Cryptocurrency Terms and Definitions

Here’s a list of various cryptocurrency terms and their definitions:

• Address – A unique string of characters that represents a destination for cryptocurrency transactions.
• Airdrop – The distribution of free tokens or coins to holders of a specific blockchain.
• Altcoin – Any cryptocurrency that isn’t Bitcoin (BTC) (e.g., Litecoin (LTC), Ripple (XRP)).
• Arbitrage – The act of buying and selling assets on different exchanges to profit from price differences.
• ASIC – Application-Specific Integrated Circuit. A specialized hardware designed for cryptocurrency mining.
• ATH – All-Time High, the highest price a cryptocurrency has ever reached.
• Atomic Swap – A technology that enables the direct exchange of one cryptocurrency for another without intermediaries.
• Bagholder – An investor who holds an asset that has lost significant value.
• Bear Market – A market characterized by falling prices. Typically defined by a 20% fall from all-time or cyclical highs.
• Bear Trap – A situation where the price of an asset briefly drops, only to reverse and move upward.
• BEP-2 – A technical standard for tokens issued on the Binance Chain.
• BEP-20 – A technical standard for tokens issued on the Binance Smart Chain (BSC) and is compatible with Ethereum’s ERC-20 standard.
• Binance Smart Chain (BSC) – A blockchain network built by Binance that runs parallel to Binance Chain.
• Bitcoin Dominance – The percentage of the total cryptocurrency market capitalization that’s held by Bitcoin. A key metric for understanding market sentiment and trends.
• Block – A collection of transactions recorded on the blockchain.
• Block Explorer – A tool that allows users to view information about blockchain transactions and blocks.
• Block Reward – The reward given to miners for successfully mining a block.
• Blockchain – A decentralized digital ledger of transactions maintained by a network of computers.
• Bull Market – A market characterized by rising prices. Normally defined by a 20% rise from lows.
• Burning – The process of permanently removing coins from circulation.
• CeFi – Centralized Finance, a type of cryptocurrency service that relies on a central authority.
• Circulating Supply – The number of coins or tokens currently available for trading.
• Circulating vs. Total Supply – Circulating supply is the number of coins currently available in the market, while total supply is the maximum number that will ever exist. This distinction is important for understanding a cryptocurrency’s potential for scarcity and value appreciation.
• Cold Wallet – A cryptocurrency wallet that isn’t connected to the internet, used for secure storage.
• Collateralized Debt Position (CDP) – A smart contract that locks collateral to issue a stablecoin.
• Compounding – The process of reinvesting earned interest or rewards to generate more returns.
• Consensus Algorithm – A mechanism used to achieve agreement on the state of the blockchain among participants.
• Cross-Chain – The ability to transfer assets or data between different blockchain networks.
• Cryptocurrency – A digital or virtual currency secured by cryptography. Will sometimes see the terms cryptocoin and crypto asset used .
• Crypto Lending – Allows you to earn interest on your cryptocurrency holdings by lending them out to borrowers, or to borrow cryptocurrency by using your existing crypto assets as collateral.
• Custodial Wallet – A wallet where a third party controls the private keys.
• Custodian – A third party that holds and secures assets on behalf of users.
• DAO – Decentralized Autonomous Organization, an organization governed by smart contracts and code.
• DApp – Decentralized Application, an application that runs on a blockchain without central control.
• DeFi – Decentralized Finance, a financial system that operates without a central authority using smart contracts.
• Deflationary – A characteristic of a cryptocurrency that has a decreasing supply over time. Can help a cryptocurrency hold or improve its value over time.
• Delisting – The removal of a cryptocurrency from an exchange.
• Derivatives – Financial contracts that derive their value from an underlying cryptocurrency, such as futures, options, and perpetual swaps. These can be used for hedging, speculation, and increasing leverage.
• DEX – Decentralized Exchange, a peer-to-peer marketplace that operates without intermediaries.
• Difficulty – A measure of how hard it is to mine a new block in a blockchain network.
• Double Spending – The problem of spending the same digital currency more than once.
• Dust – A tiny amount of cryptocurrency that is leftover after a transaction.
• Dusting Attack – A type of attack where small amounts of cryptocurrency are sent to wallets to break the anonymity of their owners.
• Elastic Supply – A feature of some cryptocurrencies where the supply expands or contracts based on demand.
• Encryption – The process of converting data into a code to prevent unauthorized access.
• Enterprise Blockchain – A blockchain designed for use by businesses and enterprises.
• ERC-20 – A technical standard for tokens issued on the Ethereum blockchain.
• Ethereum 2.0 – An upgrade to the Ethereum network that introduces PoS and other improvements.
• Fiat Currency – Government-issued currency that isn’t backed by a physical commodity.
• Flash Loan – A type of uncollateralized loan that is borrowed and repaid within the same transaction.
• FOMO – Fear of Missing Out. A psychological driver that can lead traders/investors to make impulsive decisions.
• Fork – A change in the protocol of a blockchain that splits it into two separate networks.
• Frontrunning – A practice where a trader executes orders ahead of other participants to gain an advantage.
• FUD – Fear, Uncertainty, and Doubt. Negative information that can influence market sentiment. Often used in a pejorative way (e.g., claims of market manipulation).
• GameFi – A blend of gaming and decentralized finance that allows users to earn rewards through gameplay.
• Gas – A fee required to conduct transactions on the Ethereum network. It exists to pay for the computational resources required to process transactions and maintain the network.
• Gas Limit – The maximum amount of gas a user is willing to spend on a transaction.
• Gas Price – The amount of ETH paid per unit of gas to execute a transaction on Ethereum.
• Genesis Block – The first block ever mined on a blockchain.
• Governance Token – A token that gives holders the right to vote on decisions within a decentralized platform.
• Halving – The process of cutting the block reward in half. Typically used in Bitcoin to control inflation.
• Hard Cap – The maximum amount of money a project intends to raise during an ICO.
• Hardware Wallet – A physical device used to store cryptocurrencies securely offline.
• Hash – A function that converts input data into a fixed-size string of characters.
• Hash Collision – A situation where two different inputs produce the same hash output. Hash collisions occur because it’s impossible for a hash function to perfectly and uniquely map an infinite number of possible inputs to a finite number of possible outputs.
• Hash Rate – The speed at which a cryptocurrency miner operates.
• HODL – A slang term meaning “Hold On for Dear Life,” used to encourage holding rather than selling. Became popular in the crypto community due to the often extreme nature of volatility in these markets.
• Hot Wallet – A cryptocurrency wallet that is connected to the internet.
• ICO – Initial Coin Offering, a fundraising method in which new cryptocurrencies are sold to investors.
• Impermanent Loss – A temporary loss experienced by liquidity providers due to price volatility.
• Initial DEX Offering (IDO) – A fundraising method where new tokens are sold directly on a decentralized exchange.
• KYC – Know Your Customer, a regulatory requirement to verify the identity of users.
• Layer-0 – Refers to the underlying infrastructure that supports blockchain networks, such as the internet or decentralized storage solutions like IPFS.
• Layer 1 – The base layer of a blockchain network, such as Bitcoin or Ethereum.
• Layer 2 – A secondary framework or protocol built on top of an existing blockchain to improve scalability and efficiency.
• Leverage – Borrowing funds to increase the size of a trade or investment.
• Lightning Network – A Layer 2 payment protocol built on top of Bitcoin for faster and cheaper transactions.
• Liquidity – The ease with which an asset can be converted into cash without affecting its market price.
• Liquidity Mining – A process where users earn tokens by providing liquidity to decentralized protocols.
• Liquidity Pool – A collection of funds locked in a smart contract to facilitate trading on a decentralized exchange.
• Mainnet – The primary network of a blockchain where real transactions occur.
• Market Capitalization – The total value of a cryptocurrency. Calculated by multiplying its price by its circulating supply.
• Market Maker – A participant who provides liquidity by placing buy and sell orders on an exchange.
• Mempool – A pool of unconfirmed transactions waiting to be added to a block.
• Merkle Tree – A structure used to verify data integrity in a blockchain.
• MEV (Miner Extractable Value) – The profit that miners can make by including, excluding, or changing the order of transactions within a block.
• Microtransaction – A small payment made for digital goods or services.
• Mining – The process of validating transactions and adding them to the blockchain in exchange for rewards. More info on mining can be found here.
• Mining Pool – A group of miners who combine their computational power to increase the likelihood of mining a block.
• Mnemonic Phrase – A list of words used to recover access to a cryptocurrency wallet.
• Multi-Signature (Multisig) – A type of wallet that requires multiple signatures to authorize a transaction.
• NFT – Non-Fungible Token, a unique digital asset that represents ownership of a specific item or piece of content (e.g., digital art).
• Node – A computer that participates in the blockchain network by validating transactions and blocks.
• Node Operator – A participant who runs a full node to validate and relay transactions on a blockchain.
• Nonce – A random number used in mining to generate a valid hash for a block.
• Off-Chain – Transactions that occur outside the blockchain but can be later settled on-chain.
• On-Chain – Transactions that occur directly on the blockchain.
• On-Chain Governance – A system where token holders can vote on proposals that affect the future development of a blockchain protocol.
• Oracle – A service that provides real-world data to smart contracts on a blockchain.
• Oracle Problem – The challenge of ensuring that external data provided to smart contracts is accurate and trustworthy.
• Over-The-Counter (OTC) – A type of trading that occurs directly between two parties rather than on an exchange.
• P2P – Peer-to-Peer, a network where participants interact directly without intermediaries. 
• Panic Selling – The rapid selling of assets during a market downturn out of fear of further losses.
• Paper Wallet – A physical document that contains the private and public keys for cryptocurrency storage.
• Permissioned Blockchain – A blockchain that restricts access to certain participants.
• Play-to-Earn (P2E) – A model where players earn rewards by participating in blockchain-based games.
• Price Impact – The effect that a large trade can have on the price of an asset.
• Private Key – A secret code used to sign transactions and prove ownership of a cryptocurrency.
• Proof of Burn – A consensus mechanism where coins are permanently destroyed to validate transactions.
• Proof of Stake (PoS) – A consensus mechanism where validators are selected based on the number of coins they hold.
• Proof of Work (PoW) – A consensus mechanism where miners compete to solve complex mathematical puzzles to add a block to the blockchain.
• Public Key – A cryptographic code that allows others to send cryptocurrency to an address.
• Pump and Dump – A scheme where the price of a cryptocurrency is artificially inflated and then sold off for profit.
• Rebalancing – The process of adjusting the composition of a portfolio to maintain a desired asset allocation.
• Rekt – A term used to describe a large loss in cryptocurrency trading. (Alternative of “wrecked.”)
• Rug Pull – A scam where developers abandon a project and take investors’ funds.
• SaaS – Software as a Service, a model where software is provided over the internet on a subscription basis.
• Satoshi – The smallest unit of Bitcoin, equivalent to 0.00000001 BTC.
• Satoshi Nakamoto – The pseudonymous creator of Bitcoin.
• Scalability – The ability of a blockchain network to handle an increasing number of transactions.
• Security Token – A type of cryptocurrency that represents ownership in an asset or company. A company could issue security tokens that represent shares of its stock, allowing investors to own a portion of the company and potentially receive dividends.
• Security Token Offering (STO) – A fundraising method where security tokens are sold to investors.
• Seed Phrase – A series of words that can be used to recover a cryptocurrency wallet.
• SegWit – Segregated Witness, a Bitcoin upgrade that separates transaction signatures to improve scalability.
• Self-Custody – The act of storing and managing one’s own cryptocurrency without relying on a third party.
• Sharding – A method of splitting a blockchain network into smaller partitions to increase scalability. Zilliqa was the first public blockchain to implement sharding. Ethereum 2.0 also uses sharding to improve its scalability.
• Sidechain – A separate blockchain that runs parallel to the main blockchain.
• Slippage – The difference between the expected price of a trade and the price at which it is executed.
• Smart Contract – A self-executing contract with the terms directly written into code.
• Soft Fork – A backward-compatible upgrade to a blockchain.
• Stable Yield – A consistent return generated by staking or providing liquidity in DeFi protocols.
• Stablecoin – A cryptocurrency that is pegged to a stable asset like fiat currency.
• Staking – The process of locking up cryptocurrency to participate in a PoS network and earn rewards.
• Sybil Attack – A type of attack where a single entity creates multiple fake identities to control a network.
• Swap – The process of exchanging one cryptocurrency for another.
• Synthetic Asset – A token that represents another asset, such as stocks or commodities, on the blockchain. (Related: Synthetic Asset Creation) 
• Testnet – A separate blockchain used for testing purposes.
• Testnet Faucet – A tool that provides free tokens for use on a testnet blockchain.
• Token – A digital asset created on a blockchain that represents value or utility.
• Tokenomics – The study of the economic model of a cryptocurrency, including its token distribution, supply, and incentives.
• Total Supply – The total amount of coins or tokens that will ever be created.
• Trade Volume – The total amount of an asset traded during a specific period. Common metric outside crypto.
• Trading Pair – A comparison of two assets that can be traded for each other on an exchange.
• Transaction Fee – A small fee paid to miners or validators to process transactions.
• Trezor – A popular brand of hardware wallets for cryptocurrency storage.
• Trustless – A system where participants do not need to trust a central authority or intermediary.
• TxID – Transaction ID, a unique identifier for a cryptocurrency transaction.
• Utility Token – A token that provides access to a specific product or service within a blockchain ecosystem.
• Validator – A participant in a PoS network that verifies and validates transactions.
• Vanity Address – A cryptocurrency address that includes a personalized or recognizable sequence of characters.
• Vesting – The process of locking tokens for a period before they can be spent.
• Volatility – The degree of variation in the price of a cryptocurrency over time.
• Wallet – A digital or physical tool used to store, send, and receive cryptocurrency.
• Whale – An individual or entity that holds a large amount of cryptocurrency.
• Whitepaper – A document that outlines the purpose, technology, and future goals of a cryptocurrency project.
• Wrapped Token – A token that represents another asset, such as Wrapped Bitcoin (WBTC) on Ethereum.
• Yield Farming – A DeFi activity where users earn rewards by providing liquidity to protocols.
• Zero-Knowledge Proof – A cryptographic method where one party can prove to another that something is true without revealing any information.
• Zk-Rollup – A Layer 2 scaling solution that bundles transactions off-chain and posts them to the main blockchain.
• 51% Attack – A type of attack where a malicious actor controls more than 50% of a blockchain’s computational power. The main risk of a 51% attack is that the attacker can double-spend coins, alter the blockchain’s history, and prevent legitimate transactions from being confirmed.