Crypto Terms
The world of cryptocurrencies and blockchain networks is awash in terminology and jargon that can sometimes sound strange or confusing. Given that the language of crypto is evolving daily, it can be helpful to brush up on standard terms and definitions.
A
Airdrop
When a company “drops” cryptocurrency into an investor’s wallet, usually as a part of a marketing campaign.
aNFT (Autonomous NFT)
Non-fungible tokens, or NFTs, are designed and programmed to initiate transactions independently.
Aping/Apeing
Aping (sometimes spelled “apeing”) describes purchasing a crypto token immediately or soon after it has launched, without doing much or any research into its background.
Altcoin
Short for “alternative coin,” and refers to any cryptocurrency besides Bitcoin.
Asset-Backed Token
A digital asset that gives its holder the claim to, and which is backed by, a physical asset.
Automated Market Maker (AMM)
A system that automates trading on an exchange provides that exchange with liquidity.
B
Bag
Crypto investments that investors plan to hold for the long term.
Bagholder
Someone who holds a large amount of a specific crypto, no matter how that crypto is performing.
Binance
One of the world’s largest cryptocurrency exchanges. Binance has its native cryptocurrency and its technical standard for tokens.
Bitcoin Dominance
A metric that shows the ratio of the market capitalization of Bitcoin to that of the rest of the crypto market as a way of gauging how dominant Bitcoin is. It gives a reading of the overall crypto market share that Bitcoin owns.
Block
A block is a way to structure data on a blockchain, typically transaction records from trading, mining, smart contracts, NFTs, and more. When a block is complete, it’s closed, and a new block is created on the blockchain. The block size varies depending on the blockchain.
Blockchain
A persistent, transparent, append-only digital ledger that can track or record almost any type of data or asset, from goods and services to patents, intelligent contracts, and more. Blockchain is the underlying technology of all cryptocurrencies.
Bored Ape Yacht Club
One of the world’s largest NFT collections, launched in 2021. The collection comprises 10,000 unique NFTs, and sales have totaled more than $1 billion, and many celebrities are owners, including Snoop Dogg, Justin Bieber, and Jimmy Fallon.
Burning
They are removing a cryptocurrency from the market or circulation by sending it to a wallet that can only receive and not send cryptos. Different cryptos use a burning strategy to reduce the supply of tokens in circulation, similar to a stock buyback.
C
Centralized Exchange (CEX)
A crypto exchange owned and operated by a single entity or company with a centralized protocol and governance.
Coin
Typically refers to a single unit of cryptocurrency.
Coinbase
The number of coins or tokens generated and awarded to miners for mining a new block on a blockchain network. Also, the name of a significant crypto exchange.
Cold Wallet/Cold Storage
A crypto wallet that holds assets in cold storage or offline. It is not connected to the internet.
Consensus
The state of a network is when all participants agree on an order and data in the blocks on a blockchain.
Cross-Chain
Refers to technology that can establish an interconnection between two different blockchain networks. Two blockchains that can exchange data are cross-chain.
Cryptocurrency
Digital currencies employ cryptographic technology to secure their transmission and operation on a blockchain network.
Cryptography
The science of securing information or data to prevent third parties from deciphering or accessing it. Cryptography is an integral, foundational function of blockchain technology and all forms of crypto.
CryptoPunks
One of the market’s most extensive collections of NFTs, non-fungible tokens, is on the market. The project initially launched in 2017 and is often credited with increasing interest in NFTs.
D
DAO
DAO stands for decentralized autonomous organizations, groups founded and governed by rules and smart contracts on a blockchain network with no central authority.
Decentralization
A concept refers to moving away from a central authority and putting users or customers in charge of a system or platform. Decentralization is fundamental to all forms of crypto and the emerging DeFi (decentralized finance) space.
Decentralized Finance (DeFi)
DeFi refers to financial activities, such as sending or receiving assets or funds, without using a third party to facilitate the exchange. A peer-to-peer transaction could be an example of one of those financial activities, as it does not involve a bank or financial institution.
Decentralized Applications (dApps)
Decentralized applications (dApps) are programs built by developers on blockchain networks with no intermediary. Many, if not most dApps work with and on blockchain networks to support transactions, smart contracts, and other activities on the network.
Decentralized Exchange (DEX)
A platform where users can trade, buy or sell cryptocurrencies or other assets without using a third party to facilitate the transaction. DEXs have several forms, but all operate without a central authority.
Degen
Short for “degenerate,” which means making a crypto purchase without conducting proper research or due diligence.
Diamond Hands
People or entities that employ a buy-and-hold investing strategy in the crypto market. Investors who hold their assets for long periods, often through turbulent markets, are said to have diamond hands.
Digital Gold
Generally a reference to Bitcoin, some people consider the digital version of gold — a physical store of value.
DYOR
An acronym stands for “do your research.”
E
Ether (ETH)
The native cryptocurrency on the Ethereum blockchain. Many altcoin and NFT projects are built on the Ethereum network, and Ether is heavily used in the NFT markets.
F
Flash Loan
A type of loan that doesn’t involve the borrower using collateral. Flash loans typically utilize intelligent contracts, and traders often similarly use them to margin in the stock market.
Fork
A change to a blockchain’s rules or protocol results in two “paths,” in which one path sticks to the old rules of the network, and another path splinters off and follows the new rules. An example would be when the Bitcoin network forked, resulting in the creation of Bitcoin Cash.
FUD
Short for “fear, uncertainty, and doubt.” FUD started as a crypto term but has been embraced in the mainstream.
G
Gas
Refers to the fees paid for executing transactions on the Ethereum blockchain network. Depending on the supply and demand of validators on the network, “gas fees” can increase or decrease.
Genesis Block
The first crypto block ever mined on a blockchain.
Governance Token
A unique crypto token grants its owner voting rights on a specific project. They’re often used in DAOs.
H
HODL
A misspelling of “hold” from a Reddit rant gone viral, HODL stands for “hold on for dear life.”
Halving
Bitcoin experiences a “halving” every four years, a process written into its code. Every four years or so, after a certain number of blocks have been mined on the Bitcoin network, the new amount of Bitcoin released when new blocks are mined is reduced by half.
Hash
A set of numbers and letters that identifies certain blocks on a blockchain. The character set is used to encrypt and secure data.
Hash Rate
A measurement of the amount of computing power consumed by a blockchain network as it operates. A higher hash rate can be a positive sign.
Hot Wallet
A cryptocurrency wallet that is connected to the internet, making it easier to access and transact from. Usually, hot wallets are a type of software.
I
Initial Coin Offering (ICO)
Like an IPO, ICOs are processed, and funding is raised to launch a new crypto project.
L
Layer 1 and Layer 2
A reference to the two “layers” of a blockchain. Layer 1 refers to the blockchain architecture, and Layer 2 usually refers to the technology or programs built on top of that architecture.
M
Mainnet
An independent blockchain network, running on its technology and with its protocol.
Memecoin
Cryptocurrencies that were designed with no real utility but more so as a joke.
MetaMask
A popular cryptocurrency wallet that allows users to use a browser extension to transact on the Ethereum blockchain.
Mining
The act of verifying data or transactions on a blockchain network, adding new blocks to the chain. Mining involves solving complex mathematical problems, and when a block is “solved,” a new block is added, and more cryptocurrency is added to circulation.
Mining Rig
Miners often refer to the computers used explicitly for mining cryptocurrency, which may be very powerful.
Mining Farm
A collection of mining rigs operating non-stop to mine cryptocurrency.
Mining Pool
A system in which several crypto miners combine their resources to increase their chances of successfully solving a block and getting a crypto reward.
Minting
It created a non-fungible token by verifying and logging data on a blockchain network. It can also refer to generating new tokens through a proof-of-stake mechanism.
Multi-Chain
An application or program designed to be used or deployed on multiple blockchain networks.
Moon
Short for “to the moon,” refers to a significant increase in crypto prices over a short period.
N
Node
A computer that connects to a blockchain network. It can also refer to a unit of the blockchain architecture that stores information or data.
Non-Fungible Token (NFT)
Units of value that represent ownership of unique, one-of-a-kind digital assets. Though they’re typically associated with artwork or collectibles, NFTs can represent ownership of many possible properties.
O
Off-Chain/On-Chain
References whether something exists on a blockchain (on-chain) or off-it (off-chain). For example, a paper dollar is an off-chain currency, whereas Bitcoin is an on-chain.
OpenSea
Currently the largest NFT marketplace in the world.
P
Peer-to-Peer (P2P)
A type of transaction involving only two parties and no intermediary.
Play-To-Earn (P2E)
Types of video games integrated into a blockchain network reward players for playing with in-game cryptocurrency that can often be exchanged for other types of crypto.
Proof-of-Work (PoW)
A validation and consensus mechanism by which miners confirm new data blocks added to a blockchain network. In a proof-of-work system, miners validate and “mine” new blocks by solving complex problems and puzzles.
Proof-of-Stake
A validation and consensus mechanism by which new blocks are generated and added to a blockchain network through staking rather than mining. In a proof-of-stake system, holders of a given crypto can “stake” it by pledging it to the network, which may result in staking rewards.
Public Key
The public address for an investor’s cryptocurrency wallet is similar to a bank account number. Investors could share their public key, so others know where to send cryptocurrency.
Pump and Dump
A type of scheme or scam that involves exciting a cryptocurrency to spur demand and thus the price. The scammer then sells their holdings before the price inevitably falls.
Private Key
A key that allows a crypto wallet’s owner access, similar to a bank account password. While investors would share their public key, they should never share their private key.
R
Rug Pull
Derived from the phrase “having the rug pulled out from under you,” a rug pull occurs when a crypto creator raises funds for a project and then disappears with all the funds.
S
Satoshi Nakomoto
The mysterious creator of Bitcoin. Little, if anything, is known about them, including whether they are a single person or a group or if anyone with that name exists.
Sats/Satoshis
A fraction of a Bitcoin, derived from “Satoshi Nakomoto,” the creator of Bitcoin.
Scamcoin
A cryptocurrency that has turned out to be a scam, such as the token involved in a rug pull.
Seed Phrase
A phrase is similar to a password used to access a cryptocurrency wallet. Seed phrases are 12 words long and should never be shared with anyone.
Sharding
The act of distributing network load across a blockchain network. In effect, sharding partitions a blockchain, allowing numerous processes to be validated concurrently.
Shitcoin
An altcoin with no value or utility; may be associated with meme coins. It’s likely that a shitcoin may be associated with a scam or pump-and-dump scheme, too.
Smart Contract
A digital contract, or piece of code, on a blockchain network that self-executes under specific conditions. Similar to an if/then program, a smart contract will execute without input from a third party, allowing for the automation of processes.
Stablecoin
A cryptocurrency is pegged to a non-digital asset, often a fiat currency or commodity. Since stablecoins are pegged to another asset, they, theoretically, are less volatile than other cryptos.
Staking
A process in which network participants, under a proof-of-stake mechanism, “lock up” their crypto holdings on the network in exchange for the chance to earn rewards. In practice, staking is similar to depositing cash in a savings account to earn interest.
T
TLT
An acronym for “think long term,” which inspires investors to take a buy-and-hold approach to crypto investing.
“This Is Gentleman”
A meme phrase sourced from a 2014 Reddit thread. An excited user posted, “this is a gentleman” rather than “this is it, gentleman,” and the mistake became a joke phrase often used sarcastically.
Token
Tokens are assets on a blockchain, which can take the form of cryptocurrency coins like utility tokens or NFTs.
TXN
Shorthand for “transaction.”
U
Utility Token
A cryptocurrency token that provides some practical use, or utility, on a blockchain network. That may include granting access to an application, for example. Not all cryptocurrencies are utility tokens, but many are.
V
Vanity Address
A custom, personalized wallet address purchased by a third-party service. Similar to a vanity license plate number.
Vaporware
An often-hyped product or service that never makes it to the market. In the crypto space, a hyped coin that never actually starts trading could be an example of vaporware.
Vitalik Buterin
The creator of the Ethereum blockchain, which made its debut in 2015.
W
Wallet
A software program (though they may be physical) where investors store their cryptocurrency holdings. Wallets come in many different types, including hot and cold, and with various other features. Investors need a wallet to participate in the crypto space.
Web3
The next iteration of the internet. Web 1.0 was the early internet of the 1990s, which offered limited interactivity and was mainly made up of static web pages. Web 2.0 allows people to generate and add content to the internet (through social media networks, etc.). Web3, or Web 3.0, will incorporate blockchains, crypto, the metaverse, and more.
Whale
An entity with a large holding of an individual cryptocurrency. “Bitcoin whales” may be the most common type.
Whitelist
A list of interested or registered entities who have signed up to participate in an initial coin offering. Whitelisted investors may get particular perks, like discounts off the ICO price, when a crypto debuts.
WAGMI
Short for “we’re all going to make it.”
Cryptocurrency Guides
As cryptocurrency grows, terms that once seemed arcane are becoming more widespread. With the guides below, you can learn about some of the more prominent and popular cryptocurrencies. Each guide takes an in-depth look at different crypto projects, how they work, and why people might want to buy, sell, and trade them.
