Glossary: 100 Crypto Terms Explained

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Glossary: 100 Crypto Terms Explained

Crypto uses familiar financial words in unfamiliar ways and invents new ones at protocol speed. These 100 definitions explain what the terms mean in practice, including the risks hidden behind the shorthand.

Networks, ledgers, and transactions

1. Blockchain: A replicated ledger whose transactions are grouped into cryptographically linked blocks. Public blockchains trade conventional central control for distributed verification.
2. Block: A batch of validated transactions plus metadata, linked to the prior block by a cryptographic hash.
3. Node: Software that communicates with a blockchain network. A full node independently checks the rules; a lightweight client relies more heavily on other servers.
4. Validator: A proof-of-stake participant that proposes or attests to blocks after locking stake and meeting protocol requirements.
5. Miner: A proof-of-work operator using computing equipment to compete for block rewards and transaction fees.
6. Consensus: The rules and process nodes use to agree on valid ledger history.
7. Proof of work (PoW): Consensus secured by computational work. Bitcoin uses PoW; its energy use and specialized hardware are major tradeoffs.
8. Proof of stake (PoS): Consensus secured by assets placed at risk. Ethereum uses PoS; dishonest or unreliable validators can lose rewards or be slashed.
9. Hash: A fixed-length output derived from data. Small input changes produce different outputs, helping secure blocks and transaction identifiers.
10. Hash rate: The computing power applied to a PoW network, usually measured in hashes per second.
11. Genesis block: The first block in a blockchain.
12. Block height: A block’s numerical position measured from the genesis block.
13. Block time: The average interval between blocks. It is not a guarantee that a specific transaction will confirm by that time.
14. Confirmation: Inclusion in a block, plus subsequent blocks built on top. More confirmations generally reduce reorganization risk.
15. Mempool: A node’s collection of valid, unconfirmed transactions awaiting inclusion in a block.
16. Gas: The unit measuring computation on Ethereum-compatible networks. Users pay a gas price multiplied by gas used.
17. Gas limit: The maximum gas a transaction may consume. Unused gas is not spent, but a too-low limit can cause failure.
18. Nonce: A one-use number. In Ethereum accounts it orders transactions; in Bitcoin mining it is varied while searching for a valid block hash.
19. Finality: The point at which reversing a transaction becomes impractical or, under protocol rules, finalized.
20. Fork: A divergence in software rules or chain history. A hard fork can create incompatible networks; a soft fork tightens rules while retaining compatibility.

Coins, tokens, and economics

21. Coin: The native asset of a blockchain, such as BTC on Bitcoin or ETH on Ethereum.
22. Token: An asset issued through a smart contract or token program on an existing chain.
23. Altcoin: Any cryptocurrency other than Bitcoin; the label covers radically different designs and risk levels.
24. Stablecoin: A token designed to track an external value, usually one US dollar. Pegs can fail, and reserves or mechanisms differ.
25. USDC: A dollar stablecoin issued by Circle through regulated entities, backed by cash and short-duration reserve assets under its disclosed structure.
26. USDT: Tether’s dollar-pegged token, the largest stablecoin by circulation for much of recent history and widely used across exchanges and networks.
27. Wrapped token: A representation of an asset on another network, such as WBTC. It adds custodian, bridge, or smart-contract risk.
28. NFT: A non-fungible token with a unique identifier. The token does not automatically transfer copyright in associated media.
29. Fungibility: The property that units are interchangeable. One ETH is generally treated like another ETH.
30. Market capitalization: Current price multiplied by circulating supply. It is not the amount of cash invested.
31. Fully diluted valuation (FDV): Price multiplied by maximum or total potential supply; useful for spotting future dilution.
32. Circulating supply: Tokens considered available to the public market, excluding some locked or unreleased units.
33. Maximum supply: The protocol-defined upper limit, if one exists. Bitcoin’s limit is 21 million BTC.
34. Inflation: Growth in token supply. It can dilute holders even while staking rewards increase their token count.
35. Burn: Permanently removing tokens from spendable supply, often by sending them to an inaccessible address or through protocol rules.
36. Halving: A scheduled reduction in Bitcoin’s block subsidy, occurring every 210,000 blocks.
37. Tokenomics: A project’s supply, issuance, distribution, utility, unlocks, and incentives.
38. Vesting: A schedule restricting when team or investor tokens become transferable.
39. Token unlock: The release of previously restricted tokens; large unlocks can add sell-side supply.
40. Airdrop: Distribution of tokens to eligible wallets, often for prior usage. Fake claim sites are a common phishing method.

Wallets, keys, and security

41. Wallet: Software or hardware that manages keys and constructs transactions. Coins remain recorded on the blockchain.
42. Address: A public destination for receiving assets. Network and format must match.
43. Private key: Secret data authorizing spending. Anyone who obtains it can usually control the associated assets.
44. Public key: Cryptographic data derived from a private key and used to verify signatures.
45. Seed phrase: A human-readable backup, commonly 12 or 24 words, from which wallet keys are derived.
46. Passphrase: Optional extra secret used with some seed standards. Losing it can make the wallet unrecoverable.
47. Hot wallet: A wallet on an internet-connected device, convenient for activity but more exposed to malware and phishing.
48. Cold wallet: Keys kept offline or isolated, typically for longer-term storage.
49. Hardware wallet: A dedicated device such as Trezor Safe 5, Ledger Flex, or Coldcard Q that signs transactions while protecting keys.
50. Custody: Responsibility for controlling keys. An exchange holds keys in custodial use; self-custody puts responsibility on the user.
51. Multisig: A wallet requiring multiple signatures, such as two of three keys, to spend.
52. Smart contract wallet: An on-chain account whose programmable rules may support recovery, spending limits, or batched actions.
53. Signature: Cryptographic proof that the holder of a private key authorized data without revealing the key.
54. Approval: Permission allowing a smart contract to spend specified tokens. Unlimited approvals create continuing exposure.
55. Revoke: An on-chain action removing a token approval. Revocation tools require care because fake tools also exist.
56. Phishing: A deceptive message or site designed to steal credentials, seed phrases, or signatures.
57. Wallet drainer: Malicious code or contracts that induce users to sign transactions transferring assets.
58. Rug pull: Project insiders abandoning a token or draining liquidity after attracting buyers.
59. Dusting attack: Sending tiny amounts to addresses to aid tracking or lure users into malicious interactions.
60. Self-custody: Holding your own keys. It removes custodian insolvency risk but adds irreversible operational risk.

Our pick: Trezor

Trading and markets

61. Centralized exchange (CEX): A company-operated venue such as Coinbase or Kraken that holds customer assets and matches trades.
62. Decentralized exchange (DEX): Smart contracts enabling on-chain swaps, such as Uniswap, generally without a conventional account.
63. Order book: A list of bids and asks at different prices.
64. Market order: An instruction to trade immediately at available prices; execution may be worse than the displayed quote.
65. Limit order: An instruction to trade only at a specified price or better; it may never fill.
66. Spread: The difference between the best bid and ask, or between a provider’s buy and sell quotes.
67. Slippage: The gap between expected and actual execution, often larger in illiquid pools or large orders.
68. Liquidity: The ability to trade size without sharply moving price.
69. Trading volume: Value traded during a period. Reported volume can be inflated or fragmented across venues.
70. Whale: A holder or trader large enough to influence a market.
71. Long: Exposure that profits if price rises.
72. Short: Exposure designed to profit if price falls, with potentially severe loss if it rises.
73. Leverage: Borrowed exposure that magnifies gains and losses.
74. Margin: Collateral supporting a leveraged position.
75. Liquidation: Forced closing of a leveraged position when collateral no longer meets requirements.
76. Perpetual futures: Derivatives without an expiry date that use funding payments to track spot prices.
77. Funding rate: Periodic payment between long and short perpetual-futures traders.
78. Open interest: Outstanding derivative contracts not yet closed.
79. DCA: Dollar-cost averaging—investing a fixed amount on a schedule rather than timing one entry.
80. HODL: Crypto slang for continuing to hold through volatility, originating from a misspelling of “hold.”

DeFi, applications, and scaling

81. Smart contract: Code deployed on a blockchain that executes according to its rules. Bugs can be financially irreversible.
82. dApp: An application whose core functions interact with smart contracts.
83. DeFi: Decentralized finance—on-chain trading, lending, derivatives, and asset management without traditional intermediaries.
84. Liquidity pool: Tokens locked in a smart contract to facilitate swaps or other functions.
85. Automated market maker (AMM): A DEX design that prices trades using pool balances and a formula.
86. Liquidity provider (LP): A depositor supplying assets to a pool in return for fees and sometimes incentives.
87. Impermanent loss: Underperformance an LP can experience versus simply holding the deposited assets as relative prices change.
88. Yield farming: Moving assets among protocols to earn fees or token incentives, often with layered smart-contract risk.
89. Staking: Committing assets to PoS validation directly or through a service in exchange for variable rewards.
90. Liquid staking token: A tradable receipt for staked assets, such as stETH, adding issuer and peg risks.
91. Oracle: A mechanism supplying off-chain or cross-market data to smart contracts. Manipulated data can cause protocol losses.
92. Bridge: Infrastructure transferring value or messages between chains. Bridges have been frequent exploit targets.
93. Layer 1: A base blockchain such as Bitcoin, Ethereum, or Solana.
94. Layer 2: A system that processes activity away from a base chain and settles results back to it, such as Arbitrum or Base on Ethereum.
95. Rollup: A Layer 2 that batches transactions and posts data or proofs to a base chain.
96. Optimistic rollup: A rollup assuming batches are valid unless challenged during a dispute period.
97. Zero-knowledge rollup: A rollup using validity proofs to demonstrate correct state transitions.
98. DAO: A decentralized autonomous organization coordinating assets or decisions through tokens, contracts, and governance processes.
99. Governance token: A token granting voting power; turnout, delegation, and concentrated ownership affect actual control.
100. TVL: Total value locked in DeFi contracts. It can double-count assets and does not measure profitability or safety.

Knowing the vocabulary does not replace checking the contract address, network, fee preview, issuer documentation, and transaction details. In crypto, two products can use the same label while exposing users to very different custody and smart-contract risks.