Crypto Glossary: 80 Terms in Plain English

Definitions written to be read by someone who has not read the other definitions yet. Where a term is commonly misused, the entry says so.

The basics

Address. The string you send crypto to, derived from a public key. Safe to share; knowing it does not give access to anything.

Airdrop. Free tokens distributed to wallets, usually to bootstrap a user base. Also a common scam format: a fake airdrop claim page collects an approval and drains the wallet.

Altcoin. Any cryptocurrency that is not bitcoin. A fading term, since the category now includes thousands of unrelated things.

Blockchain. A shared record of transactions, stored across many independent computers, where each batch of entries is cryptographically linked to the one before it so old entries cannot be quietly rewritten.

Block. One batch of transactions added to the chain.

Block explorer. A website for reading a blockchain: look up a transaction, an address, or a contract. Etherscan and mempool.space are common examples.

Block reward. New coins paid to whoever produces a block. The main way new supply enters circulation.

Coin vs token. A coin is native to its own blockchain (BTC, ETH). A token is issued by a contract on top of someone else’s chain (most things ending in -USD, most project tokens).

Confirmation. A block added on top of the block containing your transaction. More confirmations, more certainty it is permanent.

Consensus mechanism. The rules by which a network agrees on what happened. Proof of work and proof of stake are the two main families.

Cryptocurrency. A digital asset whose ownership is recorded on a blockchain and transferred by cryptographic signature rather than by an intermediary.

Wallets and keys

Cold storage. Keys kept on a device that never connects to the internet.

Custodial wallet. A wallet where someone else holds the keys, an exchange account being the obvious case. Convenient, and you are trusting a company.

Hardware wallet. A physical device that stores keys and signs transactions internally, so the key never reaches an internet-connected computer.

Hot wallet. A wallet whose keys live on an internet-connected device. Convenient, more exposed.

Multisig. A wallet requiring several keys to authorise a transaction, e.g. 2 of 3. Removes the single point of failure.

Non-custodial. You hold the keys. Nobody can freeze it, and nobody can help you if you lose the phrase.

Passphrase (25th word). An optional extra word added to a seed phrase, producing an entirely different set of wallets. Adds security and one more thing to lose.

Private key. The secret that authorises spending. Never shared, with no exceptions.

Public key. Derived from the private key; your address is derived from it. Safe to publish.

Seed phrase / recovery phrase. Twelve or twenty-four words that regenerate all your keys. Whoever has them has the coins.

Self-custody. Holding your own keys rather than leaving assets with a platform.

Transactions and fees

Base fee. On Ethereum, the minimum per-gas price set by the protocol. Destroyed rather than paid to a validator.

Confirmed / pending. Pending means broadcast but not yet in a block. Confirmed means included.

Dust. An amount so small that moving it costs more in fees than it is worth.

Gas. A measure of computational work required by a transaction. Fees are gas used multiplied by gas price.

Gas limit. The maximum gas you authorise. Too low and the transaction fails, and you still pay.

Mempool. The waiting room of broadcast-but-not-yet-included transactions.

Nonce. A counter ensuring transactions from one address execute in order.

Priority fee / tip. Extra paid to jump the queue.

Slippage. The difference between the expected price of a trade and the price actually received.

Transaction hash (txid). The unique identifier for a transaction. The first thing any support desk will ask for.

Networks and scaling

Bridge. A mechanism for moving value between blockchains. Historically one of the most-exploited pieces of infrastructure in crypto.

EVM. The Ethereum Virtual Machine. “EVM-compatible” means a chain runs the same contract format, so tools and addresses carry over.

Finality. The point at which a transaction can no longer be reversed by a chain reorganisation.

Fork. A change to the rules. A soft fork is backwards-compatible; a hard fork is not and can split the chain into two networks.

Layer 1. A base blockchain: Bitcoin, Ethereum, Solana.

Layer 2. A network built on top of a layer 1 that processes transactions more cheaply and settles back to it in batches. Arbitrum, Optimism, Base.

Node. A computer holding a copy of the chain and validating new blocks against the rules.

Reorg. When a chain discards recent blocks in favour of a different version of history. Usually shallow and harmless; the reason to wait for confirmations.

Rollup. The common layer 2 design: execute off-chain, post compressed data or proofs on-chain.

Throughput / TPS. Transactions per second. Frequently quoted in marketing, rarely comparable between chains.

Mining and staking

Delegation. Assigning your stake to a validator without handing over custody.

Hash rate. Total computing power securing a proof-of-work network.

Halving. A scheduled reduction of Bitcoin’s block reward, occurring roughly every four years.

Liquid staking. Staking via a protocol that gives you a tradeable receipt token, so the position is not locked.

Mining. Competing to produce blocks under proof of work, using computation.

Proof of stake. Block production rights allocated by coins locked as collateral, with penalties for misbehaviour.

Proof of work. Block production rights won by expending computation.

Slashing. A penalty destroying part of a validator’s stake for misbehaviour or prolonged downtime.

Staking. Locking coins as collateral to help secure a proof-of-stake network in exchange for rewards.

Unbonding period. The delay between requesting an exit from staking and receiving your coins.

Validator. A participant that proposes and attests to blocks on a proof-of-stake network.

Trading and markets

Ask / bid. The lowest price a seller will accept; the highest a buyer will pay.

CEX. Centralised exchange. A company holding your funds and matching trades internally, such as Collect & Exchange.

DEX. Decentralised exchange. A contract that swaps assets directly from your wallet.

DCA (dollar-cost averaging). Buying a fixed amount on a fixed schedule regardless of price.

Limit order. An order that executes only at your specified price or better.

Liquidity. How much can be traded without moving the price. Thin liquidity means bad fills.

Liquidity pool. Assets deposited into a contract so others can trade against them, with depositors earning a share of fees.

Market cap. Price multiplied by circulating supply. A weak measure, easily inflated by a small float.

Market order. An order that executes immediately at the current price.

Spread. The gap between bid and ask. On “commission-free” platforms, where the fee hides.

Volume. Amount traded over a period. Frequently faked on smaller venues.

DeFi and contracts

AMM (automated market maker). A formula-based pricing mechanism used by DEXs instead of an order book.

Approval. Permission granted to a contract to move a specific token from your wallet. Unlimited approvals do not expire and are a common attack vector.

Collateral. Assets locked to back a loan or a stablecoin.

DeFi. Financial services such as lending, trading and derivatives, built from smart contracts rather than companies.

Impermanent loss. The loss a liquidity provider takes versus simply holding, when pooled asset prices diverge. The name understates it; it becomes permanent when you withdraw.

Liquidation. Forced closure of a collateralised position when collateral falls below a threshold.

Oracle. A service feeding external data, usually prices, to a contract. A frequent target, since manipulating the feed manipulates the contract.

Smart contract. A program deployed on a blockchain that executes exactly as written and cannot be edited afterwards.

TVL (total value locked). Value deposited in a protocol. A popularity metric, not a safety metric.

Yield farming. Moving assets between protocols chasing the highest return. High effort, high risk, frequently the wrong trade after fees.

Slang you will see

Diamond hands / paper hands. Holding through a fall; selling in a panic.

DYOR. “Do your own research.” Also used as a disclaimer by people promoting something.

FOMO. Buying because a price is rising and you feel late.

FUD. Negative information, dismissed as scaremongering. Sometimes accurate, and the label is often used to avoid engaging with it.

GM. “Good morning.” A greeting, nothing more.

HODL. Holding regardless of price. From a typo in a 2013 forum post.

Maxi. Someone who believes only one asset matters.

Rug pull. A project’s creators taking the money and abandoning it.

Whale. A holder large enough that their trades move the market.

Wen. “When.” Usually asking when a token or feature will arrive.