In the ever-evolving landscape of blockchain and cryptocurrency, it could become hard for seasoned and novice users alike to keep up with the complex technical terms and novel concepts. Here is a library of key technical terms in crypto to help you navigate this rapidly evolving world easily. Go through the terms alphabetically or click on an alphabet to jump to the terms starting with that alphabet.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A
Abstract
The abstract is a term used to describe the idea that exists as a thought but has not been made into an executable format. Many technologies we use nowadays were brought to the world as abstract concepts in the beginning but later turned into an actual physical reality. One such example is cryptocurrency. The idea has been dabbled with for decades before the first actual cryptocurrency, Bitcoin launched in 2009.
Address
In the cryptocurrency ecosystem, address refers to the unique string of numbers and letters used to identify the cryptocurrency wallet. The address is also called the public key and the users can use it to send and receive cryptocurrencies. Addresses work as account numbers in transactions. Different wallets can have different address patterns, for example, the Ethereum address usually starts with 0x, whereas Bitcoin addresses always start with 1, 3, or bc1.
Airdrop
Crypto airdrops are a type of marketing strategy that blockchain startups utilize to create awareness and adoption of the services they offer. Here, the startup projects distribute their native tokens for free, to the users that meet specific criteria. Usually, the eligibility for claiming the airdrop is the user’s engagement with the platform. The rewards can change according to the time spent, activities completed, and challenges met on the platform.
Alt Season
Any cryptocurrency other than Bitcoin is collectively called altcoins. Alt season is a period in the cryptocurrency market where the dominance of Bitcoin fades and more investment is going to altcoins. Factors such as Bitcoin price, the hype around new projects, media portrayals, and even marketing tactics can instigate alt season. During alt season, the price, market capitalization, and trading volume rise significantly higher than Bitcoin.
Altcoin
The term comes from the combination of alternative and coin. Alcoin is a term used for any cryptocurrency other than Bitcoin. However, since most cryptocurrencies are forked from Bitcoin or Ethereum, some people do not consider Ethereum as altcoins. The creators fork a cryptocurrency and create their own for several reasons, including to provide better and faster service, in disagreement with the community, to appeal to a specific industry, etc. Today, there are countless altcoins in the market.
Application-Specific Integrated Circuit (ASIC)
ASIC or application-specific integrated circuit is a specialized hardware equipment that is designed for specific applications. In cryptocurrency, special ASIC machines known as ASIC miners are widely used for cryptocurrency mining. It can work the assigned task more efficiently than PCs or gaming PCs that are designed for general purposes. There are various ASIC miners available in the market, and typically they are designed for mining a specific digital currency.
Asymmetric Encryption
Asymmetric encryption, otherwise known as public key encryption is an encryption technique where the sender and user use different keys; public and private keys. The sender encrypts their message by using their public key and the receiver can use their private key to decrypt it. Here the encrypted message can only be decrypted by using the private key of the intended recipient.
Atomic Swap
Atomic swap in cryptocurrency is the exchange of two cryptocurrencies from different blockchains. Atomic swaps are conducted by utilizing smart contracts, where users agree and the smart contract executes when the agreed condition is met. Atomic swapping is useful when the user has the cryptocurrency of one blockchain but needs to perform an activity on another blockchain. Users may have to use special wallets or exchanges to facilitate atomic swaps.
Avalanche
Avalanche is a blockchain technology that rivals Ethereum. It is reported to have better scalability than Ethereum with high transaction rates and low fees. The platform offers smart contract-enabled systems that can be utilized for creating dApps and autonomous blockchains. Its native currency is AVAX which is used for securing the blockchain and as the payment for the transactions across the platform.
B
Bag Holder
A bag holder is an investor who holds on to a security often at a loss. The bag holder buys the cryptocurrency when the price is high and misses out on the chance to sell it, often leaving them with worthless coins. Bag holders hold on to the tokens believing in the long-term success of the crypto projects and their potential to generate high rewards.
Bear Market
The bear market is a term used to describe when the market is steadily declining over a long period. During the bear market, the investors will lose confidence and start to sell their possessions. This can happen due to various reasons including media portrayals, introduction of new government policies, natural calamities, etc.
Bitcoin
Bitcoin is the first and most popular functional cryptocurrency. It was launched in January 2009 by a person or a group that goes by the pseudonym Satoshi Nakamoto. Bitcoin was originally designed as a decentralized alternative to traditional currency/fiat money. However, it is now regarded as a store value. Bitcoin’s total supply is limited to 21 million and it requires solving complex cryptographic puzzles to validate a transaction and mining new Bitcoin.
Bitcoin Halving
Bitcoin halving is a process where Bitcoin’s mining rewards are cut in half. The process happens about every four years. Halving reduces inflation and increases market demand, potentially increasing its value. The last Bitcoin halving happened in April 2024, during the halving, the rewards went from 6.25 BTC to 3.125 BTC. Historically, Bitcoin’s value has risen after halving, and other cryptocurrencies have also performed well in this time frame.
BNB
BNB (Binance Coin) is the native cryptocurrency of the Binance cryptocurrency exchange. It can be used for paying fees and trading on the exchange platform. Binance uses one-fifth of its profit every year for purchasing back BNB and destroys it in a process called burning, to regulate inflation and raise the market demand for the token. The utilities of BNB have grown over the years and today it can be used for certain purchases and online services.
Blockchain
Blockchain is a distributed database stored across multiple computers in the network. The records are secured with cryptography and each block is connected to the previous block in the chain, making it immutable and secure. Though the blockchain is popularly known for recording cryptocurrency transactions, it can store any information. Since the data stored on the blockchain is immutable and transparent, it removes the need for a third-party intervention.
Blockchain Explorer
Blockchain Explorer is a web-based tool that allows users to explore the details of a blockchain including transactions, blocks, addresses, and network metrics. Using the blockchain explorer, users can examine the information of various blockchains including Bitcoin, Ethereum, Solana, and more. They make the blockchain data searchable and understandable for common users who are not too tech-savvy.
Bull Market
A crypto market is considered bull when the cryptocurrency prices increase rapidly in a six-month to twelve-month period. In a bull market, the investors have a positive feeling toward the future value and start buying. When more buy orders happen in the market than sell orders, it will raise the value of the cryptocurrency. Short-term downfalls are a part of a bull market. However, it will eventually come to an end when the investor’s confidence changes.
Bull Run
A bull run is a period where the majority of cryptocurrency investors are buying the shares. During this period, the number of buy orders outweighs sell orders, increasing the demand, and raising the price. The bull run usually happens at the time of Bitcoin halving – a process in which the rewards of mining Bitcoin reduce to 50%. During the bull run, investors will be optimistic about the market.
Bulls
In the cryptocurrency market, investors are often categorized into different groups according to their sentiments towards a cryptocurrency. Bull is a term referring to investors who feel optimistic that the value of the cryptocurrency will rise in the coming days. If there are more bulls in a market, it will contribute to a positive impact on the market.
Burning
The process of removing a certain share of crypto tokens from circulation is called cryptocurrency burning. By using the burning technique, crypto projects can decrease the availability of the tokens and increase their demand. One of the most popular examples of cryptocurrency burning is BNB burning, in which Binance – the creator of BNB buys back a certain portion of the coin annually and sends it to a wallet that cannot be used, effectively removing that portion of the total supply from circulation.
C
CEXs (Centralized Exchanges)
CEXs (centralized exchanges) are a type of cryptocurrency exchange that is run by a company or a legal entity. CEXs are subject to local laws and you need to disclose your identity through KYC verifications to use CEXs. CEXs offer high liquidity and have higher trading volume. However, CEXs require users to store their cryptocurrency that is used for active trading in the custodial wallets. This means that if the platform is compromised by any online threat, users may lose their cryptocurrencies stored in the wallet. Some of the popular CEXs include Binance, Coinbase, Kraken, and Bybit.
Commodity Futures Trading Commission (CFTC)
CFTC is a federal agency that regulates the US derivatives market. The agency overviews financial instruments such as futures contracts. The agency’s authority over virtual currencies and digital assets plays an important role in regulating the cryptocurrency market. The Digital Commodity Exchange Act of 2022 authorized CFT to regulate and register trading venues that oger spot or cash digital commodity markets.
Consensus Mechanism
The consensus mechanism in the blockchain is a protocol or an algorithm that determines whether a transaction is authentic. This protocol is distributed among all nodes in the network and they all need to use the same system for validating a transaction, removing the need for a centralized intervention. There are many consensus mechanisms including proof of work (PoW), and proof of stake (PoW).
Consortium blockchain
Consortium blockchain is a kind of hybrid of private and public blockchain. This is a collaborative method that allows multiple organizations working in an industry to collaborate. The objective of this method is to revamp the industry more efficiently. Here, only pre-approved participants can join on the blockchain. However, the network ensures that no organization has a monopoly and the decisions are made democratically.
Cross-Chain
Cross-chain in the context of blockchain refers to the transfer of data and tokens between blockchains. Cross-chain technology allows users to share assets and information on different blockchain networks. This opens the gate for a more integrated and interoperable Web 3 ecosystem. It can also become a bridge between the Web2 infrastructure and the decentralized Web3 ecosystem.
Crypto Copy Trading
Crypto copy trading is a trading strategy where the investors automatically replicate the trades of experienced traders. This method is also known as social trading. Here, traders closely follow the activities of a reputable and successful trader closely often in real-time. Copy trading is recommended for beginners to learn from experienced traders. This can serve as a great learning curve for novice traders to reduce emotional bias, and diversify their portfolio. However, the method comes with its own risk of potential losses.
Cryptography
Cryptography is the technique of hiding a message using algorithms, hashes, and signatures so that it can only be interpreted by the person that the message is intended to. The concept has been in use for thousands of years. It has become the most important cybersecurity tool in the modern world to protect all digital communications and sensitive information such as passwords, bank details, PINs, etc. In the cryptocurrency world, cryptography is used to secure transaction data, verify user identity, store private keys, etc.
Cryptocurrency
Cryptocurrency is a decentralized digital currency that utilizes blockchain technology. It is a cross-border currency that will retain its value anywhere in the world you are. The currency only exists in the digital world, to use it you need an internet connection. Cryptocurrency utilizes cryptography for securing transactions, which is why this non-fungible token is called cryptocurrency.
Cryptocurrency wallets
Cryptocurrency wallets are software or devices for storing and managing cryptocurrency. Crypto wallets do not store actual cryptocurrency as a physical wallet would, instead, it stores the private keys to access it. The wallets will have an address and whoever has the private keys can access the cryptocurrency in that address. Wallets that can connect to the internet are called “hot wallets” and ones that cannot are “cold wallets”. While hot wallets are more convenient, cold wallets are more secure.
Custodial Wallets
Custodial wallets are cryptocurrency wallets that are managed by third-party entities that provide the wallet. Usually, custodial wallets are provided by exchanges, and the private keys to your cryptocurrency are stored in the exchange’s server. Since custodial wallets are easy to use, they are ideal for novice users, and you may need custodial wallets to participate in certain activities such as presale and airdrop. However, your cryptocurrency is only as secure as the exchange is. So, use credible custodial wallets only.
D
DAO
A decentralized Autonomous Organization (DAO) is a management structure where the token holders have the authority to influence the decision-making of the entity. Here, the token holders democratically cast their votes to make decisions. The decisions made by the token holders are written into self-executing smart contracts on the blockchain making it immutable and self-executable.
dApp
Decentralized applications, also known as dApps are blockchain-based software programs, that are not controlled by any central authority. dApps offer privacy, and it is free from censorship. Unlike usual centralized applications such as Facebook, YouTube, and Twitter, dApps are usually open sources, meaning that anyone can examine and evaluate its codebase.
DeFi (Decentralized Finance)
Decentralized finance is an umbrella term for a variety of financial tools and services over the blockchain. DeFi allows users to trade, lend, borrow, and loan digital assets with each other without needing intermediaries such as banks or financial institutions. DeFi services are open to anyone around the world. However, this centralization of DeFi services comes with certain risks of fraud, rug pulls, hacking, and scams.
DEXs (Decentralized Exchanges)
Decentralized exchanges (DEXs) that are not controlled by third-party entities. DEXs are peer-to-peer marketplaces that utilize blockchain-based smart contracts to facilitate transactions between two parties. Users can use DEXs in a non-custodial manner, giving better security and reducing the risks of rug pulls, hacking, and other online threats. Though DEXs provide a level of pseudonymity, the legality can vary according to the jurisdiction.
Distributed Ledger
A ledger is a book or digital record that contains bookkeeping entries, such as financial transactions. In a distributed ledger system, a copy of the entire ledger is kept with everyone involved in that network. Blockchain utilizes a distributed ledger system to ensure the immutability and transparency of the transactions.
DOA
A decentralized Autonomous Organization (DAO) is a management structure where the token holders have the authority to influence the decision-making of the entity. Here, the token holders democratically cast their votes to make decisions. The decisions made by the token holders are written into self-executing smart contracts on the blockchain making it immutable and self-executable.
Double Spending
Double spending is the problem that occurs when someone makes copies of the same digital currency to spend it multiple times, similar to counterfeit money in fiat currency. The possibility of double spending is what stopped many cryptocurrencies in the early days fail. But with Bitcoin, the creator used blockchain technology to stop the problem of double spending.
DYOR
Do your own research abbreviated as DYOR is a common phrase used among the cryptocurrency community. It is a piece of advice given to everyone who is getting involved in the cryptocurrency market to protect themselves from fraud and cyber attacks. It encourages users and investors to do their research about various aspects of a cryptocurrency project without acting out of FOMO.
E
Encryption
Encryption is a method used in cybersecurity to convert data from a human-readable format to codes. To reveal the information hidden in encrypted data, the data needs to be decrypted with special tools or algorithms. The process behind encryption and decryption is known as cryptography. Encryption is one of the most basic parts of securing your data from online threats. There are various types of encryption techniques.
Ethereum
Ethereum is a decentralized blockchain platform that allows users to create, develop, and deploy their own decentralized applications (dApps). The platform has its own cryptocurrency called Ether with the ticker ‘ETH’, which is the second biggest cryptocurrency in the world by market capitalization. Ethereum works on a proof-of-stake consensus mechanism and users need to use Ether as the gas fee to successfully conduct a transaction on Ethereum.
Exchange
A digital marketplace that allows users to buy, sell, and trade cryptocurrencies is called an exchange in the crypto market. Exchanges will let you buy cryptocurrency in exchange for fiat currency, or other cryptocurrencies. Some will also offer interest for holding your crypto tokens in the exchange. So, it is one of the gateways for novice users to the cryptocurrency market. Mainly there are two types of exchanges centralized exchanges (CEXs), and decentralized exchanges (DEXs).
F
Flash Loan
Flash loans are uncollateralized loans in the DeFi ecosystem in which the borrower needs to return the borrowed asset in the same block. So, the borrowed and returned transactions will be recorded on the same block. As with any other DeFi protocol, flash loans are also facilitated by smart contracts written on the blockchain, providing security. If the borrower fails to comply with the agreement, the smart contract cancels the transaction and returns it back to the lender.
FOMO (Fear of Missing Out)
FOMO is an acronym for the fear of missing out. It is a psychology of making irrational decisions to buy, sell, or trade a cryptocurrency without doing the due diligence. It is a part of our evolution that we are collectively wired to follow the hype trend. In cryptocurrency, things change quickly. So, many people think to act first and then reflect on the situation, which can sometimes bring you huge rewards, but it is very risky. In the cryptocurrency market, it is better to err on the side of caution.
Fork
When a blockchain splits into different branches like a fork’s tines, it is called a “fork”. A fork usually happens when the developers in the blockchain have disagreements or plans to make better, more secure, and energy-efficient cryptocurrencies from the original blockchain. Even though the forks are headed in a different direction, you can dig back its transaction history to the original blockchain.
FUD (Fear, Uncertainty, Doubt)
FUD, the acronym for fear, uncertainty, and doubt is a manipulation tactic commonly found in various marketing, trading, and investment sectors. As we all know humans cannot always keep emotions apart from their decisions. Knowing this, bad actors spread false news, adverse claims, rumors, and cooked-up stories to their advantage, manipulating investors and consumers. FUD can make investors abandon their investments, potentially plummeting the asset’s price.
Full Nodes
Full nodes are one of the most important types of nodes in a blockchain network. They record every transaction and block of a blockchain. This means that full nodes can independently verify the history of a blockchain, making them an integral part of maintaining the integrity of a blockchain network. Typically, cryptocurrency enthusiasts, blockchain developers, coders, and other volunteers run full nodes.
Fundamental Analysis
Fundamental analysis is a method of evaluating an asset’s performance and the factors that can impact its future value. It involves analyzing the company’s business and industry conditions, financial statements, external events and influences to determine investments with strong growth potential, long-term. Using fundamental analysis, investors can check if an asset is worth buying or selling.
G
Gas Fee
Gas fee is a type of transaction fee reserved for the services in the Ethereum blockchain. Users need to pay the validators of the Ethereum network in Ether to facilitate the transaction. The gas fee typically varies according to the market demand, network traffic, availability of validating nodes, etc. This means that the gas fee will peak when the network is congested.
Gas Limit
The gas fee is the transaction fee needed for transactions through the Ethereum blockchain. The fee can vary according to various factors including network congestion, and priority transactions. The user can set a gas limit to specify how much transaction fee they are willing to pay for facilitating the transaction. Using the gas limit, the user can set a budget for the transaction and save themselves from overspending.
Graphics Card
Graphics processing units (GPUs) simply called graphics cards are special circuit boards for PC, that can improve their processing speed and computational power. While GPUs were originally used in gaming to process high-end computer graphics, it is also used in cryptocurrency for mining. It can solve cryptographic puzzles more efficiently than CPUs.
H
Hal Finney
Harold Thomas Finney II was an American software engineer who has been speculated to be the real Satoshi Nakamoto (the creator of Bitcoin). He was the first one to run Bitcoin’s algorithm and to mine them other than Satoshi himself. Before disappearing from the internet, Satoshi sent 10 Bitcoins to Hal Finney’s wallet as a reward for mining the Bitcoin. Hal Finney never confirmed the speculation and denied any association with the real person behind the pseudonym Satoshi Nakamoto. Finney passed away in August 2024.
Hard Fork
A fork in the blockchain system happens when it splits into two different independent blockchains. A hard fork occurs when the new blockchain protocol generated from the split is incompatible with previous blocks and requires nodes to update their entire software. Here, the original blockchain continues to exist with the established protocols, while the new one is not backwards compatible.
Hash
Hash is a mathematical function that secures data. Here, the algorithm converts an arbitrary data length into a fixed length. The output of the hash can vary according to the algorithm used. The hashes cannot be reverse-engineered to create the original data. Blockchain utilizes hashing, to secure its data. In blockchain, the hash is a hexadecimal number.
Hash Rate
The hash rate in the blockchain ecosystem is a term used to measure the computational power of a system connected to a cryptocurrency network that uses a PoW (proof of work) consensus mechanism. The network with a high hash rate would require high computational power and consume more energy.
HODL
HODL or HODL-ing is a trading strategy, in which the investor holds on to their possession hoping the price would go up in the future. The term originated back in 2013 when a Bitcoin investor mistakenly used “HODLING” instead of “HOLDING”. This became a meme, and later became an official term in the cryptocurrency community. HODL-ing now stands as an acronym for “hold on for dear life”, which is an apt title for the strategy.
Hot Storage
Cryptocurrency wallets that are connected to the internet are called hot storage or hot wallets in the cryptocurrency landscape. Hot storages are software or applications that are available on mobile devices, and computers. Since the wallet is connected to the internet, users can conveniently use hot wallets for active trading. However, hot storage is more prone to hacks and other online threats.
Hot Wallets
Hot wallets are crypto storage software available on internet-connected smart devices. They can store your cryptocurrency private keys and you can use this software to access and manage your digital assets. Hot wallets are accessible, easy to use, and are often offered for free. They are also great for active trading. However, since hot wallets are prone to online attacks, it is best to use cold wallets to store your cryptocurrency long-term.
Hyperledger Fabric
Hyperledger fabric is an ecosystem that acts as a foundation for developing blockchain products. It is an open-sourced and permissioned platform that makes it easy for enterprises to build their own blockchain products by using plug-and-play components. Hyperledger Fabric is modular making it suitable for tackling the requirements of a variety of industry needs. Today, over 120,000 organizations and 15,000 engineers collaborate on hyperledger fabric.
I
ICOs
ICOs or initial coin offerings are the cryptocurrency equivalent of initial public offerings in the stock market. ICO is used to raise the capital needed for the development of a blockchain project. In ICOs, the investors can purchase the cryptocurrency of the new blockchain project, before it becomes publicly available.
Immutability
Immutability is used to describe things that cannot be altered or changed. In the cryptocurrency market, immutability is often associated with blockchain because it uses a distributed ledger system. Immutability assures that no entity including government bodies and big corporations can manipulate or replace the data stored in the network.
Initial Coin Offerings
ICOs or initial coin offerings are the cryptocurrency equivalent of initial public offerings in the stock market. ICO is used to raise the capital needed for the development of a blockchain project. In ICOs, the investors can purchase the cryptocurrency of the new blockchain project, before it becomes publicly available.
J
Jager
Jager is the term used for representing the smallest denomination of Binance Coin (BNB), the crypto token of the Binance exchange. The name “jager” is an homage to the Binance Community Manager, who used it as a screen name on Telegram. Small divisions of a cryptocurrency are much needed to make the transactions more manageable. One jager is equal to 0.00000001 BNB.
K
KYC
Know your customer (KYC) is a verification process that financial institutions use to verify the identity, and financial profiles of a customer. During the KYC verification process, users may be required to produce government-issued identification documents. While cryptocurrencies stand for pseudonymity, certain exchanges exercise KYC to comply with government regulations.
L
Light Nodes
Light nodes are a type of node that works with full nodes for validating transactions. While full nodes store a copy of the entire transactions that have ever been done on a blockchain, light nodes will only store a portion of it for faster and more energy-efficient execution. Usually, light nodes are mobile devices with less storage capacity such as smartphones and tablets.
Liquidity
In finance, the term “liquidity” refers to the ease of converting assets into cash without losing significant value. The same applies to cryptocurrencies as well. Here, the conversion is between cryptocurrencies and fiat money. The liquidity can vary depending on the overall performance of the cryptocurrency market, the token’s popularity, and demand.
Liquidity Mining
Liquidity mining is a popular method in the cryptocurrency market that makes it possible for crypto holders to make a passive income. Here, you are rewarded for lending your cryptocurrency tokens to a decentralized exchange (DEX). The DEX shares its revenue among the contributors according to the amount of tokens they have staked. Liquidity mining can be highly rewarding. However, the investors should be aware of the robustness of the liquidity pool’s smart contract. Poorly written smart contracts are susceptible to hacking and online threats.
Liquidity Pool
Liquidity pools are smart contracts that have locked different cryptocurrency tokens to facilitate transactions on a decentralized exchange (DEX). Here, users can stake their crypto tokens in exchange for incentives such as a portion of the trading fee and the native token of the DEX. These tokens can have their own value and they can be used on the DEX for various purposes. The liquidity pools allow users to easily exchange two assets.
M
Market Order
A market order is the default instruction given to the broker by the investor to buy or sell an asset at the best possible price at the current market condition. There are some alternatives to market orders such as limit orders, in which the buy or sell order will be carried out when the asset comes to a pre-determined price range. A market order should be instantaneous and the price should be very close to the last posted price of the asset.
Market Sentiment
Market sentiment is a term widely thrown out when describing the state of the cryptocurrency market. Market sentiment is described as the overall outlook or attitude of the investors towards a particular security or asset. Positive sentiment can be beneficial for the market, whereas pessimistic sentiment can impact badly. Market sentiments are usually influenced by several factors including media portrayals, social media influence, current economic factors, geo-political factors, changes in law and regulations, etc.
Meme Coin
Meme coins are cryptocurrencies that are created around a fictional, or real-life character, individuals, animals, and simply anything popular. Meme coins are a fun and light-hearted cryptocurrency alternative. It solely works based on its community support and followers. While meme coins can be a worthwhile crypto investment, they often lack liquidity. DogeCoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE) are some popular examples of meme coins.
Miner Nodes
Miner nodes are the systems connected to a blockchain network that is responsible for verifying a transaction and adding new blocks to the blockchain. For this, the miner node has to solve complex mathematical puzzles. Usually, the miner nodes need special equipment and software to add a blockchain to the network. They will receive the newly minted crypto tokens as a reward.
Mining
Mining in the context of blockchain is entering a transaction officially into a blockchain and creating new crypto coins. Usually, mining requires the nodes in the blockchain network to solve complex cryptographic puzzles. The users that mine cryptocurrency are called miners. Miners receive the newly minted coins as a reward for validating and adding the transactions on the blockchain.
Mining Pool
Mining cryptocurrencies especially the popular ones such as Bitcoin and Ethereum requires a huge amount of computational power and it will consume a colossal amount of electric energy. So, various individual miners around the world pool their computational power to mine the cryptocurrency and divide the rewards according to the individual mining capacity or computational power. Joining a mining pool is the easiest way to mine popular cryptocurrencies.
Minting
In the cryptocurrency ecosystem, minting is a term that refers to the process of creating new coins or Non-Fungible Tokens (NFTs). Minting happens when the miner nodes verify the transactions and successfully add a new block to the blockchain. The newly minted cryptocurrency is awarded to the mining node as a reward.
N
NFT
NFTs or non-fungible tokens are a type of digital asset usually used for the ownership of digital art, in-game items, music, video, etc. Some of the most popular NFTs include Bored Ape, CryptoPunks, Moonbirds, etc. NFTs are stored on the blockchain technology and the users can manage it by using private keys. Users can buy, sell, and trade NFTs for cryptocurrencies, fiat money, and other assets.
Node
A device that runs software or algorithm(s) of a blockchain and connects with other such devices is called a node. A network of individual nodes is necessary for the existence of a blockchain. They are responsible for validating, recording, and broadcasting the transactions across the network depending on the blockchain, the network can have a diverse set of nodes including full nodes, light nodes, mining nodes, authority nodes, and more.
Non-custodial Wallets
Non-custodial wallets or self-custody wallets are cryptocurrency storages that give users complete control of their private keys. The private key is stored on the user’s device and if the user misplaces or accidentally deletes it, there is no way to recover it. So, Non-custodial wallets are best for experienced users who can responsibly store their seed phrase and the device with the non-custodial wallet.
O
Off-chain Transactions
Off-chain transactions are cryptocurrency transactions processed outside the main blockchain. Off-chain transactions are done through Layer-2 solutions of the main blockchain. Here, the layer-2 blockchains roll up transactions and add them to the main blockchain, when the set conditions are met. Off-chain transactions are far more cost-effective and time-efficient than on-chain transactions.
On-Chain Transactions
Transactions done on a blockchain system’s main chain rather than secondary chains are called on-chain transactions. While on-chain transactions can be more secure, it will consume more time and the transaction fee can be a lot higher. The on-chain transaction speed of Bitcoin is about 30-60 minutes. It can vary according to the network transaction and availability of miner nodes.
On-ledger Currency
Cryptocurrencies minted and used on a blockchain ledger are called on-ledger currency. Here, the same copy of the ledger is distributed among several devices in the network. This is the basic idea behind cryptocurrencies such as Bitcoin, and Ethereum. On-ledger currencies can be more functional and superior to off-ledger currencies and even fiat currencies since users cannot alter what is stored on the distributed ledger.
Oracles
Blockchain oracles are entities that make it possible for the decentralized blockchain to fetch data from external systems reliably and securely. Oracles make it possible for smart contracts to execute contracts according to real-world outputs. Oracles bridge the gap between on-chain and off-chain ecosystems, which is essential for several real-world applications of the secured and decentralized blockchain system.
Order book
Order book is a digital record of buy and sell orders of any asset organized by the price level. You can use an order book to find out the number of buy orders, sell orders, selling prices, and even the participants behind the trade. Though some participants will choose to stay anonymous, the order book is essential for figuring out the market sentiments towards an asset.
Orphan Block
On the blockchain, several blocks are created simultaneously by various miner nodes. Orphan blocks are blocks that have less proof-of-work than other blocks, which cannot included on the main blockchain. Orphan blocks are also referred to as detached blocks, extinct blocks, or stale blocks. While they were a common occurrence on Bitcoin, the new software is equipped to circumvent its occurrence.
P
Paper Wallet
Cryptocurrency wallets do not store the actual cryptocurrency, instead securely store the private keys to access it. Instead of using special software or hardware, you can simply write the raw hexadecimal private key or print out the QR code into a paper. The paper that contains your private key is called a paper wallet. While you can use paper wallets as a backup, you may need to use modern software or hardware wallets for conveniently and safely storing your digital possessions.
Password Manager
With several online applications, social networking sites, and banking profiles, that require passwords, managing and remembering all your passwords can be challenging. As the name suggests, password managers are programs that users can use to store and manage their passwords. Most browsers including Google Chrome have in-built password managers. You can also find other password managers on the internet that you can download to your device.
Peer-to-Peer (P2P)
The networks connecting two users without intermediaries are called peer-to-peer networks. In cryptocurrency, the concept of P2P is utilized for facilitating transactions between users, offering decentralization, and privacy. In P2P transactions, you cannot dispute the transaction made through a P2P network, so exercise caution when making payments.
Pegging
Pegging in cryptocurrency is the idea of connecting a digital asset to a real-life asset with a relatively stable value. Usually, cryptocurrencies are pegged to assets such as fiat currencies, gold, and other commodities. Pegging removes the volatility of crypto tokens making them ideal for transactions and purchases. Some examples of pegging include Tether (USDT), the Gemini Dollar (GUSD), and USDC (USDC).
Play-to-Earn
Play-to-earn (P2E) is a gaming model that rewards players with digital assets such as cryptocurrency and non-fungible tokens (NFTs). Play-to-earn games are built on blockchain technology and they usually have marketplaces where you can trade your tokens and assets earned through playing the game. Some of the most popular P2E games include Axie Infinity, Decentraland, CryptoKitties, etc.
Presale
Presale is an event where a cryptocurrency project offers its tokens to a limited number of investors at a discounted price. Presales are conducted to raise the capital needed for the development of a project and to get big ventures behind the project. It usually happens before a cryptocurrency’s initial coin offerings or listing on exchanges. The early investors may also get exclusive perks and there remains a potential for increased valuation once the tokens become public.
Private Blockchain
A private blockchain sometimes referred to as a “trusted” or “permissioned” blockchain is a type of blockchain that is restricted to a closed group of participants. Private blockchains are usually created for managing sensitive data and information of organizations or businesses. Unlike public blockchains private blockchains are centralized, meaning that only a limited people can verify the transactions and the data stored in the blockchain.
Private Key
When you transfer cryptocurrency to your wallet, it generates a hexadecimal code called the private key. The private key represents the ownership of the cryptocurrency. If the private key gets stolen or misplaced, you will lose your crypto possession. So, you have to keep your private keys in a safe and secure place such as a cold wallet.
Private Sale
Private sales are usually the first stage of an ICO (initial coin offerings) where a limited number of investors can purchase crypto tokens, usually at a low price. Usually, crypto projects invite large entities and venture capitalists to the event, and the details of the private sale are usually hidden from the general public. Private sales are held in hopes of getting large investors on board for an upcoming cryptocurrency project.
Proof of Authority (PoA)
Proof of authority is a consensus mechanism used by certain blockchains to validate the transactions in the network. Here, some of the nodes in the network are pre-authorized for creating new blocks. The process is automated by using specifically designed software. This kind of consensus mechanism is usually used on private blockchain structures or hybrid blockchains.
Proof of Stake (PoS)
Proof of stake is a consensus mechanism that was created as a cost-effective and energy-efficient alternative to proof of work (PoW) consensus. The PoS consensus uses cryptocurrency as collateral to make the validators accountable for their action. Here, if a transaction is added that other validators deem invalid, then they will lose a portion of what they have staked. The more coins you stake, the better your chances of getting chosen by the algorithm.
Proof of Work (PoW)
PoW is a consensus mechanism used to validate the transactions on a blockchain. This consensus mechanism requires the participating node in the blockchain network to prove that it has done the work needed to add a new blockchain. Bitcoin and Litecoin use proof of work consensus mechanism in their blockchain.
Public Blockchain
Public blockchains are the most popular type of blockchain, where anyone from the general public can participate in the validation of activities and access the data. A public blockchain is decentralized and it needs approval from the majority of the validators to add a new block to the main chain. Bitcoin, and Ethereum, are some of the examples of public blockchains. They are open-source, immutable, and self-governing blockchains.
Public Key
A public key is a hashed version of the private key. It is used for generating public addresses, that are broadcasted to the network. In a cryptocurrency transaction, both parties reveal each other’s public keys, and they will work similarly to a mail address where the sender needs the recipient’s address to send the cryptocurrency. The receiver can see the sender’s public key when receiving the cryptocurrency to verify the transaction.
Public Sale
The stage of initial coin offering that is accessible to the general public is called the public sale of a cryptocurrency project. Here, anyone with an internet connection can purchase a new cryptocurrency that has the potential to grow in its early stages. The crypto company can raise the capital needed for the development of the project, meanwhile growing its acceptance to a wide audience.
Pump and Dump
“Pump and dump” is a manipulative scam where the perpetrator uses several marketing tactics to boost the price of an asset to attract unsuspecting investors. The creators may spread fake recommendations, inflated data, and social media hype to make their product seem like the next big thing. However, after accumulating a good amount of investments, the creators will cash out the majority of the tokens they hold altogether, leaving the investors with worthless crypto tokens.
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Quantitative Analysis
Quantitative analysis (QA) also known as “quants” is a method used in trading and investing to make more informed decisions. Here, the analyst uses mathematical and statistical tools to analyze market movements to help make informed decisions regarding investments and trading. The analysis examines past stock prices, earnings reports, and other available information. Quantitive analysis solely relies on analyzing numbers rather than looking at external factors such as the credibility of the company’s management team, or industry conditions.
Quantum Computing
Quantum computing is a relatively new concept in the computer science world. It utilizes quantum mechanics to solve problems that are too complex for traditional computers. Unique properties of quantum physics such as superposition, entanglement, and quantum interference, are used in quantum computing to solve complex problems swiftly. Some of the potential applications of quantum computing include machine learning, cryptography, portfolio optimization in finance, supply chain optimization, and more.
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Ransomware
Ransomware is a type of online threat that steals or encrypts the victim’s files and demands ransom. Since cryptocurrency transactions are private and anonymous, the hackers demand victims to pay the ransom money in cryptocurrency. The hackers use several tactics to get themselves into your device including phishing traps, malicious spam mail, socially engineered scams, etc. The ransom money can range from a few dollars to millions depending on the victim and the sensitivity of the hacked data.
Recovery Phrase
A recovery phrase, also known as a seed phrase is a random collection of words that the crypto wallet generates when a user first uses it. The recovery phase is a crucial security feature of the wallet or crypto storage. If the user forgets their password or loses their device, they can use the recovery phrase to recover their digital assets.
Regulated Market
As the name suggests, a market where a private entity or government organization has superior control over other participants can be considered a regulated market. Usually, the regulations can extend to the openness of the market, price, supply, demand, refund rights of the customer, safety standards, etc. While regulated markets do offer certain benefits for both the consumers and the sellers, it removes freedom from the equation.
Rug Pulls
Rug pulls are a type of exit scam that happens in the cryptocurrency ecosystem. Here, the creators of a crypto project create hype and gather significant investors, only to abandon them with the raised investment. Scammers utilize ICOs and presales to lure unsuspecting investors and leave them with worthless cryptocurrencies. So, before investing in cryptocurrency you need to do your due diligence by researching the project.
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Satoshi
Satoshi is the smallest unit of Bitcoin. It was named after the pseudonym that the creator of Bitcoin, Satoshi Nakamoto used. One Bitcoin token is equivalent to 100 million Satoshis. This smallest denomination of Bitcoin was introduced to facilitate smaller transactions since its value skyrocketed.
Satoshi Nakamoto
Satoshi Nakamoto is a pseudonym that the creator of Bitcoin used. The whitepaper documentation for Bitcoin was published by Satoshi. However, the developer or the team of developers never revealed their true identity to date. Satoshi developed something that revolutionized the entire financial industry, and really vanished from the community.
Scalability
Scalability in reference to a blockchain is its ability to handle the growing number of transactions. Scalability is one of the most important aspects that determines the future of a blockchain. Blockchain can only handle a limited number of transactions due to the complex consensus mechanism they follow. While this long process makes transactions private and secure, the waiting time can be a problem, especially when the network is congested. However, novel technologies and concepts are emerging every day to make blockchain more scalable.
Securities and Exchange Commission (SEC)
The Securities and Exchange Commission (SEC) is a federal agency that regulates securities markets in the United States. The SEC stands to protect investors from potential scams and to promote fair and efficient markets. The cryptocurrencies that are considered as securities, also come under the SEC regulations. To operate in the United States, securities must register with the SEC.
Security Token Offering (STO)
Security token offerings (STO) are a method of raising capital for projects by offering the digital tokens of the project to the investors. STOs are similar to initial coin offerings (ICOs) but STOs are more compliant with securities laws. This makes STOs a more reliable and trustworthy alternative to ICOs. The STO investors would have privileges similar to ordinary securities such as voting rights, dividends, and sharing.
Seed Phrase
The seed phrase is a collection of random words that a crypto wallet generates when you first create an account in it. The phrase can be 12-24 words long and can be used for recovering your assets in the cryptocurrency wallet, when you forget the password, lose the device, or want to restore the wallet on different a device. You need to note down the seed phrase and store it in a secure location.
Sidechain
Sidechains are an essential part of the blockchain ecosystem that contributes to the scalability and affordability of the parent blockchain or the main chain. The sidechains are connected to the main blockchain with a two-way bridge, where the assets can interact with each other. Users can utilize the sidechain to make their transactions faster and cheaper.
Smart Contract
A smart contract is an algorithmic agreement between two parties that will execute automatically once the set condition(s) are met. Smart contracts are stored on blockchains meaning that they are immutable and transparent. Using a smart contract removes the need for a trusted third party, making the process cost-effective and more secure.
Snapshot
Traditionally, a snapshot is used to record the state of a state or the screen at a specific time. Similarly, a blockchain snapshot can be defined as the record of a blockchain at the given block height. The snapshot of a blockchain records all the data recorded in the blockchain including addresses, transactions, fee payments, metadata, and more. Snapshots are utilized especially at the time of airdrops to determine the balances in an address at the specific point in time. It also plays a crucial role in hard forks, as the new block will have the same historical data as the parent chain.
Soft Fork
Soft fork is a modification to a blockchain protocol that is backward compatible. Meaning that the new rules introduced to the blockchain also follow the old protocols. Soft forks do not require all nodes to update their software, they will automatically recognize the bollocks added by using new rules valid. This allows blockchain to introduce new rules, by only upgrading a majority of the miners.
Solana
Solana is a public, decentralized, and open-source blockchain platform. Solana stands out from Bitcoin and Ethereum for its ability to process transactions at a faster rate and low costs. Typically, Solana can process about a thousand transactions per second as opposed to the 7 transactions per second rate of Bitcoin. The native cryptocurrency of Solana with the ticker “SOL” is one of the most valued cryptocurrencies in the market.
Stablecoins
Cryptocurrencies that are pegged to a fiat currency are called stablecoins. Usually, stablecoins are tied with US dollars and they will always have a value in a 1:1 ratio with the US dollar. This is achieved by storing reserves equivalent to the tokens in circulation. Stablecoins can remove the instability and volatility of traditional cryptocurrency while being a digital currency that can be used across borders.
Stop-Loss Order
A stop-loss order is an instruction from the investor to the broker to buy or sell an asset when it reaches a predetermined value known as the stop price. As the name suggests, this method is used to limit the loss of a trader. For example, if an investor buys a share that is worth $50 and sets the stop price at $45, the share will be sold if the price drops to $45, limiting further loss.
Symmetric Encryption
Encryption is the process of converting readable into codes that can only be read after performing a process called decryption. Symmetric encryption is a type of encryption in which both the sender and the user use the same key for encrypting and decrypting data.
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Tap-to-Earn (T2E)
Tap-to-Earn games are blockchain-based games that reward users for just tapping on the screen. Many tap-to-earn games offer airdrop rewards to the participants, making the game more rewarding and engaging. In addition to repetitive tapping, these games may also include other activities for earning rewards such as social challenges, daily events, and referral bonuses.
Technical Analysis
Technical analysis in trading refers to the evaluation and statistical study of market trends regarding trading volume, and price to predict price movements. The technical analysts believe that they can find patterns by analyzing the historical price charts. This pattern can help them predict future trade strategies such as when to buy and when to sell. Technical analysis is widely used in trading financial instruments such as equities, bonds, commodities, cryptocurrencies, and more.
Tether (USDT)
Tether (USDT) is a cryptocurrency that belongs to a special genre called stablecoins. Tether is pegged to the US dollar in a 1:1 ratio, meaning that the value of the token will remain at $1 at all times, making it a more stable alternative to other cryptocurrencies, hence the name “stablecoin”. Tether usually has higher liquidity on exchanges, and they are widely used for cross-country transactions.
Token Standard
A set of rules or protocols that specifies how a cryptocurrency interacts with the blockchain ecosystem is called a token standard. Essentially, it describes the utilities, functionalities, and ease of use of a crypto token. Users can determine the features, interoperability, and perks of holding a crypto token by examining its token standard. There are multiple token standards including ERC-20, BEP-20, SPL, etc.
Tokenomics
Tokenomics is a term derived by combining “token” and “economics”. The term is used to represent the economic study of a cryptocurrency. The tokenomics describes all aspects of the token including its utility, total supply, token distribution, and more. Tokenomics gives investors an idea of the structure of the cryptocurrency, and what incentives they can gain from holding the token. Usually, crypto projects provide detailed tokenomics in their whitepaper.
Tokens
In the blockchain ecosystem, the word “token” can represent any cryptocurrency. However, over time the meaning of the word token has skewed. Today, some people use tokens for representing any altcoins – cryptocurrencies besides Bitcoin and Ethereum. Additionally, the term “token” is also used to represent the cryptocurrencies that run on top of another cryptocurrency’s blockchain. So, the meaning slightly differs according to the context.
Total Value Locked (TVL)
Total Value Locked (TVL), is a metric used in the cryptocurrency and DeFi to measure the total value of digital assets that are locked or staked on a blockchain network. The TVL is calculated based on the current market value of the assets locked in smart contracts. Higher TVL means that the DeFi ecosystem is functioning healthy. Users can use the TVL metrics to figure out the stability, and the potential of rewards.
Trade Signals
Trigger actions that indicate to traders whether to buy or sell assets or securities are called Trade Signals. Trade signals can be human-generated by analyzing technical indicators, machine-generated by mathematical calculations, or AI (artificial intelligence). Additionally, media portrayals and overall market sentiments may come into play in the generation of trade signals. The goal of trading signals is to remove sentiments and possibly make more rational decisions.
Trading Pairs
In exchanges, the cryptocurrencies are traded in pairs. It makes it possible for the users to swap one asset with another. The trading pairs can be two cryptocurrencies, or cryptocurrency and fiat currency tied together in a smart contract. The pairs are denoted as base currency/quote currency. Here, you use the quote currency to acquire the base currency. For example, if you want to buy Bitcoin for Ethereum, you should look for a trading pair that is denoted as BTC/ETH.
Trading Platforms
Trading platforms are software systems offered by brokerages, banks, or other financial institutions such as brokerages, and banks. Investors can utilize trading platforms to execute and manage their trading strategies online. They often come as websites, and mobile applications, that are easy to understand and use. Most modern trading platforms can provide real-time trade signals, live news feeds, and market simulations for learning.
Trading Strategies
Trading strategies can be considered as plans traders follow to make rational decisions depending on market conditions. An effective trading strategy can reduce risks and can help increase the rewards from trading. There are multiple trading strategies including day trading, HODL, crypto futures trading, and more. They all have their own pros and cons. In the cryptocurrency market, where things can sway either way at any time, it is important to have a trading strategy that you are comfortable with.
Trading Volume
The number of trading of an asset done over a specific period is called trading volume. Usually, the trading volume is calculated in a 24-hour format. This measure can be an indicator for investors to understand the overall activity of a market. Generally, cryptocurrencies and other digital assets with higher trading volume have higher liquidity and market capitalization.
U
User Interface
The user interface (UI) is the interface that makes it possible for users to interact with the website or application using a digital device. UI basically defines the overall look, layout, colour schemes, and functionalities of the website/application. The acceptance and ease of use can vary significantly according to the design of the UI. As thought out and fleshed out the UI is, it will become as easy to use.
Utility Token
Blockchain-based cryptocurrencies that have specific utilities and use cases related to the blockchain it was created are called utility tokens. Utility tokens give the holders access to certain features of services within the blockchain ecosystem. Some blockchains also use utility tokens as an incentive for network participants. Usually, the utility tokens are offered to the investors through ICO (initial coin offerings), IDO (Initial DEX offering), or IEO (Initial Exchange Offering) in exchange for fiat currency.
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Validator Nodes
Validator nodes are a type of node in a blockchain network that validates transactions using the consensus mechanism and keeps a record in the blockchain. Validators can also vote on the acceptability of a new block created by other validators in the network. Usually, to accept a new block to the blockchain, it needs approval from more than 50% of the active validator nodes in the network.
Volatility
Volatility is the possibility of rapid and unpredictable changes regarding a security or asset, especially for the worse. There are several methods to measure the volatility. However, most people use standard deviations of returns. Assets with higher volatility have a higher tendency to swing either way from their mean value, making them high-risk investments. However, the unpredictability can make them a more rewarding investment option too.
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Wallet
Cryptocurrency wallets are software or devices for storing and managing cryptocurrency. Crypto wallets do not store actual cryptocurrency as a physical wallet would, instead, it stores the private keys to access it. The wallets will have an address and whoever has the private keys can access the cryptocurrency in that address. Wallets that can connect to the internet are called “hot wallets” and ones that cannot are “cold wallets”. While hot wallets are more convenient, cold wallets are more secure.
Web3
Web3 or Web 3.0 is a novel World Wide Web iteration that incorporates blockchain, decentralization, and a token-based economy. Web3 aims to provide an open, censorless, consumer-driven, and immutable way of sharing and interacting with digital content. Web3 is in its early stages and there is a long way to go to achieve its goals.
Whale
An entity or a person that holds a major share of cryptocurrency is called a whale in the crypto market. Their movements in the market can create a cascade of changes, which is why the crypto trading community closely examines the whales. Whales can have a significant impact on the liquidity, and market prices of the crypto token. The crypto community even has alerts to publicly announce when a whale is making a move.
White Paper
White paper or whitepaper is a documentation that gives all the necessary details about a new project. Blockchain projects utilize whitepapers to promote their services or products to investors. A well-crafted whitepaper will contain the problem that they are addressing, the solution, technical data, tokenomics, the team, and more. Investors can examine the whitepaper of a project to examine the potential of the project.
Whitelisted Address
A whitelisted address is a cryptocurrency wallet address that has been approved for making transactions. The whitelist in the crypto community works similarly to whitelist in other industries. The counterpart of whitelisted addresses is blocklisted addresses, which are wallets that have been identified for using illegal or fraudulent activities including theft and terrorism.
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Y
Yield Farming
To put it simply, yield farming in cryptocurrency is the process of earning passive income by letting your cryptocurrency work. It involves staking your crypto tokens on DeFi platforms and earning interest or transaction fees. Usually yield farming offers significant interest rates to attract investors. Typically, yield farming offers high rewards and fewer risks in comparison to trading. However, users should analyze the platform in-depth before staking their crypto possessions.
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Zero Confirmation Transaction
Zero-confirmation transactions are cryptocurrency transactions that have not yet been added to the blockchain. When a cryptocurrency transaction happens on a blockchain, the miner nodes have to pick it up and add it to the blockchain by verifying the consensus. However, when the network is congested, or when high-priority transactions are happening, some transactions may end up in the waiting queue. Here, only the initiator will be aware of the transaction, and they can cancel it till a miner node picks the transaction.
Zero Knowledge Proof
Zero Knowledge proofs are a cryptographic method that makes it possible for users to do cryptocurrency transactions without revealing their public key. Here, the transactions are validated without needing the actual details of the transaction. This method can obscure the addresses of the sender and receiver, transaction amount, and smart contract code from the blockchain ledger.
