Cryptocurrency Terms to Know Before You Invest

Here is a quick guide to cryptocurrency terms. We define technical terms, slang, acronyms, and other jargon related to cryptocurrency.



  • ADDRESS

    A unique, alphanumeric identifier used as destination for transferring cryptocurrencies.

  • AIR DROP

    An event in which individuals that hold existing cryptocurrencies (like Bitcoin and Ethereum) are given tokens of a new cryptocurrency.

  • ALT COIN

    Alternative Coin. Bitcoin is known as the first and foremost cryptocurrency, so any cryptocurrency that is not Bitcoin is an alt coin.

  • ATH

    All-Time High. The highest price a cryptocurrency has ever reached.

  • ATL

    All-Time Low. The lowest price a cryptocurrency has ever reached.

  • ATOMIC DROP

    The exchange of one coin or token for another coin or token that takes place without the need for a third party. Atomic Swaps rely on smart contracts to ensure both parties hold up their end of the agreement.

  • BITCOIN

    The first block chain-based cryptocurrency, launched in 2009. Bitcoin remains the most influential and widely recognized coin.

  • BITCOIN CASH

    The first successful hard fork of Bitcoin that allows the protocol to grow and scale by removing its block size limit.

  • BEAR MARKET

    A market in which most (or all) prices are falling.

  • BEAR TRAP

    A short drop in a cryptocurrency’s price that makes investors think the price will continue falling. Instead, the price rises significantly following the drop, fooling the “bears.”

  • BLOCK

    A segment of data recorded on the block chain that can contain transactions and other information.

  • BLOCK CHAIN

    A digital, distributed ledger which contains data for all the transactions that have ever taken place using a given cryptocurrency.

  • BLOCK CHAIN 2.0

    A term used to describe cryptocurrency projects that facilitate programmable transactions rather than simply acting as methods to store and transfer value. Projects like Ethereum are known as Block chain 2.0 contracts because they allow their users to create and execute smart contracts and develop decentralized apps.

  • BLOCK REWARD

    The payment given to a miner for securing a block chain that uses POW (Proof-of-Work) consensus

  • BRAVE

    A free, open-source web browser that aims to provide its users the best possible user experience by blocking trackers, hiding advertisements, respecting user privacy, and even offering a built in tipping mechanism that allows users to reward content creators.

  • BNB

    BNB (Binance Coin) is an ERC20 token that lives on the Ethereum block chain. The token has multiple forms of utility, essentially being the underlying gas that powers the Binance Ecosystem. Most important, it can be used to pay for trading fees on the exchange, obtaining the equivalent of a 50% discount on trades during the first year, 25% during the second year and so on.

  • BULL MARKET

    A market in which most (or all) prices are rising.

  • BULL TRAP

    A short rise in a cryptocurrency’s price that makes investors think the price will continue to rise. Instead, the price falls significantly following the rise, fooling the “bulls.”

  • BURN

    A mechanism that destroys an amount of coins or tokens, thereby decreasing the total coin supply of a cryptocurrency.

  • CENTRALIZED

    Controlled by one group or within one certain area.

  • CENTRAL LEDGER

    An irreversible list of all transactions that have ever occurred on a platform.

  • CIRCULATION

    Free movement of coins between individuals.

  • CIRCULATING SUPPLY

    The volume of coins being held and spent at a given time for a given cryptocurrency.

  • COIN

    A cryptocurrency that relies solely on its own technology to function.

  • COLD STORAGE

    In the cryptocurrency sphere this term refers to storing cryptocurrency in a location that is offline and thus inaccessible by anyone on the internet.

  • COLD WALLET

    An offline wallet for holding cryptocurrencies. Considered more secure than hot wallets.

  • CONFIRMATION

    Verifications of consensus by miners and/or nodes. After an individual sends payment on a block chain, confirmations are required before the recipient can accept payment.

  • CRYPTOCURRENCY

    Digital currency that uses cryptography. Bitcoin & Altcoins are all types of cryptocurrency.

  • CRYPTOGRAPHY

    Code making, breaking and studying.

  • DAG

    Directed Acyclic Graphs. Also referred to as “Tangle.” DAG is an alternative to the “chain of blocks” architecture used in many crypto projects.

  • DAO

    Decentralized Autonomous Organization. An organization governed by smart contracts founded to allocate funds to cryptocurrency projects.

  • DAPPS

    Distributed Apps. Applications without centralized control.

  • DAYS DESTROYED

    A metric for measuring Bitcoin inactivity. Each day a Bitcoin remains unspent is another day added to its total number of Days Destroyed.

  • DECENTRALIZED

    Distributed amongst its users rather than controlled by one group or within one certain area.

  • DEFI

    DeFi stands for Decentralized Finance. DeFi is a new financial system based on the use of decentralized block chains and smart contracts to create new types of financial products.

  • DELEGATED PROOF OF STAKE

    DPoS. A consensus mechanism that has a block chain's nodes vote on the correct version of the block chain.

  • DESKTOP WALLET

    Software that allows its users the ability to store cryptocurrency on their personal computer.

  • DETERMINISTIC WALLET

    Software for storing cryptocurrency that offers decreased risk of losing funds because of its ability to generate unlimited addresses from a single starting point, or "seed."

  • DEX

    Decentralized exchange. A platform (which isn't controlled by any single authority) that allows users to buy and sell cryptocurrencies.

  • DIGITAL ASSET

    Any non-physical object of value, like a document, an audio file, or a logo, that can be owned and controlled.

  • DIGITAL ASSET ARRAY

    DAA. A collection or portfolio of assorted cryptocurrencies. For example, one Digital Asset Array could contain BTC, ETH, and DASH.

  • DIGITAL IDENTITY

    A set of data used to represent an entity on a network or on the Internet.

  • DIGITAL SIGNATURE

    A unique, encrypted output that cannot be duplicated. Useful for creating digital identities and confirming authenticity.

  • DISTRIBUTED LEDGER

    A list of transactions that exists on every computer that elects to run block chain software.

  • DISTRIBUTED NETWORK

    Uses nodes spread out across many different locations to achieve decentralization.

  • DOGE COIN

    A cryptocurrency that uses the “Doge” meme with a cult-like following.

  • DOUBLE SPEND

    A famous problem that occurs when cryptocurrency is spent more than once. Miners and transaction finality ensure that double-spend cannot occur.

  • DPOS

    Delegated Proof of Stake. A consensus mechanism that has a block chain's nodes vote on the correct version of the block chain.

  • DPOW

    Dynamic Proof of Work (dPoW) is currently in the early stages of development. Not many new block chain projects are experimenting with it.

  • DUMP

    The act of selling cryptocurrency.

  • DUST TRANSACTIONS

    Transfers of value that are too small to be sent due to the proportionately high fee incurred.

  • DYNAMIC RESERVE POOL

    A feature which allows KyberNetwork to maintain high levels of liquidity. The DRP keeps reserves of cryptocurrencies and establishes rates of exchange between them, allowing any user to easily trade one crypto for another.

  • ERC20

    The predominant standard for creating smart contracts on the Ethereum block chain. Others may include ERC 721, ERC888, and more

  • ERC20 TOKEN

    A token issued on the Ethereum platform.

  • ETF

    Exchange Traded Fund. A group of assets that can be bought or sold as a single asset.

  • ETHER

    The native tokens of the Ethereum platform. Required in order to send transactions or execute smart contracts.

  • ETHEREUM

    A cryptocurrency created by Vitalik Buterin that runs on Ether (ETH). Ethereum was the first block chain-based technology to make smart contracts and decentralized applications possible.

  • ENCRYPTION

    Transforming data into unrecognizable code that can only be decoded with the exact decryption key.

  • EVM

    Ethereum Virtual Machine. A testing environment on the Ethereum network for executing smart contracts and promoting security.

  • FIAT

    Paper money issued by governments as default currency. The US Dollar, Japenese Yen, Chinese Yuan, and Euro are all fiat currencies.

  • FOMO

    Fear of Missing Out. Investors with FOMO buy cryptocurrency (emotionally rather than logically) for fear of missing out on profits.

  • FORK

    A change in the original code of a software.

  • FORK HARD

    A change in a cryptocurrency’s software that makes it incompatible with the original version. For example, any block size increase in the Bitcoin protocol constitutes a hard fork.

  • FORK SOFT

    A change in a cryptocurrency’s software that does not make it incompatible with the original version.

  • GAS

    A fee which must be paid to execute network transactions.

  • GITHUB

    An open-source database for developers to create and share computer coding with a large community.

  • GPU

    Graphics Processing Unit. Hardware that can be used for mining some cryptocurrencies.

  • HARDCAP

    The maximum amount of money a cryptocurrency’s founders will accept while raising money in exchange for early coins on their platform.

  • HARDWARE WALLET

    A physical device that stores private keys.

  • HASHGRAPH

    Hashgraph is a consensus alternative to block chain. It uses a gossip protocol to spread transactions across the network by sending data to randomly chosen neighbors.

  • HASHING POWER

    The power of a mining rig. Similar in concept to the Horse Power of a vehicle.

  • HASH RATE

    The number of hashes a miner performs over a given period of time.

  • HODL

    First made popular in a post by a drunken Bitcoiner who advocated buying but not selling Bitcoin, it is now a meme to intentionally misspell “hold.” Hodlers see huge potential in the future of a cryptocurrency and don’t plan on selling anytime soon.

  • HOT WALLET

    An online wallet for storying cryptocurrencies. Considered less secure than cold wallets.

  • I2P

    Invisible Internet Project. A network layer that facilitates anonymous, censorship-resistant communication between users.

  • ICO

    Initial Coin Offering. An event in which a cryptocurrency project “goes public,” selling early coins in exchange for funds.

  • ILLIQUIDITY

    When an asset (i.e. coin) cannot be easily bought or sold due to a lack of buyers or sellers in a market. If there are only a handful of buyers or sellers the price may be substantially higher (due to few sellers charging a premium) or substantially lower (due to a few buyers demanding discounts).

  • IOT

    Internet of Things. The system that will digitally connect physical objects, making them identifiable and traceable online.

  • INFLATION

    The process of increasing a cryptocurrency's supply, which usually drives its price down.

  • INPUT

    Created each time coins are sent to an address.

  • JUMBLR

    A feature of Komodo that offers its users private payments. Jumblr works by exchanging the cryptocurrency being used for payment and mixing it among other cryptos prior to the making an anonymous transaction.

  • KIMOTO GRAVITY WELL

    An algorithm used to adjust mining difficulty so that all miners are given a fair chance at earning block rewards.

  • KYC

    Know Your Customer. Information gathered by cryptocurrency exchanges in compliance with AML (Anti Money Laundering) laws.

  • LEVERAGE

    Borrowed money used to trade assets.

  • LITECOIN

    A cryptocurrency forked from Bitcoin known primarily for its decreased block time, which (theoretically) allows for faster transactions.

  • LIGHTNING NETWORK

    A network layer that functions on top of the Bitcoin block chain and allows for a huge number of low-fee micro transactions.

  • LIQUIDITY

    The measure of how quickly an asset can be exchanged for usable currency.

  • LIQUIDITY SWAP

    A type of exchange used to make it easier for individuals to exchange assets for usable currency.

  • LTV

    LTV stands for Loan-to-value. The ratio expresses the amount of a loan compared to the value of an asset. For example: taking a $1,000 loan and putting up $2,000 worth of Bitcoin as collateral = 50% LTV. The loan is worth 50% of the Bitcoin collateral securing it.

  • MARGIN TRADING

    The practice of borrowing money to buy and sell assets.

  • MARKET CAP

    The total value of a cryptocurrency. Calculated by multiplying a coin’s price by its total supply.

  • MERGED MINING

    The process of allowing two different cryptocurrencies using the same consensus algorithm to be mined simultaneously.

  • METAMASK

    MetaMask is a Chrome extension which allows users to store and transact Ethereum and other ERC-20 tokens.

  • MICRO TRANSACTION

    A very small payment made possible with digital currencies.

  • MINER

    An individual that volunteers computing power to verify transactions on a block chain in exchange for block rewards.

  • MINER FEE

    A fee paid to voluntary participants for using their computing power to verify transactions. When a miner mines a block they get a block reward as well as all the transaction fees in it.

  • MINING

    The process by which new coins are created as transactions on a network are verified.

  • MINING ALGORITHM

    A mathematical problem that is solved by participants of a block chain to verify transactions in exchange for block rewards.

  • MINING CONTRACT

    An agreement that allows individuals to sell their computing power for the purposes of verifying transactions on a block chain.

  • MINING POOL

    A group of people online who agree to combine their mining rigs into one for more collective mining power. They split rewards evenly based on each person's mining power.

  • MINING RIG

    A mining rig is a computer used for mining cryptocurrencies. The rig might be a dedicated computer or it could be a computer that fills other needs too.

  • MINTING

    The process by which users on a PoS block chain verify transactions and receive new coins for their participation.

  • MIXING SERVICE

    A third party that enables anonymous transactions by grouping payments together, obscuring their sources.

  • MOBILE WALLET

    Software that allows individuals to store their cryptocurrencies on handheld devices.

  • MOON

    A cryptocurrency meme that refers to the skyrocketing of a coin's price. When Hodlers’ coins go to the Moon, they can all buy Lambos.

  • MNEMONIC

    A series of words that can be used to recover an account or wallet.

  • MULTI-LAYER

    When a block chain features several levels for scalability and encryption purposes, it can be said to be "Multi-Layered."

  • MULTISIG

    A feature that requires several keys to authorize a single transaction, especially for dividing responsibility among separate parties.

  • NAME COIN

    A cryptocurrency that allows data (and transactions) to be written onto its block chain.

  • NEO CONTRACTS

    Digital agreements between users on NEO's platform that are carried out automatically when their terms are met.

  • NODE

    A computer that runs a cryptocurrency’s software and validates transactions.

  • OFF BLOCKCHAIN TRANSACTIONS

    Transfer of value that takes place outside of a block chain for reduced fees and quicker transaction time.

  • OPSEC

    Operations Security. Refers to how well assets are protected.

  • ORACLE

    A third-party entity capable of transmitting reliable information to a block chain so that smart-contracts can be executed.

  • ORPHAN

    A block that is no longer a part of the original block chain because it was not verified by the majority of miners.

  • OTC EXCHANGE

    Over The Counter Exchange, also known as Off-Exchange Trading. Trades that occur between two parties rather than using a centralized exchange.

  • OUROBOROS

    Cardano's Proof-of-stake algorithm. It is used to randomly pick the next node to produce a block in. Ouroboros divides physical time into epochs, and then slots. Slot leaders have the sole right to produce one block and are chosen from the group of stakeholders.

  • PAPER WALLET

    A physical piece of paper containing a private key, a public key, and often corresponding QR codes.

  • PASS PHRASE

    Similar to a password but often longer. Where a password is generally a single word -- a pass phrase can be a combination of words.

  • PDL

    Short for Price Down Limit. PDL is a price set by DeFi platforms. If the collateral crypto price decreases below the PDL set , customers' collateral's will be sold.

  • PEER COIN

    A cryptocurrency that uses both PoW and PoS in its consensus mechanism to offer increased security.

  • PERMISSION LESS

    Permission less refers to public block chains (like Bitcoin) - anyone can generate an address and transact BTC.

  • POL

    PoI stands for Proof-of-Importance. It is a new consensus algorithm that requires users to stake currency to participate in the consensus. Compared to PoS, it adds importance to staking. Thus, it takes into account one’s involvement in the network. PoI was introduced by NEM.

  • POS

    Proof of Stake. A consensus mechanism in which individuals use their holdings of a cryptocurrency to secure the platform in exchange for rewards.

  • POST

    Proof of Stake and Trust. A consensus mechanism used by Waltonchain that relies on token holders (nodes) to verify transactions while retaining information about nodes' past performance to give higher rewards to the most reliable nodes.

  • POW

    Proof of Work. A consensus mechanism for verifying transactions with computing power that creates new coins in the process.

  • PREMINE

    A portion of the total supply of a cryptocurrency reserved for its founders. These funds are often marked as funds to pay developers or fund future ventures, but cryptocurencies with premines are generally viewed as less legitimate and fair those without premines.

  • PRESALE

    A public or private offering of tokens to interested investors, generally offering a cheaper price than the coin’s ICO price. Pre-sales are commonly seen as marketing gimmicks.

  • PRIVACY COIN

    Any cryptocurrency that focuses on maintaining private transactions between users. Examples are Dash, ZCash, and Monero.

  • PRIVATE KEY

    Private keys are used to spend cryptocurrencies.

  • PROOF OF BURN

    A consensus mechanism for verifying a block chain in which miners send coins to an unspendable address

  • PROOF OF EXISTENCE

    A process of storing information that cannot be changed or deleted.

  • PROOF OF IMPORTANCE

    Proof-of-Importance is a consensus algorithm similar to PoS. Nodes "vest" currency to participate in the creation of blocks. Unlike PoS, Proof-of-Importance quantifies a person’s support of the network. NEM is using Proof-of-Importance.

  • PROOF OF PROVENANCE

    PoP for short. A consensus mechanism used by DigixDAO to track the movements of physical assets, identify their ownership, and ensure their security.

  • PROOF OF STATE

    PoS. A method of minting new coins and securing a platform by allowing users to stake their coins and receive more coins as a reward. Introduced as an energy efficient alternative to PoW (Proof of Work).

  • PROOF OF WORK

    The consensus algorithm introduced by Bitcoin. PoW requires miners to compete against each other to add new block and earn rewards

  • QUANTUM COMPUTING

    An advanced form of computing that allows extremely complex problems to be solved very quickly. For cryptocurrency, quantum computing is important because once it is advanced enough, it may be capable of hacking private keys.

  • QUANTITATIVE EASING

    A method of increasing monetary supply (and lowering interest rates) by introducing new money to the market from a central authority.

  • QUANTUM RESISTANT TOKENS

    QRTs. Customizable tokens that can be created using Quantum Resistant Ledger. QRTs are resistant to attacks from quantum computing.

  • REDDIT

    A site that aggregates a nearly endless range of topics. Subreddits exist within Reddit to focus on specific topics.

  • REMITTANCE

    Transfer of currency across a large distance, usually across borders.

  • RESERVE MANAGER

    An individual that contributes their tokens to Kyber Network's Dynamic Reserve Pool to improve the platform's liquidity.

  • RIPPLE

    A platform that connects banks, payment providers, and digital asset exchanges to provide frictionless transactions.

  • SATOSHI

    The pseudonym of the original creator(s) of Bitcoin. Also the smallest sub-unit Bitcoin can be divided into: 1 Satoshi = 1/100,000,000 of a Bitcoin.

  • SCALABILITY

    A measure of how easily a cryptocurrency will be able to handle more users and increased transactions.

  • SCAM COIN

    An alt coin that is marketed as technology with potential, but is really just sold to make money with no promise of a future use case.

  • SEGWIT

    Segregated Witnesses. A protocol implemented by Bitcoin to increase transaction speed. SegWit allows more transactions to be written into a single block on a block chain.

  • SHARDING

    The process by which a full database is split into smaller databases called shards. Sharding helps with the scalability of cryptocurrencies.

  • SHILL

    Typically a person posing as a legitimate user of a product but who is, in fact, being paid or otherwise compensated to promote said product.

  • SHIT COIN

    A derogatory term used to describe altcoins that are based on faulty technology or have little promise for the future.

  • SIGNATURE

    A mathematical mechanism for combining a public address with a private address to ensure authenticity and prevent forging.

  • SMART BRIDGE

    A feature of the ARK cryptocurrency which allows separate block chains to connect with each other and communicate.

  • SMART COIN

    Price-stable cryptocurrencies that achieve stability through pegging their value to another asset, like the US dollar.

  • SMART MEDIA TOKEN

    A digital asset on the Steem block chain that can be launched by any user for the purpose of monetizing online content and encouraging positive user participation.

  • STABLE COIN

    Any cryptocurrency pegged to a stable asset for the purpose of reducing price volatility.

  • STAKER

    An individual that volunteers to lock some of their coins or tokens up to verify transactions on a block chain in exchange for staking rewards.

  • STAKING

    The act of locking up one's coins or tokens to help verify transactions for cryptocurrencies with Proof of Stake consensus mechanisms. Stakers earn staking rewards for providing this service.

  • STAKING REWARD

    An alternative to mining rewards. Staking rewards are earned by putting a certain amount of your cryptocurrency up as a 'stake' to confirm transactions. Rewards are given for doing this.

  • TETHER

    In the cryptocurrency sphere a Tether is a type of coin. This coin is ‘tethered’ or paired 1-to-1 with the U.S. Dollar.

  • TIMESTAMP

    A sequence of numbers used to identify the moment in time that a transaction occurred.

  • TOKEN

    A cryptocurrency created using another platform (like Ethereum). Tokens operate by using the technology of the platform on which they were created.

  • TOKENIZE

    The practice of creating digital assets that represent real-world physical assets.

  • TOTAL COIN SUPPLY

    A measure that describes how many coins of a given cryptocurrency can exist (after all mining is completed, if applicable).

  • TPS

    Transactions per second. A measure which describes how fast a cryptocurrency can handle its users' transactions.

  • TRADE VOLUME

    A measure of how frequently and how heavily a cryptocurrency is bought and/or sold during a given time period.

  • TRADING BOT

    Software preprogrammed to buy, sell, short, long or execute other trading strategies and commands when the owner is absent. Trading while asleep or away from the keyboard.

  • TRANSACTION FEE

    An amount of value that must be paid to transfer value on a block chain.

  • TREZOR

    The first hardware wallet, created by a Bitcoiner called “Slush.”

  • TWO FACTOR AUTHENTICATION

    Commonly known as 2FA. A measure of security used for protecting accounts. 2FA requires users to have not only a username and a password to login, but an extra piece of information, as well.

  • UIA

    User-Issued Assets, Tokens that can be created on the BitShares network.

  • USDT

    The acronym for stable coins issued by Tether Limited: U.S. Dollar Tether.

  • UTILITY TOKEN

    A unit of currency consumed in a process. For example, an arcade token that gets used when a game is played or a coin like BNB Binance token, which is used to pay exchange fees.

  • UTXO

    Unspent transaction output. For example, if an individual receives 1 BTC and holds it, they possess a UTXO.

  • VANITY ADDRESS

    Addresses that hold cryptocurrency. Instead of random alphanumeric strings, however, users with vanity addresses can choose specific words and phrases for their addresses, similar to vanity license plates,

  • VIRGIN COINS

    Coins which haven’t ever been spent. Virgin coins were mined and left alone.

  • WALLET

    Software or devices that contain public and private keys for storing cryptocurrencies

  • WHALE

    A very wealthy individual capable of making large trades.

  • XBT

    Ticker for Bitcoin used on Kraken and some other exchanges. Same as BTC.

  • XMR

    The native currency of Monero.

  • ZEROCOIN

    A cryptocurrency that uses the Bitcoin protocol but offers increased anonymity in transactions.

  • ZERO CONFIRMATION TRANSACTION

    Payment that has been broadcast but is still pending inclusion on a block chain.

  • ZK-SNARKS

    Zero-Knowledge Succinct Non-Interactive Argument of Knowledge. Zk-SNARKs is a technology which allows cryptocurrencies to shield transaction information from uninvolved parties.