Reference

Crypto Glossary: A to Z

The terms you will see across crypto news, analysis, and trading — explained in plain English. 74 entries.

Jump to letter 0-9 A B C D E F G H I K L M N O P R S T V W Y Z

0-9

51% Attack: An attack on a Proof of Work blockchain in which a single party controls a majority of the network's mining power, allowing them to potentially reverse transactions or prevent new ones from confirming. Theoretically possible but enormously expensive on large networks like Bitcoin.

A

AMM (Automated Market Maker): A decentralized exchange design in which prices are set algorithmically based on the ratio of two assets in a liquidity pool. Uniswap pioneered this approach.
APY: Annual Percentage Yield. The total interest earned in a year, accounting for compounding. In DeFi, APY rates are often advertised but vary significantly with market conditions.
ASIC: Application-Specific Integrated Circuit. Specialized hardware optimized for cryptocurrency mining, particularly Bitcoin.
Address: A string of letters and numbers that represents a destination for a cryptocurrency transaction. Derived from a public key. Safe to share publicly.
Airdrop: A distribution of tokens, typically free, to users who meet specific criteria such as holding a particular asset or having interacted with a protocol.
Altcoin: Any cryptocurrency other than Bitcoin. The term has fallen out of favor with newer market entrants who often distinguish between Ethereum, Bitcoin, and 'everything else.'
Arbitrum: One of the largest Ethereum Layer 2 networks. Uses optimistic rollup technology to provide cheaper and faster transactions while inheriting Ethereum's security.
Atomic Swap: A method of exchanging one cryptocurrency for another directly between users, without an intermediary, using cryptographic protocols that ensure either both sides complete or neither does.

B

Base: An Ethereum Layer 2 network launched by Coinbase in 2023. Built on the OP Stack and known for its consumer-app ecosystem.
Bitcoin: The first and largest cryptocurrency, launched in 2009 by the pseudonymous Satoshi Nakamoto. Operates on a Proof of Work blockchain with a maximum supply of 21 million coins.
Block: A batch of transactions added to a blockchain. Each block cryptographically references the previous block, forming the chain.
Block Explorer: A website that lets you search the contents of a blockchain — view transactions, addresses, blocks, and balances. Examples include blockstream.info for Bitcoin and etherscan.io for Ethereum.
Block Reward: The new cryptocurrency issued to the miner or validator who successfully proposes a block. Bitcoin's block reward halves approximately every four years.
Blockchain: A distributed database that records transactions in cryptographically linked blocks across many independent computers, with rules for participants to agree on its contents without needing a central authority.
Bridge: A protocol that allows assets or messages to move between different blockchains. Bridges have historically been a frequent target of major hacks.

C

CEX (Centralized Exchange): A cryptocurrency trading venue operated by a single company that holds customer funds and matches trades through an internal order book. Examples include Kraken, Coinbase, and Binance.
Cold Storage: Storing the private keys to a cryptocurrency wallet offline, typically on a dedicated hardware device or paper, to protect against online attacks.
Confirmation: The inclusion of a transaction in a new block on the blockchain. Each subsequent block adds another confirmation. Bitcoin transactions are conventionally considered final after six confirmations.
Consensus Mechanism: The set of rules a blockchain network uses to agree on the validity and order of transactions. The two dominant types are Proof of Work and Proof of Stake.

D

DAO (Decentralized Autonomous Organization): A group of people coordinating through smart contracts and on-chain voting rather than through a traditional corporate structure. Token holders typically vote on governance decisions.
DApp (Decentralized Application): An application that runs on a blockchain or peer-to-peer network rather than on a centralized server. Most operate through smart contracts.
DEX (Decentralized Exchange): A cryptocurrency trading venue that operates through smart contracts rather than a central operator. Users trade directly from their own wallets.
DeFi (Decentralized Finance): Financial services — lending, borrowing, trading, derivatives — built on smart contracts and operating without traditional intermediaries.
Difficulty: A parameter that determines how hard it is to mine a new block. Adjusts automatically to keep block times consistent as the total mining power changes.

E

ETF (Exchange-Traded Fund): A security that trades on a stock exchange and holds an underlying asset. Spot Bitcoin ETFs were approved in the US in January 2024.
EVM (Ethereum Virtual Machine): The runtime environment for smart contracts on Ethereum. Many other blockchains have implemented EVM compatibility to allow developers to deploy the same contracts across multiple networks.
Ether (ETH): The native cryptocurrency of the Ethereum network. Used to pay transaction fees, secure the network through staking, and as a store of value.
Ethereum: The largest smart-contract platform, launched in 2015. Hosts most of DeFi, the majority of stablecoins, and a wide range of other applications.

F

Fiat: Government-issued currency that is not backed by a physical commodity. US dollars, euros, and yen are fiat currencies.
Fork: A change to a blockchain's protocol rules. A 'soft fork' is backwards-compatible; a 'hard fork' creates a permanent split if not all participants update.

G

Gas: The fee paid to execute a transaction or smart contract on Ethereum and similar blockchains. Denominated in the network's native currency.
Genesis Block: The first block of any blockchain. Bitcoin's genesis block was mined on January 3, 2009.

H

HODL: Crypto slang for holding onto a position long-term, originating from a misspelled 2013 Bitcoin forum post. Often retroactively defined as 'Hold On for Dear Life.'
Hardware Wallet: A physical device that stores cryptocurrency private keys offline and signs transactions internally. Examples include Ledger and Trezor.
Hash: A fixed-length cryptographic fingerprint of arbitrary data. Used throughout blockchain systems for linking blocks, verifying integrity, and proof-of-work puzzles.
Hash Rate: The total computational power being used to mine a Proof of Work cryptocurrency. Higher hash rate generally indicates a more secure network.

I

Immutable: Unable to be changed. Refers to the property of blockchain records that, once confirmed, cannot be altered without enormous computational effort.

K

KYC (Know Your Customer): Identity verification procedures required by regulated cryptocurrency exchanges to comply with anti-money-laundering laws.

L

Layer 1: A base blockchain network like Bitcoin or Ethereum, as distinguished from networks built on top of them.
Layer 2: A network built on top of a Layer 1 to provide additional capacity, typically lower fees and higher throughput. Examples on Ethereum include Arbitrum, Optimism, and Base.
Liquidity Pool: A pool of tokens locked in a smart contract used to facilitate trading on an automated market maker. Liquidity providers earn a share of trading fees.

M

MEV (Maximal Extractable Value): Profits that can be extracted by reordering, including, or excluding transactions within a block. A significant economic factor on Ethereum and other smart-contract chains.
Mining: The process of validating transactions and adding new blocks to a Proof of Work blockchain in exchange for newly issued cryptocurrency and transaction fees.
Mnemonic: A sequence of words that encodes a cryptocurrency wallet's private keys. Also called a seed phrase or recovery phrase.
Multisig (Multi-Signature): A wallet or smart contract that requires multiple signatures to authorize transactions. Common configurations include 2-of-3 or 3-of-5.

N

NFT (Non-Fungible Token): A token on a blockchain where each unit is unique and not interchangeable with any other. Used for digital art, collectibles, and increasingly for identity and credentials.
Node: A computer that maintains a copy of a blockchain and participates in the network. Full nodes verify all transactions independently.

O

Optimism: An Ethereum Layer 2 network that uses optimistic rollup technology. Developed the OP Stack codebase that powers Base and several other rollups.
Oracle: A service that brings off-chain data (like asset prices) onto a blockchain so smart contracts can use it. Chainlink is the largest oracle network.

P

Private Key: A secret number that controls a cryptocurrency address and authorizes transactions from it. Anyone with the private key controls the funds.
Proof of Stake (PoS): A consensus mechanism in which validators stake the network's native currency as collateral and are pseudo-randomly selected to propose blocks. Used by Ethereum since 2022.
Proof of Work (PoW): A consensus mechanism in which miners compete to solve cryptographic puzzles to propose blocks. Used by Bitcoin and several other chains.
Public Key: A number derived from a private key that can be used to verify signatures from that private key. Cryptocurrency addresses are typically derived from public keys.
Pump and Dump: A market manipulation scheme in which a coordinated group inflates the price of a low-liquidity asset and then sells to retail buyers at the artificial high.

R

RWA (Real-World Asset): Tokenized representations of off-chain assets like Treasury bills, real estate, or commodities, brought onto a blockchain.
Rollup: A Layer 2 scaling solution that processes transactions off the main chain and posts compressed data back to the main chain for security.

S

Satoshi: The smallest unit of Bitcoin (0.00000001 BTC). Named after Satoshi Nakamoto, Bitcoin's pseudonymous creator.
Seed Phrase: A sequence of 12 or 24 words that backs up a cryptocurrency wallet. Anyone with the seed phrase has full control of the wallet.
Sharding: A scaling technique that splits a blockchain into multiple parallel chains (shards) that process transactions independently.
Sidechain: A separate blockchain that runs in parallel to a main chain, with assets that can move between them through a bridge or peg mechanism.
Slashing: The destruction of a validator's staked funds as a penalty for misbehavior on a Proof of Stake network.
Smart Contract: Code that runs on a blockchain and executes automatically when its conditions are met. The basis for DeFi, NFTs, and most other on-chain applications.
Stablecoin: A cryptocurrency designed to maintain a stable value, typically pegged 1:1 to a fiat currency like the US dollar. Major examples include USDC and USDT.
Staking: Locking up cryptocurrency to support network security on a Proof of Stake blockchain in exchange for rewards.

T

TVL (Total Value Locked): The total value of assets deposited in a DeFi protocol or set of protocols. Often used as a measure of adoption.
Token: A digital asset built on top of an existing blockchain (as opposed to a coin, which is the native asset of its own blockchain). Most ERC-20 tokens are issued on Ethereum.

V

Validator: A participant in a Proof of Stake network that proposes and attests to blocks. Equivalent to a miner in Proof of Work.

W

Wallet: Software or hardware that stores cryptocurrency private keys and lets users sign transactions. The wallet does not actually hold the coins — the blockchain does — but controls them.
Web3: A loose term for the vision of an internet built on decentralized protocols where users own their data, identity, and assets through cryptographic primitives.
Whitepaper: A document that describes a cryptocurrency project's design, technical implementation, and goals. Bitcoin's whitepaper, published by Satoshi Nakamoto in 2008, started the field.

Y

Yield Farming: The practice of moving cryptocurrency between DeFi protocols to maximize returns from interest rates, trading fees, and incentive programs.

Z

ZK-Rollup: A Layer 2 scaling solution that uses zero-knowledge proofs to verify transactions before posting to the main chain. Examples include zkSync, Starknet, and Linea.
Zero-Knowledge Proof: A cryptographic technique that lets one party prove a statement is true without revealing why. Used in privacy coins like Zcash and in scaling solutions like ZK-rollups.

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