Crypto Glossary — Every Term Explained

Plain-English definitions of the terms you will encounter in crypto. No jargon left unexplained.

Address: A string of letters and numbers that identifies a location on a blockchain where tokens can be sent. Like a bank account number — safe to share publicly. Each blockchain has its own address format.
Airdrop: Free distribution of tokens to wallet addresses, usually rewarding early users of a protocol. Famous examples include the Uniswap UNI airdrop (2020) and Arbitrum ARB airdrop (2023).
AMM (Automated Market Maker): A type of decentralised exchange that uses liquidity pools and a mathematical formula to set prices automatically, without needing buyers and sellers to match with each other. Pioneered by Uniswap.Learn more →
Altcoin: Any cryptocurrency other than Bitcoin. The term is used loosely — sometimes to mean anything other than Bitcoin and Ethereum.
APR / APY: Annual Percentage Rate (APR) is the yearly interest rate without compounding. Annual Percentage Yield (APY) includes compounding. DeFi yields are typically shown as APY; the difference matters when rates are high.

Bitcoin (BTC): The first cryptocurrency, launched in 2009 by the pseudonymous Satoshi Nakamoto. A decentralised digital currency with a fixed supply of 21 million coins, secured by proof-of-work mining.
Block: A batch of verified transactions recorded on the blockchain. New blocks are added at regular intervals (roughly every 10 minutes on Bitcoin, 12 seconds on Ethereum).
Blockchain: A shared, append-only database where data is grouped into blocks and each block references the previous one, forming a chain. Maintained by a network of computers rather than any single party.Learn more →
Bridge: Software that moves tokens from one blockchain to another. Bridges are a major security risk — they hold large amounts of locked funds and have been hacked repeatedly for hundreds of millions of dollars.
Bull / Bear Market: Bull market: sustained price rises, general optimism. Bear market: sustained price falls, general pessimism. Crypto markets have historically had violent cycles between the two.

CEX (Centralised Exchange): A crypto exchange run by a company that holds customer funds (like Binance, Coinbase, WazirX). Convenient but requires trusting the company. FTX’s 2022 collapse showed the risks.
Collateral: Assets you lock up to guarantee a loan. In DeFi lending, you must deposit more collateral than you borrow (overcollateralisation). If collateral falls in value, it is liquidated to cover the debt.
Consensus mechanism: The method by which a blockchain network agrees on what is true. The two dominant mechanisms are Proof of Work (mining with computing power, used by Bitcoin) and Proof of Stake (validators who have staked tokens, used by Ethereum).Learn more →

DAO (Decentralised Autonomous Organisation): An organisation governed by smart contracts and token holders voting, rather than a board or executives. DeFi protocols like Uniswap and Aave are governed by DAOs.
DeFi (Decentralised Finance): Financial services — lending, trading, insurance, savings — built on public blockchains using smart contracts, without banks or centralised intermediaries. See our DeFi explainer.Learn more →
DEX (Decentralised Exchange): An exchange where trading happens directly between users through smart contracts, with no company holding funds. Examples: Uniswap, Raydium, PancakeSwap.

EVM (Ethereum Virtual Machine): The computing environment in which Ethereum smart contracts run. "EVM-compatible" chains (Polygon, Arbitrum, BNB Chain, and many others) use the same format, so developers can easily deploy the same code on multiple chains.

Flash loan: A loan that is borrowed and repaid within a single blockchain transaction. Requires no collateral because if the loan is not repaid by the end of the transaction, it is reversed. Used for arbitrage and sometimes exploits. Pioneered by Aave.
Fork: A change to a blockchain’s rules. A "soft fork" is backward-compatible; a "hard fork" creates two separate chains if not all nodes upgrade. "Forking" code means copying open-source code to launch a new project.
Fungible: Interchangeable. One Bitcoin is identical in value and function to any other Bitcoin, just as one £10 note is interchangeable with any other. Contrast with non-fungible (NFTs), where each token is unique.

Gas: The fee paid to process a transaction on a blockchain, denominated in the chain’s native token. On Ethereum, gas is paid in ETH; on Solana in SOL; on BNB Chain in BNB. Gas prices rise when the network is busy.Learn more →
Gas limit: The maximum amount of gas a user is willing to spend on a transaction. Setting it too low causes the transaction to fail while still consuming some gas.Learn more →

Halving: A scheduled reduction in the Bitcoin mining reward by 50%. Happens roughly every four years (every 210,000 blocks). Halvings reduce the rate at which new BTC enters circulation and are closely watched market events.
Hash / Hash rate: A hash is a fixed-length output from a mathematical function applied to data — like a fingerprint for information. Hash rate is the total computing power being used to mine a proof-of-work blockchain.
HODL: Crypto slang for holding tokens long-term rather than trading them. Originated from a typo of "hold" in a 2013 Bitcoin forum post and became a meme. Now sometimes backronymed as "Hold On for Dear Life."

Impermanent loss: The loss liquidity providers can suffer when the prices of tokens in a pool diverge. If you provide equal values of ETH and USDC and ETH’s price doubles, you end up with less than if you had just held the ETH. The trading fees you earn must offset this loss.

Layer 1 (L1): The base blockchain itself — Bitcoin, Ethereum, Solana, and others. L1s handle consensus, data storage, and final settlement. Everything else builds on top of them.Learn more →
Layer 2 (L2): A network built on top of a Layer 1 to improve speed and reduce costs. Transactions are processed on the L2 and periodically settled back to the L1. Examples: Arbitrum, Optimism, zkSync (on Ethereum).Learn more →
Leverage: Borrowing to amplify your position. With 10x leverage, you control 10x your stake — but a 10% move against you wipes out everything. Leveraged trading is extremely high-risk.
Liquidity: How easily an asset can be bought or sold without significantly affecting its price. Deep liquidity means large trades can happen without big price swings. Low liquidity means small trades can move the price dramatically.
Liquidity pool: A communal pot of two (or more) tokens locked in a smart contract that powers a DEX. People who deposit tokens into a pool earn trading fees. The pool’s contents determine the price via a mathematical formula.
Liquid staking: Staking your tokens and receiving a tradeable token in return (like stETH from Lido). You earn staking rewards while still being able to use your stake in DeFi. The most widely-used example is stETH on Ethereum.Learn more →

Market cap: The total value of all coins in circulation: price × total supply. Used to rank cryptocurrencies by size. Importantly, it does not represent the amount of money invested — a single large trade can move price and dramatically change market cap.
MEV (Maximal Extractable Value): Value extracted by those who control the order of transactions in a block — validators, miners, or bots. MEV can include front-running (placing a trade ahead of yours), sandwich attacks, and arbitrage. A significant source of revenue and a genuine harm to ordinary users.
Meme coin: A cryptocurrency with value derived primarily from community enthusiasm and internet culture rather than underlying technology. Examples: Dogecoin, Shiba Inu, BONK, dogwifhat. Extremely speculative.
Multisig (Multi-signature): A wallet or smart contract that requires multiple private key signatures to authorise a transaction. Used for security (no single point of failure) and governance (multiple parties must agree).

NFT (Non-Fungible Token): A token on a blockchain that is unique — unlike Bitcoin where every coin is identical, each NFT has a distinct identity. Used to represent ownership of digital art, collectibles, in-game items, and more. See our NFT section.Learn more →
Node: A computer participating in a blockchain network by storing a copy of the blockchain and validating transactions. Full nodes store the entire history; light nodes store only recent data.Learn more →

Oracle: A service that brings real-world data (like asset prices) onto the blockchain. Smart contracts cannot access external data on their own — they need oracles. Manipulating oracles is one of the most common DeFi attack vectors. Pyth and Chainlink are leading oracle networks.Learn more →
Overcollateralisation: Depositing more collateral than you borrow. DeFi lending protocols require this because there are no credit checks — the extra collateral cushion protects lenders if the borrower’s collateral falls in value.

Perpetual futures (perps): A derivative contract to bet on an asset’s price without owning it. Unlike traditional futures, they never expire. Traders pay or receive "funding rates" based on whether sentiment is bullish or bearish. Extremely high-risk due to leverage.
Private key: A secret cryptographic number that proves ownership of a blockchain address. Never share it. If someone gets your private key, they control all funds at that address.
Proof of Stake (PoS): A consensus mechanism where validators stake (lock up) tokens as collateral to earn the right to validate transactions. If they cheat, their stake is "slashed" (partially destroyed). Ethereum uses PoS.Learn more →
Proof of Work (PoW): A consensus mechanism where miners compete to solve computationally expensive puzzles to add blocks. The work proves they expended real energy. Bitcoin uses PoW. Energy-intensive but very battle-tested.Learn more →
Protocol: In DeFi, a set of smart contracts that together deliver a financial service. Uniswap is a protocol (a DEX). Aave is a protocol (a lending platform). Often also used loosely to mean any blockchain-based application.

Rollup: A Layer 2 scaling solution that processes transactions off-chain and posts a compressed summary (and sometimes a cryptographic proof) back to the base chain. Two types: Optimistic rollups (Arbitrum, Optimism) and Zero-knowledge rollups (zkSync, Starknet).
Rug pull: A scam where developers create a project, attract investment or liquidity, then suddenly withdraw all funds and abandon the project. One of the most common crypto frauds, especially in meme coins and new DeFi protocols.

Seed phrase: 12 or 24 random words that can regenerate a wallet’s private key. The master backup for a non-custodial wallet. Never store it digitally; never share it. Anyone with your seed phrase controls your wallet.
Slashing: In Proof of Stake, the penalty for validators who behave maliciously or negligently — a portion of their staked tokens is destroyed. Slashing incentivises honest behaviour by giving validators real skin in the game.
Slippage: The difference between the expected price of a trade and the actual executed price, caused by the trade itself moving the market. More pronounced in illiquid pools. Set a slippage tolerance in your wallet to control how much you accept.
Smart contract: A program stored on a blockchain that runs automatically when conditions are met, without any human needing to execute it. The foundation of DeFi, NFTs, and most blockchain applications.Learn more →
Stablecoin: A cryptocurrency designed to maintain a stable value, usually pegged to $1. Types: fiat-backed (USDC, USDT), crypto-backed (DAI), synthetic (USDe). See our stablecoins section.Learn more →
Staking: Locking up tokens to help run and secure a Proof of Stake blockchain, earning rewards in return. Can also refer loosely to depositing tokens in DeFi protocols to earn yield.Learn more →

TDS (Tax Deducted at Source): India-specific: 1% deducted at source on crypto transfers above ₹50,000 per transaction (₹10,000 for certain cases). The buyer deducts and deposits this with the government. Does not reduce your 30% tax liability. See our India tax guide.
Token: A digital asset on a blockchain. "Coin" usually refers to a blockchain’s native asset (ETH, SOL). "Token" usually refers to assets built on top of a blockchain (USDC, UNI). The terms are often used interchangeably.
Total Value Locked (TVL): The total value of crypto deposited in a DeFi protocol’s smart contracts. A measure of a protocol’s size and usage. Not without flaws — TVL can be inflated by recursive deposits and fluctuates with crypto prices.

VDA (Virtual Digital Asset): India’s legal term for cryptocurrency, as defined in the Finance Act 2022. Gains from VDAs are taxed at 30% with 1% TDS. The classification covers virtually all tokens including stablecoins.
Validator: In Proof of Stake blockchains, a participant who stakes tokens to earn the right to propose and validate new blocks. Validators are rewarded for honest behaviour and penalised (slashed) for dishonesty.

Wallet: Software or hardware that stores private keys and lets you manage your crypto. Does not store coins themselves — those are on the blockchain. See our wallets guide for a full explanation.Learn more →
Web3: A broad term for the vision of a decentralised internet built on blockchains. Often used to describe the ecosystem of crypto, DeFi, NFTs, and blockchain-based applications broadly.Learn more →
Whitepaper: A technical document describing a cryptocurrency or protocol — its purpose, mechanism, and design. Bitcoin’s 2008 whitepaper by Satoshi Nakamoto is the original. Reading a whitepaper is one way to assess a project’s legitimacy.

Yield farming: Moving crypto between DeFi protocols to earn the highest available returns, including trading fees, lending interest, and protocol token rewards. High potential returns come with high complexity and risk.

Zero-knowledge proof (ZK proof): A cryptographic method to prove something is true without revealing the underlying information — like proving you know a password without revealing the password itself. Powers privacy protocols and ZK-rollup scaling (zkSync, Starknet).