Crypto Glossary

51% Attack

This is a network attack when 51% or more of a blockchain network is controlled by one person or one group of people. Because it’s controlling the majority of the network, this person or group would be able to approve unauthentic transactions and hijack the system to commit fraud or engage in other activities.

Address

A short version of a public key used to send and receive cryptocurrencies. A public key is a string of letters and numbers used to generate addresses and perform transactions.

Altcoin

Any cryptocurrency other than bitcoin, which was the first cryptocurrency. The term includes ether, cardano, solana, and many more.

Bitcoin

A digital currency that exists on a publicly shared network developed by an anonymous person or persons using the pseudonym Satoshi Nakamoto. Bitcoin (BTC) was the first cryptocurrency and was designed to provide peer-to-peer electronic payments. The number of bitcoins has been increasing, but the currency has an upper limit of 21 million bitcoins that can ever be created.

Bitcoin cash

A cryptocurrency created in 2017 to solve some of the problems of bitcoin, including the size of the data or blocks in the blockchain. Bitcoin cash (BCH) split off from the original bitcoin blockchain in an event known as a hard fork. Bitcoin cash allows for more data to be saved in a block, making it more efficient.

BitPay

A service provider that processes bitcoin payments and offers a way for merchants and users to create payment methods for products and services using bitcoin.

Block

An amount of data on a blockchain that represents a certain number of transactions. When digitally arranged, blocks form a line or a chain presenting a complete record of transactions on a network. This chain of blocks is known as a blockchain.

Blockchain

A secure decentralized network presenting a public or private database shared between several devices. Blockchains are most notably used by cryptocurrencies.

Block height

A number that presents the location of a specific block on the blockchain in reference to the number of blocks created before it.

Block reward

The reward a person receives for using their computer to solve cryptographic puzzles that help verify the data on each block before it’s added to the blockchain. Validating data with these puzzles is known as mining, and the miner receives a reward in the form of cryptocurrency.

Block size

The size of a block on the blockchain in terms of the data amount it could hold. Once the block reaches its full size, it gets validated and added to the blockchain to become a part of the public data record the blockchain presents.

BNB coin

The cryptocurrency of a blockchain founded by the Binance cryptocurrency exchange, known as the BNB chain. BNB coin (BNB) is mainly used to pay transaction fees on the BNB chain and the Binance trading platform.

Central bank digital currency (CBDC)

A cryptocurrency issued by a central bank that, in some cases, presents the fiat currency issued by this bank.

Coin

A single unit of a cryptocurrency. Coins may be used as an exchange medium on the blockchain, as payments for transaction fees, and more.

Cold wallet

A cryptocurrency wallet disconnected from the internet. A cold wallet adds a security layer to stored cryptocurrencies since hackers wouldn’t be able to access it online. Cold wallets often refer to cold storage hardware such as a USB thumb drive.

Cryptocurrency

A digital currency that uses cryptography to provide peer-to-peer payments and offer a medium of exchange.

Cryptography

The study and implementation of communication between a sender who creates an encrypted message and a receiver who decrypts the message.

Custodial wallet

A wallet operated by an entity or a financial company that holds assets on behalf of the user. The user has access to the wallet, but the entity running the wallet could control the wallet and view what’s in it.

Decentralized apps (DApps)

Apps that work like regular applications and offer similar functionality while operating on peer-to-peer networks. Decentralized applications may run on public or private blockchains.

Decentralized finance (DeFi)

Financial instruments and technologies that use secure peer-to-peer networks such as blockchains to offer financial services and products. DeFi aims to remove the need for banks and centralized financial institutions.

Deterministic wallet

A wallet that uses a string of characters known as the seed to create addresses and enable its owner to access, back up, and restore the wallet without needing a password.

Digital currency

A currency created and managed by computer technology. It may operate as money and could be used as a medium of exchange that exists as a part of a digital architecture.

Distributed ledger

A shared and synchronized database between different users that keeps a record of transactions. Each participant in this database acts as a witness by copying and verifying any additions or changes made.

Distributed network

A computer network existing as a shared system between several devices without having one central device or location. Most blockchains are distributed networks.

Double spend

The act of spending the same cryptocurrency twice by altering a transaction and getting it validated on the blockchain. Blockchains are designed to prevent double spending automatically, but a 51% attack could potentially put one entity in control and allow it to alter transactions successfully.

Dump

A market event that occurs when several large investors or many smaller investors suddenly sell a certain asset, resulting in a sharp decline in its price.

ERC-20

A technical standard that is used to create tradable and transferable tokens presenting assets, rights, and ownership on the ethereum blockchain.

Ether

The native cryptocurrency of the ethereum blockchain. Ether (ETH) is created by validating transactions on the ethereum network.

Ethereum

A blockchain designed to enable two parties to create and complete contracts automatically in what are known as smart contracts. Ethereum was introduced in 2013 by Vitalik Buterin and is the second-most popular blockchain after bitcoin.

Ethereum 2.0

The second phase of the ethereum blockchain, marking the shift from a proof-of-work (PoW) validation system to a proof-of-stake (PoS) system. PoW requires intensive processing power, while PoS removes the need for this power by allowing users invested in the blockchain's integrity to verify transactions.

Ethereum classic

A version of the ethereum blockchain that maintained the record of a hack and theft of $50 million of ether in 2016, an event known as the DAO hack. A portion of the ethereum community decided to erase the hack to return the stolen ether, creating a blockchain that doesn’t contain the hack. Another portion rejected the deletion and maintained the ethereum classic blockchain that keeps a record of the hack and theft.

Gas

The fee paid in ether to a user on the ethereum blockchain to process a transaction or validate a contract on the network.

Gas price

The cost of performing transactions on the ethereum blockchain due to the fees required to verify transactions and create contracts. The gas price is often determined based on how many people are trying to use the network simultaneously.

Genesis block

The very first block on a blockchain. The genesis block contains the first set of data recorded on its blockchain.

Gwei

A unit representing a small portion of ether that is often used to denote gas prices. One billion gwei are equal to one ether.

Hard cap

The maximum amount of cryptocurrencies that could be created on a blockchain. For example, bitcoin has a hard cap of 21 million coins. Once there are 21 million bitcoins in existence, no new bitcoins can be created.

Hard fork

An event that takes place when users of a blockchain change its protocols, records, or rules. This change creates a second blockchain that copies the history of the original blockchain. Two blockchains exist following a fork. In some cases, users may abandon one, while in others, users may use both.

Hardware wallet

A wallet that stores cryptocurrencies and other digital assets on a physical device, such as a USB thumb drive, that isn’t always connected to the internet. Hardware wallets might be cold wallets.

Hash function

A mathematical algorithm that converts data to a string of numbers and letters. When the same piece of data is put through a hash function, the result is the same every time.

Hash rate

A measure of how many calculations a computer or a network could process per second.

Hierarchical deterministic wallet (HD wallet)

Type of crypto wallet that generates different keys for the wallet from one source. It can be used across various devices and makes it easy to back up the wallet.

Hold on for dear life (HODL)

A typo that became a synonym for “hold on for dear life,” an investment strategy often used by cryptocurrency adopters. It refers to buying and holding cryptocurrencies as a form of long-term investment.

Hot wallet

A wallet that is always connected to the internet. A hot wallet is often a software wallet that allows simple cryptocurrency transactions and storage. However, it may be less secure than a cold wallet since it’s always online.

Initial coin offering (ICO)

The process of releasing a new cryptocurrency to the public and allowing people to buy it.

Ledger

A system of recording transactions between accounts and the balance of each account.

Liquidity

The ability to easily convert an asset to cash. It also refers to how often an asset, including a digital asset like a cryptocurrency, is traded. The more liquid an asset is, the easier it would be to exchange it for another asset or fiat currency.

Mainnet

The public and main network of a blockchain, as opposed to testnet, where software developers may test new features or changes without submitting them to the main network.

Market capitalization/market cap

The total value of an asset being traded on a market. A cryptocurrency market cap refers to the total value of its available coins.

Maker

A person who contributes to the trading liquidity of a market or exchange by placing orders that would be fulfilled when a matching sale or purchase is found.

Memecoin

A cryptocurrency created as a joke, meme, or method to leverage the hype surrounding a trend.

Metaverse

A digital world designed to offer participants the ability to interact online in ways similar to the ways they would interact in person. A metaverse often includes the ability to make digital purchases as well as speak and interact with others using digital representations.

Mining

A computationally intensive process used by blockchain networks to verify new blocks and transactions and issue new coins.

Mining reward

The reward given to the person or group of people who validate a block of data on a blockchain network. This reward is usually in the form of cryptocurrency. Rewarding mining activity is often present on proof-of-work blockchains, where the miner’s computer solves complex puzzles to validate the block.

Minting

The process of creating new cryptocurrencies on a proof-of-stake blockchain by authenticating data and adding it to the blockchain. Minting increases the supply of a cryptocurrency by generating new coins that would be available for circulation. Minting could also be used to create non-fungible tokens (NFTs).

Mnemonic phrase

A memory tool designed to help you remember important information. In a blockchain, this phrase is usually about 12 to 24 words and could be used to recover access to your wallet.

Non-custodial wallet

A wallet that the user has complete control of, rather than relying on another entity or financial company to manage it for them. Non-custodial wallets offer more control over your assets but could be more complicated to set up and run.

Non-fungible token (NFT)

A token that presents a unique digital asset that exists in a single or a few copies, such as art, music, software code, and more. A non-fungible token serves as ownership proof of this digital asset.

Order book

A digital record of active trades on a stock or crypto exchange. It keeps track of trades people want to make, finds a match for these trades, and completes the transactions.

Paper wallet

A physical piece of paper that contains a seed phrase or private key. This phrase or key might be written in characters or encoded in a QR code that allows you to access your wallet and digital assets.

Peer-to-peer (P2P)

A digital network where each computer acts as a participant, allowing the transfer of files and data from one computer to another without needing a central server.

Pegged currency

A currency whose value is tied to another currency or asset. A cryptocurrency pegged to the U.S. dollar would increase or decrease in value along with the dollar's value.

Private blockchain

A blockchain inaccessible to the public that may have an owner and central authority, such as an organization or a company.

Private key

A string of numbers and letters that serves as a password and allows you access to your wallet.

Proof-of-stake (PoS)

A protocol used by some blockchains to maintain the integrity and security of the network. This protocol utilizes users’ resources to verify new transactions and rewards people who are more invested in the integrity of the network by staking more cryptocurrencies.

Proof-of-work (PoW)

A protocol used by some blockchains — most namely bitcoin — to validate new transactions by solving complex cryptographic puzzles. This protocol is energy-intensive, so it rewards users who offer more computational power.

Public address

A public presentation of a wallet as a unique string of code used by individuals to receive or request payments in cryptocurrency.

Public key

A public cryptographic code made up of a string of numbers and letters that is used to send or receive cryptocurrencies on a blockchain.

Pump and dump (P&D)

A fraudulent scheme in which an asset is hyped up to dramatically raise its price before selling the asset in large quantities at the inflated price. The sudden dump of large amounts of the asset causes its price to crash.

Rug pull

A fraudulent scheme in which the scammer invites people to invest in a project or an asset that has a promise. The scammer would then pull the rug and disappear with all raised investments and potential profits.

Satoshi (SATS)

The smallest unit of bitcoin. 100 million satoshi equals one bitcoin.

Scaling problem

The struggle of a system to process more and more transactions in a timely manner as its user number grows. Blockchain technology has faced several scaling problems, since transactions must be verified before getting added to a blockchain, a process that has become increasingly time-consuming. However, several solutions were developed and implemented that helped reduce the severity of the problem.

Seed phrase

A string of words presenting a mnemonic phrase that is used to create a private key and public wallet addresses for a wallet.

Segregated witness (SegWit)

A solution that provided bigger block sizes to the bitcoin blockchain to reduce the severity of the scaling problem. SegWit divides each transaction into two parts. One part is a signature for the transaction, and the second is the details of the transaction. The signature is stored separately, allowing for the data about the transaction to go through faster.

Smart contract

A digital contract on a blockchain that includes specific conditions. Once these conditions are met, the smart contract would automatically execute the agreement terms. Smart contracts remove the need for a third party to verify that conditions were met.

Software wallet

A wallet that exists as software or an app on your computer or phone. In many cases, the wallet stores the private keys on your behalf, making it easier to send and receive cryptocurrencies and digital assets.

Stablecoin

A cryptocurrency that has a value pegged to a fiat currency or a real-world commodity. This is achieved by maintaining a reserve of the asset the stablecoin is pegged to.

Taker

A person who places an order for immediate fulfillment by agreeing to execute their order at the current market rate and get matched with someone else who wants to be on the other side of the trade.

Token

A digital representation of a cryptocurrency or other digital assets. A token might be interchangeable such as a currency, or it might be a non-fungible token that presents a unique asset.

Tokenize

The process of creating a digital representation of a digital or physical asset. The representation might be a fungible and interchangeable token or a non-fungible token.

Validator

A person who verifies new transactions on a blockchain. In exchange, a validator receives rewards, often in the form of cryptocurrencies.

Vesting

A restriction on the ability to sell a token for a set period of time. For example, when acquiring a new token, there might be a requirement to hold it for a specific period before being able to sell it.

Virtual currency

A digital currency that is used as a store of value or a unit of exchange and doesn’t have a physical representation.

Wallet

Software or a hardware device that stores your cryptocurrencies, digital assets, private keys, and public addresses.

Web3

An imagined new form of the World Wide Web that may use blockchains, cryptocurrencies, non-fungible tokens, and metaverses to offer a more connected yet decentralized internet.

Wei

The smallest unit of ether. One quintillion — one followed by 18 zeros — wei equal one ether.

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