Address
A unique string of letters and numbers to and from which cryptocurrency is sent. An address—which is usually a hashed version of a public key—functions like an email address.
Glossary & Acronyms
Our glossary and acronyms page is loaded with terms you’ll likely encounter while navigating the crypto and blockchain ecosystem. Be sure to keep it handy along your journey!
A
Airdrop
A distribution of cryptocurrencies to a pre-defined set of blockchain addresses, free of charge. Airdrops can generate awareness of the cryptocurrency being airdropped, helping drive adoption. (Learn about how airdrops are taxed in this Beginner’s Course topic.)
Alpha
The active return of an investment relative to the return of a suitable benchmark index.
Alphanumeric
Containing both letters and numbers.
Altcoin
A cryptocurrency that functions similarly to—but not exactly the same as—bitcoin. Typically, founders will detail in their whitepaper how their project’s altcoin is distinct from bitcoin.
ApeCoin
The token that is native to the Bored Ape Yacht Club (BAYC) ecosystem. The ApeCoin token has the ticker ‘APE’ and was launched on March 17, 2022. Learn about ApeCoin (APE).
Automated market maker (AMM)
Smart contracts that allow digital assets to be traded in a permissionless and automatic way by using liquidity pools, rather than a traditional market of buyers and sellers.
B
Bear market
A sustained decrease in prices encouraging a negative outlook on the market.
BEP-2
The technical standard used to issue tokens on Binance Chain (not to be confused with Binance Smart Chain).
BEP-20
The technical standard used to issue tokens on Binance Smart Chain (not to be confused with Binance Chain).
Beta
A measure of how a given asset moves, on average, when the overall market increases or decreases.
Bitcoin
A peer-to-peer network of nodes that maintain a blockchain-based distributed ledger of bitcoin balances. The cryptocurrency native to the Bitcoin network is bitcoin.
Block
A discrete group of valid transaction data that is cryptographically tied to the previous block; collectively forming a chain of blocks (i.e., a blockchain).
Block explorer
A website or software application that allows users to browse and analyse the entire history of a specific blockchain network.
Block height
The number of blocks that exist between a given block and the genesis block. The eighth block to be added to a given blockchain will have a block height of seven, for example.
Block reward
The amount of newly minted cryptocurrency and transaction fees automatically awarded by the blockchain protocol to a miner when they successfully validate a new block.
Blockchain
A database created and maintained by a peer-to-peer network of nodes. Blockchains comprise individual blocks that are each cryptographically linked to one another.
Bond
A type of debt security which effectively represents an IOU. Bonds are typically issued by governments and corporations when they want to raise money. (Head to What Are Investment Bonds & How Do I Buy Them? for more on bonds.)
Bridges
Blockchain bridges help users transfer tokens between different blockchains.
Broker
An individual or firm (i.e., a brokerage firm) that typically charges a fee or commission for executing buy and sell orders submitted by cryptocurrency investors.
BUIDL
A deliberate misspelling of ‘build’, this term is essentially a reminder to focus on improving the quality of tech and projects occupying the space.
Bull market
A sustained increase in prices encouraging a positive outlook on the market.
Byte
A unit of digital information. Typically, there are 8 bits in a byte. (A bit is a basic unit of information in computing and digital communications. It’s a portmanteau of ‘binary digit’.)
C
Cantillon Effect
An effect that’s described as a change in relative prices resulting form a change in money supply.
Confirmation time
The amount of time it takes for an unconfirmed cryptocurrency transaction to be included into the blockchain by miners. Transaction fee size can greatly affect confirmation time.
Contract For Difference (CFD)
A CFD is a broker-client agreement to pay the difference between a security’s opening and closing price. CFDs are derivatives. So, when you buy or sell a CFD, you are not buying or selling the underlying asset.
Cryptocurrency
A scarce digital asset or digital form of money enabled by blockchain technology. Cryptocurrencies are native to particular blockchain networks (e.g., bitcoin to Bitcoin).
Cryptography
The practice and study of encrypting and decrypting information through complex mathematics Cryptography is a significant component of blockchain technology.
Currency
A kind of money and medium of exchange. The most common type of currency is fiat currency.
D
DAO
Short for ‘decentralised autonomous organisation’, a DAO is a type of organisation that is controlled by its stakeholders and has no central governing body.
dApp
Short for ‘decentralised application’, a dApp is an app that is coded in a program running on a blockchain.
DeFi
An abbreviation of ‘decentralised finance’, which is a term used to describe a suite of crypto projects that are decentralising financial services.
Demurrage
Also referred to as a carrying cost of money, demurrage is a term that describes the cost associated with owning or holding currency over a given period.
Derivative
A security with a price that is dependent upon or derived from one or more underlying assets. The derivative itself is a contract between at least two parties. Common forms of derivatives are futures, forwards, options, and swaps.
Dollar-cost average (DCA)
An investment strategy of spreading out asset purchases by buying at regular intervals and in roughly equal amounts.
E
ERC-20
The technical standard used to issue tokens on Ethereum.
Ethereum
An open-source, decentralised computing infrastructure that uses blockchain technology to synchronise and store changes in state. The cryptocurrency native to Ethereum is ether.
Exchange
An online platform that allows buyers and sellers to trade a range of cryptocurrencies using fiat currency or other cryptocurrencies.
Exchange-traded fund (ETF)
An investment fund that can be traded on a stock exchange just like listed company shares. There are ETFs based on market sectors, asset classes, market caps, and foreign markets.
F
Fiat currency
Money that has no intrinsic value and is declared legal tender by a government. Examples of fiat currencies include the U.S. dollar, Japanese yen, and Australian dollar.
FOMO
An acronym for ‘fear of missing out’, FOMO refers to the anxiety that one feels when they believe they’re missing out on a potentially lucrative investment or trade opportunity.
FUD
Short for fear, uncertainty, and doubt, FUD refers to any baseless, negative information that is intentionally spread by those seeking to gain—often financially—from FUD-induced hysteria.
Fundamental analysis
The process of looking at a company or cryptocurrency at the most fundamental financial level.
Funding rate
Periodic payments made to either long or short traders, calculated based on the difference between perpetual futures markets and spot prices. When the market is bullish (bearish), the funding rate is positive (negative) and long (short) traders pay short (long) traders.
Futures
A type of derivative contract that represents a binding agreement to buy or sell a given cryptocurrency at a specified price and date. Upon expiration, futures are either cash-settled or physically delivered.
G
Gas
A unit value that quantifies the work Ethereum does. Gas exists in order to incentivise node operators on the Ethereum network to process transactions.
Genesis block
The first block in a blockchain. Because its block height is always equal to zero, the genesis block is also referred to as ‘block zero’.
Governance
Governance refers to the processes of governing a given system. In the crypto space, governance describes the mechanisms through which decisions are made on key risk parameters, proposed improvements and other matters.
Gwei
Short for GigaWei. Wei is the smallest unit of ether. Just like cents to dollars.
H
Halving
A scheduled event in which the amount of newly minted cryptocurrency awarded for successfully mining a block (i.e., the block subsidy) halves.
Hard fork
A code change in a blockchain protocol so significant that it becomes incompatible with older versions.
Hash
A code change in a blockchain protocol so significant that it becomes incompatible with older versions.
Hash rate
The speed at which miners are computing hashes. In the cryptocurrency space, measurements of hash rate are typically approximations.
Hedge fund
A pool of money contributed by private investors and run by a fund manager. The hedge fund manager’s goal is to generate as high a return as possible whilst taking on as little risk as possible.
HODL
A deliberate misspelling of ‘hold’, the phrase originated in 2013 when a user posted to the Bitcoin Forum message board, “I AM HODLING.” It is used to reinforce a long-term outlook by cryptocurrency owners.
I
Index fund
A type of mutual fund or exchange-traded fund (ETF) that is designed to track the returns of a market index such as the ASX 200.
Interoperability
The extent to which blockchains are cross-compatible and can leverage other blockchains’ unique properties.
Interoperable
The ability to be compatible across different blockchains.
L
Layer 2 (L2)
A collective term for solutions that help scale applications. In the context of crypto, Layer 2 refers to a secondary framework or protocol that is built on top of an existing blockchain.
Leverage
A technique involving the use of borrowed funds (i.e., debt) that allows traders to open a position that is larger than the balance of their account.
Liquidate
The process of turning property or assets into cash.
Liquidity
The ability to buy or sell a particular cryptocurrency in the market without significantly affecting the price.
Liquidity pool
A smart contract holding 2 tokens, enabling trading between them.
Liquidity provider (LP)
A party who deposits an equivalent value of 2(or more) tokens into a liquidity pool. They take on price risk and are compensated with fees.
Long
A trading position opened by investors and traders who buy a cryptocurrency with the expectation to sell it at a higher market value in the future.
M
Mainnet
A trading position opened by investors and traders who buy a cryptocurrency with the expectation to sell it at a higher market value in the future.
Margin trading
A method of trading cryptocurrencies where traders use funds borrowed from third parties in order to leverage their positions.
Market cap
Calculated by multiplying circulating supply by market price, market cap(italisation) represents the total trading value of a given cryptocurrency.
Market maker
Participant of the market who creates buy and sell orders.
Mempool
Short for ‘memory pool’, a mempool is a collection of all cryptocurrency transactions that are waiting to receive their first confirmation from a miner.
Merkle Tree
A method of structuring data that can significantly reduce the amount of data that a trusted authority must maintain for verification purposes. Merkle trees are widely used in public blockchain networks.
Meta
An investment trend in a given market. In the cryptocurrency market, examples of past metas include alternative layer-1 blockchains and metaverse-related tokens. The term is derived from ‘metagame’, a term used by gamers to describe an ever-evolving subset of a game’s basic strategy and rules which is required to play at a high level.
Metadata
Data that provides information about other data. In the context of NFTs, metadata describes an NFT’s properties. Examples of properties are names, IDs, descriptions, traits and links to images or multi-media.
Metaverse
A concept of an immersive online universe that combines different virtual spaces. Examples of metaverses include Decentraland and The Sandbox.
Mining
The process of verifying transactions and recording them on a blockchain. Mining is performed by so-called ‘miners’. In exchange for their efforts, miners are compensated in cryptocurrency.
Mint
The process of creating a non-fungible token (NFT) via a transaction on the blockchain. When NFT collections launch, the team will typically charge a mint price (e.g. 0.08 ETH) as a way to raise capital. Sometimes, NFT collections will launch via a free mint.
Multi-signature
A digital signature scheme that enables multiple users to authorise a cryptocurrency transaction before it is broadcasted to the corresponding blockchain network.
Mutual fund
A pool of money contributed by many multiple investors and run by a fund manager. The portfolio of a mutual fund will typically include assets like stocks and bonds.
N
Node
A participant in a blockchain network that communicates with other nodes to ensure its security and integrity. Nodes are able to validate transactions.
Non-fungible token (NFT)
NFTs are tokens that represent scarce digital content items. As distinct from cryptocurrencies like bitcoin, NFTs are not interchangeable.
O
Off-ramp
A solution that allows investors and traders to convert cryptocurrencies to fiat currencies. Off-ramps are offered by most leading cryptocurrency exchange operators.
On-ramp
A solution that allows investors and traders to convert fiat currencies to cryptocurrencies. On-ramps are offered by most leading cryptocurrency exchange operators.
Open source
Code that is designed to be publicly accessible, meaning anyone can see, modify and distribute the code as they see fit.
Options
A type of derivative contract that gives the owner the right—but not the obligation—to buy or sell an underlying cryptocurrency at a specified price on or before a specified date, depending on the form of the option.
Oracle
A blockchain middleware that serves as a secure connection between smart contracts and off-chain data; significantly bolstering the functionality of smart contracts.
Order book
A list of buy and sell orders on an exchange
P
Permissionless
Not needing permission to join or interact with something that is public.
Phishing
A method of obtaining personal information such as usernames, passwords and banking details through deceptive means. Phishing is a common type of cyber attack.
Ponzi Scheme
A scam that involves an investment scheme where early investors are being paid by funds from new investors; also referred to as a pyramid scheme.
Price floor
The general low price for a collection of items (usually referring to NFT’s). For example, if the lowest available price of a collective of NFT’s is 1 Eth, then we consider the price floor of this NFT to be 1Eth.
Private key
A unique string of letters and numbers that essentially functions as a user’s digital signature. It is vital that private keys are kept secret.
Proof of stake (PoS)
A mechanism by which block validators are selected based on how much cryptocurrency they are staking (i.e. committing funds to help maintain blockchain network). Ethereum will start using proof of stake in 2022.
Proof of work (PoW)
A mechanism by which cryptocurrency miners expend computing power to solve cryptographic puzzles; proving they have done so by writing the solution to the blockchain. Bitcoin is an example of a blockchain that uses proof of work.
Protocol
A set of rules that tells something how to do certain actions. The rules set forth in protocols can be encoded in software. Examples include the Bitcoin protocol and Internet Protocol (IP).
Public key
A unique string of letters and numbers that is visible on a blockchain. A public key can be derived from a private key—but the opposite is not possible.
Pullback
A decline in the charts from a recent peak.
Put option
An option contract where the owner has the right, but not the obligation, to sell a specified amount of an underlying asset at a specified price (i.e., strike price) within a specified time.
Q
Query
A precise request for information retrieval with databases and information systems. Query languages are programming languages used to create queries in databases and information systems.
R
Rekt
A slang version of the word “wrecked” that is most commonly used to describe a margin trader who has just had their position liquidated.
Repo market
The repo market is where banks, financial institutions and other participants borrow and lend cash for short periods in exchange for high-quality securities. (Repurchase agreements, or repos, are short-term loans which are often made overnight.
Retail investor
A non-professional investor. Also often referred to as an ‘everyday investor’.
Rug-pull
A malicious operation where the creators of a cryptocurrency withdraw liquidity and run away with investor funds.
S
Sandbox
An isolated testing environment that enabled developers to run and test applications before the changes are deployed on the main net
Satoshi
The smallest denomination of bitcoin (i.e., one hundred millionth of a single bitcoin, or 0.00000001 BTC). The plural form—satoshis—is commonly shortened to ‘sats’.
Satoshi Nakamoto
The name used by the person(s) who invented Bitcoin, authored the Bitcoin whitepaper, and published the original Bitcoin client software.
Security
In finance, a security is an investment which can be traded in financial markets. (Securitisation refers to the process of transforming assets into interest-bearing securities.)
Seed phrase
Also known as a mnemonic phrase, a seed phrase—which is typically 12 or 24 words in length—stores the information needed to recover a wallet.
Seigniorage
The profits earned by central banks or other monetary authorities through the production and maintenance of fiat money.
Sentiment analysis
The process of aggregating a large number of text documents and categorising them in a way that indicates the current level of sentiment over a given asset.
Share
Part ownership of a company. An investor will typically buy shares on a stock market such as the Australian Securities Exchange (ASX). Once they do, they become a shareholder of the company they bought shares in.
Short
A trading position opened by investors and traders—known as short sellers—who believe the market value of a given cryptocurrency will decline in the future.
Side Chain
A seperate blockchain ledger that runs parallel with the primary blockchain.
Slashing
A security mechanism in Eth 2.0 designed to prevent attacks on the network.
Slippage
The difference between the expected price of a trade and the actual price at which it executes. Slippage is typically less severe on highly liquid exchanges.
Smart contract
Computer code that is able to be stored and executed on a blockchain. Smart contracts self-execute when and if certain predetermined conditions are met.
Soft fork
A code change in a blockchain protocol that is backwards-compatible. That is to say, soft forks do not mandate all participating nodes update their software.
Solidity
A type of cryptocurrency designed to maintain as stable a price as possible. Despite offering the same utility, the form and function of stablecoins differ tremendously.
Stacking sats
Bitcoiners use this Matt Odell-coined term to share ways they’ve been accumulating bitcoin. Common examples: buying on Cash App, earning via Lolli, and profitably trading BTC-paired altcoins.
Staking
The process of participating in the validation of transactions on a proof-of-stake (PoS) blockchain.
State root
The root hash of a specialised Merkle tree (i.e. Patricia Merkle Trie) that stores the entire state of the system.
Strike price
The set price at which an option holder can buy or sell the underlying asset when the option is exercised. Strike price is sometimes called ‘exercise price’. (With options, to ‘exercise’ means to put into effect the right to buy or sell the underlying asset.)
T
Technical analysis
The process of forecasting the direction of an asset’s price movements by relying on historical price and volume data.
Testnet
An alternative blockchain network that is used—predominantly by developers and programmers—for testing and experimentation purposes.
Token contract
The address location of the actual token contract that manages the logic for the tokens. It does not refer to the address that holds your own personal tokens!
Transaction
A collection of information the blockchain needs in order to transfer cryptocurrency. Transactions are not valid unless they are signed with the appropriate private key.
Transaction fee
An amount of cryptocurrency included in a transaction that is collected by a miner of said cryptocurrency. Transaction fees incentivise miners to process transactions.
U
Unit Bias
The tendency for investors to buy shares and cryptocurrencies based on their relatively low per-unit cost. Typically, these investors fail to appreciate the relationship between the total supply of units and per-unit cost.
Universal 2nd Factor (U2F)
An authentication method that requires a physical device.
V
Volatility
The frequency and severity with which the market price of an asset fluctuates. Generally speaking, rising volatility is associated with rising uncertainty among investors and traders.
Volume
The quantity of all trades happening in a given timeframe.
W
Wallet
A software application or hardware device that manages private keys. These keys are needed to access the specific blockchain address to which a user’s cryptocurrency belongs.
Web3
Describes the vision of a serverless internet or decentralised web. That is, a version of the internet where each user is in control of their own data and identity.
Whitelist
A pre-approved list of participants that are allowed access to a token sale.
Whitepaper
A document prepared by a project’s founders detailing the problem the project addresses and how a blockchain-based cryptocurrency is fundamental to said project’s existence.
Y
Yield
Income return of a financial asset. Yield is typically expressed as a percentage.
Yield farming
Also referred to as liquidity farming, yield farming describes the practice of generating passive income by providing liquidity—or another value-added service—to a DeFi protocol. Income received is denominated in the protocol’s native crypto token.
Z
Zero-knowledge proof
An encryption scheme used to prove to someone that you know something without revealing what that something actually is.