Crypto glossary: 57 terms explained in plain English

Crypto has its own vocabulary, and much of it gets used without explanation. This glossary covers the terms you’re most likely to meet when buying, storing, trading and reporting crypto. Where there’s more to say, each entry links to a full guide.

A–C

Address. A string of characters that identifies where crypto can be sent, like an account number. Sharing it is safe; sharing your private key isn’t.

Airdrop. Tokens sent to many wallets for free, often to promote a project. Some are taxable, and many unsolicited ones are scams. See crypto airdrops explained.

Altcoin. Any cryptocurrency other than bitcoin.

Basis (cost basis). What you paid for an asset, including purchase fees, used to calculate your gain or loss when you sell. In Canada it’s called the adjusted cost base (ACB). See US crypto tax.

Block. A batch of transactions added to a blockchain. Each block contains a link (hash) to the previous one.

Blockchain. A shared, tamper-evident ledger of transactions grouped into linked blocks. See what is a blockchain?

Bridge. A service that moves tokens between different blockchains. Bridges have been a frequent target of hacks.

CEX. A centralized exchange: a company that holds your crypto and runs an order book. See CEX vs DEX.

Cold wallet. A wallet that keeps private keys offline, usually a hardware device. See hot vs cold wallets.

Consensus. The method a blockchain uses to agree on which block comes next, such as proof of work or proof of stake.

Custodial. A service that holds your private keys for you, like an exchange account.

D–H

DCA (dollar-cost averaging). Investing a fixed amount at regular intervals regardless of price. See dollar-cost averaging.

DeFi. Decentralized finance: financial services built from smart contracts and used from your own wallet. See what is DeFi?

DEX. A decentralized exchange, where trades run through smart contracts instead of a company.

Disposal (disposition). A tax term for selling, swapping, spending or giving away an asset. Most crypto taxes are triggered by disposals.

ETF / ETP. Exchange-traded funds or products that trade on stock exchanges; spot bitcoin ETPs hold bitcoin. See bitcoin ETFs explained.

Fork (hard fork). A change to a blockchain’s rules. A hard fork that not everyone accepts can split the chain into two.

Gas. The unit measuring computation on Ethereum; gas fees are paid in ETH and charged even if a transaction fails.

Gwei. A billionth of an ETH, used to quote gas prices.

Halving. The scheduled cut in half of bitcoin’s block subsidy, every 210,000 blocks. See the bitcoin halving.

Hash. A fixed-length fingerprint calculated from data. Change the data even slightly and the hash changes completely.

Hot wallet. A wallet whose keys live on an internet-connected device, such as a phone app or browser extension.

K–O

KYC. “Know your customer”: identity checks that regulated exchanges must carry out.

Leverage. Trading with borrowed money to control a larger position, which multiplies gains and losses. See leverage and derivatives rules.

Limit order. An order to buy or sell at a set price or better; it may not fill. See order types.

Liquidation. The automatic closing of a leveraged or borrowing position when losses or collateral value pass a threshold.

Liquidity pool. Tokens deposited in a smart contract so that others can trade against them on a DEX.

Maker / taker. Maker orders add liquidity to an order book and usually pay lower fees; taker orders fill immediately. See exchange fees.

Market order. An order to buy or sell immediately at the best available price, with no guarantee on that price.

Memecoin. A token inspired by internet memes or trends, usually with little or no use beyond speculation. See memecoins explained.

Mining. Using computing power to add blocks on a proof-of-work blockchain, in exchange for new coins and fees.

NFT. A non-fungible token: a unique token whose ownership is recorded on a blockchain. See what are NFTs?

Node. A computer that runs a blockchain’s software and keeps a copy of the ledger.

Oracle. A service that feeds real-world data, such as prices, into smart contracts. Oracles are a known weak point.

P–S

Phishing. Fake messages, websites or apps designed to steal your logins or seed phrase. See fake crypto apps and phishing.

Private key. The secret that controls a crypto address. Whoever has it controls the funds.

Proof of reserves. A report claiming a platform holds enough assets for its customers. It has important limits. See proof of reserves explained.

Proof of stake. A consensus method where validators lock up coins as a stake to propose and confirm blocks.

Proof of work. A consensus method where miners compete to solve computational puzzles to add blocks.

Satoshi (sat). The smallest unit of bitcoin: 0.00000001 BTC.

Seed phrase (recovery phrase). A list of words, usually 12 or 24, that can rebuild a wallet and all its keys. See seed phrase security.

Self-custody. Holding your own private keys rather than leaving crypto with a company.

Slashing. A penalty that removes part of a validator’s stake for breaking a proof-of-stake network’s rules.

Slippage. The difference between the price you expect and the price you get, usually because of price movement or a thin market.

Smart contract. A program stored on a blockchain that runs exactly as written when called.

Spread. The gap between the buying and selling price, which can work as a hidden fee.

Stablecoin. A token designed to hold a fixed value, usually one US dollar. See stablecoins explained.

Staking. Locking up crypto to help run a proof-of-stake network in exchange for rewards. See what is crypto staking.

Stop order (stop-loss). An order that becomes a market order once a set price is reached.

T–Y

Token approval. Permission you give a smart contract to move your tokens. Unlimited approvals can be abused, so revoke the ones you don’t need.

Two-factor authentication (2FA). A second login step. Authenticator apps and security keys are safer than SMS codes. See SIM swaps and 2FA.

Validator. A participant in a proof-of-stake network that proposes and checks blocks.

Volatility. How much and how fast a price moves. Crypto is highly volatile.

Wallet. Software or a device that stores private keys and signs transactions.

Wash sale. Selling an investment at a loss and buying it back soon after. Different countries treat this differently for tax. See tax-loss harvesting.

Whitelist (allow-list). On an exchange, a list of pre-approved withdrawal addresses, a useful security feature.

Yield. The return earned on crypto, for example from staking or lending. Higher yields usually mean higher risk.