When you first start your journey in the crypto world, there’s a lot of new information to digest, and fast! With the emergence of so many new technologies in the last decade, a specific vocabulary has formed around them, and it can be confusing to newcomers.
Some discuss play-to-earn crypto games, blockchains and transaction fees, the Bitcoin or Ethereum network, etc.
If you feel that people are talking in an alien language when discussing crypto around you, this article is for you! We’ve compiled a crypto glossary of the most important terms you should know to navigate your way easier in the cryptocurrency sphere.
Airdrop
The distribution of digital goods to specific wallet addresses. It can be used for marketing purposes to encourage community adoption or as a way to promote a new cryptocurrency project.
Altcoin
This is the short form for “alternative coin.” Any digital currency that appeared after Bitcoin is considered an alternative coin. Alternative coins can range from extremely popular and well-known, like the ETH of the Ethereum blockchain, to any other coins with less market value.
Atomic Swap
It’s a type of token swap between network participants with the help of a smart contract. There are no centralized intermediaries involved, like exchanges or other financial institutions.
Automated Market Maker (AMM)
An AMM is a system that operates on an exchange platform, providing liquidity through automated trading.
Bear Market
The negative trend of falling prices in a crypto market. The term is also used in traditional markets to showcase a prolonged period of low market price.
Bitcoin
You know this one! It’s the first and largest cryptocurrency by market capitalization. It was launched in 2009 together with blockchain technology to support the Bitcoin blockchain. The Bitcoin network is based on a Proof-of-Work consensus mechanism.
Blockchain (Network)
A distributed ledger system used as a digital form of keeping transaction records. Cryptocurrency transactions are validated on blockchain networks via several consensus systems and added as new blocks on an existing blockchain. For more information, check our dedicated blockchain article.
Bull Market
The counterpart of a bear market, the bull market is a positive trend of rising prices in a crypto market or a traditional market.
Burning
When it comes to a digital asset, burning refers to the process of removing coins from circulation. It’s used as a measure to adjust the supply and demand of a particular cryptocurrency. Learn more about burning coins in our Learn-to-Win article on the subject.
Cold Wallet/ Cold Storage
This is a way of storing your crypto assets entirely offline. Cold storage wallets, or hardware wallets, are physical devices that usually look like a small USB drive. They are considered the most secure storing option, as they are less likely to be hacked.
Decentralized Applications (DApps)
A decentralized application is a computer program that runs on a decentralized peer-to-peer network, such as the distributed ledger technology behind blockchain. Because decentralized apps don’t use a centralized server, they eliminate the risk of a single point of failure.
Decentralized Autonomous Organizations (DAOs)
These organizations are centered around groups of people that have no central leadership, abiding by rules encoded on a blockchain through smart contracts. Discover more about DAOs on our blog.
Decentralized Finance (DeFi)
An ecosystem of decentralized financial applications created on public blockchains. They aren’t governed by a central authority, like a central bank or financial organizations.
Digital Assets
They are virtual representations of goods with a market value that can be transferred from one owner to another electronically.
Digital Signature
It represents a code created by public key encryption and used to authenticate digital documents.
Dildo
Ha! Take your mind out of the gutter! In the crypto sphere, dildos are the green or red candles or vertical lines that you can see in a graph showing price movements or other crypto market data.
Double Spending
When a digital currency is spent twice. It can happen due to a race attack or a 51% attack. A race attack is executed when an attacker creates two conflicting transactions simultaneously. The 51% attack happens on a blockchain when a group of miners controls more than 50% of the network’s mining hash rate.
(Crypto) Exchange
A digital marketplace where users can buy or sell cryptocurrency. Centralized exchanges function like intermediaries between the two participants, while decentralized exchanges have no central authority.
Fiat Currency
Any type of traditional currency that a government backs up: US dollars, euros, sterling pounds, you name it!
Fork
A fork in crypto refers to creating an alternative version of a blockchain. A soft fork allows for the creation of a new version compatible with the old one, while a hard fork makes an incompatible version that needs to be adopted by users.
Fungible
A coin or token that can be replaced by an identical one is considered to be fungible.
Gas Fees
This term does not refer to what you’d expect but rather to the fees one has to pay for the amount of computing power required to validate transactions on the Ethereum network. They are paid in Ether, the native cryptocurrency of Ethereum.
Genesis Block
The first block of transaction data recorded on a given blockchain network. It is also called Block 0 or Block 1.
Governance
The property of having decision-making authority over a cryptocurrency project.
Hash
A unique, fixed-length string of numbers and letters that is used to confirm transactions on a blockchain. Each block of data contains both the hash value that validated the prior transaction and its own hash value.
Hot wallet
A crypto wallet connected to the internet is used to hold one’s crypto assets. Hot wallets are considered less secure than cold wallets that are offline.
Impermanent Loss
This term refers to the temporary loss of funds that a liquidity provider experiences due to volatility in a trading pair.
Initial Coin Offering (ICO)
It’s a type of fundraiser used by new crypto projects to sell their cryptocurrency to investors.
Liquidity Pool
A collection of crypto assets locked in smart contracts. They are used to provide liquidity in decentralized exchanges. For a more in-depth view of the subject, check out our article on liquidity pools.
Mining
The process of a computer network to validate and add new data to a blockchain ledger via the Proof-of-Work consensus protocol. To verify a data block, a miner must solve a cryptographic problem.
Minting
The process of creating new coins by data authentication, data block creation, and validation through a Proof-of-Stake protocol. Regarding NFTs, minting means converting digital information into digital assets recorded on a blockchain.
Node
Any computer that forms part of a private or public blockchain is called a computer node.
Non-fungible Tokens
NFTs are unique units of data stored on a blockchain that can be sold or traded. They are usually associated with digital files like photos, videos, music files, etc.
Off-chain
Transactions that happen outside of a public or private blockchain are called off-chain.
On-chain
The opposite of off-chain, on-chain refers to transactions recorded on the blockchain itself.
Play-to-Earn
A new business model in the gaming industry referring to games that rely on blockchain technology and offer their players crypto rewards and NFTs. P2E games allow players to increase the value of their crypto assets through their gameplay.
Private Key
Private keys are a type of password used to access a crypto wallet. They are used to lock one's crypto assets and tokens securely and should never be shared with anyone else.
Public Key
Public keys are the wallet addresses that a user can share with other people to receive crypto payments from them. Each cryptocurrency wallet has a public key and a corresponding private key.
Proof-of-Stake (PoS)
A blockchain protocol or consensus mechanism used to verify transactions, giving the users the option of earning staking rewards.
Proof-of-Work (PoW)
A blockchain consensus mechanism that involves mining to validate and execute transactions.
Seed Phrase
A seed phrase, or a recovery phrase is a string of 12 to 24 words generated at the initial set-up of a crypto wallet. It is created as a back-up procedure for restoring wallets and should remain private.
Smart Contracts
They are automated contracts with their terms and conditions recorded in a computer code. These contracts trigger specific actions such as transactions when predetermined requirements are met.
Stablecoins
Cryptocurrencies that maintain a stable value, as they are backed up by fiat currencies or by gold. They have low price volatility.
Token
A digital asset built on a blockchain that gives its owner access to a larger crypto ecosystem.
Whale
In the crypto world, a whale is an individual or an organization that holds a considerable amount of coins from a particular cryptocurrency. By keeping large amounts of funds, they have the possibility to control the market's price.
Whitepaper
A formal document released by a crypto project containing the mission, vision, technical documentation, and roadmap towards growth. It’s standard procedure for all crypto businesses to have such a document available for potential investors and users.
Yield farming
This concept refers to pooling funds in decentralized finance markets and earning interest in the form of liquidity pool rewards.
That’s it, folks! You’ve reached the end of our crypto glossary, and you’ve enriched your vocabulary with cryptocurrency-specific terms that will help you better understand how it all works. Next time there’s a crypto talk around you, join in with confidence and put in your two cents!
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