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Complete Crypto Glossary: 500+ Terms Defined

This glossary provides clear, accurate definitions for the terminology used across the cryptocurrency and blockchain ecosystem. Whether you are reading crypto news, listening to podcasts, or studying blockchain books, this reference will help you understand the language of the space.

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A​

51% Attack​

An attack on a blockchain network where a single entity or group controls more than 50% of the mining hashrate (proof of work) or staking power (proof of stake). This majority control theoretically allows the attacker to reverse transactions, double-spend coins, or prevent new transactions from being confirmed. Larger networks like Bitcoin are considered practically immune due to the enormous cost of acquiring majority hashrate.

Aave​

A leading decentralized lending and borrowing protocol operating on multiple blockchains. Users can deposit assets to earn interest or borrow assets by providing collateral. Aave introduced innovations like flash loans and variable/stable interest rate switching. See our DeFi guide for more on lending protocols.

Address​

A string of alphanumeric characters representing a destination for cryptocurrency transactions. Similar to a bank account number, an address can receive funds. Bitcoin addresses typically start with 1, 3, or bc1, while Ethereum addresses start with 0x. Addresses are derived from public keys through cryptographic hashing. Learn how addresses are generated from seed phrases.

Airdrop​

A distribution of cryptocurrency tokens sent to wallet addresses, typically for free. Airdrops are used for marketing, rewarding early users of a protocol, or distributing governance tokens to community members. While legitimate airdrops exist, many scam operations disguise phishing attacks as airdrops.

Algorithm​

A set of rules or procedures for solving a computational problem. In cryptocurrency, algorithms determine how transactions are validated (consensus algorithms), how mining difficulty adjusts, and how cryptographic operations are performed.

All-Time High (ATH)​

The highest price a cryptocurrency has ever reached. Bitcoin's ATH milestones are tracked in our Bitcoin history timeline.

Altcoin​

Any cryptocurrency other than Bitcoin. The term is a contraction of "alternative coin." Originally used to describe Bitcoin forks and early competitors, the term now encompasses thousands of different cryptocurrencies with various purposes and designs.

AMM (Automated Market Maker)​

A decentralized exchange mechanism that uses mathematical formulas (typically x*y=k) to price assets instead of traditional order books. AMMs enable permissionless token trading by using liquidity pools funded by users. Uniswap, SushiSwap, and Curve are prominent AMM protocols.

Anti-Money Laundering (AML)​

Regulations and procedures designed to prevent the conversion of illegally obtained money into legitimate funds. Cryptocurrency exchanges and service providers in most jurisdictions must implement AML compliance programs. See our regulation guide for details.

API (Application Programming Interface)​

A set of protocols that allows different software applications to communicate. Cryptocurrency exchanges, blockchain nodes, and data providers offer APIs for programmatic access to their services.

Apeing In​

Slang for investing in a new cryptocurrency or DeFi protocol without thorough research, often driven by fear of missing out (FOMO). The term carries inherent risk awareness — "aping in" is generally not recommended as an investment strategy.

Arbitrage​

The practice of profiting from price differences for the same asset across different markets or exchanges. In crypto, arbitrage opportunities exist between centralized exchanges, decentralized exchanges, and cross-chain markets.

ASIC (Application-Specific Integrated Circuit)​

A specialized computer chip designed for a single purpose — in crypto, typically Bitcoin mining. ASICs are dramatically more efficient at mining than general-purpose hardware (GPUs or CPUs). Their specialized nature makes Bitcoin mining highly competitive and industrial.

Atomic Swap​

A technology enabling the exchange of one cryptocurrency for another without using a centralized intermediary. Atomic swaps use hash time-locked contracts (HTLCs) to ensure that either both parties receive their coins or neither does.

Attestation​

In proof-of-stake systems, an attestation is a validator's vote on the state of the blockchain. Validators attest to the validity of blocks, and these attestations contribute to the network's consensus.

B​

Bag​

Slang for a significant holding of a particular cryptocurrency. "Holding a bag" can refer to either a profitable position or, more commonly, holding a depreciated asset purchased at higher prices.

Bear Market​

An extended period of declining prices, typically defined as a drop of 20% or more from recent highs. Crypto bear markets historically last 1-2 years and feature 70-90% declines from all-time highs. The 2022 crypto winter following the FTX collapse is a recent example.

BIP (Bitcoin Improvement Proposal)​

The formal process for proposing changes to the Bitcoin protocol. BIPs are numbered documents that describe protocol modifications, new features, or informational guidelines. Notable BIPs include BIP-39 (mnemonic seed phrases), BIP-32 (hierarchical deterministic wallets), and BIP-44 (multi-account hierarchy).

BIP-39​

The Bitcoin Improvement Proposal that defines the standard for mnemonic seed phrases — the 12 or 24-word recovery phrases used to back up cryptocurrency wallets. BIP-39 specifies a wordlist of 2,048 English words from which seed phrases are constructed. SafeSeed's Seed Phrase Generator creates BIP-39 compliant mnemonics.

BIP-44​

The standard defining the hierarchical deterministic wallet structure used by most modern wallets. BIP-44 specifies the derivation path format: m/purpose'/coin_type'/account'/change/address_index. SafeSeed's Key Derivation Tool lets you explore BIP-44 paths.

Bitcoin (BTC)​

The first and largest cryptocurrency, created by the pseudonymous Satoshi Nakamoto in 2008. Bitcoin operates as a decentralized, peer-to-peer digital currency secured by proof-of-work consensus. Its fixed supply of 21 million coins and resistance to censorship distinguish it from traditional currencies. See our Bitcoin deep dive and history timeline.

Bitcoin Cash (BCH)​

A cryptocurrency created in August 2017 through a hard fork of Bitcoin. Bitcoin Cash increased the block size limit from 1 MB to 8 MB (later 32 MB) to enable more transactions per block. The fork resulted from the contentious block size debate detailed in our Bitcoin history.

Bitcoin Dominance​

The percentage of the total cryptocurrency market capitalization represented by Bitcoin. Bitcoin dominance tends to increase during bear markets (flight to safety) and decrease during altcoin bull runs.

Bitcoin Maximalist​

A person who believes Bitcoin is the only cryptocurrency with long-term value and that other cryptocurrencies are unnecessary or inferior. Bitcoin maximalism ranges from a nuanced investment thesis to a cultural identity.

Block​

A collection of transaction data bundled together and added to the blockchain. Each block contains a header (with metadata including the previous block's hash), a list of transactions, and a nonce (in proof-of-work systems). Bitcoin blocks are created approximately every 10 minutes.

Block Explorer​

A web application that allows users to search and browse blockchain data including transactions, addresses, blocks, and other on-chain information. See our tools directory for recommended block explorers.

Block Height​

The number of blocks in the chain between any given block and the genesis block (block 0). Block height serves as a chronological reference point for blockchain events.

Block Reward​

The cryptocurrency awarded to the miner or validator who successfully creates a new block. Bitcoin's block reward started at 50 BTC and halves approximately every four years. As of 2024, the block reward is 3.125 BTC.

Block Size​

The maximum amount of data that can be included in a single block. Bitcoin's block size limit was central to the scaling debate that led to the Bitcoin Cash fork. With SegWit, Bitcoin blocks can effectively contain up to 4 MB of data (measured in weight units).

Block Time​

The average time between new blocks being added to the blockchain. Bitcoin targets 10-minute block times, while Ethereum targets approximately 12 seconds. Block time affects transaction confirmation speed.

Blockchain​

A distributed, immutable ledger that records transactions across a network of computers. Each block of data is cryptographically linked to the previous block, forming a chain that becomes increasingly difficult to alter. See our comprehensive blockchain guide.

Blockchain Trilemma​

The concept that blockchain systems can only achieve two of three properties simultaneously: decentralization, security, and scalability. This framework, often attributed to Vitalik Buterin, explains why different blockchains make different design trade-offs.

Bridge​

A protocol that enables the transfer of assets or data between different blockchain networks. Bridges are essential for cross-chain interoperability but have been the target of numerous high-profile hacks, making their security a critical concern.

Bull Market​

An extended period of rising prices and optimistic market sentiment. Crypto bull markets historically last 1-2 years and are characterized by increasing mainstream interest, media coverage, and new user adoption.

Burn​

The permanent removal of cryptocurrency tokens from circulation, typically by sending them to an irrecoverable address. Token burning is used to reduce supply (deflationary mechanism), as a fee mechanism (EIP-1559 burns a portion of Ethereum transaction fees), or as part of protocol design.

Byzantine Fault Tolerance (BFT)​

The ability of a distributed system to continue functioning correctly even when some participants are malicious or faulty. The term comes from the Byzantine Generals Problem, a classic computer science problem. Blockchain consensus mechanisms are designed to achieve Byzantine fault tolerance.

C​

CBDC (Central Bank Digital Currency)​

A digital form of fiat currency issued by a central bank. Unlike cryptocurrencies, CBDCs are centrally controlled and are not necessarily built on blockchain technology. Many countries are exploring or piloting CBDCs.

CEX (Centralized Exchange)​

A cryptocurrency exchange operated by a centralized company that acts as an intermediary between buyers and sellers. Examples include Coinbase, Binance, and Kraken. Centralized exchanges offer convenience but introduce counterparty risk — the risk that the exchange itself could fail or be compromised.

Chain Reorganization (Reorg)​

When a blockchain network encounters competing chains of blocks, a reorganization occurs as nodes switch to the longest (or heaviest) valid chain. Short reorgs are normal, but deep reorgs can indicate network attacks.

Circulating Supply​

The number of cryptocurrency tokens currently available and in circulation. Circulating supply is used to calculate market capitalization (price multiplied by circulating supply).

Client​

Software that connects to a blockchain network. Full clients (full nodes) download and verify the entire blockchain, while light clients rely on full nodes for some verification. Running a full client contributes to network decentralization and security.

CoinJoin​

A privacy technique that combines multiple Bitcoin transactions from different users into a single transaction, making it difficult to determine which inputs correspond to which outputs. CoinJoin implementations include Wasabi Wallet's WabiSabi protocol and JoinMarket.

Cold Storage​

A method of storing cryptocurrency offline, disconnected from the internet, to protect against hacking and online theft. Cold storage methods include hardware wallets, paper wallets, and air-gapped computers. See our cold wallet guide.

Cold Wallet​

A cryptocurrency wallet that is not connected to the internet. Cold wallets provide maximum security against online attacks and are recommended for long-term storage of significant amounts. See wallet types.

Collateral​

Assets deposited to secure a loan or position. In DeFi, borrowing typically requires over-collateralization — depositing more value than you borrow — to account for price volatility.

Composability​

The ability of DeFi protocols to interact with and build upon each other, like "money legos." Composability enables complex financial strategies by combining simple protocol interactions.

Confirmation​

The process by which a transaction is included in a block and added to the blockchain. Each subsequent block built on top provides an additional confirmation. More confirmations increase the finality and irreversibility of a transaction. Bitcoin transactions are generally considered secure after 6 confirmations.

Consensus​

Agreement among network participants on the state of the blockchain. Consensus mechanisms (such as proof of work and proof of stake) are the rules by which networks achieve agreement without central authority.

Consensus Mechanism​

The protocol by which network nodes agree on the current state of the blockchain. Major consensus mechanisms include Proof of Work (Bitcoin), Proof of Stake (Ethereum), Delegated Proof of Stake, and various BFT-based algorithms.

Counterparty Risk​

The risk that another party in a transaction will fail to fulfill their obligations. In cryptocurrency, counterparty risk primarily applies to centralized exchanges and lending platforms. Self-custody eliminates counterparty risk for stored assets.

Cross-Chain​

Referring to interactions between two or more different blockchain networks. Cross-chain bridges, swaps, and protocols enable assets and data to move between chains.

Cryptography​

The mathematical science of encoding and decoding information. Cryptocurrency relies on public-key cryptography (asymmetric encryption), hash functions, and digital signatures to secure transactions and verify ownership.

Curve​

A decentralized exchange protocol specialized in efficient stablecoin and pegged asset trading. Curve's bonding curve design minimizes slippage for trades between similarly-valued assets.

Custodial​

Referring to a service that holds cryptocurrency on behalf of users. Custodial wallets and exchanges control the private keys, meaning the user must trust the custodian. Contrasted with non-custodial (self-custody) solutions.

D​

DAO (Decentralized Autonomous Organization)​

An organization governed by smart contract rules and token holder voting rather than centralized management. DAOs manage treasuries, protocol parameters, and strategic decisions through on-chain governance.

dApp (Decentralized Application)​

An application that runs on a decentralized network (typically a blockchain) rather than centralized servers. dApps use smart contracts for backend logic and typically interact with users through web interfaces.

DCA (Dollar-Cost Averaging)​

An investment strategy of buying a fixed dollar amount of cryptocurrency at regular intervals, regardless of price. DCA reduces the impact of volatility and eliminates the need to time market entries. Widely recommended for long-term Bitcoin accumulation.

DeFi (Decentralized Finance)​

Financial services built on blockchain technology that operate without centralized intermediaries. DeFi includes lending, borrowing, trading, insurance, and asset management protocols. See our comprehensive DeFi guide.

Degen​

Slang for "degenerate" — used in crypto culture to describe someone who takes high-risk positions in DeFi protocols or new token launches, often without thorough research. Used both self-deprecatingly and as a warning.

Delegated Proof of Stake (DPoS)​

A consensus mechanism where token holders vote for a limited number of delegates who validate transactions and produce blocks. Networks using DPoS include EOS and Tron.

Derivation Path​

The hierarchical path used to generate specific keys and addresses from a master seed in HD wallets. Defined by BIP-44, derivation paths follow the format m/purpose'/coin_type'/account'/change/address_index. SafeSeed's Key Derivation Tool visualizes these paths.

DEX (Decentralized Exchange)​

A cryptocurrency exchange that operates without a central authority, using smart contracts to facilitate trades. Users trade directly from their wallets without depositing funds to a third party. Examples include Uniswap, SushiSwap, and dYdX.

Diamond Hands​

Slang for holding cryptocurrency through significant price declines without selling. The opposite of "paper hands." The term implies conviction in a long-term thesis despite short-term volatility.

Difficulty​

A measure of how hard it is to mine a new block in a proof-of-work blockchain. Bitcoin's difficulty adjusts every 2,016 blocks (approximately two weeks) to maintain the target 10-minute block time regardless of total network hashrate.

Difficulty Adjustment​

The automatic recalibration of mining difficulty to maintain consistent block times as hashrate changes. Bitcoin's difficulty adjustment is considered one of its most elegant design features, ensuring the issuance schedule remains predictable.

Digital Signature​

A cryptographic mechanism that proves the authenticity and integrity of a message or transaction. In Bitcoin, digital signatures prove that the owner of a private key authorized a transaction without revealing the key itself.

DYOR (Do Your Own Research)​

A common admonition in the crypto community urging individuals to independently verify claims and thoroughly research projects before investing. DYOR reflects the decentralized ethos of personal responsibility.

E​

EIP (Ethereum Improvement Proposal)​

The formal process for proposing changes to the Ethereum protocol. EIPs follow a structured process from draft to final implementation. Notable EIPs include EIP-1559 (fee market reform) and EIP-4844 (proto-danksharding).

EIP-1559​

An Ethereum Improvement Proposal implemented in August 2021 that reformed Ethereum's fee market. EIP-1559 introduced a base fee that is burned (destroyed) and a priority fee (tip) for miners/validators. This made fees more predictable and introduced a deflationary mechanism.

Elliptic Curve Cryptography (ECC)​

The type of public-key cryptography used by Bitcoin and most other cryptocurrencies. ECC provides strong security with relatively small key sizes. Bitcoin specifically uses the secp256k1 elliptic curve.

Emission​

The rate at which new cryptocurrency tokens are created and released into circulation. Bitcoin's emission follows a predictable schedule defined by the block reward and halving events.

ERC-20​

The technical standard for fungible tokens on the Ethereum blockchain. ERC-20 defines a common set of functions (transfer, approve, balanceOf, etc.) that all compliant tokens implement, enabling interoperability across the Ethereum ecosystem.

ERC-721​

The technical standard for non-fungible tokens (NFTs) on Ethereum. ERC-721 defines unique tokens where each token has a distinct identifier and cannot be exchanged 1:1 with another token of the same type.

Escrow​

A mechanism where funds are held by a third party (or smart contract) until conditions are met. Smart contract escrow eliminates the need for trusted third parties in cryptocurrency transactions.

Ethereum (ETH)​

The second-largest cryptocurrency by market capitalization and the leading smart contract platform. Created by Vitalik Buterin and launched in 2015, Ethereum enables programmable transactions through smart contracts. It transitioned from proof of work to proof of stake in September 2022 ("The Merge").

EVM (Ethereum Virtual Machine)​

The runtime environment for executing smart contracts on Ethereum. The EVM processes Solidity bytecode and maintains the state of all Ethereum accounts and smart contracts. Many other blockchains (Polygon, Avalanche, BSC) are "EVM-compatible," meaning they run the same smart contract code.

Exchange​

A platform where cryptocurrencies can be bought, sold, and traded. Centralized exchanges (CEX) act as intermediaries, while decentralized exchanges (DEX) use smart contracts. See our tools directory for guidance.

F​

Faucet​

A website or application that distributes small amounts of cryptocurrency for free, typically for testing purposes on testnets or for introducing new users to cryptocurrency.

Fee​

The cost paid to process a transaction on a blockchain network. Fees compensate miners or validators for including transactions in blocks. Bitcoin fees are measured in satoshis per byte, while Ethereum fees are denominated in gas.

Fiat​

Government-issued currency that is not backed by a physical commodity. Examples include the US Dollar, Euro, and Japanese Yen. The term "fiat" is Latin for "let it be done," reflecting that these currencies derive value from government decree.

Finality​

The assurance that a confirmed transaction cannot be reversed or altered. Different blockchains achieve different levels of finality — Bitcoin provides probabilistic finality (increasing certainty with each confirmation), while some proof-of-stake chains provide absolute finality.

Flash Loan​

A DeFi innovation that allows users to borrow any amount of cryptocurrency without collateral, provided the loan is repaid within the same transaction (single block). Flash loans enable arbitrage and complex financial operations but have also been used in exploit attacks.

FOMO (Fear of Missing Out)​

The anxiety that others are profiting from an opportunity that one is missing. FOMO is a powerful emotional driver in crypto markets, often leading to impulsive buying at elevated prices.

Fork​

A change to a blockchain's protocol rules. A soft fork is backward-compatible (old nodes can still validate new blocks), while a hard fork creates a permanent divergence, resulting in two separate chains. Bitcoin Cash was created through a hard fork of Bitcoin.

FUD (Fear, Uncertainty, and Doubt)​

Information or sentiment spread to cause negative market reactions. While sometimes used to dismiss legitimate criticism, genuine FUD campaigns exist in crypto markets.

Full Node​

A computer that downloads, stores, and validates the complete blockchain. Full nodes enforce all protocol rules independently and contribute to network decentralization. Running a full node is the most trustless way to verify transactions.

Fungible​

Interchangeable — one unit is equivalent to any other unit. Bitcoin is fungible in the sense that one BTC is worth the same as any other BTC (though individual bitcoin UTXOs have different histories). Non-fungible tokens (NFTs) are specifically not interchangeable.

G​

Gas​

The unit measuring computational effort required to execute operations on Ethereum. Every transaction and smart contract interaction requires gas, which is paid in ETH. Gas prices fluctuate based on network demand.

Gas Limit​

The maximum amount of gas a user is willing to spend on a transaction. Setting a gas limit prevents runaway costs from faulty smart contracts. If a transaction exceeds its gas limit, it fails but still costs gas up to the limit.

Gas Price​

The amount of ETH a user is willing to pay per unit of gas. Higher gas prices incentivize validators to include your transaction more quickly. Measured in gwei (1 gwei = 0.000000001 ETH).

Genesis Block​

The first block in a blockchain. Bitcoin's genesis block (Block 0) was mined by Satoshi Nakamoto on January 3, 2009, and contained the famous newspaper headline about bank bailouts.

Governance​

The process by which decisions about a protocol's development and operations are made. On-chain governance uses token-holder voting to make decisions, while off-chain governance relies on community discussion and developer consensus.

Governance Token​

A cryptocurrency token that grants holders voting rights in protocol decisions. Governance tokens enable decentralized decision-making about protocol parameters, treasury spending, and upgrades.

GPU Mining​

Using graphics processing units (GPUs) to mine cryptocurrency. GPUs are more versatile than ASICs and can mine multiple algorithms. Ethereum was GPU-mined before transitioning to proof of stake.

Gwei​

A denomination of ETH equal to 0.000000001 ETH (10^-9 ETH). Gas prices on Ethereum are typically expressed in gwei.

H​

Halving​

A programmatic reduction in the block reward paid to miners, occurring at predetermined intervals. Bitcoin's halving occurs every 210,000 blocks (approximately four years), cutting the reward in half. Halvings reduce the rate of new supply creation and have historically preceded bull markets. See the Bitcoin timeline for halving dates.

Hard Fork​

A non-backward-compatible change to a blockchain's protocol that requires all nodes to upgrade. Nodes running old software will not recognize blocks produced under the new rules, effectively splitting the network. Bitcoin Cash and Ethereum Classic resulted from hard forks.

Hardware Wallet​

A physical device designed specifically to store cryptocurrency private keys offline. Hardware wallets sign transactions internally and never expose private keys to connected computers, providing strong protection against malware and hacking. See our hardware wallet setup guide.

Hash​

The output of a hash function — a fixed-length string of characters generated from input data of any size. Hashes are deterministic (same input always produces the same output), one-way (cannot reverse to find the input), and collision-resistant (extremely difficult to find two inputs producing the same output).

Hash Function​

A mathematical function that converts input data into a fixed-size output (hash). Bitcoin uses SHA-256 as its primary hash function. Hash functions are fundamental to blockchain security, mining, and address generation.

Hash Rate (Hashrate)​

The total computational power being used to mine and process transactions on a proof-of-work blockchain. Measured in hashes per second (H/s). Bitcoin's hashrate is measured in exahashes per second (EH/s). Higher hashrate indicates greater network security.

HD Wallet (Hierarchical Deterministic Wallet)​

A wallet that generates all addresses from a single master seed using a tree-like derivation structure (defined by BIP-32). HD wallets allow generating unlimited addresses from a single seed phrase backup, simplifying backup and recovery.

HODL​

Originally a misspelling of "hold" from a 2013 BitcoinTalk forum post, HODL has become a crypto culture term meaning to hold cryptocurrency through price volatility rather than sell during downturns. The term has been retroactively interpreted as "Hold On for Dear Life."

Hot Wallet​

A cryptocurrency wallet connected to the internet. Hot wallets include mobile apps, desktop wallets, and web wallets. They are convenient for frequent transactions but are more vulnerable to hacking than cold storage.

HTLC (Hash Time-Locked Contract)​

A type of smart contract used in payment channels and atomic swaps. HTLCs require the recipient to acknowledge receiving payment within a specified time by generating a cryptographic proof, or the funds are returned to the sender.

I​

ICO (Initial Coin Offering)​

A fundraising method where new cryptocurrency tokens are sold to early backers. ICOs were extremely popular in 2017 but declined due to regulatory scrutiny after many projects failed or proved fraudulent.

Immutable​

Unable to be changed or altered. Blockchain records are considered immutable because altering any block would require recomputing all subsequent blocks — practically impossible on large networks.

Impermanent Loss​

A loss experienced by liquidity providers in AMM protocols when the price ratio of deposited tokens changes. Called "impermanent" because the loss is only realized upon withdrawal; if prices return to original ratios, the loss disappears.

Index Fund (Crypto)​

An investment vehicle that tracks a basket of cryptocurrencies rather than a single asset. Crypto index funds provide diversified exposure to the cryptocurrency market.

Inflation​

The rate at which new cryptocurrency units are created. Bitcoin has a decreasing inflation rate that approaches zero as the block reward decreases through halvings. Some cryptocurrencies have fixed inflation rates, while others are deflationary.

Input​

In a Bitcoin transaction, inputs reference previous unspent transaction outputs (UTXOs) that the sender is authorized to spend. Inputs are "consumed" when spent and cannot be used again.

J​

Jager​

The smallest denomination of Binance Coin (BNB), similar to how a satoshi is the smallest unit of Bitcoin.

K​

KYC (Know Your Customer)​

Identity verification requirements that financial institutions and cryptocurrency exchanges must implement to comply with anti-money laundering regulations. KYC typically involves providing government-issued identification, proof of address, and sometimes a selfie.

Key Pair​

A set of two cryptographically linked keys — a public key and a private key. The public key can be shared freely and is used to receive funds, while the private key must be kept secret and is used to authorize transactions. Key pairs are the foundation of cryptocurrency ownership.

L​

Layer 1 (L1)​

The base blockchain protocol — the main chain that processes and finalizes all transactions. Bitcoin and Ethereum are layer-1 blockchains. Layer 1 determines the fundamental security and decentralization properties of the network.

Layer 2 (L2)​

A separate protocol built on top of a layer-1 blockchain to improve scalability and reduce transaction costs. Layer 2 solutions process transactions off the main chain while inheriting the security of the base layer. The Lightning Network (Bitcoin) and rollups (Ethereum) are prominent L2 solutions.

Ledger​

A record-keeping system. In cryptocurrency, "the ledger" refers to the blockchain itself — the complete record of all transactions. Ledger is also the brand name of a popular hardware wallet manufacturer.

Lightning Network​

A layer-2 payment protocol built on top of Bitcoin that enables fast, low-cost transactions through payment channels. The Lightning Network can theoretically process millions of transactions per second while settling to the Bitcoin blockchain for final security.

Liquid Staking​

A DeFi mechanism that allows users to stake their cryptocurrency while receiving a liquid derivative token in return. The derivative token can be used in other DeFi protocols, avoiding the opportunity cost of traditional staking lockups.

Liquidity​

The ease with which a cryptocurrency can be bought or sold without significantly affecting its price. Higher liquidity means tighter spreads and less price impact for large trades.

Liquidity Mining​

Providing liquidity to DeFi protocols in exchange for reward tokens. Liquidity mining incentivizes users to deposit assets into liquidity pools, earning both trading fees and additional token rewards.

Liquidity Pool​

A collection of cryptocurrency tokens locked in a smart contract that provides liquidity for decentralized exchanges. Liquidity providers deposit token pairs and earn a share of trading fees proportional to their contribution.

M​

Mainnet​

The primary, production blockchain network where real transactions with actual value occur. Contrasted with testnets, which are used for development and testing.

Market Cap (Market Capitalization)​

The total value of a cryptocurrency, calculated by multiplying the current price by the circulating supply. Market cap is used as a rough measure of a cryptocurrency's relative size.

Maximal Extractable Value (MEV)​

The maximum value that can be extracted from block production beyond standard block rewards and gas fees. MEV includes profits from transaction ordering, insertion, and censorship within blocks. MEV is a significant research area in Ethereum.

Mempool​

The waiting area for unconfirmed transactions before they are included in a block. When you send a Bitcoin transaction, it first enters the mempool, where miners select transactions to include in the next block (typically prioritizing higher-fee transactions). Monitoring the mempool helps estimate transaction confirmation times.

Merkle Tree​

A data structure used to efficiently verify the integrity of large data sets. In blockchain, Merkle trees allow nodes to verify that a specific transaction is included in a block without downloading the entire block.

MetaMask​

A popular cryptocurrency wallet available as a browser extension and mobile app. MetaMask primarily serves the Ethereum ecosystem and enables interaction with decentralized applications.

MiCA (Markets in Crypto-Assets)​

The European Union's comprehensive regulatory framework for cryptocurrency. MiCA establishes licensing requirements for crypto service providers and rules for stablecoin issuance. See our regulation guide.

Mining​

The process of using computational power to validate transactions and create new blocks on a proof-of-work blockchain. Miners compete to solve cryptographic puzzles, and the winner receives the block reward plus transaction fees. Mining secures the network by making it computationally expensive to attack.

Mining Pool​

A group of miners who combine their computational power and share the resulting rewards proportionally. Mining pools reduce reward variance for individual miners — instead of rarely winning large rewards, pool members receive smaller, more frequent payments.

Mnemonic Phrase​

See Seed Phrase.

Multisig (Multi-Signature)​

A security mechanism requiring multiple private keys to authorize a transaction. For example, a 2-of-3 multisig wallet requires any 2 out of 3 designated key holders to sign a transaction. Multisig is used for organizational treasuries, escrow, and enhanced personal security.

N​

NFT (Non-Fungible Token)​

A unique digital token representing ownership of a specific item — artwork, music, in-game items, or other digital or physical assets. Unlike fungible tokens where each unit is identical, each NFT is unique and cannot be exchanged 1:1 with another.

Node​

A computer running blockchain software that maintains a copy of the blockchain and participates in the network. Full nodes validate all transactions and blocks independently, contributing to network security and decentralization.

Nonce​

A number used once. In proof-of-work mining, the nonce is the variable miners adjust to find a hash that meets the difficulty target. In Ethereum transactions, the nonce is a sequential number preventing transaction replay.

Non-Custodial​

A service or wallet where users maintain control of their own private keys. Non-custodial solutions eliminate counterparty risk but place full responsibility for key security on the user. See our guide on wallet types.

O​

Off-Chain​

Transactions or activities that occur outside the main blockchain. Off-chain transactions can be faster and cheaper but may sacrifice some security or decentralization properties. Layer-2 solutions process transactions off-chain while settling to the main chain.

On-Chain​

Transactions or activities that are recorded directly on the main blockchain. On-chain data is public, immutable, and verified by the network consensus mechanism.

Open Source​

Software whose source code is publicly available for anyone to inspect, modify, and distribute. Most major cryptocurrency protocols and wallets are open source, allowing community verification of security and functionality. SafeSeed's tools are open source.

Oracle​

A service that provides external (off-chain) data to smart contracts on the blockchain. Oracles are critical for DeFi applications that need real-world data like asset prices, weather conditions, or event outcomes.

Ordinals​

A Bitcoin protocol introduced in 2023 that enables inscription of data directly onto individual satoshis. Ordinals enabled "Bitcoin NFTs" and triggered debate about appropriate use of Bitcoin block space. See the Bitcoin timeline.

Output​

In a Bitcoin transaction, outputs define the new owners and amounts of the coins being sent. Unspent transaction outputs (UTXOs) are the building blocks of Bitcoin's accounting system.

P​

P2P (Peer-to-Peer)​

A network architecture where participants interact directly with each other without a central server or intermediary. Bitcoin's design as a peer-to-peer electronic cash system is fundamental to its censorship resistance.

Paper Wallet​

A physical document containing the private key and public address for a cryptocurrency wallet, typically as QR codes. Paper wallets provide cold storage but are fragile and can be damaged by water, fire, or fading. SafeSeed's Paper Wallet Creator helps generate secure paper wallets.

Passphrase (25th Word)​

An optional additional word added to a BIP-39 seed phrase to create a completely different set of wallets. The passphrase acts as an additional layer of security — even if someone obtains your seed phrase, they cannot access your funds without the passphrase. Also called the "25th word."

Peg​

A fixed exchange rate between a cryptocurrency and another asset, typically a fiat currency. Stablecoins maintain a peg to currencies like the US dollar through various mechanisms (reserves, algorithms, or over-collateralization).

Permissionless​

A system that anyone can use without requiring approval or registration. Public blockchains like Bitcoin and Ethereum are permissionless — anyone can create a wallet, send transactions, or run a node.

PoS (Proof of Stake)​

A consensus mechanism where validators are chosen to create new blocks based on the amount of cryptocurrency they have staked (locked up) as collateral. PoS requires significantly less energy than proof of work. Ethereum transitioned to PoS in September 2022.

PoW (Proof of Work)​

A consensus mechanism where miners compete to solve computationally intensive cryptographic puzzles. The first to find a valid solution earns the right to create a new block and receive the block reward. Bitcoin uses proof of work for its security model.

Private Key​

A secret cryptographic key that controls access to cryptocurrency funds. The private key is used to create digital signatures that authorize transactions. Losing your private key means permanently losing access to your funds. Private keys should never be shared or stored digitally in unencrypted form. See our security guide.

Protocol​

The set of rules governing how a blockchain network operates. Protocol rules define everything from block structure and transaction format to consensus mechanisms and monetary policy.

Public Key​

A cryptographic key derived from the private key that can be shared publicly. The public key is used to generate wallet addresses and verify digital signatures. While public keys can be freely shared, they cannot be used to derive the private key.

Q​

QR Code​

A two-dimensional barcode that can encode data such as cryptocurrency addresses. QR codes make it easy to share wallet addresses without typing long strings of characters, reducing the risk of errors.

R​

Reentrancy Attack​

A smart contract vulnerability where an attacker exploits a function that makes an external call before updating its state. The most famous reentrancy attack was the 2016 DAO hack, which resulted in the Ethereum/Ethereum Classic fork.

Rollup​

A layer-2 scaling solution that processes transactions off-chain and posts compressed data to the main chain. Optimistic rollups assume transactions are valid and allow challenges, while ZK-rollups generate cryptographic proofs of validity. Both types are central to Ethereum's scaling strategy.

Rug Pull​

A type of scam where developers of a cryptocurrency project abandon the project after collecting investor funds. Common in DeFi, rug pulls involve removing liquidity from a token's trading pool, making it worthless.

S​

Satoshi​

The smallest unit of Bitcoin, equal to 0.00000001 BTC (one hundred millionth of a Bitcoin). Named after Bitcoin's pseudonymous creator, Satoshi Nakamoto. Transaction fees and small payments are often denominated in satoshis (or "sats").

Satoshi Nakamoto​

The pseudonymous creator(s) of Bitcoin who published the white paper in 2008 and released the first software in 2009. Satoshi's true identity remains unknown. See the Bitcoin history timeline.

Scalability​

The ability of a blockchain to handle increasing transaction volume without degrading performance or increasing costs. Scalability is one vertex of the blockchain trilemma.

Schnorr Signature​

A digital signature scheme activated on Bitcoin through the Taproot upgrade in November 2021. Schnorr signatures are more efficient than the original ECDSA signatures and enable key aggregation, improving privacy and reducing transaction sizes for multisig transactions.

Security Audit​

A professional review of a smart contract or protocol's code to identify vulnerabilities and security risks. Reputable DeFi protocols undergo multiple audits from independent security firms before launching.

Seed Phrase​

A sequence of 12 or 24 words that serves as the master backup for a cryptocurrency wallet. Generated according to the BIP-39 standard, a seed phrase can regenerate all private keys and addresses associated with a wallet. Seed phrases must be stored securely — anyone with access to your seed phrase controls your funds. See our comprehensive seed phrase guide and generate phrases safely with SafeSeed.

SegWit (Segregated Witness)​

A Bitcoin protocol upgrade activated in August 2017 that separates signature data from transaction data. SegWit fixed the transaction malleability bug, effectively increased block capacity, and enabled the Lightning Network. SegWit addresses start with "bc1."

Self-Custody​

The practice of holding your own cryptocurrency private keys rather than trusting a third party. Self-custody eliminates counterparty risk but requires proper security practices. See our guides on wallet types and security.

SHA-256​

The cryptographic hash function used in Bitcoin's proof-of-work mining algorithm and transaction processing. SHA-256 produces a 256-bit (32-byte) hash value and is part of the SHA-2 family of hash functions designed by the NSA.

Sharding​

A scalability technique that divides a blockchain network into smaller partitions (shards), each capable of processing transactions independently. Sharding aims to increase throughput by parallelizing transaction processing.

Sidechain​

A separate blockchain that runs parallel to and is connected to a main chain through a two-way peg. Sidechains can have different rules and features while leveraging the main chain's security for fund transfers.

Slashing​

A penalty mechanism in proof-of-stake systems where validators lose a portion of their staked funds for malicious behavior or severe negligence (like signing conflicting blocks). Slashing provides economic disincentive against attacks.

Slippage​

The difference between the expected price of a trade and the actual execution price. Slippage occurs in low-liquidity markets or during high volatility. DEXes allow users to set maximum slippage tolerance.

Smart Contract​

A self-executing program stored on a blockchain that automatically enforces agreed-upon terms when predefined conditions are met. Smart contracts enable complex applications like DeFi protocols, NFT marketplaces, and governance systems. Ethereum was the first blockchain to widely support smart contracts.

Soft Fork​

A backward-compatible protocol change where blocks produced under new rules are still recognized by old nodes. Soft forks are less disruptive than hard forks because they do not split the network. SegWit and Taproot were implemented as soft forks.

Solidity​

The primary programming language for writing smart contracts on Ethereum and EVM-compatible blockchains. Solidity is a statically-typed, object-oriented language influenced by JavaScript, Python, and C++.

Stablecoin​

A cryptocurrency designed to maintain a stable value relative to an external reference, typically a fiat currency like the US dollar. Types include fiat-backed (USDT, USDC), crypto-backed (DAI), and algorithmic stablecoins. Stablecoins are essential for DeFi operations and crypto trading.

Staking​

The process of locking cryptocurrency in a proof-of-stake network to participate in block validation and earn rewards. Staking contributes to network security while providing passive income for token holders.

State Channel​

A layer-2 scaling solution where participants transact off-chain through bilateral channels, only recording the opening and closing state on-chain. Payment channels (used in the Lightning Network) are the most common type of state channel.

T​

Taproot​

A Bitcoin soft fork activated in November 2021 that introduced Schnorr signatures, Tapscript, and improved script spending mechanisms. Taproot enhances privacy (making complex transactions look identical to simple ones), reduces fees, and enables more sophisticated smart contracts on Bitcoin.

Testnet​

A blockchain network used for testing and development that mirrors the main network (mainnet) but uses tokens with no real value. Developers use testnets to test applications and protocol changes without risking real funds.

Throughput​

The number of transactions a blockchain can process per unit of time. Bitcoin processes approximately 7 transactions per second on its base layer, while Ethereum processes approximately 15-30. Layer-2 solutions dramatically increase throughput.

Timestamp​

A record of the date and time when a block was created. Timestamps in block headers provide chronological ordering of transactions.

Token​

A digital asset created on an existing blockchain (rather than having its own blockchain). ERC-20 tokens on Ethereum are the most common example. Tokens can represent anything from currency and governance rights to real-world assets.

Tokenomics​

The economic design and properties of a cryptocurrency token, including supply schedule, distribution, incentive mechanisms, and utility. Understanding tokenomics is essential for evaluating any cryptocurrency project.

Total Value Locked (TVL)​

The total value of cryptocurrency assets deposited in DeFi protocols. TVL is used as a measure of DeFi adoption and protocol usage. DeFiLlama is the standard source for TVL data.

Transaction Fee​

The fee paid to network validators (miners or stakers) for processing a transaction. Fees vary based on network congestion and transaction complexity. Monitoring fee levels helps optimize transaction timing.

Treasury​

In the context of DAOs and protocols, the treasury is a pool of funds controlled by governance. Treasuries fund development, marketing, and other protocol activities, typically through on-chain voting.

Trezor​

A leading hardware wallet manufacturer that produces devices for secure cryptocurrency storage. Trezor was one of the first hardware wallets and remains widely recommended. See our hardware wallet comparison.

Trustless​

A system where participants do not need to trust any counterparty or intermediary to ensure honest behavior. Blockchain networks are trustless because cryptographic proofs and consensus mechanisms replace trust in individuals or institutions.

TVL (Total Value Locked)​

See Total Value Locked.

U​

Unconfirmed Transaction​

A transaction that has been broadcast to the network but has not yet been included in a block. Unconfirmed transactions sit in the mempool until a miner or validator includes them in a block.

Uniswap​

The largest decentralized exchange on Ethereum, pioneering the Automated Market Maker (AMM) model. Uniswap allows permissionless token listing and trading through liquidity pools rather than order books.

UTXO (Unspent Transaction Output)​

The fundamental unit of Bitcoin's accounting system. Each UTXO represents a specific amount of Bitcoin that has been received but not yet spent. When you "spend" Bitcoin, you consume UTXOs as inputs and create new UTXOs as outputs. The sum of all your UTXOs is your Bitcoin balance.

V​

Validator​

In proof-of-stake networks, a validator is a node that participates in block production and transaction validation by locking up (staking) cryptocurrency as collateral. Validators earn rewards for honest behavior and face slashing for malicious actions.

Vanity Address​

A cryptocurrency address that contains a specific pattern or word, generated by repeatedly creating keys until the desired pattern appears. Vanity addresses are purely cosmetic and do not affect security (though generating them requires significant computation).

Vesting​

A schedule by which tokens are gradually released to holders over time rather than all at once. Vesting is common for team allocations, investor tokens, and ecosystem fund distributions.

Volatility​

The degree of price fluctuation over a given period. Cryptocurrency markets are known for high volatility compared to traditional assets. Volatility creates both risk and opportunity.

Volume​

The total amount of a cryptocurrency traded within a specific time period, typically 24 hours. Trading volume indicates market activity and liquidity. Higher volume generally indicates healthier price discovery.

W​

Wallet​

Software or hardware that stores cryptocurrency private keys and enables users to send and receive digital assets. Wallets do not actually "store" cryptocurrency — the assets exist on the blockchain, and the wallet stores the keys needed to access them. See our comprehensive guide on wallet types.

Wash Trading​

The practice of simultaneously buying and selling the same asset to create misleading trading activity. Wash trading artificially inflates volume figures and is illegal in regulated markets.

Weak Hands​

Investors who sell quickly at the first sign of price decline. The opposite of "diamond hands."

Web3​

A vision of a decentralized internet built on blockchain technology, where users own their data and identity. Web3 encompasses DeFi, NFTs, DAOs, and decentralized social media.

Whale​

An individual or entity holding a large amount of cryptocurrency. Whale movements (large transactions) can significantly impact market prices and are closely monitored by on-chain analytics platforms.

Whitepaper​

A document describing the technology, purpose, and design of a cryptocurrency or blockchain project. Satoshi Nakamoto's Bitcoin white paper (2008) is the most famous example. Serious projects publish detailed whitepapers explaining their technical architecture.

Wrapped Token​

A token on one blockchain that represents an asset from another blockchain. For example, Wrapped Bitcoin (WBTC) is an ERC-20 token on Ethereum backed 1:1 by Bitcoin held in custody. Wrapped tokens enable cross-chain asset usage.

X​

XPub (Extended Public Key)​

A master public key that can generate all public keys and addresses in an HD wallet. Sharing an xpub allows others to view all addresses associated with a wallet without the ability to spend funds. Useful for watch-only wallets and accounting purposes, but sharing an xpub reveals your entire transaction history.

Y​

Yield​

The return earned on cryptocurrency holdings, typically expressed as an annual percentage. Yield can come from staking, lending, liquidity provision, or other DeFi activities. Higher yields generally indicate higher risk.

Yield Farming​

The practice of moving cryptocurrency between DeFi protocols to maximize returns. Yield farmers seek the highest yields available, often leveraging composability to create complex strategies across multiple protocols.

Z​

Zero-Knowledge Proof (ZKP)​

A cryptographic method where one party can prove to another that a statement is true without revealing any information beyond the validity of the statement itself. ZKPs are used in privacy coins (Zcash), scaling solutions (ZK-rollups), and identity verification. The technology is central to blockchain privacy and scalability research.

ZK-Rollup​

A layer-2 scaling solution that uses zero-knowledge proofs to bundle multiple transactions and post a single proof to the main chain. ZK-rollups provide faster finality than optimistic rollups because validity is mathematically proven rather than assumed.

ZK-SNARK (Zero-Knowledge Succinct Non-interactive Argument of Knowledge)​

A specific type of zero-knowledge proof that is both "succinct" (small proof size, fast verification) and "non-interactive" (does not require back-and-forth between prover and verifier). Used by Zcash and various ZK-rollup implementations.

ZK-STARK (Zero-Knowledge Scalable Transparent Argument of Knowledge)​

An alternative to ZK-SNARKs that does not require a trusted setup and is resistant to quantum computing attacks. ZK-STARKs produce larger proofs but offer stronger security assumptions. Used by StarkNet and other scaling solutions.

SafeSeed Tool

Many of the terms in this glossary relate to the cryptographic foundations of cryptocurrency security. Explore how seed phrases, key derivation, and address generation work in practice using SafeSeed's Seed Phrase Generator and Key Derivation Tool. Understanding these concepts is the foundation of cryptocurrency self-custody.