New to crypto? This glossary covers the essential terms you will encounter when reading about Bitcoin, Ethereum, DeFi, and the broader blockchain ecosystem. Bookmark this page and refer back to it whenever you come across an unfamiliar term.
A
Altcoin
Any cryptocurrency other than Bitcoin. Examples include Ethereum (ETH), Solana (SOL), and Cardano (ADA). The term is short for “alternative coin.”
ATH (All-Time High)
The highest price a cryptocurrency has ever reached. When a coin “hits a new ATH,” it has surpassed its previous price record.
Airdrop
A distribution of free tokens to wallet holders, typically used by new projects to build awareness and reward early supporters.
B
Bitcoin (BTC)
The first and most well-known cryptocurrency, created in 2009 by the pseudonymous Satoshi Nakamoto. Bitcoin is a decentralised digital currency that operates on a peer-to-peer network without the need for intermediaries like banks.
Block
A collection of transactions bundled together and added to the blockchain. Each block contains a reference to the previous block, forming a chain.
Blockchain
A distributed, immutable ledger that records all transactions across a network of computers. It is the underlying technology behind Bitcoin and most cryptocurrencies.
Bridge
A protocol that allows tokens or data to be transferred between different blockchain networks. For example, a bridge might let you move ETH from Ethereum to the Polygon network.
C
Cold Wallet
A cryptocurrency wallet that is not connected to the internet, such as a hardware wallet or paper wallet. Cold wallets offer stronger security against hacking.
Consensus Mechanism
The method a blockchain uses to agree on the current state of the ledger. The two most common are Proof of Work (PoW) and Proof of Stake (PoS).
Custodial
A service where a third party holds your private keys and manages your crypto on your behalf, such as a centralised exchange. The opposite is non-custodial, where you control your own keys.
D
DAO (Decentralised Autonomous Organisation)
An organisation governed by smart contracts and token holder votes rather than a traditional management structure. DAOs are commonly used to manage DeFi protocols and investment funds.
DApp (Decentralised Application)
An application that runs on a blockchain network rather than a centralised server. DApps include decentralised exchanges, lending platforms, and games.
DCA (Dollar-Cost Averaging)
An investment strategy where you buy a fixed amount of a cryptocurrency at regular intervals, regardless of its price. DCA reduces the impact of short-term volatility.
DeFi (Decentralised Finance)
A broad category of financial services built on blockchain technology that operate without traditional intermediaries. DeFi includes lending, borrowing, trading, and yield farming.
DEX (Decentralised Exchange)
A cryptocurrency exchange that operates without a central authority, allowing users to trade directly from their wallets. Examples include Uniswap and SushiSwap.
E
Ethereum (ETH)
The second-largest cryptocurrency by market capitalisation. Ethereum is a programmable blockchain that supports smart contracts, enabling developers to build decentralised applications and tokens on top of it.
EVM (Ethereum Virtual Machine)
The runtime environment for executing smart contracts on the Ethereum network. Many other blockchains are “EVM-compatible,” meaning they can run Ethereum smart contracts.
F
Fiat
Government-issued currency that is not backed by a physical commodity, such as GBP, USD, or EUR. In the crypto world, “fiat” is used to distinguish traditional currencies from digital assets.
FOMO (Fear Of Missing Out)
The anxiety that you might miss a profitable opportunity. FOMO often drives impulsive buying during market rallies.
Fork
A change to a blockchain protocol. A hard fork creates a permanent split (e.g., Bitcoin Cash forking from Bitcoin), while a soft fork is a backward-compatible upgrade.
FUD (Fear, Uncertainty, and Doubt)
Negative or misleading information spread to drive down the price of a cryptocurrency. “Don’t fall for the FUD” is a common phrase in crypto communities.
G
Gas
The fee paid to process a transaction on the Ethereum network (and similar blockchains). Gas prices fluctuate based on network demand — higher demand means higher fees.
Genesis Block
The very first block in a blockchain. Bitcoin’s genesis block was mined by Satoshi Nakamoto on 3 January 2009.
H
Halving
An event that cuts the Bitcoin mining reward in half, occurring approximately every four years. Halvings reduce the rate of new Bitcoin creation and have historically preceded major price increases.
Hash Rate
The total computational power being used to mine and process transactions on a Proof of Work blockchain. A higher hash rate means a more secure network.
HODL
Crypto slang for holding onto your coins long-term rather than selling. Originally a misspelling of “hold” in a 2013 Bitcoin forum post, it became a rallying cry during market downturns.
Hot Wallet
A cryptocurrency wallet connected to the internet, such as a mobile app or browser extension. Hot wallets are convenient but more vulnerable to hacking than cold wallets.
L
Layer 1
The base blockchain network, such as Bitcoin, Ethereum, or Solana. Layer 1 refers to the main chain where transactions are finalised.
Layer 2
A secondary protocol built on top of a Layer 1 blockchain to improve scalability and reduce fees. Examples include Bitcoin’s Lightning Network and Ethereum’s Arbitrum and Optimism.
Liquidity
How easily an asset can be bought or sold without significantly affecting its price. High liquidity means there are many buyers and sellers, leading to tighter spreads and faster trades.
M
Market Cap
The total value of a cryptocurrency, calculated by multiplying the current price by the total supply in circulation. Market cap is used to rank and compare cryptocurrencies.
Mempool
The waiting area for unconfirmed transactions on a blockchain. When you send a Bitcoin transaction, it sits in the mempool until a miner includes it in a block.
Mining
The process of using computational power to validate transactions and add new blocks to a Proof of Work blockchain. Miners are rewarded with newly created coins and transaction fees.
N
NFT (Non-Fungible Token)
A unique digital token representing ownership of a specific item, such as digital art, music, or in-game assets. Unlike Bitcoin or ETH, each NFT is one-of-a-kind and cannot be exchanged on a like-for-like basis.
Node
A computer that runs blockchain software and maintains a copy of the ledger. Nodes validate transactions and help keep the network decentralised and secure.
O
Oracle
A service that feeds real-world data (such as prices, weather, or sports scores) into a blockchain so that smart contracts can react to external events. Chainlink is the most widely used oracle network.
P
Private Key
A secret cryptographic key that proves ownership of a cryptocurrency wallet and authorises transactions. Never share your private key — anyone who has it can access your funds.
Proof of Stake (PoS)
A consensus mechanism where validators are chosen to create new blocks based on the amount of cryptocurrency they have staked (locked up). Ethereum transitioned from Proof of Work to Proof of Stake in 2022.
Proof of Work (PoW)
A consensus mechanism where miners compete to solve complex mathematical puzzles to validate transactions and create new blocks. Bitcoin uses Proof of Work.
R
Rug Pull
A scam where the creators of a crypto project suddenly withdraw all funds and abandon the project, leaving investors with worthless tokens.
S
Satoshi
The smallest unit of Bitcoin, equal to 0.00000001 BTC. Named after Bitcoin’s creator, Satoshi Nakamoto.
Seed Phrase
A series of 12 or 24 words that can be used to recover a cryptocurrency wallet. Your seed phrase is the master backup for all your crypto — store it securely offline and never share it.
Smart Contract
A self-executing program stored on a blockchain that automatically enforces the terms of an agreement when predefined conditions are met. Smart contracts power DeFi, NFTs, and DAOs.
Stablecoin
A cryptocurrency designed to maintain a stable value, typically pegged to a fiat currency like the US dollar. Popular stablecoins include USDT (Tether), USDC, and DAI.
Staking
Locking up cryptocurrency in a Proof of Stake network to help validate transactions and earn rewards. Staking is similar to earning interest on a savings account.
T
Token
A digital asset created on an existing blockchain (such as Ethereum) rather than on its own chain. Tokens can represent anything from utility access to governance rights.
TVL (Total Value Locked)
The total amount of assets deposited in a DeFi protocol. TVL is a key metric for measuring the size and health of DeFi platforms.
W
Wallet
Software or hardware used to store, send, and receive cryptocurrency. Wallets hold your private keys and allow you to interact with the blockchain.
Web3
A vision for a decentralised internet built on blockchain technology, where users own their data, identity, and digital assets rather than relying on centralised platforms.
Whale
An individual or entity that holds a very large amount of cryptocurrency. Whale transactions can significantly move the market.
Y
Yield Farming
A DeFi strategy where users provide liquidity to protocols in exchange for rewards, often paid in the protocol’s native token. Yield farming can offer high returns but carries significant risk.