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Crypto glossary: 57 terms explained
Plain-language definitions of the words you will meet when trading crypto, from blockchain basics to futures and risk management.
- Airdrop
An airdrop is a free distribution of tokens to wallets, often to reward early users or promote a pro… - Altcoin
An altcoin is any cryptocurrency other than Bitcoin. The word is short for "alternative coin" and co… - APR and APY
APR is a yearly rate without compounding. APY includes compounding. Both estimate how much a deposit… - Automated market maker
An automated market maker (AMM) is a decentralized exchange design that prices trades using a formul… - Bear market
A bear market is a prolonged period of falling prices, often defined as a drop of 20% or more from a… - Bid-ask spread
The spread is the gap between the highest price buyers will pay (bid) and the lowest price sellers w… - Bitcoin
Bitcoin is the first cryptocurrency, launched in 2009. It uses a proof-of-work blockchain and has a … - Blockchain
A blockchain is a shared database that records transactions in linked blocks. Thousands of computers… - Bull market
A bull market is a period when prices are broadly rising and investor confidence is high.… - Candlestick
A candlestick shows the open, high, low and close price for one time period on a chart.… - Circulating supply
Circulating supply is the number of coins that are currently available to trade, as opposed to locke… - Cold wallet
A cold wallet keeps private keys offline, for example on a hardware device or paper backup.… - Consensus mechanism
A consensus mechanism is the set of rules a blockchain uses so participants agree on which transacti… - dApp
A dApp, or decentralized application, is an app whose back end runs on smart contracts instead of a … - DeFi
DeFi, short for decentralized finance, is a set of financial services such as trading and lending bu… - Dollar-cost averaging
Dollar-cost averaging (DCA) means buying a fixed amount at regular intervals regardless of price.… - Drawdown
A drawdown is the fall from a peak value to a later low.… - Fully diluted valuation
Fully diluted valuation (FDV) is price multiplied by the maximum or total future supply of a token.… - Funding rate
The funding rate is a periodic payment between long and short traders in perpetual futures that keep… - Gas fee
A gas fee is the payment you make to have a transaction processed on a blockchain such as Ethereum.… - Halving
A halving is a scheduled event, about every four years, that cuts Bitcoin's block reward in half. It… - Hot wallet
A hot wallet is connected to the internet, such as a mobile app or browser extension.… - KYC
KYC, or know your customer, is the identity check that regulated platforms perform before allowing d… - Layer 2
A layer 2 is a network built on top of a base blockchain to process transactions faster and more che… - Leverage
Leverage lets you open a position larger than your own capital by borrowing, which multiplies both g… - Limit order
A limit order buys or sells only at your chosen price or better.… - Liquidation
Liquidation is the forced closing of a leveraged position when your margin can no longer cover losse… - Liquidity
Liquidity is how easily an asset can be bought or sold without moving its price much.… - Long and short
Going long means betting the price will rise. Going short means betting it will fall, usually throug… - Margin
Margin is the collateral you put up to open and maintain a leveraged position.… - Market capitalization
Market capitalization is a coin's price multiplied by its circulating supply. It is a rough measure … - Market order
A market order buys or sells immediately at the best available price.… - Mining
Mining is the process of using computers to validate transactions and create new blocks on a proof-o… - Node
A node is a computer that runs blockchain software and keeps a copy of the ledger.… - Order book
An order book is a live list of buy and sell orders at different prices for a market.… - Perpetual futures
A perpetual future is a derivative contract that tracks an asset's price and has no expiry date. A f… - Private key
A private key is the secret that proves ownership of crypto in a wallet. Whoever has it controls the… - Proof of stake
Proof of stake is a consensus method where validators lock up coins as a deposit for the right to ad… - Proof of work
Proof of work is a consensus method where miners spend computing power to add blocks. Bitcoin uses i… - Risk management
Risk management is the set of rules you follow to limit losses, such as position sizing, stop-losses… - Seed phrase
A seed phrase is a list of 12 or 24 words that can restore a wallet and its private keys.… - Slippage
Slippage is the difference between the price you expected and the price you actually got, caused by … - Smart contract
A smart contract is a program stored on a blockchain that runs automatically when its conditions are… - Stablecoin
A stablecoin is a crypto token designed to keep a steady value, usually pegged to a currency such as… - Staking
Staking means locking crypto to help run a proof-of-stake network or protocol in exchange for reward… - Stop-loss
A stop-loss is an order that closes a position automatically if the price reaches a level you set.… - Support and resistance
Support is a price area where buyers have tended to step in. Resistance is where sellers have tended… - Take profit
A take-profit order closes a position automatically when the price reaches your profit target.… - Token
A token is a digital asset created on top of an existing blockchain, as opposed to a coin that has i… - Tokenomics
Tokenomics describes a token's supply, distribution, release schedule and uses.… - Trading pair
A trading pair shows two assets that can be exchanged, such as BTC/USDT, where BTC is priced in USDT… - Trading volume
Trading volume is the amount of an asset traded in a given period.… - Two-factor authentication
Two-factor authentication (2FA) adds a second proof of identity, such as a code, on top of your logi… - USDT
USDT, or Tether, is the largest dollar-pegged stablecoin and a very common trading pair on exchanges… - Validator
A validator is a participant in a proof-of-stake network that checks transactions and proposes block… - Volatility
Volatility measures how much and how fast a price moves. Crypto is typically more volatile than trad… - Whale
A whale is a person or entity that holds a very large amount of a cryptocurrency.…