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Glossary
Short, precise definitions of the 75 terms you meet most often when reading about crypto.
A
Address
An alphanumeric string derived from a public key that serves as the destination of a payment. It is not the public key itself but a shortened version with an error-checking code. Sharing it is safe and reveals nothing about your private key, though it does expose your history to anyone who links it to you. Always check the first and last characters before sending, because of address poisoning.
Address poisoning
A technique in which the attacker sends you a token transfer of negligible value from an address whose first and last characters match one you already use, hoping you will copy it from your history and pay them instead. The defence is never copying addresses from history, using the wallet's address book and checking the middle characters. More in the most common crypto scams.
Airdrop
A free distribution of tokens to addresses meeting certain criteria, usually to reward earlier use or to spread governance. In most jurisdictions receiving one has tax consequences, and fake airdrops that simply appear in your wallet are typically bait to make you sign on a malicious site. What is genuine and what is not, in what is a crypto airdrop.
AMM
Automated market maker: a smart contract that sets prices from a formula over the reserves of two assets, instead of matching buyers against sellers. It lets anyone trade against the shared pool at any moment, with no human counterparty, and it is the core mechanism of decentralised exchanges. How it fits the wider picture, in what is DeFi.
Approve and revoke
An approval is the permission you grant a contract to spend your tokens, often for an unlimited amount and with no expiry; it stays live long after you close the website. Revoking withdraws it. This is the door most drainers walk through, so approve tight amounts and review your outstanding approvals periodically with a revocation tool.
APR and APY
APR is the simple annual rate; APY adds the effect of compounding, so it is always equal to or higher than APR for the same underlying yield. Comparing one platform's APY with another's APR exaggerates the difference. Both are also denominated in the asset itself: Ethereum staking yields 2.67 per cent a year as of 28 August 2026, in ETH. See what is staking.
B
Base fee and priority fee
Since EIP-1559, every Ethereum transaction pays a base fee set by the protocol according to how full the previous block was, which is destroyed, plus a priority fee or tip that the validator keeps and that determines ordering. Raising the tip speeds things up; lowering it does not avoid the base fee. See what are gas fees.
BIP-39 and HD derivation
BIP-39 is the standard that turns random entropy into memorable words with a checksum, which is why one seed usually works across wallets from different manufacturers. Hierarchical deterministic derivation, defined in BIP-32 and BIP-44, grows an endless tree of keys and addresses from that seed, each with its own path. Together they are why a single backup covers all your accounts.
Blob
Temporary data space introduced on Ethereum by Dencun on 13 March 2024, where layer 2 networks publish their data at a fraction of the cost of permanent storage. It is deleted after a few weeks, which is what makes it cheap. Since BPO2, on 7 January 2026, the per-block target is 14 blobs with a maximum of 21. See what is a layer 2.
Block and confirmation
A block is the batch of transactions added to the chain at regular intervals; Bitcoin targets roughly ten minutes on average and readjusts difficulty every 2,016 blocks. Every block built on top of yours adds one confirmation. The six-confirmation convention is not a protocol rule: certainty here is probabilistic and grows with each block.
Blockchain
A ledger of transactions grouped into blocks that are chained together by hashes and replicated across thousands of independent computers. Changing an old entry means redoing everything that came after it and out-muscling the rest of the network. It is not a fast or cheap database: it trades performance for the guarantee that nobody rewrites it alone. Practical comparison in Bitcoin vs Ethereum.
Bridge
A mechanism for moving value between chains, normally by locking the asset on one and issuing a representation on the other. It concentrates custody without the security of the base layer, which is why bridges account for the largest thefts: Ronin, 620 million dollars in March 2022; Wormhole, over 320 million in February 2022. Context in what is a layer 2.
C
CASP
A crypto-asset service provider authorised under MiCA to hold assets in custody, exchange them, execute orders or give advice. A licence granted in one member state can be passported across the EU, and older national anti-money-laundering registrations no longer suffice. Check the register before opening an account, and read how to choose a safe exchange.
Cost basis and FIFO
Cost basis is what an asset cost you, including fees, and it is subtracted from the disposal proceeds to work out the gain. When you have bought the same coin many times, some rule must decide which units you sold: FIFO, first in first out, is the most common, though other methods apply in some countries. Keep records from day one.
Custody and self-custody
Under custody a third party such as an exchange holds the keys and what you own is a bookkeeping claim against it; if the firm fails, you are a creditor. FTX filed for bankruptcy on 11 November 2022 with 9 billion dollars of liabilities against 900 million in liquid assets. In self-custody you sign, with no intermediary and no safety net. Compared in custodial vs non-custodial wallets.
D
DCA
Buying a fixed amount at fixed intervals, whatever the price. It does not improve the outcome by itself and it will not save you from a sustained decline: what it does is remove the decision of when to enter and reduce how much depends on timing. The cost is more fees, because you trade more often. Context in crypto trading basics.
Digital signature
Cryptographic proof that whoever controls a private key has authorised a specific message, verifiable by anyone without revealing the key. Signing a message to log in to a website moves no funds; signing a transaction or a spending approval does. A great many thefts consist of nothing more than getting the victim to sign something whose real contents they never read on the device screen.
Drainer
Malicious code planted in a website or a software library that empties balances and approvals the moment you connect a wallet and sign. The attack on Ledger Connect Kit on 14 December 2023 injected one into a library used by thousands of applications and took around 484,000 dollars. See the most common crypto scams.
E
EIP-1559
The overhaul of Ethereum's fee market activated on 5 August 2021 with the London upgrade. It replaced the blind auction with an algorithmic base fee that is burned, making estimates far more predictable. As a side effect, whenever burning exceeds issuance the supply of ETH becomes deflationary. Explained in what are gas fees.
EMT and ART
MiCA's two stablecoin categories. An EMT, or e-money token, references a single official currency, as USDC and EURC do, and its issuer must be a credit institution or an electronic money institution. An ART references baskets of currencies, commodities or crypto-assets. As of July 2026 no ART has been authorised. See what are stablecoins.
ERC-20
The Ethereum standard defining the minimum functions of a fungible token: check a balance, transfer, and authorise a third party to spend. Thanks to it any wallet or exchange can integrate a new token without bespoke code. An ERC-20 is not the network's native coin, and the difference matters: it is set out in token vs coin.
ERC-721 and ERC-1155
ERC-721 is the non-fungible token standard: each unit carries its own identifier and is not interchangeable with another. ERC-1155 lets a single contract manage both unique pieces and batches of identical ones, with cheaper batch transfers. Neither stores the image on chain, only a link to it. See what is an NFT.
ESMA and national competent authorities
ESMA, the European Securities and Markets Authority, coordinates how MiCA is applied and maintains EU-wide registers. Day-to-day licensing and supervision, however, sit with each country's national competent authority, and a licence issued by one of them is valid across the Union. Before trusting a platform with funds, look it up in your own authority's public register.
EVM
The Ethereum Virtual Machine: the standardised environment that runs contract code identically on every node, so all of them reach the same result. Many other chains are EVM-compatible, which lets developers reuse contracts and tooling. Compatible does not mean secure, and it does not mean identical in cost. See what is a smart contract.
F
FDV and circulating supply
Circulating supply is the number of units available on the market today; FDV, or fully diluted valuation, applies today's price to the entire future supply, including tokens still locked. A wide gap between market cap and FDV warns that many units remain to be released and that selling pressure will arrive as vesting schedules mature.
Flash loan
An uncollateralised loan borrowed and repaid inside a single transaction: if it is not paid back by the end, everything reverts and it is as though it never happened. It has legitimate uses, such as arbitrage or refinancing a position. It is also the standard tool for manipulating oracles and draining badly designed protocols within one block.
Fork (hard fork and soft fork)
A change to a protocol's rules. A soft fork tightens them and stays backwards compatible: older nodes keep accepting the new blocks. A hard fork widens or breaks them and forces everyone to upgrade; if part of the community refuses, the chain splits in two and two separate assets appear. Copying a project's code to launch another one is also called forking.
Funding rate
A periodic payment exchanged between longs and shorts in perpetual futures to keep the contract price anchored to spot. When it is positive, longs pay shorts. A high, sustained funding rate signals crowded positioning on one side and often precedes cascades of liquidations once the price turns.
G
Gas
The unit measuring the computational work of an operation, not its value or its duration. Sending five euros or five hundred thousand costs the same gas; a DeFi swap costs far more than a transfer because it touches more contracts. The final bill is gas used multiplied by the gas price. Full breakdown in what are gas fees.
Gas limit
The ceiling on gas units you authorise a transaction to consume. It works as a circuit breaker: if the contract loops, spending stops there. Whatever you do not use is returned, but if the limit is set too low the transaction fails and the gas already burned is gone. A simple ETH transfer consumes exactly 21,000 units.
Gwei
A denomination of ether equal to one billionth of one, used to express the gas price because the figures in ETH are unreadable. As of 28 August 2026 Ethereum gas sits at 0.151 gwei, a long way from the 50 to 200 gwei that were routine in 2021. A simple transfer therefore costs roughly one US cent.
H
Halving
The scheduled halving of Bitcoin's block reward, which happens every 210,000 blocks. The fourth took place on 20 April 2024 and cut issuance from 6.25 to 3.125 BTC per block; the fifth is estimated for around 17 April 2028. It is a supply change everyone can see coming, not a surprise headline. Context in the mining guide.
Hash
The output of a cryptographic function that turns any input into a fixed-length string. It runs one way only, so the original cannot be recovered from the hash, and the smallest change to the input produces a completely different result. That property underpins block chaining, download integrity and the proof of work behind mining.
Health factor
A single number summarising how much room your borrowing position has left before liquidation, computed from the value of the collateral and of the debt. Below one, anyone can liquidate you. Nobody is going to send you an alert about it, and it depends on prices that move at three in the morning and within minutes, so keep it comfortably above the limit.
HODL and FOMO
HODL began as a typo on a forum in 2013 and describes holding an asset come what may; it names an attitude, not a strategy with exit rules. FOMO is the fear of missing out that pushes people to buy after a rally and sell in a panic. Both terms explain behaviour, they do not justify decisions.
I
Impermanent loss
The gap between what your deposit in a pool is worth and what it would have been worth had you simply held the two assets separately. It appears when their prices diverge: the AMM leaves you with more of the one that fell and less of the one that rose. It is called impermanent because it reverses if prices return, but it becomes real the moment you withdraw.
K
KYC and AML
KYC is the customer identification every regulated platform must carry out; AML is the wider set of anti-money-laundering duties, which includes monitoring transactions and reporting suspicious ones. Neither is a commercial whim: both come from legislation. A platform that lets you cash out to a bank account without ever identifying you is not being generous, it is operating outside the framework.
L
Leverage and liquidation
Leverage lets you hold a position larger than your capital, posting the rest as collateral. It multiplies gains and losses equally. When the price moves against you and the collateral no longer covers the position, the platform closes it by force: that is liquidation, and the margin you posted goes with it. At 10x, a 10 per cent move wipes you out.
Limit order and stop-loss
A limit order fixes the highest price you will pay or the lowest you will accept, and executes only if the market reaches it; it shields you from slippage but may never fill. A stop-loss triggers at a given price and then fires an order, usually at market: it caps the loss, though in a crash it can fill well below your level.
Liquid staking
You deposit your asset with a protocol that runs the validators and receive a token representing that position, usable across DeFi while it keeps accruing rewards. It sidesteps the 32 ETH minimum and the exit queue, but adds smart contract risk and the chance that the token trades below its theoretical value. Detail in what is staking.
Liquidity
How easily an asset can be bought or sold without moving its price. It is not the same as volume: a token can churn heavily between a handful of holders and still be impossible to sell in size. Thin liquidity is why so many small projects climb easily and then refuse to let you out anywhere near the price on the screen.
Liquidity pool
A shared fund of two or more tokens deposited by users, against which swaps are executed. Whoever contributes earns a share of the fees and often incentives paid in the protocol's own token. In exchange they take on smart contract risk and impermanent loss, which advertised yield figures almost never deduct. See what is DeFi.
M
Maker and taker
A maker leaves an order on the book and supplies liquidity; a taker executes against an existing order and removes it. Almost every exchange charges the first less. As of 28 August 2026 Binance charges 0.100 per cent on both sides at its base tier, while Coinbase Advanced charges 0.40 and 0.60 per cent up to 10,000 dollars of monthly volume. See how to choose a safe exchange.
Market capitalisation
Current price multiplied by circulating supply. It is a rough measure of size, not money invested and not money that could be taken out: if the price rises 10 per cent, market cap grows without a cent flowing in. For illiquid assets the figure is especially misleading, because the reference price is set by marginal trades.
Mempool
The waiting room where each node holds transactions that have been broadcast but not yet included in a block. When demand exceeds space, whoever pays more per byte goes first and the rest wait. As of 28 August 2026 Bitcoin's mempool is close to empty, with fees of 1 to 2 sat/vB. Careful: sitting in the mempool is not the same as being confirmed.
MiCA
Regulation (EU) 2023/1114 on markets in crypto-assets, in force since 29 June 2023. The stablecoin titles have applied since 30 June 2024 and the service provider regime since 30 December 2024, with national transitional periods running into 2026. It sets one rulebook across the whole EU. Full walkthrough in crypto regulation.
Mining
The process by which specialised machines compete to solve a cryptographic puzzle and win the right to propose the next block, in exchange for the block reward and the fees. It burns real electricity, and that cost is precisely what makes attacking the network expensive. As of 28 August 2026 Bitcoin's hashrate is around 893 EH/s. Full detail in what is crypto mining.
Multisig and MPC
Two ways of making sure no single person can move funds. Multisig requires m signatures out of n keys and is recorded on chain, with rules anyone can inspect and audit; treasuries and DAOs rely on it. With MPC no complete key exists anywhere: several parties jointly compute one signature, which is more discreet on chain but depends on the provider's software.
N
Node
A computer running the network software, downloading the chain and independently checking every block and every transaction against the consensus rules. Do not confuse it with a miner or a validator: an ordinary node produces no blocks, it only verifies everyone else's and rejects the invalid ones. This is the piece that stops the rules depending on anyone's good faith.
Nonce
A number used once, with two meanings worth keeping apart. In mining it is the value a miner keeps changing until it finds a hash below the difficulty target. In Ethereum accounts it is the sequential counter of your transactions: resending one with the same nonce and a bigger tip is what lets you speed up or cancel a stuck payment.
O
Optimistic rollup and zk-rollup
Two ways of executing transactions off the main chain and publishing the data back to it. The optimistic kind assumes the batch is valid and opens a challenge window, which delays withdrawals; the zk-rollup attaches a cryptographic validity proof and needs no such wait. Neither architecture guarantees the network will last. See what is a layer 2.
Oracle
A service that feeds outside-world data, above all prices, into a blockchain, because a smart contract cannot query the internet by itself. It is a critical point of failure: if the price it publishes is manipulated or freezes, every contract relying on it liquidates or pays out wrongly. See what is a smart contract.
Order book
The public list of pending buy and sell orders, sorted by price, that a centralised exchange matches. Its depth tells you how much you can move without pushing the price. A thin book, with little size at each level, produces wide spreads and heavy slippage. Decentralised venues built on an AMM replace this machinery with a mathematical formula.
Overcollateralised loan
A loan where you must deposit more value than you receive, because the protocol cannot assess your creditworthiness and cannot chase you off chain. The collateral is all there is. If its value falls below the threshold, anyone can liquidate it at a discount. This is Aave's model, with 17.46 billion dollars of TVL as of 28 August 2026. See what is DeFi.
P
Passphrase
An extra word or phrase added to the seed that produces a completely different wallet, sometimes called the thirteenth or twenty-fifth word. It gives you a hidden wallet: anyone who forces you to hand over the words sees only the decoy. The price is steep, because forgetting the passphrase means that balance is gone. Practical considerations in how to choose a hardware wallet.
Phishing
Impersonating a website, an email or a support agent to get you to hand over credentials or your seed phrase. It remains the most profitable attack against individuals. The Ledger customer data leak, which put 1.1 million email addresses in public view in December 2020, fuelled years of targeted campaigns. Real cases in the most common crypto scams.
Pig butchering
A long-con scam: a casual approach over messaging or social media, weeks of trust building, then a fake investment platform that shows profits and only blocks the withdrawal at the end. According to Chainalysis, the average payment per scam rose from 782 dollars in 2024 to 2,764 in 2025. How to spot it early, in the most common crypto scams.
Public key and private key
A mathematically linked pair of numbers. The private key signs transactions and proves ownership; the public key, derived from it, lets anyone verify that signature without being able to reverse it. Whoever holds the private key holds the funds, with no recovery process and no customer support desk. Hence the insistence on keeping it off any connected device: see how to choose a hardware wallet.
R
Rug pull
A fraud in which a project's promoters pull the liquidity or dump their allocation at once, leaving a token with no market. It can be blunt, with code that blocks selling, or gradual, through quiet sales of the team's share. The warning signs are usually visible in the token distribution and the absence of lock-ups. See the most common crypto scams.
S
Seed phrase
A list of twelve or twenty-four words from which every private key in a wallet is generated. It is the wallet: whoever copies it takes the funds, and whoever loses it loses them for good, even with the device in hand. Write it on paper or metal and never photograph it, type it into a phone or store it in the cloud. More in how to choose a hardware wallet.
Sequencer
The component that orders a layer 2's transactions before publishing them to the main chain. Nearly all of them are still run centrally today, so a sequencer can censor or delay trades, and if it halts the network stops producing blocks. Forced exit to the base layer is the guarantee that offsets this single point of failure.
Sidechain
An independent chain with its own consensus and its own validators, connected to another through a bridge. Unlike a rollup, it does not inherit the security of the main chain: if its validators fail or collude, the main chain will not fix it. It is usually cheaper and faster, and that is exactly the trade being accepted.
Slashing
A penalty that destroys part of the deposit of a validator that signs contradictory messages, such as proposing two blocks for the same slot. It does not punish being offline: that merely loses rewards gradually. It is the mechanism that makes attacking a proof-of-stake network expensive, explained in proof of work vs proof of stake.
Slippage
The difference between the price you expected and the one you actually get, because the market moved or because your order ate through several levels of the book. Decentralised exchanges let you set a maximum tolerance: too low and the trade fails, too high and you invite a sandwich attack. Worked examples in the trading guide.
Spread
The gap between the best available buy price and the best available sell price. It is a real cost even when no line item shows it: you enter at the top and leave at the bottom. On heavily traded pairs it is a matter of cents; on small tokens it can dwarf the headline commission. Do not confuse it with slippage. Groundwork in crypto trading basics.
Sybil
An attack in which one person controls many identities or addresses to pass as a crowd and capture a disproportionate share of a distribution or a vote. Projects apply filters to weed out those patterns, and legitimate users are often caught in the net. Context in what is a crypto airdrop.
T
Taxable disposal
The moment a tax authority treats you as having parted with a crypto-asset, which in most jurisdictions is what triggers a gain or a loss. Selling is the obvious case, but swapping one coin for another, spending crypto and sometimes receiving rewards can count too. Cashing out to your bank is rarely the only trigger. Rules differ by country, so check yours or ask an adviser.
Testnet and mainnet
Mainnet is the live network, where transactions move real money and cannot be undone. A testnet is a parallel network with the same rules but worthless coins, handed out free so developers can test contracts and applications. Never send real funds to a testnet address or the other way round: the address format may match, but these are different chains.
Tokenomics
A token's economic design: how many units exist, how they are issued, who receives them, when they unlock and what they are for. This is where you see whether a project is built to work or built to sell. A distribution weighted towards the team and private investors is a warning sign. See what is an ICO.
TVL
Total value locked in the contracts of a protocol or a chain, measured in dollars. It is useful for comparing sizes, though it inflates when the same capital is reused across several layers. As of 28 August 2026 DeFi TVL stands at around 99.2 billion dollars, with roughly 49.8 billion on Ethereum. Context in what is DeFi.
U
UTXO
Bitcoin's accounting model: there are no balances, only outputs from earlier transactions that have not yet been spent. Your wallet adds those pieces up to show you a balance, and when you pay it spends whole pieces and sends the change back to an address of your own. Ethereum instead uses an account model, and much of the difference between them follows from that, as explained in Bitcoin vs Ethereum.
V
Vesting and cliff
Vesting is the schedule that releases team, investor or adviser tokens in stages. The cliff is the initial period during which nothing is released, at the end of which a tranche unlocks all at once. Cliff dates concentrate selling pressure and they are public: worth checking before you buy, not afterwards.
Volatility
How far and how often an asset's price moves. In crypto it is structurally high and it cuts both ways: as of 28 August 2026 bitcoin is up 26 per cent over the month and down 27.8 per cent over the past twelve. A yield quoted in the asset itself, such as a staking APR, does not on its own make up for that movement.
W
Whitepaper
The technical document in which a project sets out what problem it solves, how it works and how its token is distributed. The Bitcoin one, from 2008, runs to nine pages and describes a complete mechanism. Many current whitepapers are sales brochures with no verifiable specification: the telling sign is silence on distribution and lock-ups. See what is an ICO.
Y
Yield farming
Moving capital between protocols in pursuit of the highest yield, usually paid in freshly minted incentive tokens. Eye-catching percentages typically depend on that issuance and collapse as soon as more people arrive or the reward token loses value. On top of market risk you take on smart contract risk and the risk of any bridges used along the way. See what is DeFi.