Raise your hand if crypto terms confuse you. That feeling is expected, especially if you’re a beginner in crypto. To make the learning process smooth as ice, we compiled the top 40 crypto terms you should know.
Top 40 crypto terms for beginners
1. Altcoins
Any cryptocurrency other than Bitcoin falls under the “altcoin” umbrella. Examples are Ethereum and stablecoins like Tether (USDT) and Dogecoin (DOGE).
2. Bitcoin (BTC)
It’s the first and most traded cryptocurrency. It uses a “proof-of-work” consensus mechanism, where miners solve complex puzzles to earn new Bitcoin and validate transactions. Satoshi Nakamoto (a pseudonym) created BTC and documented the process in the “Bitcoin: A Peer-to-Peer Electronic Cash System” whitepaper.
3. Blockchain
It’s the underlying technology behind cryptocurrency transactions. It’s a secure, decentralised ledger that records every transaction users make.
4. On-ramp and off-ramp
Ramps are bridges that link the traditional finance industry and decentralised finance entities. On-ramp services convert fiat (aka local currency) to cryptocurrency. Binance and Coinbase are examples of on-ramp platforms. Conversely, off-ramp services convert cryptocurrency to fiat. Crane, a blockchain-powered fintech platform for receiving crypto, is a typical example of an off-ramp service. The Nigerian-based service lets you receive crypto and convert it to fiat.
5. Bull market
It’s a period of rising cryptocurrency prices.
6. Bear market
It’s a period of falling cryptocurrency prices. It’s the opposite of the bull market.
7. Tokens and tokenomics
Tokens are digital assets built for specific blockchain platforms. Meanwhile, tokenomics studies tokens’ design and economic characteristics on a blockchain project. Tokenomics examines token value within an issuing platform and how they’re created and distributed.
8. Utility token and security token
Utility tokens are digital assets that provide access to specific products or services on a blockchain platform. A good example is Crane Coins (CNC), which lets users perform particular services (e.g., airtime recharge, data subscription, and cash trade-in) on Crane. Utility tokens are bound to the issuing platform or entity.
In contrast, security tokens are tokenised shares of real-world assets (e.g., stocks, bonds, or real estate on the blockchain). It has the potential for value appreciation, with investors receiving interests or dividends depending on investment conditions.
9. Cold wallet
They’re hardware devices used to store cryptocurrency in an isolated, secure offline environment. They’re not connected to the internet, reducing the risk of scams.
10. Hot wallet
They are software-based wallets with an internet connection for sorting cryptocurrencies. They provide convenient access to digital assets.
11. Market Capitalization (Market Cap)
It’s the total value of outstanding cryptocurrency units. It’s calculated by multiplying the price per coin by the circulating supply.
12. Proof-of-Stake (PoS)
An alternative consensus mechanism where validation power is proportional to the cryptocurrency a user holds (staking), and it offers more energy efficiency than proof-of-work.
13. Gas
It’s a fee paid to miners or validators for processing transactions on the network. It’s often measured in the Ethereum network’s native token, Gwei.
14. Decentralized Applications (DApps)
Applications built on blockchains. It offers functionalities, like gaming, finance, and social media without centralised control.
15. Hold On for Dear Life (HODL)
It’s a misspelling of “hold.” The concept encourages crypto users and enthusiasts to buy and hold onto digital assets for a long period, irrespective of the inevitable short-term price instability.
16. Layer 2 (L2) Solutions
Technologies built on existing blockchains to improve scalability and transaction speed.
17. Decentralized Autonomous Organization (DAO)
A community-governed organisation with rules encoded in smart contracts operating without a central authority.
18. Fiat
Fiat money is a government-issued currency not backed with physical commodities like gold or silver. The stability of the issuing government and the relationship between demand and supply influences the value of fiat money. The U.S dollar, naira, and euro are examples of fiat currencies.
19. Technical Analysis (TA)
It’s the Study of historical price charts and trading indicators to predict the future price of cryptocurrencies.
20. Fundamental Analysis (FA)
It evaluates the long-term potential to assess the inherent value of a cryptocurrency.
21. Fear of Missing Out (FOMO)
FOMO is the pressure to invest in a rapidly rising cryptocurrency because of the fear of losing out on potential gains.
22. Fear, Uncertainty, and Doubt (FUD)
Negative information or rumours spread to manipulate cryptocurrency prices.
23. Margin trading
It lets investors borrow funds to amplify potential gains (and losses).
24. Stop-Loss Order
An order set to automatically sell a cryptocurrency if its price falls below a predetermined level, limiting potential losses.
25. Coins
A slang for cryptocurrency.
26. Distributed ledger
Like a blockchain, a distributed ledger is a shared database replicated across multiple locations, ensuring transparency and security.
27. Mining
In proof-of-work systems, miners use computational power to solve complex puzzles, adding new blocks to the blockchain and earning rewards in cryptocurrency.
28. Hashing
A cryptographic function that converts data into a unique string of characters, used for verifying transactions and ensuring data integrity on the blockchain.
29. Fork
A branching point in a blockchain’s history, often resulting in two separate versions of the cryptocurrency. Forks can be planned upgrades or contentious splits due to disagreements within the community.
30. Private Key
Think of this as a secret password to access cryptocurrency holdings.
31. Public Key
Like a public address, anyone can use your public key to send you cryptocurrency, but they cannot spend it without your private key.
32. Wallet
A digital storage for cryptocurrency. Hardware wallets offer offline security, while software wallets provide convenient online access.
33. Paper wallet
An offline storage method where your private key is printed on paper. Although it’s secure, losing the paper means losing your crypto.
34. Fungible
Fungible assets like BTC are identical and interchangeable. They hold the same value and function, irrespective of origin.
35. Non-fungible Token (NFT)
Unlike fungible tokens, NFTs are unique and indivisible, representing ownership of digital assets like artwork or collectables.
36. Decentralized Finance (DeFi)
A financial system built on blockchain technology that removes intermediaries and provides open access to financial products.
37. Centralized Exchange (CEX)
A platform where users buy and sell cryptocurrencies through a centralised entity.
38. Peer-to-peer (P2P) and Decentralized Exchange (DEX)
A peer-to-peer (P2P) is an online marketplace for trading cryptocurrencies without intermediaries or third parties. Similarly, a decentralised exchange (DEX) lets users conduct transactions on the blockchain directly. DEX doesn’t hold user funds or directly control transactions.
39. Stablecoin
A cryptocurrency pegged to fiat currencies like the US dollar or Euro to prevent price fluctuations. Examples are Tether (USDT) and USD Coin (USDC).
40. Smart contracts
They’re automated contracts on the blockchain designed to self-execute once predetermined conditions are met.