Crypto Terms You Need to Know

Whether you’re just starting to invest in cryptocurrency or you’re simply looking to participate in the conversation, we’ve got you covered. Learn the most important blockchain and crypto terms and jargon here.


Airdrop

When free crypto tokens are given out to promote a new project or encourage adoption. Basically, a marketing campaign.


Altcoin

Any coin that isn’t Bitcoin. That’s simply because Bitcoin was the first, so everything else is termed an “alternative coin.”


Bear market

When prices fall by 20% or more from recent highs.


Bitcoin

The first cryptocurrency, launched on January 3, 2009.


Blockchain

A decentralized, digital leger that records cryptocurrency transactions in a chronological order. In other words, this is the record-keeping system that underlies cryptocurrencies. The beauty of this system is that it’s both permanent and unchangeable, making it nearly impossible to hack or falsify.


Bull market

A prolonged period of rising prices. Technically, a bull market is when stock prices rise by 20% after two declines of 20% each.


Coin

A cryptocurrency. Some blockchains have the same name for their coin and the network, others have different names for each. For example, Ethereum is the blockchain network that powers the cryptocurrency called ether (ETH).


Cold Wallet/Cold Storage

A method of storing your cryptocurrency offline, typically in physical devices that look like a USB drive. Sometimes offline computers or even paper wallets are used.


Cryptocurrency

Digital, decentralized currency. (Learn more)


Cryptography

The study and practice of encoding (encrypt) and decoding (decrypt) data. Basically, fancy math.


Decentralization

If a system is decentralized, it means that nodes or actors (individual computers or people) are working together to achieve a common goal. This is the opposite of a system that has a central authority.


Decentralized Finance (DeFi)

Financial activity that is conducted without an intermediary, like a bank or government. In the world of crypto, DeFi is more of an umbrella term used to describe the vision of the future where blockchains allow us to create a new, internet-native financial system.


Decentralized Applications (DApp)

Similar to the digital apps you have on your phone, dapps run autonomously on distributed networks. Dapps utilize smart contracts so that actions are triggered automatically, without human involvement. The idea is to use blockchain to keep the users’ data out of the hands of any one actor or organization “behind” the app.


Digital currency

A currency that only exists in a digital form.


Ethereum

The second largest cryptocurrency by trade volume, behind Bitcoin. The Ethereum network allows developers to create apps (dapps) and has a crypto called ether. Notably, the Ethereum network is also able to execute smart contracts.


Exchange

A digital marketplace where you can buy and sell cryptocurrency.


Fiat

Legal tender backed by a central government. The U.S. dollar or the British pound are fiats.


Gas

Specific to the Ethereum platform. Gas is a fee that developers have to pay the network in order to use it. You pay gas in ether, the native cryptocurrency on Ethereum. It’s called “gas” because it’s what it takes to “fuel” the network (technically, gas is the computational effort to conduct a transaction, smart contract, or launch a dapp on the Ethereum network).


Gas Price

The price a user is willing to pay for a transaction on the Ethereum platform.


Halving

A 50% (halved) reduction in mining block rewards for a particular currency. The purpose of this feature is to arrive at a finite supply of a crypto asset. For Bitcoin, this happens about every four years.


HODL

Common crypto slang, this is an intentional misspelling of “hold.” It has now also come to stand for “hold on for dear life.” The idea promoted is to never sell crypto.


Hash

An output of a hashing algorithm (fancy math) that creates a unique string of numbers and letters. The same data will always produce the same hashed value, but it’s a one-way function. In other words, it’s nearly impossible to reverse the computation, and thus nearly impossible to hack or crack the blockchain.


Hot Wallet

Cryptocurrency storage that is connected to the Internet. These wallets make accessing crypto more convenient, but they are more susceptible to hacking.


Initial Coin Offering (ICO)

This is the crypto equivalent of an IPO (initial public offering). A company will launch an ICO as a way to raise money to support their project.


Know Your Customer (KYC)

A standard compliance procedure in the finance industry. A financial institution is obligated to carry out certain identity and background checks on a person before they become a customer. This verification clashes with the ideals of cryptocurrency, which is by definition decentralized, in part to keep users’ personal information private.


Market Capitalization

The total value of a project, company, or entity. For cryptocurrency, “market cap” is calculated by taking the current price of a project’s token (coin) and multiplying it by the total circulating supply (however many coins have been mined).


Mining

The process of adding blocks to a blockchain to verify transactions. It is also the process through which new coins are added.


Node

A computer that is part of a blockchain network. This is the most basic unit of the blockchain infrastructure.


Non-fungible Tokens (NFTs)

Digital tokens used to prove ownership of unique (non fungible) items. These items can be tangible (like physical art) or intangible (like digital art, or a membership to a club), but the key is that they can’t be copied, substituted, or subdivided. NFTs are most often held on the Ethereum blockchain.


Peer-to-peer (P2P)

A distributed system in which two users interact directly, with no third party or intermediary. You’re most likely used to a client-server network, where you (a client) are connecting through the internet to a central server that manages the resources and holds data. In a P2P network, all the computers are connected directly so that every computer shares resources.


Public Key

A cryptocurrency wallet’s address. Just like with your bank account number, a public key can be shared so people or institutions can send you money, or can take it with your authorization.


Private Key

The encrypted code that gives you direct access to your cryptocurrency. As is true with the password to your bank account, you don’t want to share your private key, nor do you want to forget it.


Smart Contract

Algorithms that trigger specific actions when predetermined conditions are met. It’s sort of like an “If…then” statement. The cool part is it happens automatically, without any human interaction. That means no paperwork, no lag, no time spent fixing human errors, no manually filing important documents.


Stablecoin

A type of digital asset that is tied to another non-digital currency or commodity (like gold or the U.S. dollar) in order to minimize volatility (be “stable”).


Token

A unit of value on the blockchain. Whereas coins are meant to be used for transactions, tokens can hold other value (like holding digital files or other tradable assets). You can buy tokens with coins.


Wallet

A place to store cryptocurrency holdings. Many exchanges offer digital wallets.


Whale

A person or institution that holds a lot of crypto.


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