Cryptocurrency Terms and Concepts (A to Z)

Cryptocurrency terms can be confusing and overwhelming for those new to the world of digital currencies. To help you navigate this complex landscape, we have put together a glossary of essential terms that will provide you with a better understanding of the technology and concepts behind cryptocurrencies.

Whether you are a seasoned investor or just getting started, this guide will help you become more informed and confident in your cryptocurrency transactions.

From Bitcoin to Ethereum, from wallets to smart contracts, this glossary covers the most important terms you need to know to successfully navigate the exciting and ever-changing world of cryptocurrencies.

Term A	Definition
51% attack	A scenario where a single entity or group controls most of the computational power on a blockchain network, allowing them to manipulate transactions.
Address	A unique identifier used to send and receive cryptocurrency, associated with a specific wallet.
Airdrop	A distribution of cryptocurrency tokens to a large number of wallets, often as a marketing or promotional campaign.
Algorithm	A set of rules or instructions used to perform a specific task, such as mining cryptocurrency.
Altcoin	Any cryptocurrency other than Bitcoin, such as Ethereum, Litecoin, and Ripple.
ASIC	Application-specific integrated circuit. A specialized computer chip designed specifically for mining cryptocurrency.
ASIC-resistant	A characteristic of some cryptocurrencies, designed to make them resistant to mining using ASICs.
Atomic swap	A technology that allows users to exchange one cryptocurrency for another without the need for a centralized exchange.
Atomic unit	The smallest unit of a cryptocurrency, such as a Satoshi for Bitcoin.

Term B	Definition
Backward-compatible	Changes to the protocol of a blockchain that are compatible with the previous version of the protocol.
Bitcoin	The first and most well-known cryptocurrency, created in 2009 by the anonymous person or group known as Satoshi Nakamoto.
Bitcoin Cash	A cryptocurrency that split from the Bitcoin blockchain in 2017, to increase the block size limit and improve transaction processing speed.
Block	A package of data containing several cryptocurrency transactions, a timestamp and a cryptographic hash.
Block Explorer	A tool that allows users to view the contents of a blockchain, including transactions and blocks.
Block height	The number of blocks in a blockchain, starting from the Genesis block.
Block reward	The amount of cryptocurrency given to miners for adding a new block to the blockchain.
Blockchain	A decentralized digital ledger that records transactions across a network of computers.
Blockchain Explorer	A tool that allows users to view the contents of a blockchain, including transactions and blocks.
Bounty	A reward offered by a cryptocurrency project for completing a specific task or finding a bug or vulnerability in their code.
Bollinger Bands	A technical analysis tool used to measure volatility in the price of a cryptocurrency.
Bytecoin	A privacy-focused cryptocurrency.
Byzantine fault tolerance	The ability of a distributed system to continue functioning properly even in the presence of faulty nodes or malicious actors.
Byzantine generals problem	A theoretical problem in computer science that describes the difficulty of achieving consensus in a distributed system.

Term C	Definition
Central bank digital currency (CBDC)	A digital currency issued and backed by a central bank.
Centralized exchange	An exchange that is operated by a single company or organization, which holds custody of users’ funds.
Chain split	A scenario where a blockchain network splits into two separate chains due to a disagreement over the rules of the protocol.
Charlie Lee	The creator of Litecoin, a popular cryptocurrency that is based on the Bitcoin protocol.
Cold storage	A method of storing cryptocurrency offline, such as on a hardware wallet or paper wallet, to reduce the risk of theft.
Confirmations	The number of blocks that have been added to the blockchain since a particular transaction was included in a block. The more confirmations a transaction has, the more secure it is considered.
Confirmation time	The amount of time it takes for a transaction to be verified and added to the blockchain.
Consensus	The process by which a decentralized network of nodes agrees on the validity of transactions and the state of the blockchain.
CPU	Central processing unit. A computer chip that is commonly used for mining cryptocurrency.
Cryptanalysis	The practice of analyzing cryptographic algorithms and systems to identify weaknesses and vulnerabilities.
Cryptography	The practice of using mathematical algorithms to secure and protect information.
Cryptocurrency	A digital or virtual currency that uses cryptography for security and operates independently of a central bank. Examples include Bitcoin, Ethereum, and Litecoin.

Term D	Definition
DAO	Decentralized autonomous organization. An organization that is run by rules encoded as computer programs on the blockchain.
Darkcoin	A cryptocurrency that emphasizes privacy and anonymity, and has since been rebranded as Dash.
Decentralization	The principle of distributing power away from a central authority or organization. In the context of cryptocurrency, decentralization refers to the absence of a central authority controlling the currency.
Decentralized exchange (DEX)	An exchange that operates on a decentralized blockchain network, allowing users to trade cryptocurrency without the need for a central authority.
Decentralized finance (DeFi)	A term used to describe a variety of financial applications and services that are built on decentralized blockchain networks.
Delegated proof of stake (DPoS)	A consensus mechanism used by some cryptocurrencies, such as EOS, that allows token holders to vote for delegates who validate transactions and add them to the blockchain.
Difficulty	A measure of how hard it is to mine a block on the blockchain. It is adjusted regularly to maintain a consistent block time.
Difficulty adjustment	A process where the difficulty of mining a block on the blockchain is adjusted to maintain a consistent block time.
Digital asset	Any asset that is represented digitally, such as a cryptocurrency token or a digital representation of a physical asset.
Digital identity	A digital representation of an individual’s identity, used for authentication and verification purposes.
Digital signature	A cryptographic method used to verify the authenticity of a message or transaction.
Directed Acyclic Graph (DAG)	A data structure used in some cryptocurrencies, such as IOTA, to represent transactions.
Distributed ledger	A database that is stored on a network of computers, rather than a single server.
Distributed ledger technology (DLT)	A technology that uses a distributed database to maintain a record of transactions across a network of computers.
Dogecoin	A cryptocurrency that was created as a joke in 2013, but has since gained a cult following and significant value.
Daemon	A process that runs in the background on a computer and performs a specific task, such as verifying transactions on the blockchain.
Double spending	The act of spending the same cryptocurrency twice, by sending it to two different recipients at the same time. The blockchain prevents double spending by verifying transactions and maintaining a record of all previous transactions.

Term E	Definition
ERC-20	A standard for creating tokens on the Ethereum blockchain.
Electrum	A popular software wallet for Bitcoin.
Ethereum	A decentralized platform for building decentralized applications (dapps) and smart contracts.
Ethereum Classic	A cryptocurrency that split from the Ethereum blockchain in 2016, after a controversial hard fork.

Term F	Definition
Faucet	A website or application that gives away small amounts of cryptocurrency for free.
Fear of missing out (FOMO)	A psychological phenomenon where people invest in cryptocurrency based on the fear of missing out on potential gains.
Fiat currency	A government-issued currency that is not backed by a physical commodity, such as gold.
Fork	A change to the protocol of a blockchain that creates a new version of the blockchain with different rules.
Full node	A node on a blockchain network that maintains a complete copy of the blockchain and verifies all transactions.

Term G	Definition
Gas	The unit of measurement used to calculate transaction fees
GPU	Graphics processing unit. A computer chip that is commonly used for mining cryptocurrency.
Genesis block	The first block in a blockchain.
Gwei	A unit of measurement used to express the cost of a transaction on the Ethereum network.

Term H	Definition
Halving	A programmed reduction in the block reward for mining cryptocurrency, which occurs periodically to reduce the rate of new supply.
Hard cap	The maximum amount of funding that a cryptocurrency project can raise during an initial coin offering (ICO).
Hard fork	A type of fork that results in a permanent split in the blockchain and creates two separate networks.
Hardware wallet	A type of cryptocurrency wallet that stores the user’s private keys on a physical device, such as a USB drive.
Hash	A fixed-length string of characters generated by a hashing algorithm, which represents the data that was input into the algorithm.
Hash function	A mathematical algorithm used to convert data into a fixed-length string of characters, known as a hash.
Hash rate	The measure of a miner’s computational power used to verify transactions and add them to the blockchain.
Hashcash	A proof-of-work algorithm used to prevent spam in email systems, which inspired the development of Bitcoin’s proof-of-work consensus mechanism.
Hashing power	The measure of a miner’s computational power used to verify transactions and add them to the blockchain.
HODL	A slang term used by cryptocurrency enthusiasts to encourage long-term holding of their cryptocurrency investments, rather than selling during periods of volatility.
Hot wallet	A type of cryptocurrency wallet that is connected to the internet, and therefore more vulnerable to hacking.

Term I	Definition
ICO	Initial Coin Offering, a fundraising method used by new cryptocurrency projects to raise capital by selling tokens to investors.
ICO whitelist	A list of approved investors who are allowed to participate in an initial coin offering (ICO).
Immutable	A characteristic of the blockchain, meaning that it cannot be changed or deleted once data is added to the blockchain.
Initial distribution	The process of distributing a new cryptocurrency to early adopters and investors.
Initial exchange offering (IEO)	A fundraising method used by cryptocurrency projects, where tokens are sold through a cryptocurrency exchange.
Interoperability	The ability of different blockchain networks to communicate and exchange information with each other.
InstantSend	A feature of the Dash cryptocurrency that enables near-instant transactions.

Term K	Definition
Key derivation function (KDF)	A cryptographic algorithm used to derive a private key from a seed phrase or password.
Key pair	A pair of cryptographic keys used to encrypt and decrypt data, consisting of a public key and a private key.
KYC	Know Your Customer. A process used by cryptocurrency exchanges and other businesses to verify the identity of their customers and comply with anti-money laundering (AML) regulations.

Term L	Definition
Ledger	A record of all transactions on a blockchain network, maintained by all nodes on the network.
Lightning Network	A layer 2 payment protocol built on top of the Bitcoin blockchain, designed to enable faster and cheaper transactions.
Litecoin	A popular cryptocurrency that is based on the Bitcoin protocol, but has faster block times and lower transaction fees.

Term M	Definition
Mainnet	The live and operational version of a blockchain.
Market capitalization (market cap)	The total value of all units of a cryptocurrency that are in circulation.
Masternode	A full node on a cryptocurrency network that performs additional functions, such as verifying transactions and participating in consensus.
Maximum supply	The maximum number of units of a cryptocurrency that will ever be created.
Merkle tree	A data structure used in the blockchain to efficiently store and verify the integrity of large amounts of data.
Micropayment	A small payment, typically less than a cent, that is made online.
Mining	The process of verifying transactions on the blockchain and adding them to the public ledger. Miners use powerful computers to solve complex mathematical problems and receive newly created cryptocurrency as a reward.
Mining pool	A group of miners who combine their computing power to increase their chances of mining a block and receiving the associated block reward.
Mining rig	A specialized computer system that is designed for mining cryptocurrency.
Mnemonic phrase	A sequence of words used to derive a private key for a cryptocurrency wallet.
Multi-signature	A feature of some cryptocurrency wallets that requires multiple signatures to authorize a transaction.
Multisig	Short for multi-signature, a feature of some cryptocurrency wallets that requires multiple signatures to authorize a transaction.

Term N	Definition
NEO	A smart contract platform and cryptocurrency for building decentralized applications.
Node	A computer on a cryptocurrency network that validates transactions and maintains the blockchain.
Non-fungible token (NFT)	A unique type of cryptocurrency token that represents a specific asset, such as artwork or collectibles.
Nonce	A random number used in the proof-of-work consensus mechanism to find a valid block hash.

Term O	Definition
OTC	Over-the-counter. Refers to trading that occurs outside of a cryptocurrency exchange.
Off-chain	Refers to transactions that occur outside of the blockchain network.
On-chain	Refers to transactions that are recorded and processed on the blockchain network.
Oracles	Third-party services that provide data to smart contracts on the blockchain.
Orphan block	A valid block on the blockchain that is not part of the main chain due to being mined at the same time as another block.

Term P	Definition
Paper wallet	A type of cold storage for cryptocurrency, consisting of a printed piece of paper with the user’s private key.
Payment gateway	A service that allows merchants to accept cryptocurrency payments online.
Peer-to-peer (P2P)	A network architecture where participants communicate directly with each other, rather than through a central authority.
Pay-to-script-hash (P2SH)	A Bitcoin transaction type that allows more complex scripts to be used in transactions.
Permissioned blockchain	A blockchain that requires permission to access and participate, typically used in enterprise settings.
Permissionless blockchain	A blockchain that can be accessed and participated in by anyone, without requiring permission.
Plasma	A scaling solution for the Ethereum blockchain that enables off-chain transactions.
Private blockchain	A blockchain that is permissioned, meaning that access is restricted to a specific group of users or organizations.
Private key	A secret key used to access and control a cryptocurrency wallet and authorize transactions.
Proof of work (PoW)	A consensus mechanism used by some cryptocurrencies, where miners must solve a cryptographic puzzle to verify transactions and add them to the blockchain.
Proof of stake (PoS)	A consensus mechanism used by some cryptocurrencies, where token holders are selected to validate transactions and add them to the blockchain based on their stake in the network.
Public blockchain	A blockchain that is open and permissionless, meaning that anyone can join the network and participate in transaction verification.
Public key	A key used to receive cryptocurrency payments and verify transactions on the blockchain.
Pump and dump	A fraudulent trading scheme where a group of investors artificially inflate the price of a cryptocurrency, before selling their holdings and causing the price to crash.

Term

Definition

QR code

A code made up of black and white squares, which can be scanned by a smartphone camera to store or transmit data.

Term R	Definition
Reorg	A process where the blockchain is reorganized due to a change in the underlying consensus rules.
Raiden Network	A layer 2 payment protocol built on top of the Ethereum blockchain, designed to enable faster and cheaper transactions.
Ransomware	Malware that encrypts a victim’s files and demands payment in cryptocurrency in exchange for the decryption key.
Regulator	A government agency or entity responsible for regulating and overseeing the use of cryptocurrencies and related activities.
Ripple	A cryptocurrency and payment protocol designed for fast and cheap international transfers.
RippleNet	A global payment network built on top of the Ripple cryptocurrency and designed for fast and cheap international transfers.

Term S	Definition
Satoshi	The smallest unit of a Bitcoin, named after its anonymous creator, Satoshi Nakamoto. One Bitcoin contains 100 million Satoshis.
Scaling	The process of improving the speed and capacity of a blockchain network to accommodate more transactions and users.
SEC	Securities and Exchange Commission. A US government agency responsible for regulating securities and enforcing securities laws.
Seed phrase	A sequence of words used to generate a private key for a cryptocurrency wallet.
SegWit	Segregated Witness. A protocol upgrade for the Bitcoin blockchain that increases the block size limit and improves transaction processing efficiency.
SHA-256	A cryptographic hashing algorithm used by the Bitcoin blockchain to verify transactions and mine new blocks.
Sharding	A technique used to partition a blockchain network into smaller, more manageable shards, to improve scalability.
Sidechain	A separate blockchain network that is interoperable with another blockchain network, allowing for more complex and varied transactions.
Signature	A digital signature used to authenticate a transaction on the blockchain.
Silk Road	An infamous online black market that was shut down by law enforcement in 2013, and was one of the early adopters of Bitcoin as a payment method.
Smart contract	A self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. They run on the blockchain and can automate the process of verifying and enforcing the terms of a contract.
Smart property	A digital asset that is linked to a smart contract and can be managed and traded on the blockchain.
Solidity	A programming language used to write smart contracts on the Ethereum blockchain.
Solidus Bond	A theoretical cryptocurrency proposal that combines the security benefits of proof-of-work and proof-of-stake consensus mechanisms.
Soft cap	The minimum amount of funding that a cryptocurrency project needs to raise during an initial coin offering (ICO).
Soft fork	A type of fork that does not result in a permanent split in the blockchain, but instead creates a new set of rules that are backward-compatible with the old rules.
Stable value coin	A type of cryptocurrency that is designed to maintain a stable value, typically by being backed by a stable asset, such as the US dollar.
Stablecoin	A cryptocurrency that is pegged to the value of a stable asset, such as the US dollar.
State channel	A type of off-chain transaction used to enable fast and cheap micropayments.
Stellar	A cryptocurrency and payment protocol designed for fast and cheap international transfers.
Stop loss	An order placed by a trader to automatically sell a cryptocurrency asset if the price drops below a certain threshold.
Supply	The total number of units of a cryptocurrency that are in circulation or that will ever be created.
Sybil attack	A type of attack on a blockchain network, where a single user creates multiple fake identities to gain control over the network.

Term T	Definition
Token	A unit of value created and managed by a cryptocurrency project. It can represent an asset, utility, or security.
Token sale	A fundraising method used by cryptocurrency projects, where tokens are sold to investors in exchange for cryptocurrency or fiat currency.
Testnet	A separate blockchain network used for testing and experimentation, separate from the main network.
Tangle	A distributed ledger technology used by the IOTA cryptocurrency, which is based on a directed acyclic graph (DAG) rather than a traditional blockchain.
Tor	The Onion Router. A network designed for anonymous communication over the internet, often used to access the dark web and protect the privacy of cryptocurrency transactions.
TPS	Transactions per second. A measure of the speed and scalability of a blockchain network.
Transaction fee	A fee paid by the sender of a cryptocurrency transaction to incentivize miners to add the transaction to the blockchain.
Turing completeness	The ability of a programming language or system to perform any computable function, used to describe the flexibility and power of smart contracts on the blockchain.
Two-factor authentication (2FA)	A security measure that requires users to provide two forms of authentication, such as a password and a security token, to access their cryptocurrency accounts.

Term U	Definition
UTXO	Unspent transaction output. A type of data structure used in the Bitcoin blockchain to represent unspent transaction outputs.
Unconfirmed transaction	A transaction that has been broadcast to the blockchain network but has not yet been verified and added to the blockchain.
Utility token	A type of cryptocurrency token that represents access to a specific product or service on a blockchain network.

Term V	Definition
Validator	A node on a blockchain network that participates in consensus and validates transactions.
Vanity address	A custom-made cryptocurrency address that contains a specific word or phrase.
Virtual machine	A software environment that emulates a computer system and allows for the execution of code and applications on the blockchain.
Vulnerability	A weakness or flaw in a blockchain system that can be exploited by attackers to compromise the security and integrity of the network.

Term W	Definition
Wallet	A digital tool or program that stores, sends and receives cryptocurrency. There are various types of wallets, including software, hardware, and paper wallets.
Web3	A term used to describe the vision of a decentralized web, where blockchain networks and decentralized applications are integrated into the internet infrastructure.
Whitepaper	A document published by a cryptocurrency project that outlines its goals, technology, and development roadmap. The whitepaper provides investors and users with information about the project and is often used as a marketing tool to attract funding.

Term

Definition

XRP

A cryptocurrency used in the RippleNet payment network.

Term

Definition

Yearn.finance

A decentralized finance platform that allows users to earn yield on their cryptocurrency investments.

Term Z	Definition
Zcash	A cryptocurrency that uses advanced cryptography to provide enhanced privacy and security features, such as zero-knowledge proofs.
Zero-knowledge proof	A method of proving that a statement is true without revealing any additional information beyond the truth of the statement itself.
Zilliqa	A blockchain platform that uses sharding to increase transaction throughput and achieve scalability.
Zero confirmation transaction	A cryptocurrency transaction that has been broadcast to the network but has not yet been confirmed and added to the blockchain. Also known as an unconfirmed transaction.