supply
The number of cryptocurrency coins or tokens that are publicly available and currently in circulation in the market. Excludes locked, reserved, or not-yet-minted tokens.
Cold Wallet
A cryptocurrency wallet that stores private keys completely offline, disconnected from the internet. Hardware wallets and paper wallets are examples. Considered the most secure storage method.
Consensus Mechanism
The method a blockchain network uses to agree on the valid state of the ledger. Common mechanisms include Proof of Work, Proof of Stake, and Proof of History.
Custodial
A service where a third party (like an exchange) holds your private keys on your behalf. Convenient, but means you don't fully control your funds.
DAO (Decentralized Autonomous Organization)
An organization governed by smart contracts and token holders rather than traditional management. Token holders vote on proposals that are automatically executed on-chain.
DApp (Decentralized Application)
An application built on a decentralized blockchain network rather than centralized servers. DApps use smart contracts for their backend logic.
DeFi (Decentralized Finance)
Financial services and products built on blockchain networks using smart contracts, removing intermediaries like banks. Examples include lending, borrowing, trading, and yield farming.
DeFi Protocol
A set of smart contracts on a blockchain that provide financial services (lending, trading, yield) without a centralized intermediary.
Deflation (Crypto)
A reduction in the total supply of a cryptocurrency over time, often through token burns. Deflationary tokens become scarcer over time, which can affect their value dynamics.
Delegation
The act of assigning your staked tokens to a validator so they can participate in consensus on your behalf. You keep custody of your tokens but earn a share of staking rewards.
DePIN
Decentralized Physical Infrastructure Networks — blockchain projects that incentivize the deployment of real-world physical infrastructure (wireless networks, storage, computing) using token rewards.
DEX (Decentralized Exchange)
A cryptocurrency exchange that operates without a central authority, using smart contracts and liquidity pools to enable peer-to-peer trading directly from users' wallets.
Epoch
A defined period of time used in Proof of Stake blockchains for validator selection, reward calculation, and other protocol events. In Ethereum, an epoch is 32 slots.
ERC-20
The standard token interface on Ethereum, defining a common set of rules for fungible tokens. Most tokens on Ethereum are ERC-20 tokens.
ERC-721
The Ethereum standard for non-fungible tokens (NFTs), where each token has a unique ID and is not interchangeable with others.
Ethereum
A decentralized blockchain platform featuring smart contracts and the largest ecosystem of decentralized applications. Its native currency is Ether (ETH).
EVM (Ethereum Virtual Machine)
The runtime environment that executes smart contracts on Ethereum. Other blockchains have created EVM-compatible environments to leverage Ethereum's tooling and developer ecosystem.
FDV (Fully Diluted Valuation)
The total market value of a cryptocurrency if all tokens that will ever exist (including unreleased and locked tokens) were in circulation at the current price.
Fiat Currency
Traditional government-issued currency (e.g. USD, EUR, GBP) that has no intrinsic commodity backing and derives value from government decree and public trust.
Finality
The irreversibility of a blockchain transaction. A transaction with finality cannot be reversed or altered. Proof of Work chains have probabilistic finality; many PoS chains offer faster finality.
Floor Price
The lowest listed price for an NFT within a specific collection. Used as a baseline metric for NFT collection valuations.
Fork
A change to a blockchain's protocol. A soft fork is backward-compatible; a hard fork creates two separate, incompatible blockchains. Famous examples include the Bitcoin Cash hard fork.
Front-Running
A practice where a transaction is placed ahead of another known pending transaction to profit from the resulting price change. Common in blockchain environments due to visible mempool transactions.
Gas
The unit measuring computational effort required to execute operations on Ethereum. Users pay gas fees in ETH to compensate for the energy needed to process and validate transactions.
Gas Fee
The cost of a transaction or smart contract execution on a blockchain, typically paid in the blockchain's native token. Fees vary based on network demand.
Gas Limit
The maximum amount of gas a user is willing to spend on a transaction. If the actual gas used exceeds this limit, the transaction fails but gas is still consumed.
Genesis Block
The very first block in a blockchain, with no predecessor. Bitcoin's genesis block was mined by Satoshi Nakamoto on January 3, 2009.
Governance Token
A token that gives holders the right to vote on proposals affecting a decentralized protocol, such as fee changes, new features, or treasury spending.
Halving
A scheduled reduction of the Bitcoin block reward by 50%, occurring approximately every four years (every 210,000 blocks). Halvings reduce the rate of new Bitcoin issuance.
Hardware Wallet
A physical device that stores cryptocurrency private keys offline in secure hardware. Examples include Ledger and Trezor devices. Considered the gold standard for long-term crypto security.
Hash
A fixed-length output produced by a cryptographic hash function from any input. Hashes are used to verify data integrity and link blocks in a blockchain.
Hot Wallet
A cryptocurrency wallet connected to the internet, enabling convenient transactions. More convenient than cold wallets but considered less secure for large holdings.
Impermanent Loss
The temporary loss of funds experienced by liquidity providers in AMM pools when the price ratio of the pooled tokens changes compared to when they were deposited.
Inflation (Crypto)
The increase in the total supply of a cryptocurrency over time due to new token issuance (e.g. staking rewards or mining rewards). High inflation can dilute the value of existing holdings.
Interoperability
The ability of different blockchains to communicate and share data or assets. Bridges and cross-chain protocols aim to improve blockchain interoperability.
Layer 1
The base blockchain protocol (e.g. Bitcoin, Ethereum, Solana). Layer 1 is responsible for core consensus, security, and data availability.
Layer 2
A secondary network built on top of a Layer 1 blockchain to increase scalability and reduce fees. Examples include the Lightning Network (Bitcoin) and Optimism/Arbitrum (Ethereum).
Liquidity
The ease with which an asset can be bought or sold without significantly affecting its price. High liquidity means the market is deep; low liquidity means large trades can cause big price moves.
Liquidity Pool
A collection of tokens locked in a smart contract that provides liquidity for decentralized exchanges. Liquidity providers deposit tokens and earn a share of trading fees.
Liquidity Provider (LP)
A user who deposits tokens into a DEX liquidity pool to enable trading. In return, LPs receive a share of trading fees and sometimes additional token rewards.
Market Capitalization
The total market value of a cryptocurrency. Calculated as: Current Price × Circulating Supply. Used to rank and compare the relative size of different cryptocurrencies.
Maximum Supply
The maximum number of coins or tokens that will ever exist for a given cryptocurrency. Bitcoin's maximum supply is 21 million BTC.
Meme Coin
A cryptocurrency that originated from or is strongly associated with internet memes or jokes. Examples include Dogecoin and Shiba Inu. Often highly speculative and volatile.
Mempool
The 'memory pool' — a temporary holding area for pending blockchain transactions that have been broadcast but not yet included in a confirmed block.
MEV (Maximal Extractable Value)
Profit that validators or miners can extract by strategically ordering, including, or excluding transactions in the blocks they produce, beyond standard block rewards and fees.
Mining
The process of validating transactions and adding new blocks to a Proof of Work blockchain (e.g. Bitcoin). Miners compete to solve a computational puzzle and are rewarded with new cryptocurrency.
Mint
The process of creating a new token or NFT on a blockchain. Minting is when new digital assets are generated and recorded on-chain for the first time.
Multisig (Multi-Signature)
A security method requiring multiple private keys to authorize a transaction. For example, a 2-of-3 multisig wallet requires any 2 of 3 designated keys to sign.
NFT (Non-Fungible Token)
A unique digital token on a blockchain that represents ownership of a specific asset (digital art, music, collectibles, etc.). Unlike regular tokens, each NFT is unique and not interchangeable.
Node
A computer that participates in a blockchain network by maintaining a copy of the blockchain and relaying transactions. Full nodes store the entire blockchain history.
Non-Custodial
A service or wallet where you control your own private keys. Gives full ownership of your crypto but means you are solely responsible for security.
Oracle
A service that brings external, real-world data onto a blockchain so smart contracts can use it. Examples: price feeds, weather data, sports results. Chainlink is a major oracle provider.
Phishing
A scam where an attacker creates a fake website, email, or message that impersonates a legitimate service to steal credentials or seed phrases.
Priority Fee (Tip)
An optional additional fee paid to validators on Ethereum to incentivize faster inclusion of your transaction in the next block.
Private Key
A secret cryptographic key that gives the holder full control over the associated blockchain address. Anyone with your private key has complete control of your funds. Never share it.
Proof of Stake (PoS)
A consensus mechanism where validators are chosen to create new blocks based on the amount of cryptocurrency they 'stake' (lock up) as collateral. Used by Ethereum, Solana, Cardano.
Proof of Work (PoW)
A consensus mechanism requiring participants (miners) to expend computational energy to solve a mathematical puzzle to add new blocks. Used by Bitcoin.
Public Key
A cryptographic key derived from a private key that can be safely shared. It is used to create wallet addresses and verify that transactions were signed by the private key holder.
Pump and Dump
A price manipulation scheme where the price of a token is artificially inflated through coordinated buying (pump), then the organizers sell their holdings (dump), crashing the price and harming other buyers.
Real World Asset (RWA)
Traditional financial assets like bonds, real estate, or commodities represented as tokens on a blockchain. RWA tokenization aims to bring traditional finance onto-chain.
Rollup
A Layer 2 scaling solution that processes transactions off-chain and batches them together before submitting the compressed data to the main chain. Types include Optimistic Rollups and ZK-Rollups.
RPC (Remote Procedure Call)
A communication protocol used by wallets and apps to interact with blockchain nodes. Custom RPC endpoints let you connect to different networks or private nodes.
Rug Pull
A scam where cryptocurrency developers abandon a project and abscond with investor funds, often after artificially inflating the token price. Common in DeFi and meme coin markets.
Sandwich Attack
A type of MEV attack where a bot places transactions before and after a victim's trade, profiting from the price impact their trade causes.
Seed Phrase
A sequence of 12 or 24 common words that encodes your wallet's private keys. The seed phrase is the master backup for your wallet. Anyone who has it has full access to your funds. Never share it.
Self-Custody
Holding your own private keys rather than entrusting them to an exchange or custodian. Self-custody gives full control but full responsibility.
Sharding
A database partitioning technique applied to blockchains, splitting the network into smaller pieces (shards) that process transactions in parallel to increase throughput.
Slashing
A penalty applied to Proof of Stake validators who behave maliciously or negligently, resulting in the loss of a portion of their staked tokens.
Slippage
The difference between the expected price of a trade and the actual price at which it executes. Common on DEXs with low liquidity or during high volatility.
Smart Contract
A self-executing program stored on a blockchain that automatically performs predetermined actions when specific conditions are met. No intermediary required.
Smart Contract Audit
A security review of a smart contract's code by independent security researchers to identify vulnerabilities before deployment.
Social Engineering
Psychological manipulation tactics used by scammers to trick people into revealing sensitive information like seed phrases or private keys.
Solana
A high-performance Layer 1 blockchain using Proof of History combined with Proof of Stake, capable of thousands of transactions per second with very low fees.
SPL Token
The Solana equivalent of an ERC-20 token. SPL tokens follow the Solana Program Library token standard and power most tokens in the Solana ecosystem.
Stablecoin
A cryptocurrency designed to maintain a stable value, typically pegged 1:1 to a fiat currency like the US dollar. Examples: USDC, USDT, DAI.
Staking
The process of locking up cryptocurrency to participate in a blockchain's consensus mechanism (Proof of Stake) or to earn rewards in DeFi protocols.
Token
A digital asset built on top of an existing blockchain (e.g. an ERC-20 token on Ethereum). Distinct from a 'coin' which is the native asset of its own blockchain.
Token Approval
Permission granted to a smart contract to spend tokens from your wallet on your behalf. Unlimited approvals can be dangerous — always review and revoke unnecessary approvals.
Token Burn Mechanism
A systematic process of removing tokens from circulation by sending them to an unspendable address, intended to reduce supply over time.
Tokenomics
The economic model of a cryptocurrency or token, including its total supply, distribution, inflation/deflation mechanisms, and utility. Critical for understanding a token's long-term dynamics.
Total Supply
The total number of coins or tokens that currently exist for a cryptocurrency, including locked tokens but excluding burned tokens.
Transaction
A signed instruction recorded on a blockchain, typically transferring cryptocurrency from one address to another or executing a smart contract function.
Transaction Hash (TxHash)
A unique identifier for a blockchain transaction, generated by hashing the transaction data. Can be used on a block explorer to look up the status and details of any transaction.
Utility Token
A token that provides access to a product or service within a blockchain ecosystem, such as paying for transaction fees, accessing platform features, or participating in governance.
Validator
A participant in a Proof of Stake blockchain who locks up (stakes) cryptocurrency to earn the right to validate transactions and create new blocks.
Wallet
Software or hardware that stores cryptographic keys (public and private) enabling users to send, receive, and manage cryptocurrency. The coins themselves live on the blockchain.
Wallet Drainer
A malicious smart contract or website that tricks users into signing a transaction that gives the attacker permission to transfer all tokens from the victim's wallet.
Web3
A vision for a decentralized internet built on blockchain technology, where users own their data and digital assets rather than relying on centralized platforms.
Whitepaper
A technical document published by a cryptocurrency project explaining its concept, technology, tokenomics, and implementation plan. Bitcoin's whitepaper was published by Satoshi Nakamoto in 2008.
Yield
Returns generated from lending, staking, or providing liquidity in DeFi protocols. Often expressed as APY (Annual Percentage Yield) or APR (Annual Percentage Rate).
Zero-Knowledge Proof
A cryptographic method allowing one party to prove they know something without revealing the actual information. Used in privacy coins and Layer 2 solutions like ZK-Rollups.