Cryptocurrency Glossary: Terms and Crypto Guides

A

Airdrop

When a company “drops” cryptocurrency into an investors wallet, usually as a part of a marketing campaign.

aNFT (Autonomous NFT)

Non-fungible tokens, or NFTs, that are designed and programmed to initiate transactions on their own.

Aping/Apeing

Aping (sometimes spelled “apeing”) describes the act of purchasing a crypto token immediately or soon after the token 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 engages in automating trading on an exchange, providing 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 own native cryptocurrency, and its own 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. Gives a reading of the overall crypto market share that is owned by Bitcoin.

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 full 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 be used to track or record almost any type of data or asset, from goods and services to patents, smart 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

The act of 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 type of crypto exchange that is 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 large 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 when all participants on that network 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 in an effort 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 largest collections of NFTs, or non-fungible tokens, on the market. The project originally launched in 2017, and is often credited with ginning up interest in NFTs.

D

DAO

DAO stands for decentralized autonomous organizations, which are groups that are founded and governed by a set of rules and smart contracts on a blockchain network, with no central authority.

Decentralization

A concept that 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 to 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 the use of 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, which some people consider the digital version of gold — a physical store of value.

DYOR

An acronym, standing for “do your own research.”

E

Ether (ETH)

The native cryptocurrency on the Ethereum blockchain. Many altcoin and NFT projects are built on the Ethereum network, and as such, 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 smart contracts, and traders often use them in a similar way to margin in the stock market.

Fork

A change to a blockchain’s rules or protocol, which results in two “paths,” in which one path sticks to the old rules of the network, and another path which 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 special type of crypto token that 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 that is 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)

Similar to an IPO, ICOs are processes during which 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 own technology and with its own 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

How miners often refer to the computers that are specifically used for mining cryptocurrency, and which may be very powerful.

Mining Farm

A collection of mining rigs operating non-stop to mine cryptocurrency.

Mining Pool

A system in which a number of crypto miners combine their resources in order to increase their chances of successfully solving a block, and getting a crypto reward.

Minting

The act of creating 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 that is designed to be used or deployed on multiple different blockchain networks.

Moon

Short for “to the moon,” which is a reference to a large increase in crypto prices over a short period of time.

N

Node

A computer that connects to a blockchain network. It can also refer to a unit of the blockchain architecture which 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 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 that are integrated on a blockchain network, and which 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 blocks of data that are 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 investors cryptocurrency wallet, and which is similar to a bank account number. Investors could share their public key so that others know where to send cryptocurrency.

Pump and Dump

A type of scheme or scam that involves hyping up 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 an investor 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 of 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 actually 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, similar to a password, that is 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 for numerous processes to be validated concurrently.

Shitcoin

An altcoin with no value or utility; may be associated with memecoins. 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 automation of processes.

Stablecoin

A cryptocurrency that 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 in order 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 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 sort of 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 in order 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 mostly made up of static web pages. Web 2.0 allowed people to generate content and add it 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 take part in an initial coin offering. Whitelisted investors may get certain perks, like discounts off the ICO price, when a crypto debuts.

WAGMI

Short for “we’re all going to make it.”