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The terms that come up again and again when working with crypto-assets, explained plainly and assuming nothing. They are grouped by topic and ordered to be read top to bottom, but each one stands on its own.
Last updated: 12 October 2026 · 95 terms
A ledger shared across many computers where transactions are grouped into blocks chained to one another. Nobody holds a privileged copy, and altering something old would mean redoing everything after it on most copies, which is what makes it hard to falsify.
A digital asset transferred and held on a blockchain, with no bank keeping the accounts. The word covers both coins with their own network, such as bitcoin, and tokens issued on someone else's.
The first cryptocurrency, running since January 2009. It has a twenty-one million unit cap written into its code and uses proof of work. It tends to set the tone for the market: when bitcoin moves, almost everything else follows.
Ethereum's native currency. It pays for the cost of running transactions and contracts on that network. Ethereum left proof of work in September 2022 and now runs on proof of stake.
Any cryptocurrency that isn't bitcoin. It's a leftover from the early years and says very little today: it lumps together networks with billions in use and tokens with nothing behind them.
A unit issued on an existing blockchain rather than having its own network. It can represent a stake, a usage right, a vote, a real asset or nothing at all. What it is worth depends on the rights it grants, not on the technology.
A non-fungible token: each unit differs from the others and can be identified separately. It became famous through digital collectibles, but its durable use is proving title to something unique, on screen or off it.
A program that lives on the blockchain and runs on its own when the conditions written into it are met. It isn't a contract in the legal sense: it does what its code says, including whatever the code gets wrong.
The cost of running an operation on a network. It is paid in the native currency and rises with congestion, because transactions compete to get into the next block. For a product with users, high gas is a conversion problem, not just a pricing one.
A fixed-length fingerprint computed from a piece of data. Change one comma in the original and the whole fingerprint changes, and the data can't be reconstructed from it. It is what chains blocks together and what lets you verify nothing has been touched.
A computer that keeps a copy of the blockchain and validates what comes in. The more independent nodes, the harder the network is to manipulate. It's the difference between a public blockchain and a company database under another name.
The rules by which thousands of nodes that don't know each other agree on which transactions are valid and in what order. Proof of work and proof of stake are the two most widespread.
The consensus bitcoin uses. Miners compete by spending electricity on a computational puzzle; whoever solves it proposes the next block and gets paid. It is expensive to attack precisely because it is expensive to run.
The consensus Ethereum has used since 2022. Instead of burning electricity, validators lock up their own coins as collateral; validate badly and they lose it. It consumes a fraction of the energy of proof of work.
Competing to create the next block on a proof-of-work network, in exchange for the reward and the fees. Today it is an industrial activity with purpose-built hardware, not something done on a home graphics card.
A facility with hundreds or thousands of machines dedicated to mining, usually where electricity is cheap. It is the industrial form of mining and bears little resemblance to the image of a computer at home.
The halving of the reward bitcoin miners receive, scheduled every 210,000 blocks, roughly four years. It's the mechanism that winds issuance down towards the twenty-one million cap.
A change to a network's rules. If the change is backwards compatible it's called soft; if it isn't, the chain splits in two and each goes its own way, as happened with Bitcoin and Bitcoin Cash in 2017.
The bridge that feeds outside data into a blockchain: a price, an exchange rate, the outcome of something. A contract can't query the internet by itself, so the oracle ends up being the weak point of many systems.
A direct exchange between two parties, with no intermediary holding the money in between. In crypto the term covers both the network itself and the markets where two people agree a price and settle between themselves.
The property of a blockchain whereby a confirmed transaction is never deleted or edited. It has an upside for auditing and a downside for privacy: what gets written stays, and anyone who can tie an address to a person can read their whole history.
The tool for inspecting what happens on a network: transactions, addresses, contracts. It is how you check what a project claims rather than taking its word, and it's open to anyone.
The testnet is the test network, with worthless coins, where things are rehearsed before going live. The mainnet is the real network, where a mistake costs real money and can rarely be undone.
The tool that stores the keys giving access to funds. The wallet doesn't hold the coins: it holds the keys. Losing the keys means losing access, and there is no customer service desk that can fix it.
The secret number that authorises moving funds from an address. Whoever holds it is in charge. It is never shared, not with technical support, and not stored in a screenshot or a note on your phone.
The value derived from the private key, from which the address you share to receive funds is generated. It can be published safely: the private key can't be worked out from the public one.
The twelve or twenty-four words that can regenerate an entire wallet and all its keys. It is the backup and also the single point of failure: whoever reads it takes the funds. Keep it offline, and in more than one physical place.
One where you hold the keys and nobody else can move the funds. In exchange, nobody can recover them if you lose access. The opposite is a custodial wallet, where a third party keeps the keys for you.
One where a third party, usually an exchange, keeps the keys. It's more convenient and the account can be recovered, but the funds depend on that company staying solvent and operating. Hence the saying: not your keys, not your coins.
A setup where moving funds requires several signatures from a defined set, for example two of three. It's the standard for company treasuries and for projects: it removes the chance that one person, or one compromised device, can empty the account.
The usual way to share an address without typing it. It avoids transcription errors, which in crypto are irreversible, but it doesn't protect against someone swapping the code: always check the first and last characters of the address.
A cryptographic technique proving a signature came from one member of a group without revealing which. It underpins Monero's privacy and is one reason that kind of coin disappears from regulated platforms.
A review of the code by a specialised third party before deployment. It reduces risk but doesn't remove it: many exploited protocols had been audited. What matters is who did it, which version they reviewed and what they left out.
The fraud where the team pulls the liquidity or sells its share and disappears. It can be spotted beforehand by the usual signals: an anonymous team with no track record, unlocked tokens and pressure to get in quickly.
A platform where crypto-assets are bought and sold. Centralised ones work like a broker: they hold the funds and match orders on their own books. In the European Union they have been regulated by MiCA since late 2024.
A market that runs on smart contracts, with nobody holding the funds: you trade from your own wallet. In exchange there is no one to reverse a mistake and no support desk, and liquidity can be far thinner than on a centralised venue.
Exchanging one token directly for another in a single transaction, usually on a DEX, without passing through euros or dollars. The price depends on the liquidity available at that moment.
The mechanism for moving value from one blockchain to another, usually by locking the asset at the origin and issuing a representation at the destination. Historically one of the most attacked pieces in the sector: it concentrates a lot of value in a single contract.
Money issued by a state and backed by its authority rather than by a commodity: euro, dollar, real. In crypto the term distinguishes moving in and out of the traditional banking system from moving between crypto-assets.
A token designed to hold a steady value against a currency, almost always the dollar. Some are backed by audited real reserves and some hold the peg through algorithmic mechanisms, which is where the loudest collapses have happened.
Price multiplied by circulating units. It gives a sense of size but is easily gamed: if only two per cent of supply circulates, a high price in a thin market inflates a figure nobody could realise by selling.
What the project would be worth if every planned token were already circulating. Comparing market cap with FDV tells you how much supply is still coming, which is the question that most shapes the future price and the one least often asked.
The ability to buy or sell without moving the price against you. An illiquid asset can show a flattering quote and be impossible to sell in size. In tokenisation it's the investor's first doubt, and it has to be answered before they ask.
The gap between the price you expected and the one you end up paying, because your own order moves the market while it executes. The thinner the liquidity and the larger the order, the worse it gets.
Whoever posts buy and sell orders continuously so there is always someone to trade with, earning the spread between them. In token launches it's a standard piece, and the terms they work on are worth knowing.
Derivative contracts that let you bet up or down with leverage and no expiry date. They move more volume than the spot market and are the fastest way to lose your capital if you don't understand liquidation.
A sustained rise in which almost everything goes up at once, the good and the bad. It's when luck is easiest to mistake for judgement.
The opposite phase: sustained falls, thin volume and projects disappearing. Historically it's when the things that work in the next cycle get built.
A holder with positions large enough to move the price with their own trades. In illiquid assets a handful of addresses hold almost everything, and you can check that on a block explorer.
Someone left holding an asset that no longer rises, usually because they bought late and didn't sell. Community slang, not a technical concept.
Someone who has just arrived in the sector. It's used mockingly, though most of the expensive mistakes are made by people who think they no longer are one.
The set of financial services that run on smart contracts instead of an institution: trading, lending, derivatives or liquidity management, with nobody holding the funds along the way.
Locking up your own coins to help validate a proof-of-stake network in return for a reward. The yield comes from issuance and network fees, and it carries risk: validating badly is penalised with part of the deposit.
Reusing coins already staked as collateral for services beyond the main network, in return for more yield. It stacks risks: a penalty in any of those services hits the same deposit.
A token representing a staked position that can be moved or used as collateral while the original deposit stays locked. It solves staking's illiquidity and in exchange adds one more layer to depend on.
A contract where several people deposit two assets so others can swap between them, sharing the fees. It's what replaces the order book on a DEX.
The formula that sets the price inside a pool from the ratio between the two assets, with no order book and no intermediary. It's the mechanism that made decentralised trading viable.
What a liquidity provider loses when the prices of the two assets diverge, compared with simply holding them. It's called impermanent because it disappears if the price comes back, and permanent the moment you withdraw.
The value deposited in a protocol. It's the sector's most quoted metric and also its most misleading: it rises when the price of what's deposited rises without a single new euro arriving, and the same capital is counted several times if it passes through several protocols.
A contract where funds are deposited and an automated strategy puts them to work: lending them, providing liquidity, or combining several things. The depositor receives a share and delegates management to the code.
Depositing one asset as collateral to borrow another, usually a stablecoin. It's DeFi's most mature use, with protocols such as Aave, and it provides liquidity without selling the position.
The automatic sale of collateral when its value falls below the required minimum. It gives no warning and grants no grace: a contract executes it the moment the threshold is crossed, and in sharp falls liquidations cascade.
The ratio between what you've borrowed and what you've deposited as collateral. The higher it is, the less room to fall before liquidation. That's the number to watch, not the price.
Two ways of expressing an annual return: APR is simple and APY includes compounding, so it always looks higher. Anyone advertising triple-digit APY is assuming continuous reinvestment and an unchanging yield, which never happens.
Moving capital between protocols chasing the highest yield of the moment, almost always paid in the protocol's own token. When that token falls the real yield disappears, and often it was negative from the start.
The profit made by whoever decides the order of transactions within a block: jumping ahead of a large order, capturing a liquidation. It's an invisible cost paid by users and an entire industry inside the sector.
Products that pay out if a protocol suffers a code failure or an attack. It's a small market with a lot of small print, but its pricing is a good indicator of how much risk the sector itself sees in a given protocol.
A network built on top of another that processes transactions separately and settles them on the main chain. It was born to fix Ethereum's cost and speed, and today it's where much of the activity happens: Arbitrum, Base, Optimism.
The most widespread kind of layer 2: it bundles thousands of transactions off the main chain and posts a proof or a summary to it. Optimistic ones assume everything is correct unless challenged; zero-knowledge ones prove mathematically that it is.
A demonstration that something is true without revealing the information that proves it. It serves scaling, by posting a proof instead of all the data, and privacy: showing you meet a requirement without handing over the document.
A design that splits across separate layers what a single chain used to do: execution, consensus and data availability. It lets a network specialise in one part and lean on others for the rest.
Making a wallet a smart contract rather than just a key pair. It allows recovering access without a seed phrase, paying fees in another token, or having someone else pay them for you. It's the piece that brings the experience closest to a normal app.
A blockchain dedicated to a single application instead of sharing a network with everything else. It gives control over fees and performance in exchange for starting from zero on security and liquidity.
Networks that pay in tokens for contributed real infrastructure: antennas, storage, sensors, compute. It's one of the few segments where the token has a clear job beyond being speculated on.
Representing on a blockchain an asset that exists outside it: a property, a stake, a loan portfolio. What changes isn't the asset but how ownership is recorded, how it is divided and how it is transferred.
Traditional assets brought on-chain: real estate, credit, commodities, government debt. It's the fastest-growing segment since 2023 because it connects real-economy yield with crypto infrastructure.
Shares in treasury-bill funds represented as a token. They have become the yield-bearing haven inside the sector: they pay the issuing state's interest rate with on-chain settlement.
Safekeeping of assets by an authorised, supervised entity, with client assets segregated from its own. It's the requirement any institutional investor asks about before even looking at the product.
A DeFi market only pre-verified addresses can enter. It's the formula by which regulated entities use this infrastructure without stepping outside their identification obligations.
A token's economic design: how many there are, how and when they are issued, who receives them and what makes them necessary. What decides things is rarely the total supply but the unlock schedule and the initial distribution.
Sending tokens to an address they can't leave, to take them out of circulation. It reduces supply, which guarantees nothing on its own: with no demand, burning supply doesn't hold up a price.
The schedule by which team and investor tokens are released. The cliff is the initial period in which nothing is released. Knowing when those dates fall explains much of a young project's price action.
The moment the token is created and enters circulation. It starts the vesting schedules and usually coincides with the first market listing.
A public token sale to fund a project, the dominant format in 2017 and 2018. It left a record of fraud that explains much of the regulation that followed; today launches use more controlled formats and, in the European Union, fall under MiCA.
The collective sale of a project's tokens, usually in phases and at different prices depending on when you enter. It's the broader term of which the ICO is one case.
Distributing tokens free to users who meet certain conditions, to spread ownership and attract activity. It has spawned an industry of accounts that exist only to qualify, so the challenge is distributing to real users.
A system rewarding use of a protocol without explicitly promising a future token. It replaced the announced airdrop because it lets you reward activity without taking on the legal commitment of an issuance.
The public plan of what a project intends to deliver and when. Useful for checking what was promised against what was delivered over the previous twelve months, which tells you far more than what it promises for the next twelve.
An organisation whose decisions are made by token vote and executed by contracts. It works well for managing parameters and a treasury; it works badly for anything requiring speed or personal accountability.
The mechanism by which protocol changes are proposed, voted and applied automatically. Turnout tends to be low and power tends to be concentrated, so it's worth checking who actually votes before giving the process much weight.
The process of identifying a user before letting them operate. It's mandatory for regulated platforms and it's the step where most people abandon a sign-up, so its design is a product matter as much as a legal one.
The set of obligations to monitor and report suspicious activity. In crypto it includes analysing an address's history, because the chain's traceability shows where funds have been.
The European regulation on markets in crypto-assets, fully applicable since late 2024. It sets what can be offered, who needs authorisation and how risks must be communicated. It shapes a campaign from day one, not at the end.
The obligation for platforms to exchange originator and beneficiary data on transfers above a certain amount, as banks do. It's one of the operational demands that creates most work when integrating crypto.
An exchange-traded fund that holds the real asset rather than derivatives, bought from an ordinary brokerage account. The approval of the bitcoin ones in January 2024 in the United States opened the door to institutional capital without self-custody.
This is a glossary, not financial advice. If a definition here is enough for you to decide where to put money, you are missing information.
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