Airdrop
A marketing strategy where cryptocurrency projects distribute free tokens to wallet addresses to promote awareness and adoption. Airdrops are often used to reward early supporters or incentivize community participation.
Crypto Glossary
Essential cryptocurrency and blockchain terminology explained
58+ Terms
Showing all 58 terms
A
Altcoin
Any cryptocurrency other than Bitcoin. The term is short for 'alternative coin' and includes thousands of cryptocurrencies like Ethereum, Solana, Cardano, and others.
APY (Annual Percentage Yield)
The rate of return on an investment over one year, including compound interest. In crypto, APY is commonly used to describe staking and DeFi yield farming rewards.
B
Bear Market
A prolonged period of declining prices in the cryptocurrency market, typically characterized by pessimism and negative sentiment. Opposite of a bull market.
Bitcoin (BTC)
The first and most well-known cryptocurrency, created by Satoshi Nakamoto in 2009. Bitcoin operates on a decentralized peer-to-peer network and uses proof-of-work consensus.
Blockchain
A distributed ledger technology that records transactions across multiple computers in a secure, transparent, and tamper-proof manner. The foundation of all cryptocurrencies.
Bridge
A protocol that enables the transfer of assets and data between different blockchains. Bridges are essential for cross-chain interoperability in the crypto ecosystem.
Bull Market
A period of sustained price increases in the cryptocurrency market, characterized by optimism and positive sentiment. Opposite of a bear market.
Burn
The permanent removal of cryptocurrency tokens from circulation by sending them to an unrecoverable wallet address. Burning tokens reduces supply and can increase scarcity.
C
Centralized Exchange (CEX)
A cryptocurrency exchange operated by a centralized organization that facilitates trading and custody of assets. Examples include Binance, Coinbase, and Kraken.
Cold Wallet
A cryptocurrency wallet that is not connected to the internet, providing enhanced security for long-term storage. Also known as cold storage or hardware wallet.
Consensus Mechanism
The method by which a blockchain network agrees on the current state of the ledger. Common mechanisms include Proof of Work (PoW) and Proof of Stake (PoS).
D
DAO (Decentralized Autonomous Organization)
An organization governed by smart contracts and community voting rather than centralized leadership. DAOs enable decentralized decision-making and governance.
dApp (Decentralized Application)
An application that runs on a decentralized network (usually a blockchain) rather than centralized servers. dApps are censorship-resistant and operate without a central authority.
DeFi (Decentralized Finance)
Financial services built on blockchain technology that operate without traditional intermediaries like banks. DeFi includes lending, borrowing, trading, and yield farming protocols.
DEX (Decentralized Exchange)
A cryptocurrency exchange that operates without a central authority, allowing peer-to-peer trading directly from users' wallets. Examples include Uniswap, SushiSwap, and PancakeSwap.
DYOR (Do Your Own Research)
A common crypto acronym reminding investors to conduct independent research before making investment decisions rather than relying solely on others' advice.
E
Ethereum (ETH)
The second-largest cryptocurrency by market cap, known for its smart contract functionality and hosting thousands of decentralized applications. Ethereum transitioned to Proof of Stake in 2022.
F
FDV (Fully Diluted Valuation)
The theoretical market capitalization of a cryptocurrency if all tokens were in circulation. Calculated by multiplying the current price by the maximum token supply.
FOMO (Fear Of Missing Out)
The anxiety of missing potential profits, often leading to impulsive buying decisions during price rallies. A common psychological factor in crypto trading.
FUD (Fear, Uncertainty, and Doubt)
Negative information or misinformation spread to create fear and uncertainty about a cryptocurrency or project, often to manipulate prices.
G
Gas Fees
Transaction fees paid to validators or miners for processing and validating transactions on a blockchain network. Gas fees vary based on network congestion and transaction complexity.
H
HODL
A misspelling of 'hold' that became a popular meme in the crypto community, referring to the strategy of holding cryptocurrency long-term despite market volatility.
Hot Wallet
A cryptocurrency wallet connected to the internet, offering convenience for frequent transactions but with higher security risks compared to cold wallets.
I
ICO (Initial Coin Offering)
A fundraising method where new cryptocurrency projects sell tokens to early investors. ICOs were popular in 2017-2018 but have largely been replaced by other methods like IDOs and IEOs.
Impermanent Loss
The temporary loss of funds experienced by liquidity providers in DeFi protocols when the price of deposited tokens changes compared to when they were deposited.
L
Layer 1
The base blockchain network layer that processes and finalizes transactions. Examples include Bitcoin, Ethereum, Solana, and Cardano.
Layer 2
A secondary framework built on top of a Layer 1 blockchain to improve scalability and reduce transaction costs. Examples include Arbitrum, Optimism, and Polygon.
Liquidity
The ease with which a cryptocurrency can be bought or sold without significantly affecting its price. High liquidity indicates a healthy and active market.
Liquidity Pool
A collection of funds locked in a smart contract that provides liquidity for decentralized exchanges. Liquidity providers earn fees from trades executed against the pool.
M
Market Cap (Market Capitalization)
The total value of a cryptocurrency, calculated by multiplying the current price by the circulating supply. Used to rank and compare cryptocurrency projects.
Memecoin
A cryptocurrency inspired by internet memes or jokes, often with no utility beyond speculation and community engagement. Examples include Dogecoin and Shiba Inu.
MEV (Maximal Extractable Value)
The maximum profit that can be extracted from block production beyond standard block rewards and gas fees, often through transaction reordering or front-running.
Mining
The process of validating transactions and adding new blocks to a blockchain using computational power. Miners are rewarded with newly minted cryptocurrency and transaction fees.
N
NFT (Non-Fungible Token)
A unique digital asset verified using blockchain technology, representing ownership of items like art, collectibles, and virtual real estate. Unlike cryptocurrencies, NFTs are not interchangeable.
P
Proof of Stake (PoS)
A consensus mechanism where validators are chosen to create new blocks based on the amount of cryptocurrency they stake. More energy-efficient than Proof of Work.
Proof of Work (PoW)
A consensus mechanism where miners compete to solve complex mathematical problems to validate transactions and create new blocks. Used by Bitcoin and previously Ethereum.
R
Restaking
The process of using already-staked cryptocurrency to secure additional blockchain protocols or services, earning additional rewards. Popularized by protocols like EigenLayer.
Rollup
A Layer 2 scaling solution that executes transactions off-chain and posts transaction data to Layer 1 for security. Types include Optimistic Rollups and ZK-Rollups.
Rug Pull
A type of scam where cryptocurrency project developers abandon a project and run away with investors' funds. Common in DeFi and NFT projects with low liquidity.
RWA (Real World Assets)
Tokenized representations of physical or traditional financial assets on blockchain, such as real estate, commodities, or bonds. Bridges traditional finance with DeFi.
S
Sharding
A scaling technique that divides a blockchain network into smaller partitions (shards) to process transactions in parallel, improving throughput and efficiency.
Sidechain
An independent blockchain connected to a main chain via a two-way bridge, allowing assets to move between chains while processing transactions independently.
Smart Contract
Self-executing code stored on a blockchain that automatically enforces agreements when predetermined conditions are met. The foundation of DeFi and dApps.
Solana (SOL)
A high-performance Layer 1 blockchain known for fast transaction speeds and low fees. Solana uses a Proof of History (PoH) consensus mechanism combined with Proof of Stake.
Stablecoin
A cryptocurrency designed to maintain a stable value by pegging to a reserve asset like the US dollar. Examples include USDT, USDC, and DAI.
Staking
The process of locking cryptocurrency in a wallet to support blockchain operations (like validation) in exchange for rewards. Common in Proof of Stake networks.
T
Token
A digital asset created on an existing blockchain. Tokens can represent currencies, utility, governance rights, or ownership of assets.
Token Unlock
The scheduled release of previously locked tokens into circulation, often granted to team members, investors, or advisors. Can affect token price due to increased supply.
TVL (Total Value Locked)
The total value of assets deposited in a DeFi protocol or blockchain network. TVL is a key metric for assessing the size and health of DeFi platforms.
V
Validator
A network participant in Proof of Stake blockchains responsible for verifying transactions and creating new blocks. Validators stake cryptocurrency as collateral.
Vesting
A process where tokens are released gradually over time to team members, advisors, or investors, preventing immediate sell pressure and aligning long-term incentives.
W
Wallet
A software or hardware tool used to store, send, and receive cryptocurrency. Wallets hold private keys that grant access to blockchain assets.
Web3
The next evolution of the internet built on blockchain technology, emphasizing decentralization, user ownership, and peer-to-peer interactions without intermediaries.
Whale
An individual or entity holding a large amount of cryptocurrency, capable of influencing market prices through large trades.
Whitepaper
A technical document published by cryptocurrency projects outlining their technology, use case, tokenomics, and roadmap. Essential for evaluating new projects.
Y
Yield Farming
A DeFi strategy where users provide liquidity or stake tokens in protocols to earn rewards, often in the form of additional tokens. High-risk, high-reward activity.
Z
Zero-Knowledge Proof (ZK)
A cryptographic method that allows one party to prove knowledge of information without revealing the information itself. Used in privacy-focused blockchains and ZK-Rollups.
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