Crypto Glossary

A free distribution of tokens to wallet addresses, usually to reward early users or bootstrap a community. Legitimate airdrops never ask for your private key or a payment to claim — that request is always a scam.

Any cryptocurrency other than Bitcoin. The term covers everything from established networks like Ethereum to tokens created last week, so it says nothing about quality.

Automated Market Maker. A decentralised exchange design where trades happen against a pool of deposited assets rather than a traditional order book, with prices set by a formula based on the pool's balance.

Annual Percentage Yield — the return on a deposit over a year including compounding. Advertised crypto yields are often paid in a volatile token, so a high APY can still lose money in dollar terms.

All-Time High and All-Time Low — the highest and lowest price an asset has ever traded at. Useful context, but a price near its all-time high is not by itself a reason to buy or sell.

A sustained period of falling prices, conventionally a decline of 20% or more from recent highs. Crypto bear markets have historically lasted a year or longer and seen drawdowns far deeper than that.

A shared ledger maintained by many computers at once, where transactions are grouped into blocks and each block references the one before it. Changing an old record would require redoing every block after it, which is what makes the history practically tamper-resistant.

A website for reading a blockchain directly — looking up a transaction, checking a wallet balance, or confirming whether a transfer went through. Because the data is public, anyone can verify a transaction independently.

A service that moves assets between blockchains, usually by locking the asset on one chain and issuing a representation on another. Bridges hold large balances and have been among the most heavily exploited targets in crypto.

A sustained period of rising prices and broad optimism. Crypto bull markets tend to draw in new participants near the top, which is also when risk is highest.

Permanently removing tokens from circulation by sending them to an address nobody controls. Burning reduces supply, though whether that supports the price depends entirely on whether demand holds.

Centralised Exchange — a company that holds your funds and matches trades internally, such as Coinbase or Binance. Convenient and liquid, but you are trusting the company with custody.

The number of tokens currently available to trade, excluding those locked, reserved or not yet issued. Market cap uses this figure, which is why a token can look small while a much larger supply waits to be unlocked.

A wallet whose private keys have never touched an internet-connected device, typically a hardware device or paper backup. The standard recommendation for holdings you do not need to access frequently.

Custodial means someone else holds your private keys — an exchange, usually. Non-custodial means you hold them, and nobody can freeze, seize or lose your funds on your behalf. The trade-off is that nobody can recover them either.

Decentralised Autonomous Organisation — a group coordinating through on-chain voting rather than a traditional company structure. Voting power usually follows token holdings, so large holders often decide outcomes.

Decentralised Finance — lending, borrowing, trading and derivatives run by smart contracts rather than institutions. It removes the need to trust an intermediary and replaces it with the need to trust code.

Decentralised Exchange — trading directly from your own wallet through smart contracts, with no company holding your funds. You keep custody, but there is no support desk if you make a mistake.

Community slang for holding through volatility versus selling under pressure. Worth recognising as social pressure rather than analysis — neither is a strategy.

A token balance too small to be worth moving, because the network fee would exceed its value. Some scams send tiny amounts to many wallets to track them or bait interaction.

Government-issued currency such as dollars, euros or pounds. On-ramps convert fiat to crypto; off-ramps convert it back.

A change to a blockchain's rules. A soft fork stays backwards-compatible; a hard fork does not, and if participants disagree the chain can split into two, as Bitcoin and Bitcoin Cash did.

Fear, Uncertainty and Doubt, and Fear Of Missing Out. Both terms get used to dismiss legitimate concern or to justify rushed decisions. Treat either label as a reason to slow down.

The fee paid to have a transaction processed. Gas is priced by network demand, so the same transfer can cost cents when the network is quiet and a great deal more when it is busy.

A scheduled reduction in the rate new Bitcoin is created, occurring roughly every four years. It is the mechanism enforcing Bitcoin's fixed supply cap, and is widely watched though its price effect is heavily debated.

A wallet on an internet-connected device — a phone or browser extension. Convenient for regular use, and the correct place for small amounts rather than long-term holdings.

The loss a liquidity provider takes when the assets they deposited change in relative price. The name is misleading: it becomes permanent the moment you withdraw, and can exceed the fees earned.

Know Your Customer — the identity verification regulated exchanges must perform. Services offering to skip it are usually operating outside the law, which puts your funds at risk.

Layer 1 is a base blockchain such as Bitcoin or Ethereum. Layer 2 is a network built on top to process transactions more cheaply, settling back to the base chain periodically.

How easily an asset can be bought or sold without moving its price. Thin liquidity is the reason a small token can jump on a modest order — and why selling it can be far harder than buying it.

The forced closure of a leveraged position when its collateral falls below a required threshold. Liquidations happen automatically and can cascade, which is a common cause of sudden crypto crashes.

Price multiplied by circulating supply. It is the standard way to compare size, but it is not money invested — it is what every existing token would be worth if all of them could sell at the current price, which they could not.

A market order executes immediately at whatever price is available. A limit order executes only at your specified price or better, and may never fill. On illiquid assets a market order can fill far from the quoted price.

A token whose value rests on community and attention rather than technology or revenue. Moves are larger and faster than the rest of the market in both directions.

Competing to add the next block by expending computing power, used by Bitcoin and other proof-of-work chains. Miners are rewarded with new coins and transaction fees.

Non-Fungible Token — a token representing ownership of one specific item rather than an interchangeable unit. Unlike a coin, each is distinct, and each must find its own buyer to sell.

A computer running blockchain software and holding a copy of the ledger. Nodes independently verify transactions, which is what allows the network to function without a central authority.

The secret that controls a wallet. Anyone who has it has your funds, permanently and irreversibly. No legitimate service will ever ask for it — every request for one is theft.

A consensus method where validators lock up tokens as collateral rather than expending computing power. It uses far less energy than mining and is what Ethereum moved to in 2022.

A consensus method where participants expend computing power to add blocks. It is energy-intensive by design — that cost is what makes rewriting history expensive.

A scam where a project's creators drain the liquidity or dump their holdings, leaving buyers with a token they cannot sell. Common warning signs are anonymous teams, unlocked liquidity and supply concentrated in a few wallets.

The difference between the price you expected and the price you got. It grows with order size and shrinks with liquidity, and can be severe on thinly traded tokens.

A program stored on a blockchain that runs automatically when its conditions are met. It cannot be altered once deployed, which is a strength for predictability and a weakness when there is a bug.

A token designed to hold a steady value, usually one dollar. Some are backed by reserves of cash and bonds; others rely on algorithms, and several of those have collapsed. The backing matters far more than the peg.

Locking tokens to help secure a proof-of-stake network in exchange for rewards. Staked tokens are often subject to an unbonding period during which they cannot be sold.

A scheduled release of tokens previously locked for the team or early investors. Large unlocks add supply and frequently coincide with price weakness, and schedules are usually public in advance.

How a token's supply is created, distributed and destroyed — total supply, who holds it, unlock schedules and any burn mechanism. Often more predictive of long-term price than the technology.

TVL — the value of assets deposited in a DeFi protocol. A rough measure of scale that is easily overstated, since it moves with token prices and the same asset can be counted in several protocols.

The value traded over a period, usually 24 hours. High volume means an asset can be entered and exited more easily; reported volume has historically been inflated on some venues, so treat outliers sceptically.

The public identifier you share to receive funds. Always verify the whole string, not just the first and last characters — malware exists specifically to swap a copied address for an attacker's.

A holder large enough to move a market by trading. On small tokens a whale exiting can halve the price, which is why checking how concentrated ownership is matters.

A token representing an asset from another chain, such as wrapped Bitcoin on Ethereum. It relies on whoever holds the underlying asset actually holding it, which is a trust assumption worth understanding.