Crypto Glossary

An airdrop is a free distribution of tokens to users, usually for past activity in a project or to draw attention to a launch. Some are genuinely valuable, and they are also the disguise most wallet-draining scams choose.

An altcoin is any cryptocurrency other than bitcoin. The word lumps everything together, from Ethereum, the second largest network, to a token minted yesterday as a joke, so on its own it says nothing about quality.

Anti-Money Laundering — a set of policies and procedures that exchanges and financial institutions use to prevent illicit financial activity. In practice, this means monitoring transactions for suspicious patterns, applying withdrawal limits, and requiring identity verification (KYC) before larger transactions — requirements are typically set by the regulator in the exchange's operating jurisdiction.

The highest price an asset has ever reached over its entire trading history.

A token standard on the BNB Smart Chain (BSC), structurally compatible with ERC-20 but with lower transaction fees.

Bitcoin is the first cryptocurrency, launched in 2009 by an author writing as Satoshi Nakamoto. It runs without a bank or intermediaries: a network of independent computers verifies transactions, and there will never be more than 21 million coins.

A block explorer is a website for looking up any transaction, address or block on a network. It needs no account and shows the same data any node sees: the blockchain is public in full.

A blockchain is a shared database held simultaneously by thousands of independent computers. Records are gathered into blocks, each block references the one before it, and an old record cannot be altered without breaking the whole chain after it.

A bridge moves assets between blockchains. Tokens do not travel: the original is locked on one network while a wrapped copy is issued on the other. Bridges are the most attacked part of crypto infrastructure.

A CEX is a centralised exchange: a company that holds your funds, runs the accounts, and matches buy and sell orders in an order book. Fast and convenient, but it holds the keys to the coins, not you.

A cold wallet keeps keys on something that is never connected to the internet. Transactions are signed inside the device, so malware on the computer has no path to the key.

A consensus mechanism is the rule by which a network with no centre decides which version of history is correct. It sets who writes the next block and what keeps a participant honest.

A custodial wallet is an account where a company holds the keys: an exchange, a broker, a payment service. What you own is not coins but that company's obligation to hand them over on request.

A DAO is an organisation where holders of a token vote on decisions and a smart contract carries them out. No director, no board: if a proposal passes, code executes it automatically.

DeFi is financial services built on smart contracts that run without a bank or a broker: swapping, lending, earning on deposits. The rules live in code, any wallet can use them, and there is no intermediary able to say no.

A DEX is an exchange built on smart contracts: no accounts, no registration, no custody of your funds. You swap tokens straight from your own wallet, and the price comes from a liquidity pool rather than an order book.

ERC-20 is the token standard on Ethereum: a set of rules a contract follows so wallets and exchanges understand the token without bespoke support. Most well-known tokens, USDT and USDC among them, are issued under it.

A platform for buying, selling, and trading cryptocurrencies. It can be centralized (CEX) or decentralized (DEX).

Traditional government-issued currency not backed by a physical commodity, such as the US dollar, euro, or Czech koruna — as opposed to cryptocurrency.

Fear of Missing Out — the emotional state in which an investor buys an asset near the top of a rally out of fear of "missing the move," which often leads to losses.

Fear, Uncertainty and Doubt — the spread of negative or alarming information about a project, often deliberate, intended to push its price down.

Gas is the fee for computation on a network. You pay for the work the network does rather than for the amount you send: a plain transfer is cheap, a swap through a smart contract costs more, and the price climbs when the network is busy.

The very first block in a blockchain, from which the entire chain begins. Bitcoin's genesis block was created on January 3, 2009.

A tiny denomination of ether (ETH) commonly used to express gas fees. One ETH equals one billion gwei.

A halving is a pre-programmed cut of the mining reward by half. In bitcoin it happens every 210,000 blocks, roughly once every four years, and halves the rate at which new coins appear.

A hard fork is a change to a network's rules that old software cannot accept. Nodes that do not upgrade stop recognising new blocks, and when enough disagree the chain splits into two separate networks.

A hash is a fixed-length string a mathematical function produces from any input. Changing one character of the input changes the result completely, and the input cannot be recovered from the hash.

Crypto slang (originating from a typo of "hold") for a strategy of holding cryptocurrency long-term regardless of market swings.

A hot wallet is an app on a phone, computer or browser where the keys live on a device that is online. Convenient for everyday amounts and for connecting to services, and less safe than cold storage for exactly that reason.

An ICO is a sale of a project's tokens before the product exists, to raise money for development. The model boomed in 2017 and largely vanished after regulators judged most such sales to be securities offerings.

Initial DEX Offering — a token launch that takes place directly on a decentralized exchange, without a centralized intermediary.

KYC is the mandatory identity check a service runs on a customer: passport, selfie, sometimes proof of address and source of funds. Without it a regulated venue is not allowed to open your account or move fiat for you.

A Layer 2 is a network built on top of a base blockchain: it processes transactions itself and posts only a compressed summary back to the main chain. Hence fees in cents rather than dollars, while keeping the base layer's security.

Leverage means trading a position larger than your own money: the exchange supplies the rest and you post margin as security. Profit and loss are calculated on the whole position, so a small price move produces a large result in either direction.

A limit order is an instruction to buy or sell at a price you name, or better. It waits in the book and may never fill, but if it fills it does so on your terms, with no slippage.

Liquidation is the forced closing of a position by the exchange once the collateral no longer covers the loss. The timing is not yours: the position is closed automatically and the margin you put up is gone.

A liquidity pool is a reserve of two tokens held in a smart contract that a DEX swaps against. The price comes from the ratio between the assets rather than an order book, and ordinary users fund it in exchange for a share of the fees.

Market cap is the price of a coin multiplied by the number of coins in circulation. It shows the size of an asset rather than how much money went into it, and it is the figure projects are compared by.

A market order buys or sells immediately at the best available prices. It almost always fills and fills at once, but the price comes from the book rather than from you: on a thin pair it lands worse than the screen showed.

Mining is the process where computers compete for the right to write the next block and are paid in new coins for it. The winner is decided by grinding through candidates, meaning by electricity spent, not by a vote.

An NFT is a token that exists in a single copy and therefore is not interchangeable: one bitcoin equals any other, while two NFTs are always different. It is how a claim to one specific thing is recorded on a blockchain: an image, an in-game item, a ticket.

A node is a computer that keeps a copy of the blockchain and checks every transaction and block against the network's rules. It is nodes, not miners, that decide which rules count as valid.

A non-custodial wallet is one whose keys only you hold. Nobody can freeze the funds or refuse a transfer, and nobody can help if the keys are lost or handed to a scammer.

A number used once, which miners search for when mining a block in Proof-of-Work networks; also a counter that prevents a transaction from being replayed on an account.

An order book is the list of all live offers to buy and sell an asset, sorted by price. It shows more than the rate: it shows depth, meaning how much can be bought or sold before the price moves.

P2P is a trade directly between two people: one sells crypto, the other pays in fiat, and the platform holds the coins in escrow until both sides confirm. It is how people buy and sell where no direct bank rail to an exchange exists.

A private key is the secret number that signs transfers from your address. It is ownership itself: whoever knows the key controls the coins, and no password change or support ticket can undo that.

Proof-of-Stake gives the right to write a block not to the strongest computer but to whoever has locked coins in the network. The stake is the guarantee of honesty: misbehave and part of it is burned.

Proof-of-Work is how a network agrees who writes the next block: the right goes to whoever first finds the solution to a computational puzzle. The search costs electricity, and that cost is what stops the history being rewritten.

A public key is the other half of a key pair, derived from the private one. An address for receiving funds comes from it, and it can be shared freely: the private key cannot be computed back from it.

A rug pull is when a project's creators take investors' money and vanish: they drain the liquidity pool, dump their entire token supply, or simply switch the site off. The price collapses to near zero within minutes.

The smallest unit of Bitcoin, equal to one hundred-millionth (0.00000001) of a BTC. Named after Bitcoin's creator.

A seed phrase is a set of 12 or 24 words from which every key in a wallet is regenerated. It is the access itself: whoever knows the phrase owns the funds, and if you lose it there is no way to recover it.

The gap between the price you saw when you sent a trade and the price it actually filled at. It shows up as a slightly worse rate than the one on screen, and it grows the thinner the market is and the faster the price moves.

A smart contract is a program that lives on a blockchain and executes automatically when its conditions are met. Its code is public, it usually cannot be changed after deployment, and nobody can halt its execution.

A backwards-compatible update to a protocol's rules, where old nodes can continue operating on the upgraded network without being forced to update.

A stablecoin is a cryptocurrency pegged to the value of an ordinary currency, most often the dollar. One USDT or USDC should always be worth about a dollar, which is why people park money in them between trades and settle payments with them.

Staking means locking coins in a network to earn a reward. Your coins help confirm transactions under Proof-of-Stake, and the network pays a percentage for it, usually 3–12% a year.

Tokenomics is a token's issuance and distribution rules: how many exist, who received them, when they unlock and what burns them. These numbers set the future pressure on the price long before any news about the project.

A transaction is a record of coins moving from one address to another, signed with the sender's private key. Once it lands in a block and gathers confirmations it becomes part of the blockchain permanently: it cannot be reversed.

An equivalent of the ERC-20 standard, but on the TRON network. It is widely used for USDT transfers — fees on TRON are typically much lower than on Ethereum.

A wallet is software or a device that stores your private keys and signs transactions with them. The coins stay on the blockchain; the wallet holds the right to move them, which is why losing a wallet with no backup means losing the money.

An investor or wallet holding a very large amount of cryptocurrency. The actions of whales (large buys or sells) can noticeably move an asset's price.

A whitepaper is the document in which a project states the problem it solves, how it works technically and how the tokens are distributed. It is the first thing worth reading and the first thing that gets faked.

A DeFi strategy in which a user supplies assets to protocols (for example, liquidity pools) in order to earn interest income or additional tokens.