50 terms, plain English.

Address

A string of letters and numbers derived from a public key. Funds are sent to addresses. A single wallet can produce a practically unlimited number of addresses, all controlled by the same seed.

Airdrop

A token distribution sent to a list of eligible addresses, typically based on past activity (using a protocol, holding an asset, etc.). Often a reward; sometimes a tax problem.

AMM

Automated Market Maker. A smart contract that holds a pool of two assets and lets anyone swap between them at a price determined by a formula. Uniswap is the canonical example.

ATH

All-time high. The highest price an asset has ever reached on a given timeframe.

Block

A bundle of transactions plus metadata, cryptographically chained to the previous block. Bitcoin produces one roughly every 10 minutes.

Block reward

The amount of new bitcoin created and given to whichever miner produces a valid block. Halves roughly every four years; currently 3.125 BTC.

Bridge

Infrastructure that moves an asset between two blockchains. Historically the most-hacked piece of crypto infrastructure by a wide margin. Use sparingly.

BTC dominance

Bitcoin's share of total crypto market capitalization. Rises in fear-off cycles, falls when speculative capital rotates into altcoins.

Burn

Permanently destroying tokens by sending them to an unspendable address. Used to reduce supply, signal commitment, or as a fee mechanism (EIP-1559 burns ETH).

CEX

Centralized Exchange. A company that runs an orderbook and custodies your funds. Coinbase, Kraken, Binance. Convenient and counterparty-risky.

Cold storage

A wallet whose keys have never touched an internet-connected device. The standard for serious long-term holdings.

DAO

Decentralized Autonomous Organization. A group whose treasury and decisions are controlled by smart contracts and token-holder votes. Outcomes range from genuinely organized to barely-functional Discord.

DeFi

Decentralized Finance. Lending, trading, derivatives, and other financial primitives built as open smart contracts. Composable, transparent, and routinely exploited.

DEX

Decentralized Exchange. A trading venue that runs as smart contracts, with no central operator holding user funds. Uniswap, Curve, dYdX.

Difficulty

How hard the proof-of-work puzzle is. Bitcoin retargets every 2016 blocks (about two weeks) so blocks keep arriving every ~10 minutes regardless of how much hashrate is online.

ETF

Exchange-Traded Fund. A regulated wrapper that tracks an asset's price and trades like a stock. Spot Bitcoin ETFs launched in the US in January 2024.

Fee market

The auction for blockspace. Users include a fee with each transaction; miners include the highest-paying transactions in the next block.

Fork

A divergence in the blockchain. Soft forks tighten the rules and remain backwards-compatible. Hard forks change the rules incompatibly and can split the chain into two.

Gas

The unit of computational work on Ethereum and similar chains. Every operation costs gas; the gas price is what users pay per unit. The product is the fee.

Halving

The roughly-every-four-years event when Bitcoin's block reward is cut in half. Cuts new supply issuance and historically precedes major bull cycles.

Hard wallet

Slang for hardware wallet — a dedicated device that holds private keys offline and signs transactions on-device.

Hashrate

How much computational guessing the network is doing per second to find the next block. A proxy for security and miner commitment.

HODL

Hold On for Dear Life. Originated as a typo. Now the canonical term for the buy-and-hold-through-volatility strategy.

Layer 1 / Layer 2

L1 is the base blockchain itself (Bitcoin, Ethereum). L2 is a protocol built on top that inherits L1's security but processes transactions off-chain for scale. Lightning, Optimism, Arbitrum, Base.

Lightning Network

A Layer 2 payment network for Bitcoin using off-chain payment channels. Enables instant low-fee transfers without writing each one to the chain.

Liquidation

When a leveraged position falls below the margin requirement and is force-closed by the lender. The cascading kind takes prices much further than fundamentals would suggest.

Mempool

The set of transactions that have been broadcast but not yet included in a block. Each node maintains its own. Mempool fee levels determine how quickly your transaction confirms.

MEV

Maximal Extractable Value. The profit a block producer can extract by reordering, inserting, or censoring transactions. Sandwich attacks, arbitrage frontruns, etc.

Multisig

A wallet that requires M of N keys to authorize a transaction. Removes single points of failure. The serious way to hold significant funds.

Node

A computer running blockchain software that stores the chain, validates transactions, and relays them to peers. Verifies the network without trusting anyone.

Nonce

On Bitcoin: the number miners vary while searching for a valid block hash. On Ethereum: a per-account counter that prevents replay attacks.

Onchain

Recorded directly on the blockchain. As opposed to off-chain (Lightning, layer 2 prior to settlement, exchange ledgers).

Oracle

A service that brings off-chain data (prices, weather, sports scores) onto a blockchain so smart contracts can use it. Chainlink is the largest.

Private key

A 256-bit secret that proves ownership of an address. Anyone with it can spend the funds. Anyone without it cannot, regardless of resources.

Proof of stake

A consensus mechanism where validators are selected based on staked tokens. Used by Ethereum since the Merge. Cheaper to run, different security model.

Proof of work

A consensus mechanism that requires solving a computationally expensive puzzle to produce a block. Used by Bitcoin. Security comes from the cost of redoing the work.

Public key

Derived from the private key. Used to receive funds (via the address) and verify signatures. Safe to share publicly.

RPC

Remote Procedure Call. The interface wallets and apps use to talk to blockchain nodes. Public RPC endpoints exist; running your own avoids leaking activity to a third party.

Sat

Satoshi. The smallest unit of bitcoin. 1 BTC = 100,000,000 sats.

Seed phrase

A 12 or 24 word backup that encodes a wallet's master key. Anyone with the phrase has full control of every address derived from it. Guard accordingly.

Slippage

The difference between the price you expected and the price you got. Worse on thin orderbooks and large orders.

Smart contract

Code deployed to a blockchain that runs deterministically when invoked. Once deployed, modifications are limited or impossible by design.

Stablecoin

A token pegged to a stable asset (usually the US dollar). Backed variously by reserves, crypto collateral, or algorithmic mechanisms — the last category has a poor track record.

Taproot

A 2021 Bitcoin upgrade that improved privacy and enabled more complex smart contracts. Made many script-locked transactions indistinguishable from simple ones on-chain.

TVL

Total Value Locked. The dollar value of assets currently deposited in a DeFi protocol or chain. A rough proxy for adoption; can be inflated by recursion.

UTXO

Unspent Transaction Output. The atomic unit of bitcoin ownership. Bitcoin doesn't track balances; it tracks UTXOs that you can spend.

Validator

On a proof-of-stake chain, the operator that proposes and votes on blocks. Earns rewards for honest behavior; gets slashed for misbehavior or downtime.

Wallet

Software (or hardware) that manages keys and constructs transactions. Doesn't actually 'hold' coins — the coins live on the chain; the wallet just holds the keys that can spend them.

Whale

A holder large enough that their movements visibly affect the market. The threshold is informal and asset-dependent.

ZK proof

Zero-Knowledge Proof. A cryptographic technique to prove a statement is true without revealing why. Powers privacy chains (Zcash) and validity rollups (zkSync, Starknet).