Crypto Glossary

An airdrop is a marketing or distribution method in which a blockchain project sends tokens, free of charge, to a large number of wallet addresses. Recipients may qualify by holding a particular coin, using a protocol, or completing simple tasks.

Airdrops can build awareness and decentralise ownership, but they are also used by scammers. Treat unexpected tokens with caution and never connect your wallet to an unknown site to “claim” one.

“Altcoin” is short for “alternative coin” and refers to any cryptocurrency that is not Bitcoin. The term covers tens of thousands of assets, from large, established networks to tiny, speculative tokens.

Altcoins vary enormously in purpose and risk. Some power smart-contract platforms, others are stablecoins or governance tokens, and many have little real use at all.

A bear market is an extended stretch of declining prices, typically accompanied by pessimism and reduced trading activity. In crypto, drawdowns of 50% or more from a peak are common during bear markets.

The opposite condition is a bull market. Market mood can be gauged with sentiment tools such as the Crypto Fear & Greed Index.

A blockchain is a digital ledger that records transactions in batches called blocks, each cryptographically linked to the one before it. The ledger is replicated across many independent computers, so no single party controls it and past records are extremely difficult to alter.

This shared structure is what lets cryptocurrencies operate without a central authority. Networks agree on the ledger’s contents using a consensus mechanism such as proof of work or proof of stake.

A bull market is an extended period in which prices trend upward and investor confidence is high. Crypto bull markets can be dramatic, with major assets multiplying in value over months.

Rising optimism can tip into excess, so periods of strong gains often carry elevated risk. The opposite condition is a bear market.

A cold wallet stores the private keys that control your crypto offline — for example on a hardware device or a piece of paper — so they are never exposed to an internet-connected computer.

Because they are not online, cold wallets are much harder for attackers to reach than “hot” (connected) wallets, making them a common choice for long-term storage.

DeFi, short for “decentralised finance,” refers to financial services — lending, borrowing, trading, earning yield — delivered through smart contracts on public blockchains instead of banks or brokers.

DeFi can offer open, permissionless access, but it also carries risks including smart-contract bugs, volatile collateral, and a lack of consumer protection.

Dollar-cost averaging (DCA) is the practice of investing a set amount of money at regular intervals — say weekly or monthly — rather than all at once. This spreads purchases across many prices and removes the pressure to time the market.

DCA does not guarantee a profit and does not protect against loss in a falling market, but it can reduce the impact of volatility. You can test the approach with our DCA Calculator.

A crypto exchange is a marketplace for buying, selling, and trading digital assets. Centralised exchanges are run by companies that hold customer funds and match orders, while decentralised exchanges let users trade directly from their own wallets via smart contracts.

Leaving assets on a centralised exchange means trusting that company to safeguard them — the origin of the common warning, “not your keys, not your coins.”

Fiat money is currency issued and backed by a government rather than by a physical commodity like gold. The US dollar, euro, and Japanese yen are all fiat currencies.

In crypto, “fiat” usually refers to traditional money used to buy digital assets. Stablecoins are designed to track the value of a fiat currency.

A fork happens when a blockchain’s software rules change. A soft fork is backward-compatible, while a hard fork is not and can split the network into two chains with separate histories going forward.

Notable hard forks have produced entirely new cryptocurrencies when communities disagreed on a network’s direction.

A gas fee is the payment required to have a transaction or smart-contract operation included in a block. It compensates the validators or miners who secure the network and process the work.

Fees rise and fall with demand for block space. On busy networks, gas fees can spike significantly during periods of heavy activity.

A halving is a pre-programmed event that reduces the reward paid to miners for adding a new block by 50%. Bitcoin halves roughly every four years, gradually slowing the creation of new coins until its supply cap is reached.

Because halvings reduce new supply, they attract close attention, though their effect on price is debated and never guaranteed.

HODL originated as a misspelling of “hold” in an early Bitcoin forum post and has since become shorthand for holding through volatility instead of trading in and out.

It is often backronymed as “hold on for dear life.” HODLing is a strategy, not advice — long-term holders can still suffer large losses.

Liquidity measures how easily an asset can be traded without causing a large change in its price. A highly liquid market has many buyers and sellers and tight spreads; a thin market does not.

Low liquidity can lead to slippage, where a trade executes at a worse price than expected, and makes prices easier to manipulate.

Market capitalisation (market cap) is a measure of a cryptocurrency’s total value, found by multiplying its current price by the number of coins in circulation.

Market cap is widely used to rank and compare assets, but it can be misleading: a low price does not mean a coin is “cheap,” and thinly traded tokens can show large caps on very little real liquidity.

Mining is the process by which proof-of-work networks validate transactions and create new coins. Miners compete to solve a computational puzzle; the winner adds the next block and receives a reward plus fees.

Mining secures the network but consumes significant electricity, which is one reason some projects use proof of stake instead.

An NFT, or non-fungible token, is a unique digital certificate of ownership recorded on a blockchain. Unlike a coin, each NFT is one-of-a-kind and cannot be swapped one-for-one with another.

NFTs are used for digital art, collectibles, in-game items, and proof of membership. Their value depends entirely on what buyers are willing to pay and can be highly volatile.

A private key is a secret string of data that proves ownership of a crypto address and authorises transactions from it. Anyone who holds the private key controls the funds.

For this reason it must never be shared. Its counterpart, the public key, can be shared freely to receive funds. Losing a private key usually means losing access permanently.

Proof of stake (PoS) is a way of securing a blockchain in which participants called validators lock up, or “stake,” their coins for the right to propose and confirm blocks. Acting dishonestly can cost them their stake.

PoS uses far less energy than proof of work and underpins many modern networks. Holders can often earn rewards by staking.

Proof of work (PoW) is the original blockchain consensus mechanism, used by Bitcoin. Miners expend computing power to solve a difficult mathematical puzzle, and the first to succeed adds the next block and earns a reward.

PoW is highly secure but energy-intensive. The competitive process is known as mining.

A public key is derived mathematically from a private key and is used to generate the address others send funds to. It can be shared openly without putting your holdings at risk.

The relationship only works one way: a public key can be created from a private key, but the private key cannot be reverse-engineered from the public key.

A smart contract is a program stored on a blockchain that automatically executes when predefined conditions are satisfied, without needing an intermediary to enforce it.

Smart contracts power DeFi, NFTs, and most blockchain applications. Because the code is final once deployed, bugs can be costly and irreversible.

A stablecoin is a cryptocurrency engineered to maintain a stable price, most often pegged one-to-one to a fiat currency such as the US dollar.

Stablecoins are used to move value, trade, and park funds without converting back to traditional money. Their stability depends on how they are backed — by cash reserves, other crypto, or algorithms — and pegs can and do break.

Staking means committing your coins to support the operation of a proof-of-stake blockchain. In return, stakers can earn rewards, similar in spirit to interest.

Staking carries risks: funds may be locked for a period, rewards vary, and a validator that misbehaves can be penalised. Rewards are never guaranteed.

A token is a digital asset issued on an existing blockchain rather than running on its own dedicated network. Tokens can represent many things: governance rights, access to a service, a stablecoin, or a stake in a project.

This differs from a “coin,” which is native to its own blockchain. Creating a token is relatively easy, so they range widely in quality and legitimacy.

Volatility describes how sharply and frequently an asset’s price changes. Crypto is known for high volatility: double-digit percentage swings in a single day are not unusual.

High volatility means greater potential gains but also greater risk of loss. Strategies such as dollar-cost averaging aim to soften its impact.

A crypto wallet stores the private keys that let you access and spend your assets. It does not hold the coins themselves — those live on the blockchain — but controls the keys that prove ownership.

Wallets range from convenient “hot” apps connected to the internet to more secure offline cold wallets for long-term storage.

A whale is a holder with enough of a given cryptocurrency to influence its market. When a whale buys or sells in size, the trade can move the price, especially in markets with low liquidity.

Analysts often watch large wallet movements for clues about market direction, though such signals are far from reliable.