The past decade has witnessed the exponential growth of cryptocurrencies with more and more people adopting digital tokens and investing in them.

To succeed in crypto, it’s important to know the basic terminology. This knowledge will help you understand information better and aid you in becoming a better investor who makes well-informed choices. Crypto literacy is your ultimate key to success in this industry.

Below is a glossary of terms and acronyms used in the crypto and blockchain sectors.

Key Terms in the Crypto and Blockchain Sectors

A

• Accumulation phase: During this phase, institutional investors gradually begin acquiring assets, indicating the potential for a forthcoming positive uptrend.
• Airdrop: A token distribution method used to send cryptocurrency or tokens to wallet addresses.
• Altcoins: Short for Alternative coin refers to any digital currency that was introduced after Bitcoin and Ethereum. Altcoins could be completely new technologies or forks of existing cryptocurrencies.
• AML (Anti Money Laundering): A software intermediary that allows two separate applications to communicate with one another. APIs define methods of communication between various components.
• API: Application programming interface that enables the interface between a blockchain and another software.
• ASIC: In the context of cryptocurrency mining, ASICS – Application-Specific Integrated Circuits – undertake calculations with the aim of discovering values that yield the sought-after solution when incorporated into a hashing algorithm.
• Attestation: In the Proof-of-Stake mechanism, each validator offers an attestation or vote in support of a block it aligns with. This process leads to the establishment of consensus and the validation of both the block and the transactions it encompasses.

B

• Bag: In crypto slang, this refers to a significant quantity of a specific digital currency. On occasion, albeit less commonly, it may also refer to the assets held within an individual’s cryptocurrency investment portfolio.
• Bear/Bearish market: This is the opposite of a bull market, where market prices are seen to be declining over a consistent period of time.
• Blockchain: A decentralised platform for data storage where information can be replicated and dispersed throughout a network of computer systems is a blockchain.
• Blocks: Each block in a blockchain contains a cryptographic reference to the last, making it impossible to change the history of the blockchain.
• Block time: When we discuss ‘block time,’ we are addressing the duration it takes for a block of transactions (as defined by ‘block’) to receive confirmation from the network, which can be accomplished either by miners in Proof-of-Work (PoW) or validators in Proof-of-Stake (PoS) systems.
• Block reward: When miners or validators create blocks, a block reward is issued. This takes the form of newly minted cryptocurrency, which is used as an incentive for participants to help keep the blockchain running.
• Blockchain explorer: A blockchain explorer is a user-friendly application, often a website with an associated API, that simplifies the display of blockchain activity data. While blockchains store data indefinitely and are accessible to all, finding specific information may require data indexing, organising it into categories like sender addresses or token types, for user-friendly querying.

One prominent example of a blockchain explorer is “Etherscan” for the Ethereum blockchain. It allows users to explore Ethereum’s transaction history, smart contracts, token transfers, and more in a user-friendly interface as mentioned by industry experts from Bitcode Method.

• Bull/Bullish market: This describes a situation in which the market prices of a cryptocurrency are on an upward trend, steadily rising over a specified period, and the general sentiment among the public is positive and optimistic.

C

• Cash token: CashTokens are a fresh set of opcodes that enhance Bitcoin Cash’s functionalities, enabling the creation of novel financial instruments represented by both fungible and non-fungible tokens.
• CeDeFi: CeDeFi, short for centralised decentralised finance, integrates conventional centralised financial services with decentralised applications, harmonising traditional regulatory frameworks with contemporary financial innovations.
• Confirmation: Confirmation occurs when a blockchain transaction is verified by the network.
• Consensus: Consensus is the process by which participants within a blockchain network agree on what should be incorporated into the blockchain. The two primary consensus mechanisms currently employed by cryptocurrency networks are Proof-of-Work and Proof-of-Stake.
• Cryptocurrencies: Digital currency founded in mathematical principles and governed by encryption techniques for controlling currency unit creation and transaction verification. Cryptocurrencies function autonomously, without central bank oversight, and their transactions are recorded through distributed ledger technology.
• Cryptography: The mathematical and computational practice of encoding and decoding data. Cryptography is also a method of securing data from unauthorised access. In the blockchain, cryptography is used to secure transactions between two nodes in a blockchain network.

D

• DAO (Decentralised Autonomous Organisation): A Decentralised Autonomous Corporation is an organisation or corporation run by a computer, not a governing body or authority.
• DApp: A decentralised application that functions only on a blockchain or form of distributed ledger system.
• Dead cat bounce: A temporary price increase of a token after a sustained decline.
• Dead coin: A cryptocurrency that is no longer in existence.
• Death cross: A death cross is a bearish signal in trading, signifying when a slower-moving average crosses above the faster-moving average. Although various moving averages can be applied, the most frequently used pair comprises the 50-day moving average (50-DMA) and the 200-day moving average (200-DMA), often indicating a significant sell-off trend.
• DeFi (Decentralised Finance): The core of blockchain as a concept which removes central authorities and intermediaries.
• DLT (Distributed Ledger Technology): Another term for blockchain.

E

• ERC-20: ERC-20 is the most widely used crypto-token standard, used mainly on the  Ethereum network. It allows developers to easily create digital currencies, which are immediately compatible with existing infrastructure.
• ERC-721: Ethereum network’s standard for non-fungible tokens. It allows for the creation of unique, legitimate tokens. It can create digital collectables and gaming items or tokenise unique real-world items.
• EVM: The Ethereum Virtual Machine is essentially a global blockchain-based computer. It provides a runtime environment for developers to create trustless, decentralised applications on the Ethereum network.

F

• Fiat currency: Fiat money is a currency declared legal tender by a government, it is the national currency used by citizens and assigned by governments.
• Fork: A fork is when a blockchain experiences a change in the protocol that produces two parallel chains. Forks typically occur when crypto developers or communities decide to change or update the protocol. There are two types of forks: hard forks, which break backwards-compatibility and cause a new currency to be issued, and soft forks, which update the ruleset—requiring support from most of the network’s participants.
• FUD: Fear, uncertainty, and doubt—usually refers to information likely to push people toward a negative perception of the market.
• Fundamental Analysis: A method of evaluating the value of a given asset’s value and estimating its future performance. In the context of crypto projects, it considers factors such as a product’s technological and innovative value, the team behind it, or the token distribution model and its use cases.

G

• Gas: A fee charged for performing operations on the Ethereum network—sending transactions and deploying and interacting with smart contracts.
• Gains: An increase in value or profits.
• Game channels: Game channels represent the latest technological innovation in the realm of blockchain gaming. They facilitate swift gameplay by eliminating the need to wait for block confirmations.

H

• Halving: The production of Bitcoin minted per block decreases by 50% every four years, a phenomenon referred to as “halving.”
• Hardware wallet: A hardware wallet is a physical device used to store cryptographic keys and authorise transactions. Some can connect to the internet, while others remain offline, using methods like QR codes for transaction approvals. Hardware wallets aim to enhance security by reducing the risk of key or Secret Recovery Phrase theft when connected to the internet.
• Hash: A hash is the outcome of processing a piece of data through a dedicated hashing algorithm, condensing the data into a nearly unique alphanumeric string. In the context of cryptocurrency, this is crucial because a blockchain serves as an unchangeable ledger of transactions, and hashing plays a vital role in detecting any illicit attempts to modify or manipulate data.
• HODL: Refers to the action of not selling your cryptos, often due to opposing the market trend that may be declining at the time.

I

• ICO: An Initial Coin Offering (ICO) occurs when a new token project offers early tokens in exchange for upfront capital.
• Immutability: Immutability refers to the unchangeable nature of cryptocurrencies. Once data is on the blockchain, it can’t be changed. This feature ensures secure and reliable commerce and trade on blockchain networks.
• Insurance fund: An exchange insurance fund serves the purpose of safeguarding against unforeseen losses arising from leveraged trading. Its primary function is to mitigate the risk of trader bankruptcy in cases of liquidation.

J

• JSON-RPC: JSON-RPC is essentially a data transfer method that predates public blockchain technology. It was adopted as a standard for facilitating data exchange between blockchain networks, internet browsers, and wallets. As a result, these networks are commonly referred to as ‘RPC networks,’ even though JSON-RPC isn’t their defining technical characteristic.

K

• KYC (Know Your Customer): A process that gathers and verifies information on the identity and background of customers.
• KYT (Know Your Transaction): A process that gathers information on transactions made by financial institutions.

L

• Layer 2: A Layer 2 network, or L2, is a blockchain that helps another network scale up. Examples in Ethereum include Arbitrum, Optimism, and StarkNet. These blockchains process many transactions quickly by using Ethereum Mainnet for security while focusing on speed and scale.
• Leveraged tokens: Having multiplied earnings and losses.
• Liquidity: How easy it is to trade tokens for money or other tokens. For example, stocks are easy to turn into cash, but real estate is not. Liquidity affects how risky an asset is and its price.

M

• Market Cap: Market capitalisation is the total value of all the coins that have been mined. The market cap of a cryptocurrency is determined by the current price multiplied by the circulating supply: Market Cap = Price (X times) Circulating Supply.
• MetaMask: MetaMask, available as both a mobile app for iOS and Android and a browser extension, serves as a tool for connecting with blockchains and the decentralised web. It empowers users to oversee their digital identity and control who can interact with it.
• Mining: Crypto mining is the method of confirming transactions through a proof-of-work consensus system. During mining, computer hardware is used to crack a complex code with countless potential combinations. Having more computing power allows you to make more attempts within a set time frame, increasing your chances of earning newly created cryptocurrency.
• Multi-signature wallet (Multisig): A multi-signature crypto wallet requires multiple keys for access and transactions. Usually, a designated number of individuals must provide approval or “sign” a transaction before gaining access to the wallet.

N

• NFT: A non-fungible token (NFT) is a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership.
• Node: A component of cryptocurrency required for most popular currencies, such as Bitcoin and Dogecoin, to function. Nodes store data and contribute to the consensus process to ensure that all new transactions and blocks are valid.
• Nonce: A random or semi-random number that is generated for a specific use. It is related to cryptographic communication and information technology (IT). The term stands for “number used once”  and is commonly referred to as a cryptographic nonce.

O

• Ommer block: In Proof-of-Work, miners were rewarded for being the first to mine a block. Sometimes, a miner almost made it but not quite. This almost-mined block was called an “ommer” (previously an “uncle”). Miners of these almost-mined blocks got a partial reward. However, this feature is no longer in use since the Beacon Chain was launched.
• On-chain:  A transaction that occurs on a blockchain, reflected on the distributed, public ledger
• Oracle: Any entity or individual trusted to provide information about an event’s result. In blockchain, an oracle, whether human or machine, plays a role in transmitting data to a smart contract. This data can then be used to validate an event or a particular outcome.

P

• Paper wallet: A piece of paper on which a cryptocurrency address’s public and private keys are physically printed out.
• Private key: A private key is used to identify the owner of a given cryptocurrency wallet.
• Proof-of-Stake: A consensus mechanism used to verify new cryptocurrency transactions. Here, crypto-investors who deposit an amount of cryptocurrency to the network (known as “staking”) are allowed to help generate unique blocks and earn block rewards.
• Proof-of-Work: a form of cryptographic proof in which one party (the prover) proves to others (the verifiers) that a certain amount of a specific computational effort has been expended. Verifiers can subsequently confirm this expenditure with minimal effort on their part.
• Public key: a long string of characters that is run through an algorithm to produce your wallet address.

R

• Rollups: These are tools to make Ethereum work faster. They handle transactions and smart contracts efficiently and then send them to the Ethereum Mainnet for security. There are two main types: Zero Knowledge (ZK) rollups and Optimistic rollups. Examples include Arbitrum and Optimism.
• Rug pull: A “rug pull” in the world of cryptocurrency is similar to a pyramid scheme. Scammers create a token, hype it up by adding money to it and giving it away, and when people invest and raise the price, the scammers sell their majority share, leaving investors with almost nothing. It’s a trick to take people’s money.

S

• Smart contracts: A self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained exist across a distributed, decentralised blockchain network.
• Stablecoin: A cryptocurrency that is ‘pegged’ to the value of a stable asset, such as fiat currency or gold. Theoretically, its price remains steady because it’s measured against a fixed amount of an asset that is expected to have less price volatility.

T

• Total Value Locked: TVL shows the total value, in tokens, put into something like a protocol or network. For example, in a token trading platform, it can be the value in all the pools. In a Proof-of-Stake network, it’s the value of tokens staked for consensus.
• Trustless: The word ‘trustless’ means you don’t have to rely on a central authority for trust because everyone has a record of all transactions. This makes sure no one can easily change or hack the data. Even though it’s called ‘trustless,’ it actually builds trust among people because everyone knows the system works the same way for everyone.

V

• Volatility: A measure of how much aand how quickly an asset’s price has increased or decreased over time.

W

• Web3: Also known as Web 3.0, is a term used interchangeably with “the decentralised web.” It’s a broad term that encompasses the entire world of crypto/blockchain and decentralised technology, along with the communities and ecosystems associated with them.
• Whale: People or organisations who own large amounts of crypto.
• Whitepaper: A technical document released alongside new crypto projects that explains how the system works.

Z

• Zero address: The Zero Address on Ethereum is where a special transaction is sent to create a new smart contract on the network.

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Crypto can be quite complex to understand and overwhelming due to the large quantities of information that one has to take in. However, similarly to attaining success in traditional stock markets, one has to constantly equip oneself and conduct research in order to be successful and well-knowledged so as to make informed decisions. Crypto-literacy is the key to successful investments.