Crypto glossary

69 terms, defined in plain English. Where a word has an ugly truth behind it, this says so — that's the whole point of writing them ourselves.

Last reviewed: September 2026

A

Address

The string you send crypto to — the public destination for a payment, derived from a public key. An address is not an account held anywhere: it is an entry in a shared ledger that only the holder of the matching private key can spend from. Addresses are pseudonymous, not anonymous. They carry no name, but every transaction they ever make is permanently public, so an address linked to your identity once is linked to it forever.

Airdrop

Free tokens distributed to wallets, usually to bootstrap a user base or reward early activity. Some are genuine marketing from real projects. Many are bait: the "claim" page asks you to connect your wallet and approve a transaction that drains it. The rule that keeps people safe is boring — never connect a wallet to claim an airdrop you were not already expecting, and never approve a transaction you cannot read.

Altcoin

Any cryptocurrency that is not Bitcoin. The term is a relic of a time when Bitcoin was the only asset that mattered and everything else was an alternative to it; it lumps Ethereum together with tokens created last week, which makes it close to useless as a category. It survives mostly in market commentary, where "altcoin season" means capital rotating out of Bitcoin into everything else.

AML / KYC

Anti-Money-Laundering and Know-Your-Customer: the identity checks a regulated exchange runs before letting you trade — ID documents, proof of address, sometimes a selfie. They exist because exchanges sit at the boundary between crypto and the banking system, and that boundary is regulated. The practical consequence for a user is that the exchange knows exactly which real person owns which addresses, which is how "pseudonymous" quietly stops being private.

Approval

Permission you grant a smart contract to move a specific token on your behalf. Almost every decentralised app needs one to function, which is why the prompt becomes routine — and routine is what the attack relies on. An approval persists until revoked, so a contract you interacted with once can move those tokens at a time of its choosing, long afterwards. Unlimited approvals are the default in many interfaces and are worth downgrading. Reviewing and revoking old ones periodically is the single highest-value piece of wallet hygiene.

ASIC

An Application-Specific Integrated Circuit — a chip built to do exactly one calculation and nothing else. Bitcoin mining ASICs compute SHA-256 hashes millions of times more efficiently than a general-purpose processor, which is why mining moved off laptops within a few years and has not gone back. The flip side is that an ASIC is worthless for anything but the coin it was built for, so its value tracks that one network.

B

Bear market

An extended period of falling prices and negative sentiment. In crypto the label gets applied loosely, but it usually means a drawdown deep enough and long enough that the people who arrived in the last run-up have left. Bear markets are where most of the building happens and most of the attention does not, which is why they tend to look obvious only in hindsight.

Block

A batch of transactions bundled together and added to a blockchain as one unit. Each block carries a reference to the block before it, which is what chains them and what makes rewriting history expensive: change an old block and every block after it breaks. Bitcoin targets one block roughly every ten minutes; other networks are faster. Block size is capped, which is why space in one is something users compete for.

Block explorer

A website that lets you read a blockchain directly — look up a transaction, an address, or a block and see its real state. Because the ledger is public, an explorer needs no permission and no account. It is the tool that turns "trust me, I sent it" into something checkable, and the fastest way to confirm for yourself that a payment actually happened rather than taking anyone's word for it.

Block reward

What a miner or validator receives for adding a block: newly created coins (the subsidy) plus the transaction fees paid by everyone in that block. On Bitcoin the subsidy halves roughly every four years and is designed to reach zero, at which point fees alone pay for security. The reward is not a gift — it is the budget that makes attacking the network more expensive than playing by its rules.

Blockchain

A shared ledger that many independent computers hold copies of, where new entries are added in batches that each reference the batch before them. The chaining is what makes the history tamper-evident, and the fact that thousands of parties hold it is what stops any one of them rewriting it. The word has been stretched to cover almost anything with a database; in the sense that matters, a blockchain is a ledger nobody is in charge of.

Bridge

Infrastructure that moves value between two blockchains that cannot talk to each other natively — usually by locking an asset on one chain and issuing a claim on it on the other. Bridges are useful and structurally fragile: they concentrate large balances in one contract, which has made them among the most profitable targets in crypto. Several of the largest thefts in the industry's history were bridge exploits.

Bull market

An extended period of rising prices and rising confidence, in which everything looks like skill. Crypto bull markets are unusually reflexive: rising prices attract attention, attention attracts money, and money raises prices, until something breaks the loop. The most useful thing to remember about one is that it makes bad decisions look good for long enough to repeat them.

Burn

Permanently removing tokens from circulation by sending them to an address nobody holds the key to. Used to reduce supply, either as a one-off event or continuously as part of a protocol's design — Ethereum destroys part of every transaction fee this way. Treat burn announcements with some scepticism as a value argument: destroying tokens nobody wanted does not create demand, and a project burning its own unsold supply is describing its inventory, not its adoption.

C

CEX

A centralised exchange — a company that holds your coins and matches your trades on its own internal books, like a broker. Convenient, fast, and the normal on-ramp from ordinary money. The trade-off is that while your coins sit there they are the exchange's liability rather than your property, which is the whole meaning of "not your keys, not your coins".

Cold storage

Keeping private keys on something that has never touched the internet — a hardware wallet, or in the strictest form a key generated and stored entirely offline. The point is to remove the attack surface rather than defend it: malware cannot steal a key from a device it cannot reach. The cost is friction, which is the intended trade for anything you are not spending this week.

Confirmation

One block built on top of the block containing your transaction. Zero confirmations means broadcast but not yet settled; each additional block makes reversal more expensive, because an attacker would have to redo that work and out-pace the rest of the network. There is no number that means "final" in an absolute sense — settlement is a probability that gets close enough to one that people stop worrying.

Consensus

How a network with no one in charge agrees on a single version of the ledger. The mechanism differs — proof of work spends electricity, proof of stake bonds capital — but the job is identical: make agreement cheap and disagreement expensive, so the honest answer is also the profitable one. Consensus is the problem blockchains exist to solve; everything else is an implementation detail.

Custodial wallet

A wallet where somebody else holds the private keys for you — an exchange account, or a hosted app. It behaves like a normal financial account: password resets, support, recoverable if you lose your phone. It is also a claim on a company rather than direct ownership, which means it can be frozen, and it goes down with the company if the company goes down.

D

DeFi

Decentralised finance — lending, trading, and derivatives run by smart contracts rather than by a firm. The appeal is that the rules are public code anyone can read and nobody can quietly change. The risk is the same fact from the other side: the code is the final authority, and a flaw in it is not a dispute you can appeal, it is a transfer that already happened.

Depeg

When a stablecoin trades away from the value it is supposed to hold. Small deviations happen constantly and mean little. A sustained one means the market doubts the backing — either that the reserves exist, or that they can be reached quickly enough to honour redemptions. Depegs are informative precisely because they are a live vote on a claim the issuer makes about assets you cannot inspect directly.

DEX

A decentralised exchange — trading that happens through smart contracts, with the assets staying in your own wallet until the moment of the trade. No account, no identity check, no company holding a balance for you. In exchange you accept that there is no support desk, that a mistyped transaction is final, and that the contract itself is now part of your risk.

Difficulty

How hard the network makes its proof-of-work puzzle, adjusted automatically so blocks keep arriving at the intended pace no matter how much mining power is online. Bitcoin recalculates it every 2,016 blocks — roughly every two weeks. It is the thermostat that keeps issuance on schedule, and the reason a tenfold increase in mining hardware produces the same ten-minute blocks rather than ten times as many coins.

E

ERC-20

The Ethereum standard that most tokens follow — a shared interface for balances and transfers that means any wallet or exchange can support a new token without custom work. It is the reason launching a token is trivial, which is both why the ecosystem grew quickly and why so much of what launched was worthless. The standard says nothing about whether a token is backed by anything.

ETF

An exchange-traded fund — a regulated product holding an asset on investors' behalf and trading on a normal stock exchange. A spot crypto ETF holds the actual coin, so buying a share gives price exposure through a brokerage account with no wallet, no keys and no exchange sign-up. It also means a custodian holds the underlying, which is a very different ownership model from holding it yourself.

EVM

The Ethereum Virtual Machine — the runtime every Ethereum node uses to execute contract code. Because all of them run the same instructions over the same state, they independently reach the same result, and that agreement is the network's answer rather than any one machine's. Several other chains implement it too, which is why a contract written for Ethereum often deploys elsewhere unchanged. "EVM-compatible" in a project's marketing means exactly that and nothing about its security.

F

Fiat

Government-issued money that is not backed by a commodity — dollars, euros, yen. Its value comes from the state that issues it and the expectation that others will accept it. The word appears constantly in crypto because the entire pitch rests on a comparison: fiat supply is set by policy and can be expanded, and Bitcoin's is set by code and cannot.

Finality

The point past which a transaction will not be reversed. Under proof of work it is probabilistic — never absolutely guaranteed, just buried under enough accumulated work that undoing it stops being affordable. Proof-of-stake designs can offer a stronger form, where reversing a finalised block would require validators to forfeit stake. Either way there is no field on a block explorer that says "final"; exchanges pick a depth they are comfortable with and wait for it.

Fork

A change to a blockchain's rules. A soft fork tightens them in a way old software still accepts, so the network stays on one chain. A hard fork changes them in a way old software rejects — and if both sides keep going, one chain becomes two, sharing history up to the split and diverging permanently after it. Bitcoin Cash and Ethereum Classic both exist because of contested hard forks.

G

Gas

The fee paid to have a transaction processed on Ethereum, priced by how much computation it needs rather than how much value it moves. Sending a token costs little; a complex contract interaction costs more. Because block space is limited, gas rises when the network is busy — which is why the same action can cost cents at one hour and a great deal more at another.

Genesis block

The first block of a blockchain, the one with no predecessor to reference. Bitcoin's was mined in January 2009 and carries a headline from that day's newspaper embedded in its data — a timestamp, and a fairly pointed comment on bank bailouts. Its coins have never been spendable, an oddity of the original code that was never corrected.

Gwei

The unit Ethereum gas prices are quoted in — one billionth of an ETH. It exists because quoting fees in whole ETH would mean a string of leading zeros nobody can read at a glance. When a wallet says a transaction costs 30 gwei, that is the price per unit of gas, not the total: the total is that price multiplied by how much work the transaction needs.

H

Halving

The scheduled event, every 210,000 blocks or roughly four years, that cuts Bitcoin's block subsidy in half. April 2024's halving — the fourth — took it from 6.25 to 3.125 BTC. It is the mechanism that enforces the 21 million cap, and the subject of the most confident cycle theory in crypto, built on a sample of four.

Hash

A fixed-length fingerprint of some data, produced by a one-way function. The same input always gives the same fingerprint, a tiny change to the input gives a completely different one, and you cannot work backwards from the fingerprint to the data. Blockchains use hashes to chain blocks together, so that altering old data breaks every link after it — visibly, and immediately.

Hot wallet

A wallet on an internet-connected device — a phone app, a browser extension, an exchange balance. Convenient for spending and permanently exposed to whatever reaches the device. The standard advice is not to avoid hot wallets but to treat one like a physical wallet: enough for the week, and nothing you cannot afford to lose to a bad click.

I

Immutable

Practically impossible to change after the fact. Blockchain data is not literally unalterable — it is protected by making alteration cost more than it could ever be worth, and by the fact that every other participant holds a copy that would disagree. "Immutable" is a statement about economics and redundancy, not physics, and it weakens on any chain where few parties hold the ledger.

Impermanent loss

The loss a liquidity provider takes when the two assets they deposited move apart in price, compared with simply having held them. The name is optimistic: it is only impermanent if prices return to where they started, and there is no reason they should. It is the main reason a headline yield on a liquidity pool is not the return you receive, and the reason those yields have to be high enough to compensate for it.

L

Layer 1

A blockchain that settles its own transactions and provides its own security — Bitcoin, Ethereum, Solana. Everything built on top of it inherits that security. The defining constraint of a layer 1 is that decentralisation, security and throughput trade against each other, which is the pressure that produced layer 2s.

Layer 2

A network built on top of a layer 1 that handles transactions off the main chain and periodically settles back to it, buying speed and lower fees while borrowing the base chain's security. The trade-offs are real and specific to each design: withdrawal delays, differing assumptions about who can censor you, and the fact that the bridge back to layer 1 is itself a piece of software that can fail.

Ledger

The record of who owns what. A blockchain's ledger is public, append-only, and held in full by many independent parties, which is the whole architectural difference from a bank's ledger — one is replicated and verifiable by anyone, the other is authoritative because of who keeps it. Note that Ledger is also a hardware-wallet brand; the two meanings collide constantly in practice.

Liquidation

The forced closing of a leveraged position when its collateral no longer covers its losses. On an exchange this happens automatically and without warning. Liquidations cluster: a price move triggers some, those forced sales move the price further, which triggers more — which is why crypto drawdowns are often sharper than the news that started them would justify.

Liquidity

How much can be bought or sold without moving the price much. Deep liquidity means a large order fills near the quoted price; thin liquidity means the quote is close to fiction for any real size. It is the most consistently underestimated risk in crypto, because an asset can look priced at one level right up until someone tries to sell a meaningful amount of it.

M

Market cap

Price multiplied by circulating supply. Useful for rough comparison and routinely mistaken for money invested, which it is not — a token with a tiny float and a thin market can post a large market cap on very little real buying. Read it alongside liquidity and how much of the supply is actually free to trade, or it will mislead you.

Mempool

The waiting room for broadcast-but-not-yet-included transactions. Each node keeps its own view of it. Because block space is limited, miners and validators generally take the highest-paying transactions first, so the mempool is where fee competition actually happens — and why a transaction with too low a fee can sit unconfirmed for a long time.

Mining

Competing to add the next block by finding a hash below the network's target — trial and error, at enormous scale, using purpose-built hardware. The winner collects the block reward. The electricity is not a side effect: it is the cost that makes rewriting history uneconomic, which is the property the whole system is buying.

Multisig

A wallet requiring several keys to authorise a transaction — two of three, three of five, and so on. It removes the single point of failure that makes self-custody frightening: one lost or stolen key is survivable. Used by organisations holding shared funds, and increasingly by individuals with enough at stake to justify the extra setup. The trade-off is complexity, and a recovery plan that now has several moving parts to keep track of.

N

NFT

A non-fungible token — a unique on-chain record of ownership pointing at some specific thing, most often an image. What the token proves is that you hold that entry on that ledger. It does not, by itself, give you copyright, and it usually does not store the artwork on-chain, so the thing it points at can move or vanish independently of the token.

Node

A computer running the network's software and holding a copy of its ledger, checking every block and transaction against the rules for itself. Nodes are what make a blockchain hard to change: a rule alteration that node operators refuse to run simply does not take effect, no matter who proposed it. Running one is how you verify rather than trust.

Nonce

A number a miner varies to change a block's hash. Because the output of a hash function is unpredictable, the only way to find one below the target is to try nonces until one works — billions per second, with no shortcut. The nonce is the visible evidence of that search, and it is what "proof of work" is proof of.

O

On-chain

Recorded on the blockchain itself, as opposed to on a company's internal books. An on-chain transfer is publicly verifiable by anyone; a trade inside an exchange is not on-chain at all, it is a database update. The distinction matters whenever someone cites activity as evidence of adoption — much of what people call crypto activity never touches a chain.

Oracle

A service that feeds outside information — a price, a result, a rate — into a blockchain, because contracts cannot see anything beyond their own chain. This is a genuine structural weak point: a lending protocol that liquidates positions based on a price is only as honest as the oracle reporting it, and manipulating a thinly-traded price feed to trigger liquidations is a well-established attack rather than a hypothetical one.

P

Private key

The secret that authorises spending. It signs transactions, and the signature can be checked against your public key by anyone without ever revealing the key itself. There is no reset and no recovery: whoever holds it controls the coins, and losing it means the coins stay where they are permanently. This is the single hardest thing about self-custody, and it is deliberate.

Proof of Stake

A consensus mechanism where validators lock up the network's own token as collateral and are chosen to propose blocks in proportion to that stake. Misbehaviour costs them part of the deposit, so honesty is enforced by capital at risk rather than electricity spent. It is dramatically cheaper to run than proof of work, and it makes influence a function of holdings, which is the objection its critics keep returning to.

Proof of Work

A consensus mechanism where the right to add a block is earned by spending real computation, and the chain carrying the most cumulative work is treated as the true one. Rewriting history therefore means out-computing everyone else at once. The security is bought with energy, which is simultaneously the design's strongest property and its most criticised one.

Public key

The half of a key pair you can safely share. Your address is derived from it, and anyone can use it to verify that a signature really came from the matching private key — without learning anything about that key. This one-way relationship is what lets a public ledger prove ownership without anyone ever revealing a secret.

R

Reorg

Short for reorganisation: when the network discards a stretch of blocks in favour of a competing chain with more work behind it. Shallow reorgs of a block or two happen naturally when two miners find blocks at nearly the same moment, and transactions in the discarded branch return to the waiting pool rather than vanishing. Deep reorgs are what a 51% attack would produce, and on a large network they do not happen by accident.

Rug pull

A project that takes the money and leaves — developers draining the liquidity pool, or minting themselves an unlimited supply, after enough people have bought in. The tells are consistent: anonymous teams with no track record, unaudited contracts, tokenomics where insiders hold most of the supply, and marketing that talks about price rather than product.

S

Satoshi

The smallest unit of bitcoin — one hundred-millionth of one BTC — named after the pseudonymous author of the white paper. Because a whole bitcoin has become an awkward unit to quote, prices and fees are frequently expressed in satoshis instead. "Stacking sats" is the corresponding habit: buying small amounts regularly rather than trying to time an entry.

Seed phrase

A list of ordinary words — usually twelve or twenty-four — that encodes every private key in a wallet. Anyone holding it holds the funds, on any device, forever. It is written on paper rather than stored digitally for exactly that reason. No legitimate service, wallet or support agent will ever ask for it, and every message that does is an attempt to steal from you.

Slashing

The penalty in proof of stake: a validator that signs conflicting blocks, or fails in ways the protocol treats as harmful, has part of its deposit destroyed. It is the mechanism doing the work that electricity does under proof of work — making dishonesty cost real money rather than merely failing to pay. Anyone staking through a pool or an exchange is exposed to the operator's mistakes here, which is a risk the advertised yield rarely mentions.

Smart contract

Code deployed to a blockchain that runs exactly as written when its conditions are met, with no one able to intervene. That is the feature and the whole problem: there is no clause for "obviously not what we intended". Contracts are audited because a bug is not a dispute to be resolved afterwards — it is money that has already moved.

Stablecoin

A token designed to hold a steady value, almost always one US dollar. The common kind is backed by reserves of real assets a company holds; others are over-collateralised with crypto, and a third kind tried to maintain the peg algorithmically. That third kind is the reason the category is treated with suspicion: an algorithmic stablecoin collapsed in 2022 and took a great deal of the market with it.

Staking

Locking tokens as collateral to help secure a proof-of-stake network, in return for a share of newly issued tokens and fees. Running a validator on Ethereum requires 32 ETH; smaller holders usually join a pool or use an exchange, which hands the operational risk — and often the keys — to somebody else. Rewards are denominated in the token, so a staking yield does not protect against that token falling.

T

Tokenomics

How a token's supply is created, distributed and released over time — total supply, what insiders hold, and the schedule on which their allocations unlock. It is the least glamorous section of any project's documentation and usually the most predictive: a token where founders and early investors control most of the supply has a large, scheduled seller regardless of how good the product is.

TVL

Total Value Locked — the worth of all assets deposited in a DeFi protocol, used as its headline size metric. Treat it carefully. It is denominated in tokens whose prices move, so TVL rises and falls without anyone depositing anything, and the same underlying asset can be counted by several protocols at once when it is re-deposited across them.

V

Validator

The proof-of-stake equivalent of a miner: a participant that has locked collateral and takes turns proposing and attesting to blocks. Running one on Ethereum requires 32 ETH and a machine that stays online, since being offline costs money too. Most people who stake do it through a pool or an exchange rather than running their own, which is convenient and means the influence their stake carries is exercised by somebody else.

Volatility

How sharply a price moves. Crypto's is high by the standards of almost any other asset class, and it is structural rather than temporary — thin liquidity, leverage, round-the-clock trading with no circuit breakers, and a valuation resting largely on expectation. Volatility is not a bug being fixed; it is a property to size positions around.

W

Wallet

Software or hardware that stores your private keys and signs transactions with them. Nothing is actually kept "in" it — the coins are entries on a public ledger, and the wallet holds the authority to move them. That distinction explains why restoring a seed phrase on a new device recovers everything, and why losing the keys loses the funds even though the ledger entry is still plainly visible.

Whale

A holder large enough that their trading moves the market. In thin order books that threshold is lower than most people assume. Whale-watching services track large addresses and report their movements, which is worth less than it sounds — a transfer between two wallets owned by the same exchange looks identical, on-chain, to someone preparing to sell.