The crypto glossary

A crypto address is a string of letters and numbers that identifies a destination on a blockchain, similar to an IBAN or email address but for digital assets. Bitcoin addresses start with '1', '3', or 'bc1'; Ethereum addresses start with '0x' followed by 40 hex characters. Each address is derived from a public key by hashing and encoding it, and there is no central registry: you can generate billions of addresses for free, and most wallets create a fresh one for every incoming payment for privacy. Sending to the wrong address, or to an address on the wrong network, almost always means losing the funds with no recovery. Always copy and paste, then verify the first and last few characters; clipboard hijack malware is a known threat. Some addresses also resolve from human-readable names like 'alice.eth' via the Ethereum Name Service. See also: wallet, public-key, transaction.

See also: wallet, public-key, transaction

An algorithmic stablecoin tries to hold its peg using on-chain mechanics rather than a pool of dollars or other reserve assets. The classic design uses two linked tokens: the stablecoin itself and a 'volatility' token that absorbs swings, with smart contracts minting or burning each as needed to push the price back to the peg. Algorithmic stablecoins have an unhappy track record. Basis Cash (2020), Empty Set Dollar (2020), and many smaller projects depegged within months. The most damaging failure was TerraUSD (UST) in May 2022, paired with LUNA, which had reached a market cap of about $18 billion before collapsing in days and wiping out roughly $40 billion in combined value across UST and LUNA. Newer designs like Frax mix algorithmic and fiat-backed elements to be more resilient. The EU's MiCA regulation effectively bans pure algorithmic stablecoins from June 2024. Treat any non-fiat-backed stablecoin with extra care. See also: stablecoin, fiat-backed, crypto-backed.

See also: stablecoin, fiat-backed, crypto-backed

Altcoin is short for 'alternative coin' and refers to any cryptocurrency other than Bitcoin. The category covers thousands of assets ranging from large established networks (Ethereum, Solana, BNB, XRP, Cardano) to tiny meme coins with no working product. Altcoins generally try to differ from Bitcoin in some way: faster blocks, programmable smart contracts, lower fees, different consensus rules, or a focus on privacy, gaming, or stable value. Because most altcoins are smaller, they tend to be more volatile than Bitcoin and often follow ETH's price action more closely than BTC's. Liquidity outside the top names is thin, and many projects from earlier cycles (2017, 2021) have lost most of their value or shut down entirely. The phrase 'altcoin season' is trader slang for periods when smaller coins outperform Bitcoin in percentage terms. Treat altcoin investing as higher-risk than holding BTC or ETH. See also: bitcoin, token, market-cap.

See also: bitcoin, ethereum, token, market-cap

Anti-money-laundering (AML) refers to laws and procedures designed to stop criminals from disguising the origin of illegal funds. In most countries, regulated crypto businesses (exchanges, custodians, certain wallet providers) must run an AML program: verify customer identity (KYC), monitor transactions for suspicious patterns, screen against sanctions lists, file suspicious activity reports, and keep records for several years. The global standard-setter is the Financial Action Task Force (FATF), and major implementations include the EU's MiCA and AMLD packages, the US Bank Secrecy Act, and the UK's Money Laundering Regulations. AML compliance is one reason centralized exchanges require ID, refuse certain countries, and freeze accounts that interact with sanctioned addresses or known mixers. DeFi protocols, being smart contracts rather than companies, sit in a gray zone, though front-end interfaces are increasingly subject to similar rules. Failure to comply with AML rules has cost crypto firms billions in penalties (Binance settled for $4.3 billion in November 2023). See also: kyc, fatf, travel-rule.

See also: kyc, fatf, travel-rule, mica

An automated market maker (AMM) is the pricing engine used by most decentralized exchanges. Instead of matching individual buy and sell orders on a book, an AMM holds two or more tokens in a pool and quotes a price from a math formula based on the pool's current balances. The most common formula is the constant product rule used by Uniswap v2 and v3: x * y = k, where x and y are the two token balances and k stays roughly constant during a trade. Curve uses a different formula optimized for assets that should trade near 1:1 (stablecoins, wrapped versions of the same asset), giving much tighter prices. AMMs let any token be listed without permission and run 24/7 without operators, but they have built-in slippage on large trades, leak value to MEV bots, and can lose money for liquidity providers via impermanent loss. They process tens of billions of dollars in monthly volume. See also: dex, liquidity-pool, slippage.

See also: dex, liquidity-pool, slippage, impermanent-loss

Annual percentage rate (APR) is the simple yearly return on an investment, ignoring compounding. If you earn 1% per month and do not reinvest, the APR is 12%; the APY for the same series with monthly compounding would be slightly higher (about 12.68%). DeFi protocols often display APR for staking and APY for lending, which can make it hard to compare offers across platforms; convert to one or the other before deciding. APR is more useful when the rewards are paid in a different asset than the deposit (for example, ETH staked, rewards paid in ETH but treated as a separate stream) since you cannot literally compound them automatically. As with APY, very high crypto APRs almost always reflect short-term token incentives rather than sustainable revenue, and you should size positions accordingly. See also: apy, rewards, staking.

See also: apy, rewards, staking

Annual percentage yield (APY) is the rate of return on an investment over one year, including the effect of compounding (reinvesting earnings as they accrue). A 10% APR compounded daily works out to roughly 10.52% APY. APY is the standard headline number on most DeFi lending and staking dashboards because it looks higher than the underlying APR. Treat very high crypto APYs with care: yields above 20%-30% almost always rely on token incentives that the protocol is paying out of its treasury and that fade or collapse when those incentives stop, when the token price falls, or when too many depositors arrive and dilute the rate. The historic Anchor Protocol on Terra advertised 19.5% APY on UST and went to zero in May 2022. A useful question: what is the underlying revenue source, and would it still pay this rate if the project's own token went to zero? See also: apr, yield-farming, defi.

See also: apr, yield-farming, defi, rewards

ATH stands for 'all-time high', the highest price an asset has ever traded at since launch. Bitcoin's ATH as of 2024 was set in March 2024 above $73,000, breaking the prior November 2021 peak near $69,000. Ethereum's ATH of around $4,890 was also set in November 2021. Trading at or near an ATH means every previous buyer is in profit, which removes the resistance that comes from holders waiting to break even before selling, but it also means there is no historical price reference for further upside. Many smaller coins from the 2017 and 2021 cycles are still 70-95% below their ATHs years later, which is a useful reminder that 'cheap relative to ATH' is not the same as 'undervalued'. ATH watchers also track 'all-time high date' to gauge how long it has been since the last peak. See also: atl, bull-market, bear-market.

See also: atl, bull-market, bear-market

ATL stands for 'all-time low', the lowest price an asset has ever traded at, usually measured after listing on a major exchange. For long-running coins the ATL was likely set very early in their history (Bitcoin's was around $0.05 in 2010), so the figure becomes more of a trivia point than a useful signal. For newer tokens, the ATL is often set during deep bear markets or after a project failure. Comparing the current price to both the ATL and ATH gives a rough sense of where in the cycle an asset sits, but on its own ATL is not a buy signal: many tokens go on to set lower ATLs because the underlying project fades. Pair ATL with on-chain activity, developer commits, and revenue to judge whether the low reflects panic or genuine decline. See also: ath, bear-market, fud.

See also: ath, bear-market, fud

In crypto, a backup is a copy of the information needed to restore a wallet, almost always the seed phrase plus any optional passphrase. Without a working backup, a lost or broken device means lost funds with no recovery path: there is no customer support that can reset your wallet. Best practice is to write the seed phrase on paper or stamp it into metal, store at least two copies in physically separate locations (home safe, bank deposit box, trusted relative), and never store the phrase in a screenshot, cloud note, password manager that syncs online, or email. Test recovery before depositing serious money: import the seed into a fresh device or wallet app and confirm the addresses match. For large balances, consider a multi-sig setup that survives the loss of any single backup. Beware of unsolicited 'wallet support' requests for your seed phrase; they are scams. See also: seed-phrase, recovery-phrase, cold-storage.

See also: seed-phrase, recovery-phrase, cold-storage

A bear market is a sustained period of falling prices, low trading interest, and pessimistic sentiment. Crypto bear markets typically see Bitcoin decline 60%-85% from its previous peak and last 12-24 months: notable examples include 2014-2015, 2018-2019, and 2022 when Bitcoin fell from around $69,000 to under $16,000 amid the collapse of Terra/LUNA in May, Three Arrows Capital in June, and FTX in November. Smaller altcoins fall further, and many never recover. The name comes from a bear swiping downward with its claws. Bear markets are when most building happens (lower hype, easier hiring, less competition), but the price action makes that work invisible until the next cycle. Strategies people use include dollar-cost averaging into majors, staking for yield, and tax-loss harvesting where the law allows. The end of a bear market is usually only obvious in hindsight. See also: bull-market, fud, dca.

See also: bull-market, fud, dca, atl

Bitcoin is the first cryptocurrency, launched on 3 January 2009 by an anonymous developer using the name Satoshi Nakamoto. It runs on a public blockchain secured by proof-of-work mining, with a hard supply cap of 21 million coins; the last fraction is expected to be mined around the year 2140. New blocks are added roughly every 10 minutes, and the block reward halves about every four years (the most recent halving was April 2024, cutting issuance to 3.125 BTC per block). Bitcoin is mostly used as a store of value and a settlement network rather than for everyday spending; on-chain capacity is around 7 transactions per second, with faster payments possible via the Lightning Network. The U.S. Securities and Exchange Commission approved spot Bitcoin ETFs in January 2024, opening the asset to traditional brokerage accounts. Risks include high price volatility, energy debate around mining, and the fact that lost private keys mean lost coins forever. See also: blockchain, mining, halving.

See also: blockchain, mining, halving, proof-of-work

A block is a batch of transactions added to a blockchain at the same time, along with a header that links it to the previous block by including that block's hash. This linking is what creates the 'chain' and makes earlier history hard to rewrite: changing an old block would force every later block's hash to change too, and the network would reject it. Bitcoin produces a new block roughly every 10 minutes and caps each at about 1-4 MB, fitting around 2,000-3,000 transactions; Ethereum targets one block every 12 seconds. Each block also has a coinbase entry that rewards the miner or validator who produced it, plus the fees from the included transactions. The first block of any chain is called the genesis block. Most wallets and exchanges wait several blocks ('confirmations') before treating a payment as final, to reduce the risk of small reorganizations. See also: blockchain, hash, mining.

See also: blockchain, hash, mining, genesis-block

A blockchain is a shared digital record book that stores transactions in linked groups called blocks, copied across many computers around the world. Each new block references the cryptographic hash of the previous one, so changing an old entry would force every later block to be rewritten on the majority of machines at once. The first working blockchain went live with Bitcoin in January 2009; Ethereum followed in July 2015 and added programmable contracts. Public blockchains (Bitcoin, Ethereum) let anyone read and write; private or 'permissioned' chains restrict access to known parties. Strengths: a single agreed history without needing a central authority, plus transparent audit trails. Weaknesses: throughput is limited (Bitcoin handles roughly 7 transactions per second; Ethereum around 15-30), data once written is hard to remove even when wrong, and energy use can be high on proof-of-work networks. Most cryptocurrencies, stablecoins, NFTs, and DeFi apps run on top of one or more blockchains. See also: bitcoin, ethereum, consensus.

See also: bitcoin, ethereum, consensus, node

A brain wallet is a wallet whose private key is generated from a passphrase that the user memorizes, with no written or digital backup. The idea is to be able to cross borders or survive a house fire without losing access to funds. In practice brain wallets have proven dangerous: humans pick passphrases from a much smaller space than truly random keys, and attackers run constant brute-force checks against any passphrase that has ever appeared in a book, song lyric, or web page. Studies have shown thousands of brain wallets drained within hours of being funded. The safer modern equivalent is a 12 or 24-word seed phrase generated by a hardware wallet using strong randomness, written on paper or metal, and stored physically. If the goal is portable access, an encrypted backup of the seed (BIP-39 passphrase plus the words) gives most of the same benefits without the brute-force risk. Avoid plain brain wallets for any non-trivial amount. See also: seed-phrase, paper-wallet, passphrase.

See also: seed-phrase, paper-wallet, passphrase

A bull market is a sustained period of rising prices and positive sentiment. In crypto, bull markets have historically been driven by Bitcoin halving cycles, new product launches (DeFi summer 2020, NFTs 2021), or major institutional events (spot Bitcoin ETF approval January 2024). Past bull runs have produced 5x to 20x moves in BTC and much larger moves in smaller coins, but they also feature sharp 30%-40% pullbacks along the way that shake out margin traders. The term comes from a bull striking upward with its horns. Indicators people watch include rising market cap, falling stablecoin reserves on exchanges, narrowing dominance, and rising Google search interest. Bull markets eventually turn into bear markets; calling the top in advance is famously difficult, and many gains are given back during the next downturn if not realized. See also: bear-market, ath, fomo.

See also: bear-market, ath, fomo, halving

Capital gains are the profit from selling an asset for more than you paid for it; capital losses are the opposite. In most countries, including the US, UK, Canada, Australia, Germany, and most of the EU, crypto disposals are taxable capital gains events. The triggering action varies but typically includes selling crypto for fiat, swapping one crypto for another, spending crypto on goods, and sometimes receiving certain DeFi rewards. Many jurisdictions distinguish short-term gains (assets held for less than a year, taxed as ordinary income in the US) from long-term gains (taxed at lower rates). You owe tax on the gain calculated as sale price minus your cost basis, regardless of whether you converted to dollars; a profitable BTC-to-ETH swap is taxable even though you never touched cash. Track every disposal; many users rely on tools like Koinly or CoinTracker because manual tracking across exchanges and wallets is impractical. Always confirm with a tax professional in your jurisdiction. See also: taxable-event, cost-basis, fifo.

See also: taxable-event, cost-basis, fifo

A central bank digital currency (CBDC) is a digital form of a country's official money, issued and controlled by its central bank rather than a private company. CBDCs differ from regular bank deposits by being a direct claim on the central bank, and from stablecoins by having full state backing. As of 2024, the Bahamas (Sand Dollar, 2020), Jamaica (JAM-DEX, 2022), and Nigeria (eNaira, 2021) have launched live retail CBDCs; China is running a large pilot of the digital yuan (e-CNY); the European Central Bank is in the preparation phase for a digital euro; the Federal Reserve has not committed to a US digital dollar. Designs vary widely: some are token-based and run on permissioned blockchains, others are simple account-based systems. Debates focus on privacy (a CBDC could enable detailed transaction surveillance), bank disintermediation, and offline use. CBDCs are not crypto in the usual sense: they are centrally controlled, not censorship-resistant, and not deflationary by design. See also: stablecoin, fiat-backed.

See also: stablecoin, fiat-backed

A centralized exchange (CEX) is a company-run trading platform that holds customer funds and matches buy and sell orders on an internal order book. Examples include Coinbase, Binance, Kraken, Bitstamp, OKX, and Bybit. CEXs typically require ID verification (KYC), accept bank transfers and card payments, and offer features that DEXs do not: fiat on-ramps, customer support, margin trading, futures, and high-volume order matching with tight spreads. The trade-off is custody: while your assets sit on the exchange, the exchange controls the keys, and a hack, freeze, or insolvency can mean partial or total loss. The collapse of FTX in November 2022 cost customers roughly $8 billion. The phrase 'not your keys, not your coins' summarizes the risk. Many users keep small trading balances on a CEX and move long-term holdings to a self-custody wallet. Regulators in the US, EU, and UK now license major CEXs. See also: exchange, dex, custodial.

See also: exchange, dex, custodial, kyc

In crypto, 'coin' usually means the native asset of its own blockchain, while 'token' means an asset built on someone else's chain. Bitcoin (BTC) is a coin because it lives on the Bitcoin blockchain; ether (ETH) is the coin of Ethereum; SOL is the coin of Solana. By contrast, USDC and UNI are tokens, since they are issued by smart contracts on Ethereum and other chains. Coins are typically used to pay transaction fees on their network and to reward miners or validators for securing it. The distinction is not always strict in casual conversation, where people may call any crypto asset a 'coin'. New coins often launch via a fair mining start, an airdrop, or a sale, and supply rules are set in the protocol's code. Coin supply may be capped (BTC at 21 million) or uncapped (ETH has no hard cap). See also: token, cryptocurrency, mining.

See also: token, cryptocurrency, bitcoin, mining

Cold storage is the practice of keeping private keys completely offline so they cannot be reached by an internet attacker. The most common implementations are hardware wallets, where keys live on a dedicated chip, and paper or metal backups of a seed phrase. Cold storage is the standard for long-term holdings: exchanges, large investors, and prudent individuals all keep the bulk of their crypto cold and only move small amounts to hot wallets when needed for trading or DeFi. The defining property is that signing a transaction requires physical access to the offline device or backup; remote attackers cannot get in. Cold storage does not protect against losing the keys yourself, so the backup discipline is the other half of the practice: write the seed on paper or stamp it into metal, store copies in two separate physical locations, and test recovery on a spare device before relying on it. See also: cold-wallet, hardware-wallet, seed-phrase.

See also: cold-wallet, hardware-wallet, seed-phrase

A cold wallet is a crypto wallet whose private keys are kept entirely offline, away from internet-connected devices. The two common forms are hardware wallets (small dedicated devices like Ledger, Trezor, Coldcard) and paper or metal backups of a seed phrase. Cold wallets are the standard for storing significant balances because malware on a regular computer cannot reach the keys: even when you sign a transaction, the device itself does the signing internally and only sends out the signed result. Trade-offs: less convenient for frequent use, you still need to verify what you are signing on the device's screen (which prevents most front-end attacks), and a lost or destroyed device with no backup means lost funds. Always test recovery from your seed phrase before depositing serious money, and store the backup in two physically separate locations. See also: hot-wallet, hardware-wallet, cold-storage.

See also: hot-wallet, hardware-wallet, cold-storage, seed-phrase

Consensus is how a blockchain's many independent computers agree on a single shared history without a central authority. The consensus mechanism defines who proposes the next block, how others check it, and what happens when two valid blocks appear at once. The two main families are proof-of-work (Bitcoin: spend electricity to earn the right to propose) and proof-of-stake (Ethereum since 2022: lock up coins as collateral). Other approaches include delegated proof-of-stake, proof-of-history (Solana), and Byzantine fault tolerant variants used by some app-chains. A good consensus mechanism makes attacking the chain much more expensive than honest participation: on Bitcoin you would need to outspend the entire mining industry, on Ethereum you would need to acquire and risk losing tens of billions of dollars of staked ETH. Trade-offs differ across designs in energy use, finality time, and how easily a small group could collude. See also: proof-of-work, proof-of-stake, validator.

See also: proof-of-work, proof-of-stake, validator, node

Cost basis is the original purchase price of an asset, including any fees paid to acquire it, used to calculate the capital gain or loss when you later dispose of it. If you bought 1 BTC for $20,000 plus a $50 fee and later sold it for $50,000, your cost basis is $20,050 and your gain is $29,950. In crypto, tracking cost basis becomes complicated because most users buy in many small lots over time, swap between assets, and move coins between wallets. The accounting method chosen (FIFO, LIFO, specific identification, average cost) changes which lot is matched to a sale and therefore the size of the gain or loss; tax authorities in different countries allow different methods. Tools like Koinly and CoinTracker import exchange and wallet history to compute basis automatically. Get this right from the start: reconstructing cost basis years after the fact is tedious and error-prone. See also: capital-gains, fifo, taxable-event.

See also: capital-gains, fifo, taxable-event

A crypto-backed stablecoin is collateralized by other crypto assets locked in smart contracts, rather than by fiat in a bank. The leading example is DAI from MakerDAO/Sky: users open a vault, deposit ETH or other approved collateral, and mint DAI against it at a conservative loan-to-value ratio (typically 50%-66%). If the collateral value falls too far, automated auctions sell it to keep the stablecoin fully backed. Over-collateralization is the key safety feature: $1 of DAI is typically backed by $1.50-$2.00 of crypto. The trade-offs vs fiat-backed: crypto-backed stablecoins are transparent on-chain (anyone can verify backing), do not depend on a bank, and survive without a central issuer, but they require more capital to mint than they create, and during sharp crashes the auction system has come close to failing (Black Thursday, March 2020). DAI's collateral mix now includes USDC and US Treasuries, blurring the line. See also: dai, stablecoin, fiat-backed.

See also: dai, stablecoin, fiat-backed

A cryptocurrency is a digital asset that uses cryptography and a blockchain to record ownership and transfers without a central issuer like a bank or government. Bitcoin (2009) was the first; today there are tens of thousands of others, though only a few hundred have meaningful trading volume. Cryptocurrencies can be used to pay fees on a network (ETH on Ethereum), store value (BTC), represent dollars (USDC, USDT stablecoins), grant voting rights in a protocol (governance tokens), or stand in for real-world or in-game items. Prices are typically volatile, supply rules are set in code, and transactions are usually irreversible once confirmed. Regulators in most countries treat crypto as property or as a security depending on the structure, with tax events triggered on disposal. Risks include scams, exchange failures (FTX collapsed November 2022), self-custody mistakes, and regulatory change. See also: bitcoin, altcoin, stablecoin.

See also: bitcoin, altcoin, token, stablecoin

A custodial service holds your crypto private keys on your behalf, similar to how a bank holds your dollars. Centralized exchanges (Coinbase, Binance, Kraken), brokerage apps (PayPal, Robinhood crypto), and many staking services are custodial. The trade-offs vs self-custody: customer support, password reset, 2FA recovery, easier fiat on/off ramps, and often regulated insurance on certain balances, but you also take on counterparty risk. If the custodian is hacked, frozen by regulators, or goes insolvent, you become a creditor in a recovery process; the FTX collapse in November 2022 cost customers roughly $8 billion and many had to wait years for partial repayment. The phrase 'not your keys, not your coins' summarizes the risk. Many users keep a working trading balance with a custodian and move long-term holdings to a self-custody wallet. See also: non-custodial, cex, wallet.

See also: non-custodial, cex, wallet

Convertible virtual currency (CVC) is the term used by US tax and financial-crime authorities to describe digital assets that can be exchanged for or substituted for real currency. The IRS has used CVC since at least 2014 (Notice 2014-21) to define the scope of crypto tax rules: CVCs are treated as property rather than currency for tax purposes, so every disposal is a taxable event. The Financial Crimes Enforcement Network (FinCEN) uses CVC in its anti-money-laundering guidance, classifying exchanges and certain wallet providers as money services businesses subject to registration, KYC, and reporting requirements. The category covers Bitcoin, Ethereum, stablecoins, and most other crypto assets, but does not cover purely closed-loop in-game currencies that cannot be converted out. The term is mostly American; the EU prefers 'crypto-asset', the UK uses 'cryptoasset', and FATF uses 'virtual asset'. See also: aml, kyc, capital-gains.

See also: aml, kyc, capital-gains, taxable-event

DAI is a US dollar stablecoin issued by the MakerDAO protocol (rebranded to Sky in 2024) on Ethereum. Unlike USDT and USDC, DAI is not backed by a company holding fiat in a bank: it is created by users locking collateral (originally just ETH, now a mix of ETH, stablecoins, and real-world assets) into smart contracts called vaults, and minting DAI against that collateral at a conservative ratio. If the collateral value falls too far, vaults are auctioned off to keep DAI fully backed. Supply has ranged from about $4 billion to $9 billion in recent years. DAI was the original on-chain-only stablecoin (launched in late 2017) and remains widely used in DeFi. The trade-offs vs centralized stablecoins: DAI's contracts are public and auditable, but its collateral mix now includes large amounts of USDC and tokenized US Treasuries, so it inherits some of the same counterparty risks. See also: stablecoin, crypto-backed, defi.

See also: stablecoin, crypto-backed, defi

A decentralized autonomous organization (DAO) is a group that runs on a blockchain, with rules and treasury controlled by smart contracts and decisions made by token-holder votes rather than executives. The first major example, 'The DAO' on Ethereum in 2016, raised about $150 million worth of ETH before a smart-contract bug let an attacker drain a third of the funds, prompting a chain rollback that split the network into Ethereum and Ethereum Classic. Modern DAOs include MakerDAO/Sky (running the DAI stablecoin), Uniswap (the leading DEX), Aave (lending), and many smaller protocols. Most DAOs use a multi-sig or time-locked smart contract to execute proposals, and many control treasuries worth tens to hundreds of millions of dollars. Real-world challenges include low voter turnout, concentration of voting power among a few large holders or delegates, and unclear legal status (Wyoming, Tennessee, the Marshall Islands, and a few others have created DAO LLC structures). See also: governance-token, smart-contract, defi.

See also: governance-token, smart-contract, defi

Dollar-cost averaging (DCA) means buying a fixed dollar amount of an asset on a regular schedule (weekly or monthly) regardless of the price. Buying $100 of Bitcoin every Monday, for example, gives you more BTC when the price is low and less when it is high, smoothing out your average entry. DCA removes the need to time the market, which most retail buyers do badly, and it lowers the regret on individual buys because no single purchase is the whole position. Studies of past Bitcoin cycles show DCA into BTC over multi-year periods has outperformed most active timing strategies for non-professionals. The trade-off: in a strongly trending market, a single early lump-sum buy beats DCA, and in a long bear market DCA still loses money in the short term. Best paired with a long time horizon and an asset you would hold through a 70% drawdown. See also: hodl, bear-market, bull-market.

See also: hodl, bear-market, bull-market

DeFi (decentralized finance) is the set of financial apps that run on public blockchains as smart contracts, replacing banks, brokers, and exchanges with code that anyone can interact with using a self-custody wallet. The largest DeFi categories are decentralized exchanges (Uniswap, Curve), lending markets (Aave, Compound), liquid-staking (Lido), and stablecoins (DAI). Total value locked across DeFi peaked above $180 billion in late 2021, fell to around $40 billion in the 2022 bear market, and recovered to over $100 billion through 2024. DeFi works without account opening or KYC, settles 24/7, and exposes everything on-chain for audit, but the trade-offs are real: smart-contract bugs have caused billions in losses (Ronin $625M March 2022, Wormhole $325M February 2022), front-end hacks bypass even safe contracts, and stablecoin pegs can break. Yields advertised on DeFi often reflect token incentives and fade. See also: dex, tvl, smart-contract.

See also: dex, tvl, smart-contract, yield-farming

Delegated staking lets coin holders assign their stake to a professional validator without giving up custody of the coins themselves. The validator runs the node and signs blocks on behalf of all its delegators; rewards are split between the validator (who takes a commission, typically 5%-10%) and the delegators (who receive the rest in proportion to their stake). Cosmos, Polkadot, Cardano, Solana, and many others use this model directly at the protocol level. On Ethereum, delegation is not native to the protocol but is offered by staking pools and liquid-staking services like Lido, Rocket Pool, and Coinbase. Delegated staking is the easiest way for small holders to earn staking rewards without operating infrastructure, but you take on the validator's slashing risk: if they go offline or misbehave, your stake can be reduced. Spread delegations across multiple operators to limit single-validator risk. See also: staking, validator, slashing.

See also: staking, validator, slashing

A decentralized exchange (DEX) is a smart-contract-based marketplace where users trade tokens directly from their own wallets without an account or custodian. The largest DEXs (Uniswap, Curve, PancakeSwap, Aerodrome) use the automated market maker model: instead of an order book, prices come from a math formula applied to two pools of tokens that liquidity providers have deposited. Anyone can list a token on most DEXs, which is good for access but means many listed tokens are scams or have no real volume. DEXs do not need KYC and you keep custody of your funds, but you are also fully responsible: a wrong address, a fake token contract, or a malicious approval can drain your wallet. Trade execution costs include the swap fee (often 0.3%), slippage on thin pools, and the network gas fee. Aggregators like 1inch and Matcha route a single trade across several DEXs for a better price. See also: amm, liquidity-pool, slippage.

See also: amm, liquidity-pool, slippage, exchange

Dominance is the percentage share of total crypto market capitalization held by a single coin, most often Bitcoin. Bitcoin dominance is a long-watched ratio: it sat above 90% in the early years, fell to around 35% during the 2017 ICO boom and the 2021 altcoin run, then climbed back into the 50%-60% range during 2023-2024. Rising BTC dominance usually means money is rotating out of smaller coins and into Bitcoin, often during sell-offs or 'flight to quality' periods. Falling dominance often coincides with 'altcoin season', when smaller coins outperform in percentage terms. Stablecoin dominance (USDT, USDC) is sometimes tracked separately as a proxy for sidelined cash waiting to be deployed. Dominance is a useful framing tool but not a precise signal; it depends on which coins are counted in the denominator and on issuance changes. See also: bitcoin, market-cap, altcoin.

See also: bitcoin, market-cap, altcoin

ERC-20 is the technical standard for fungible tokens on Ethereum and other EVM-compatible chains, proposed by Fabian Vogelsteller in November 2015 and finalized as Ethereum Improvement Proposal 20. The standard defines a small set of required functions (transfer, approve, balanceOf, totalSupply) so that wallets, exchanges, and DeFi protocols can interact with any ERC-20 token without custom code. Almost every well-known ERC-20 token, including USDC, USDT, UNI, LINK, AAVE, and SHIB, lives on Ethereum or one of its layer-2s. The standard is fungible: every unit of a given token is identical and interchangeable, in contrast to ERC-721 NFTs, which are unique. ERC-20 also has well-known footguns: the 'approve' function can be exploited if you grant unlimited spending allowance to a malicious contract, and several large hacks have come from this. Always review what you are approving on a hardware wallet, and revoke unused allowances periodically (revoke.cash). See also: token, erc-721, ethereum.

See also: token, erc-721, ethereum, smart-contract

ERC-721 is the technical standard for non-fungible tokens (NFTs) on Ethereum and other EVM chains, finalized in January 2018 by William Entriken, Dieter Shirley, Jacob Evans, and Nastassia Sachs. Each ERC-721 token has a unique numeric ID inside its contract, so wallets and marketplaces can tell one token apart from another even within the same collection. CryptoKitties (late 2017) was the first big use case; CryptoPunks, Bored Ape Yacht Club, Art Blocks, and most digital-art collections use ERC-721 or a derivative. The standard exposes functions for ownership, transfer, and approval, plus an optional metadata extension that points to a JSON file describing the token (name, image URL, attributes). The metadata and the underlying art are usually not stored on-chain; they sit on IPFS or a centralized server, so long-term availability depends on how the files are hosted. ERC-1155 is a related standard that supports both fungible and non-fungible tokens in the same contract. See also: nft, erc-20, smart-contract.

See also: nft, erc-20, smart-contract

Ethereum is a public blockchain that lets developers run programs called smart contracts, launched 30 July 2015 by Vitalik Buterin and co-founders. Its native coin is ether (ETH), used to pay transaction fees known as 'gas'. Ethereum switched from proof-of-work to proof-of-stake on 15 September 2022 in an upgrade called The Merge, which cut the network's energy use by roughly 99.95%. The chain hosts most of the activity in DeFi, NFTs, and stablecoins; major tokens like USDC and USDT issue large supplies on Ethereum. Throughput on the base layer is limited (around 15-30 transactions per second), so most user activity has shifted to layer-2 rollups such as Arbitrum, Optimism, and Base, which batch transactions and post proofs back to Ethereum. Trade-offs: gas fees can spike during busy periods, and the technical surface area for smart-contract bugs is large. See also: smart-contract, layer-2, proof-of-stake.

See also: smart-contract, layer-2, proof-of-stake, erc-20

A crypto exchange is a marketplace where users buy, sell, and trade digital assets. Centralized exchanges (CEXs) like Coinbase, Binance, Kraken, and Bitstamp hold customer funds, run an internal order book, and require ID verification (KYC) in most jurisdictions. Decentralized exchanges (DEXs) like Uniswap, Curve, and PancakeSwap run as smart contracts: users connect a self-custody wallet and trade directly against liquidity pools without an account. CEXs typically offer fiat on-ramps, margin, and futures; DEXs allow anyone to list a token and let you keep self-custody but no recourse if you send to the wrong address or sign a malicious approval. Major risks across both: hacks (Mt. Gox 2014, FTX collapse November 2022 with roughly $8 billion in customer losses), regulatory action, and counterparty failure. Best practice for long-term holdings is to withdraw to a personal wallet rather than leave funds on an exchange. See also: cex, dex, liquidity.

See also: cex, dex, liquidity, order-book

The Financial Action Task Force (FATF) is an inter-governmental body, founded by the G7 in 1989 and headquartered in Paris, that sets global standards for anti-money-laundering and counter-terrorism financing. Its 39 member jurisdictions and many regional partners adopt the standards into national law. In 2019 FATF extended its rules to virtual asset service providers (VASPs), defining what counts as a regulated crypto business and requiring jurisdictions to license or register them. The most cited provision is the Travel Rule (FATF Recommendation 16), which requires VASPs to share originator and beneficiary information for transfers above a threshold, mirroring rules for bank wires. FATF also publishes 'gray' and 'black' lists of countries with weak AML enforcement; appearing on a list raises compliance costs for institutions doing business with that country. FATF guidance is the upstream source of most crypto AML rules in the EU, US, UK, and Asia. See also: aml, kyc, travel-rule.

See also: aml, kyc, travel-rule

A fiat-backed stablecoin holds a reserve of cash and short-term government debt equal to or greater than the supply of tokens it has issued, and promises that holders can redeem each token for one unit of the underlying currency. USDT (Tether) and USDC (Circle) are the dominant US dollar fiat-backed stablecoins, between them issuing more than $140 billion as of 2024. The model is the simplest to understand and the most successful in use: the peg stays close to $1 because authorized redeemers can always profit by buying off-peg and redeeming at par. Risks come from the reserve itself: a bank holding the cash can fail (USDC briefly depegged to $0.87 in March 2023 during Silicon Valley Bank's collapse), the issuer can lie about the assets, or regulators can freeze accounts. Look for monthly attestations or audits, regulated banking partners, and a clear redemption path before relying on a fiat-backed stablecoin. See also: stablecoin, usdt, usdc.

See also: stablecoin, usdt, usdc

FIFO stands for 'first in, first out' and is an accounting method where the oldest units of an asset are assumed to be sold first. If you bought 1 ETH at $2,000 in January and another at $3,000 in March and then sold 1 ETH in June for $4,000, FIFO matches the sale to the January lot, giving a $2,000 gain. The alternative methods are LIFO (last in, first out), HIFO (highest cost first), specific identification (you choose the lot for each sale), and weighted average cost. The choice can change the size of your taxable gain significantly; tax authorities in different countries allow different methods. The US IRS now requires specific identification or, by default, FIFO; the UK uses a same-day and 30-day matching rule then a 'section 104 pool' (similar to weighted average); Germany allows FIFO. Always confirm the rules in your own jurisdiction with a qualified tax professional. See also: cost-basis, capital-gains, taxable-event.

See also: cost-basis, capital-gains, taxable-event

A flash loan is an uncollateralized loan that must be borrowed and repaid in the same blockchain transaction. Because everything happens in one transaction, if the loan is not repaid by the end the entire transaction reverts and it is as if the loan never happened, so the lender takes no real credit risk. Flash loans were popularized by Aave in 2020 and let users borrow tens of millions of dollars for a few seconds to do arbitrage between exchanges, refinance a position from one protocol to another, or close out a complex DeFi setup. The fee is typically 0.05%-0.09% of the loan amount. The downside is that the same tool has been used in many large attacks: an attacker borrows huge sums, manipulates a thin oracle or pool, drains a protocol, and repays the loan, all atomically. Defending requires careful price-oracle design and validation. Total losses to flash-loan attacks run into the hundreds of millions of dollars. See also: defi, smart-contract, dex.

See also: defi, smart-contract, dex

FOMO stands for 'fear of missing out' and describes the urge to buy an asset because its price is rising fast and you do not want to be left behind. It is the emotional driver behind buying at local tops and chasing pumps, and it is the single most common way retail traders lose money in crypto. Classic FOMO patterns: buying a coin after seeing it on social media trending lists, doubling down after an initial buy goes up 20%, or rotating savings into whatever is up most that week. The defense is a written plan made before the rally: an entry price, a position size, and an exit. Cycle veterans often joke that FOMO buys mark the top, while FUD-driven sells mark the bottom. The opposite acronym, FUD (fear, uncertainty, doubt), describes the matching emotion at lows. See also: fud, hodl, bull-market.

See also: fud, hodl, bull-market

A fork is a change to a blockchain's rules, or a split into two separate chains. Soft forks tighten the rules so old nodes still recognize new blocks as valid (Bitcoin's SegWit in 2017, Taproot in 2021); hard forks change the rules in ways that are not backward compatible, so the chain may split if not everyone upgrades. Famous chain splits include Ethereum vs Ethereum Classic in July 2016 (after the DAO hack) and Bitcoin vs Bitcoin Cash in August 2017 (over block size). After a hard-fork split, holders of the original coin typically receive an equal balance of the new coin at the snapshot block. Forks are also a normal part of how blockchains pick a winner when two valid blocks appear at once: nodes follow the longest valid chain, and the loser's blocks are 'orphaned'. The term also refers to copying a project's open-source code to start a new one. See also: blockchain, consensus, block.

See also: blockchain, consensus, block

FUD stands for 'fear, uncertainty, and doubt' and refers to negative information (real, exaggerated, or fabricated) that pushes people to sell. The term was borrowed from older tech industry usage. In crypto, FUD can be legitimate (an exchange suspends withdrawals, a regulator opens an investigation) or manufactured (rumors spread to drive a price down so the spreader can buy cheaper). Examples of major real FUD events: the China mining ban in 2021, the Terra/LUNA collapse in May 2022, and the FTX bankruptcy in November 2022. FUD often peaks at local lows, just as FOMO peaks at local highs. The defense is the same: a written plan, position sizing you can sleep with, and primary sources rather than social media takes. Distinguishing real risk from noise is the core skill, and getting it wrong in either direction is costly. See also: fomo, bear-market, hodl.

See also: fomo, bear-market, hodl

Gas is the unit that measures the computational work needed to run a transaction on Ethereum and other EVM chains. Each operation a transaction performs (a token transfer, a swap, a contract call) costs a certain number of gas units; the total gas used multiplied by the per-unit price you are willing to pay (in 'gwei', a billionth of an ETH) gives the fee paid to the network. A simple ETH transfer uses 21,000 gas; a token swap on Uniswap can use 100,000-300,000; a complex DeFi position can run into the millions. The gas price is set by a market: when the network is busy, users bid more to be included sooner, and fees can spike from a few cents to tens of dollars during peaks. EIP-1559 (August 2021) split the fee into a 'base fee' that is burned (removing ETH from supply) and a 'tip' that goes to validators. Layer-2 rollups have cut typical fees by 90%-99%. See also: ethereum, layer-2, transaction.

See also: ethereum, layer-2, transaction

The genesis block is the very first block of a blockchain, hard-coded into the protocol rather than mined or validated like later blocks. Bitcoin's genesis block was created on 3 January 2009 by Satoshi Nakamoto and contains a famous text in its coinbase field: 'The Times 03/Jan/2009 Chancellor on brink of second bailout for banks', a reference to a London newspaper headline that day. Ethereum's genesis block was produced on 30 July 2015 and pre-allocated ether to early backers from the 2014 crowdsale. Because every later block points to the previous one's hash, the genesis block is the anchor for the entire chain's history. The 50 BTC mined in Bitcoin's genesis block are technically unspendable due to a quirk of the original software. The genesis block is often cited as the symbolic start of a project's history and is sometimes celebrated as a network's birthday. See also: block, blockchain, bitcoin.

See also: block, blockchain, bitcoin, ethereum

A governance token gives holders the right to vote on changes to a DeFi protocol or DAO, such as fee parameters, new asset listings, treasury spending, or upgrades. Examples include UNI (Uniswap), AAVE (Aave), COMP (Compound), MKR (MakerDAO), and CRV (Curve). Voting weight is usually proportional to tokens held or staked, sometimes time-locked to encourage long-term alignment. Governance tokens are not equity in a legal sense: most explicitly disclaim profit rights, which is partly a legal defense against being classified as securities. Some have value capture mechanisms (fee switches, buy-and-burn), others are mostly symbolic. Voter turnout is often low (frequently under 10% of supply), and a small number of large holders or delegates can dominate decisions. Treat governance tokens as a bet on the protocol's continued growth and on its eventual ability to direct revenue to holders, which has been slow to arrive in many cases. See also: dao, defi, token.

See also: dao, defi, token

A halving is a scheduled cut to a proof-of-work coin's block reward, written into the protocol to slow new supply. Bitcoin halves every 210,000 blocks, roughly every four years; the reward has gone from 50 BTC per block at launch in 2009, to 25 in 2012, 12.5 in 2016, 6.25 in 2020, and 3.125 after the April 2024 halving. The next halving is expected in 2028, dropping the reward to 1.5625 BTC. The schedule continues until the supply cap of 21 million is approached around the year 2140. Halvings cut miner revenue overnight unless the price rises or fees increase, which historically forces less efficient miners offline and concentrates the industry. Many traders watch halvings as potential price catalysts because past cycles have peaked 12-18 months after each one, but a sample of three or four events is too small to be a reliable rule. Litecoin, Bitcoin Cash, and a few others also halve. See also: bitcoin, mining, proof-of-work.

See also: bitcoin, mining, proof-of-work, miner

A hardware wallet is a small dedicated device that stores private keys offline and signs transactions internally, so the keys never touch your computer or phone. Major brands include Ledger (Nano S Plus, Nano X), Trezor (Model One, Safe 3, Safe 5), Coldcard, and Keystone, with prices typically ranging from $60 to $250. To send a transaction you connect the device, review the details on its small screen, and physically press a button to confirm. Even if your computer is fully compromised, the attacker cannot extract the keys or move funds without that physical confirmation. Setup generates a 12 or 24-word seed phrase that backs up the device; that phrase must be kept on paper or metal, never digitally. Risks that remain include 'blind signing' complex contracts you cannot read on the small screen, supply-chain tampering (buy direct from the manufacturer), and lost devices with lost backups. See also: cold-wallet, seed-phrase, wallet.

See also: cold-wallet, seed-phrase, wallet

A hash is the fixed-length output of a one-way math function applied to any piece of data. The same input always produces the same hash, but even a one-character change produces a completely different result, and you cannot work backward from the hash to the original input. Bitcoin uses SHA-256, which produces 256-bit (64 hex character) outputs; Ethereum uses Keccak-256. Blockchains use hashes everywhere: each block header includes the hash of the previous block (creating the chain), each transaction has its own hash that serves as a unique ID, and proof-of-work mining is a contest to find a block whose hash starts with a certain number of zeros. Hashes also let users verify that downloaded files or messages have not been altered. The probability of two different inputs producing the same hash is astronomically small, which is why hashes work as digital fingerprints. See also: blockchain, mining, proof-of-work.

See also: blockchain, mining, proof-of-work, block

HODL is crypto slang for buying and holding through volatility regardless of price moves. The word comes from a now-famous typo in a December 2013 BitcoinTalk forum post titled 'I AM HODLING', written by a user who admitted they were a bad short-term trader and would just hold instead. Some have since back-formed it into 'hold on for dear life'. HODLing has been a strong strategy for Bitcoin and Ethereum over multi-year horizons: someone who bought BTC at almost any point before 2021 and held has been in profit at most 2024 prices. The downside is that the same approach applied to many altcoins from past cycles led to 80%-99% losses with no recovery. HODLing only works if the asset survives long enough to recover, which is a much higher bar for small projects than for the top two coins. See also: dca, bull-market, bitcoin.

See also: dca, bull-market, bitcoin

A hot wallet is any crypto wallet whose private keys are held on a device connected to the internet, such as a phone app, browser extension, desktop wallet, or exchange account. Examples include MetaMask, Phantom, Trust Wallet, and the wallet inside Coinbase or Binance apps. Hot wallets are convenient for daily use, signing transactions on DeFi sites, and holding small balances, but the always-online keys are exposed to phishing, malicious browser extensions, malware, and clipboard hijackers. Best practice is to keep only the amount you would carry in a physical wallet (an amount you could lose without serious harm) in a hot wallet, and move larger sums to a hardware (cold) wallet. Many users run two hot wallets: a 'burner' for connecting to new or risky DeFi sites, and a separate one for known protocols, to limit damage from a malicious approval. See also: cold-wallet, hardware-wallet, wallet.

See also: cold-wallet, hardware-wallet, wallet

Impermanent loss is the gap between holding two tokens in your wallet versus depositing the same two tokens into a liquidity pool, when the prices of those tokens move apart. Because an automated market maker rebalances the pool with every trade, providers end up with more of whichever asset fell and less of whichever asset rose; if you withdrew at that point you would have less total dollar value than if you had just held. The loss is called 'impermanent' because if the prices move back to their starting ratio, it disappears, but if you withdraw while prices are far apart it becomes a permanent loss. Trading fees can offset impermanent loss; on busy pools they often do, on quiet pools they do not. Stablecoin-only pools (USDC/USDT/DAI) have very low impermanent loss because the assets stay close in price. Volatile pairs (ETH/SHIB) have high impermanent loss risk. See also: liquidity-pool, amm, yield-farming.

See also: liquidity-pool, amm, yield-farming

Know Your Customer (KYC) is the process by which a regulated business verifies a customer's identity before letting them transact. For most centralized crypto exchanges this means submitting a government ID, a selfie or short video for liveness, and proof of address; higher trading limits often require additional documents. KYC is a subset of broader anti-money-laundering (AML) rules required in the US, UK, EU, Singapore, Japan, and most other major jurisdictions. The trade-offs are real: KYC reduces fraud and helps law enforcement trace illegal funds, but it also creates large databases of personal data that have been hacked (Coinbase reported a customer data breach in 2025; many smaller exchanges have leaked KYC documents over the years). Self-custody wallets and most DeFi protocols do not require KYC because they are not centrally operated. Treat KYC documents as sensitive: only submit to licensed venues, and prefer those with a record of careful data handling. See also: aml, fatf, travel-rule.

See also: aml, fatf, travel-rule, mica

A layer-2 (L2) is a separate blockchain that sits on top of a layer-1 like Ethereum, processes transactions in its own faster and cheaper environment, and periodically posts compressed proofs back to the L1. L2s let Ethereum scale past its base-layer limit of around 15-30 transactions per second without changing the core protocol. The dominant Ethereum L2s are Arbitrum, Optimism, Base (run by Coinbase), zkSync, Starknet, and Polygon zkEVM, with combined TVL in the tens of billions and combined daily transactions far exceeding the Ethereum mainnet itself. The two main families are optimistic rollups (assume transactions are valid, allow a 7-day challenge window) and ZK rollups (post a cryptographic proof of validity with each batch). Trade-offs: fees on L2 are typically 90%-99% lower than mainnet, but withdrawing funds back to L1 takes minutes (ZK) to days (optimistic), and bridges between chains have been a major source of hacks. See also: rollup, ethereum, smart-contract.

See also: rollup, ethereum, smart-contract

A limit order is an instruction to buy or sell an asset only at a specified price or better. A limit buy at $50,000 will only fill if the market drops to $50,000 or lower; a limit sell at $80,000 only fills at $80,000 or higher. If the market never reaches your price, the order sits open until you cancel it or it expires. Limit orders give you price control and let you act as a maker (often paying lower fees), but they do not guarantee execution: a fast move can leave you behind. They are the standard tool for buying dips and selling rallies without having to watch a chart all day. The opposite is a market order, which fills immediately at whatever price is available and pays the spread plus taker fees. Most traders use a mix: limit orders to enter and exit planned positions, market orders only when speed matters more than price. See also: market-order, order-book, spread.

See also: market-order, order-book, spread

Liquidity is how easily an asset can be bought or sold near the quoted price without moving the market. A highly liquid market has many buyers and sellers, tight spreads, and can absorb large orders with small price changes. A thin market may have wide spreads and big slippage on even modest trades. Bitcoin and Ethereum are the most liquid crypto assets, with daily spot volume routinely above $20 billion combined; small altcoins might trade only a few hundred thousand dollars a day, so a $10,000 sell can drop the price several percent. On centralized exchanges liquidity comes from market makers placing orders on the book. On decentralized exchanges it comes from liquidity providers depositing pairs of tokens into pools. Always check 24-hour volume and the depth chart before sizing a trade in a small token, and beware of fake volume on lightly regulated venues. See also: order-book, slippage, volume.

See also: order-book, slippage, volume, liquidity-pool

A liquidity pool is a smart contract that holds two or more tokens and lets users trade between them based on the current ratio in the pool. Liquidity providers (LPs) deposit pairs of tokens (for example ETH and USDC in equal dollar value) and earn a share of the trading fees in proportion to their deposit. The standard formula on Uniswap v2 is x * y = k, the constant product rule, which gives a price curve that always quotes a price but charges more for larger trades. Pools replaced traditional order books on most decentralized exchanges because they are cheaper to run on a blockchain and let any token be listed. Risks for LPs include impermanent loss when the two assets move apart in price, smart-contract bugs, and rug pulls in pools created by anonymous teams. Stablecoin-only pools (USDC/USDT/DAI) have lower yield but much lower impermanent loss. See also: amm, impermanent-loss, dex.

See also: amm, impermanent-loss, dex, yield-farming

Market capitalization (market cap) is the total value of a coin's circulating supply: current price multiplied by the number of coins in circulation. As of 2024 Bitcoin's market cap has crossed $1 trillion; Ethereum sits in the hundreds of billions; the next ten coins range from tens of billions down to a few. Market cap is widely used to rank crypto assets but it has limits: it ignores tokens that are locked, vested, or have not yet been issued, so the 'fully diluted valuation' (price times maximum supply) is often much larger. Low-supply coins can also reach high market caps with thin trading volume, making the number misleading. Comparing market caps across coins is a quick sanity check: a small new project with a $5 billion market cap is implicitly being valued like an established mid-cap network. Always cross-check with circulating supply and 24-hour volume. See also: cryptocurrency, dominance, volume.

See also: cryptocurrency, dominance, volume, altcoin

A market order is an instruction to buy or sell immediately at the best available price on the order book. It guarantees execution but not price: in a thin market or fast move, the fill can be noticeably worse than the displayed quote. Market orders are best for small sizes in liquid markets where speed matters more than a few basis points of price improvement, for example exiting a position quickly during news. Most exchanges charge higher fees for market orders ('taker' fees) than for limit orders ('maker' fees) because takers consume existing liquidity rather than provide it. Always check 24-hour volume and the depth chart before placing a large market order; a $1 million market buy in a coin with $5 million daily volume can move the price several percent against you. The opposite tool is a limit order, which fills only at your chosen price or better. See also: limit-order, slippage, order-book.

See also: limit-order, slippage, order-book

MiCA (Markets in Crypto-Assets) is the European Union's comprehensive crypto regulation, signed into law in May 2023 and rolling out in stages. Stablecoin rules took effect 30 June 2024, with full provisions for crypto-asset service providers (CASPs) and other tokens applying from 30 December 2024. MiCA creates a single licensing regime across all 27 EU member states: an exchange or wallet provider authorized in one country can operate in all of them with passporting. Key provisions include reserve and reporting requirements for stablecoin issuers (with extra rules for those above defined size thresholds), authorization requirements for trading platforms and custodians, mandatory white papers for token offerings, and rules against market abuse and insider trading. MiCA does not cover DeFi, NFTs (with some exceptions), or central bank digital currencies. It is the most ambitious crypto regulatory framework to date and is influencing rule-making in the UK and elsewhere. See also: aml, kyc, stablecoin.

See also: aml, kyc, stablecoin

A miner is a participant in a proof-of-work blockchain that uses computing power to find new blocks and earn the block reward plus transaction fees. On Bitcoin, miners run specialized hardware called ASICs (application-specific integrated circuits) that do nothing except compute SHA-256 hashes as fast as possible; a modern unit draws 3-5 kW. Most miners join pools (Foundry, AntPool, F2Pool) that combine hash power and split rewards in proportion to contribution, smoothing out income for smaller participants. Miner economics depend on the coin price, the block reward (3.125 BTC per Bitcoin block after the April 2024 halving), the network's total hash power, and the local cost of electricity. Industrial miners cluster in regions with cheap power: Texas, Kazakhstan, parts of Canada, Paraguay. Ethereum stopped using miners in September 2022 when it moved to validators. See also: mining, proof-of-work, validator.

See also: mining, proof-of-work, validator, halving

Mining is the process by which proof-of-work blockchains add new blocks and issue new coins. Miners run specialized computers (ASICs for Bitcoin, GPUs for some smaller chains) that race to find a number called a 'nonce' which, combined with the block data, produces a hash below a difficulty target. The first miner to find a valid block broadcasts it and earns the block reward plus transaction fees. Bitcoin's reward halves every 210,000 blocks (roughly four years); after the April 2024 halving it is 3.125 BTC. Difficulty automatically adjusts every 2,016 blocks so blocks keep arriving about every 10 minutes regardless of how much computing power joins or leaves. Mining secures the network because rewriting history would mean redoing all that work faster than the rest of the world combined. The downside is energy use: the Bitcoin network draws roughly 150-200 TWh per year, comparable to a mid-sized country. Ethereum stopped mining in September 2022 when it switched to proof-of-stake. See also: proof-of-work, halving, miner.

See also: proof-of-work, halving, miner, block

A multi-signature (multi-sig) wallet requires more than one private key to authorize a transaction, configured as 'M of N' (for example, 2 of 3, or 3 of 5). Bitcoin supports multi-sig natively via P2SH and P2WSH; Ethereum uses smart-contract wallets like Safe (formerly Gnosis Safe), which secures over $100 billion in DAO and treasury funds. Multi-sig is the standard for protecting business and DAO treasuries because no single compromised device or person can move funds; it also helps individuals split keys across geographic locations to survive theft, fire, or a single seed-phrase mistake. The trade-offs: setup is more complex, recovery requires the right combination of keys, on-chain fees can be slightly higher, and you need to keep all participating devices and backups in working order. For high-value cold storage, a 2-of-3 multi-sig spread across two hardware wallets and one trusted backup location is a common pattern. See also: cold-wallet, hardware-wallet, wallet.

See also: cold-wallet, hardware-wallet, wallet

A non-fungible token (NFT) is a unique on-chain certificate representing ownership of a specific digital or physical item. Each NFT has a one-of-a-kind ID inside its smart contract, so unlike fungible tokens (where every USDC is interchangeable with every other USDC) NFTs are individually identifiable. Most NFTs use the ERC-721 or ERC-1155 standard on Ethereum and other EVM chains. Use cases include digital art (CryptoPunks, Bored Ape Yacht Club), gaming items, music, event tickets, domain names (ENS), and tokenized real-world assets. The 2021-2022 NFT boom saw multibillion-dollar monthly trading volumes; volumes fell roughly 90% during the 2022-2023 bear market and have only partly recovered. NFTs do not store the artwork itself on-chain in most cases; they store a link to a file on IPFS or a centralized server, so the long-term durability depends on how the file is hosted. Royalty payments to creators have become harder to enforce as marketplaces compete on fees. See also: erc-721, smart-contract, token.

See also: erc-721, smart-contract, token

A node is any computer running blockchain software and storing some or all of the chain's history. Full nodes keep the entire ledger and independently verify every block and transaction against the protocol rules; this is what gives a public blockchain its self-checking property. Light nodes only download block headers and rely on full nodes for details, trading some trust for storage savings. Mining or staking nodes additionally produce new blocks. Anyone can run a node: as of 2024 there are roughly 15,000-20,000 reachable Bitcoin full nodes and a similar number of Ethereum execution clients, distributed across many countries. Running your own node lets you broadcast transactions and check balances without trusting a third party, which matters for self-custody users and businesses. The hardware bar is modest, a Raspberry Pi can run Bitcoin Core, though disk space (Bitcoin around 600 GB, Ethereum 1+ TB pruned) keeps growing. See also: blockchain, validator, consensus.

See also: blockchain, validator, consensus, miner

A non-custodial wallet or service is one where you alone hold the private keys and no third party can move your funds. Examples include hardware wallets (Ledger, Trezor), browser wallets (MetaMask, Phantom), and most DeFi front-ends. The advantage is full control: no one can freeze your account, demand KYC on existing holdings, or lose your money to insolvency. The cost is full responsibility: lose the seed phrase and the funds are gone forever, sign a malicious transaction and they are drained, send to a wrong address and there is no chargeback. Non-custodial setups also typically lack fiat on-ramps, so most users still pair them with a custodial exchange for buying and selling. The phrase 'be your own bank' captures both the freedom and the burden. For non-trivial balances, hardware wallet plus a tested seed-phrase backup is the standard self-custody setup. See also: custodial, wallet, hardware-wallet.

See also: custodial, wallet, hardware-wallet

An order book is a real-time list of all open buy and sell orders for an asset on an exchange. Buy orders (bids) are sorted from highest to lowest price; sell orders (asks) from lowest to highest. The gap between the highest bid and the lowest ask is the spread, and the midpoint is often quoted as the current price. When a new order matches an existing one (a market buy hitting the lowest ask, for example), the trade executes and the matched orders are removed from the book. Centralized exchanges run their order books off-chain in fast in-memory systems handling thousands of updates per second. Most decentralized exchanges replaced order books with automated market makers because order books are expensive to run on a blockchain, though chains like Solana and dYdX have brought on-chain order books back at lower cost. Reading the order book gives a sense of liquidity and likely slippage on a large trade. See also: exchange, liquidity, spread.

See also: exchange, liquidity, spread, limit-order

A paper wallet is a piece of paper printed with a crypto address and its matching private key, often as QR codes for easy scanning. They were popular in Bitcoin's early years as a cheap form of cold storage, but they have fallen out of favor because of safety problems. The main risks are key generation done on an internet-connected computer or printer (which may be compromised), partial spending mishandled by old wallet software (sweep the entire balance, not part of it), and physical damage from water, fire, or fading ink. Modern best practice is a hardware wallet with a written or metal-stamped seed phrase, which is more flexible and more durable. If you do use a paper wallet, generate it on an offline computer, print on a non-networked printer, store in a sealed waterproof bag, keep at least two copies in separate locations, and test recovery before depositing significant funds. See also: cold-wallet, seed-phrase, brain-wallet.

See also: cold-wallet, seed-phrase, brain-wallet

A passphrase, in BIP-39 terminology, is an extra word or sentence you can add on top of your 12 or 24-word seed phrase to create a different wallet from the same words. Without the passphrase, the seed alone restores one wallet; with the passphrase added, it restores another, completely separate wallet. This gives plausible deniability (a thief who finds your seed only sees the empty 'decoy' wallet) and an extra layer of protection against seed theft. The trade-off is that a forgotten passphrase is just as fatal as a lost seed: there is no way to recover the funds. Best practice is a passphrase you can both remember reliably and back up safely (separate location from the seed words, ideally encoded in a way only you understand). For most users a strong seed-phrase backup is enough; passphrases are an advanced layer for those willing to take on the operational risk. See also: seed-phrase, brain-wallet, hardware-wallet.

See also: seed-phrase, brain-wallet, hardware-wallet

Phishing is a scam where attackers impersonate a trusted service to trick you into handing over credentials, seed phrases, or wallet approvals. In crypto, common patterns include fake login pages for exchanges and wallets, malicious browser extensions, Discord direct messages from impostor 'support' staff, and ads at the top of search results that lead to lookalike domains. Once you sign a malicious transaction or paste a seed phrase, the funds are gone within seconds and cannot be recovered. Defenses: bookmark the real URLs of the services you use and only navigate from the bookmarks; never type a seed phrase into anything except a wallet's official setup flow; treat any unsolicited 'support' message as fake; use a hardware wallet so suspicious approvals require physical confirmation; and read the transaction details on the device screen before pressing approve. The yearly losses to crypto phishing run into the hundreds of millions of dollars. See also: rug-pull, 2fa, hardware-wallet.

See also: rug-pull, 2fa, hardware-wallet, wallet

A private key is a long random number that proves ownership of a crypto address; whoever holds it controls the funds at that address. Private keys are typically 256 bits long and are usually shown as a 64-character hex string, a WIF string, or hidden behind a 12 or 24-word seed phrase that can regenerate them. Every transaction must be signed with the private key, and the signature can be checked by anyone using the matching public key without ever exposing the private one. There is no password reset and no customer support: lose the key and your coins are unrecoverable, share the key and they can be drained instantly. Best practice is to keep private keys offline (hardware wallet, paper backup in a safe) and never type them into a website, chat, or email. Phishing sites that ask for your seed or private key are the single most common way users lose funds. See also: public-key, seed-phrase, wallet.

See also: public-key, seed-phrase, wallet, cold-wallet

Proof-of-stake (PoS) is a consensus mechanism in which the right to propose the next block is given to validators chosen in proportion to how much of the chain's coin they have locked up as collateral. Cheating, going offline, or signing conflicting blocks can cause part of that stake to be 'slashed' (destroyed), which discourages bad behavior. Ethereum switched from proof-of-work to PoS on 15 September 2022 in The Merge, cutting the network's energy use by about 99.95%. To run a solo Ethereum validator you need 32 ETH; smaller holders can pool funds via staking services or liquid-staking tokens like stETH. Other large PoS networks include Cardano, Solana (a hybrid), Avalanche, and BNB Chain. Trade-offs vs PoW: lower energy use and faster finality (Ethereum finalizes in about 13 minutes), but new economic risks such as concentration among large stakers and potential censorship by big block proposers. See also: validator, staking, slashing.

See also: validator, staking, slashing, consensus

Proof-of-work (PoW) is a consensus mechanism in which computers compete to solve a hard math puzzle, and the winner gets to add the next block and earn the reward. The puzzle is to find a value that, when hashed with the block data, produces a result below a target threshold; this takes trillions of guesses and a lot of electricity, but checking a found solution is instant. Bitcoin has used PoW since 2009 and remains the largest PoW network; Litecoin, Dogecoin, and Monero also use it. PoW security comes from cost: an attacker would need more than half of the global mining power to rewrite recent history, which on Bitcoin would cost billions of dollars in hardware and ongoing power bills. The main criticism is energy use; supporters argue the energy is partly the point and increasingly comes from stranded or renewable sources. Ethereum used PoW from 2015 to 2022 before switching to proof-of-stake. See also: mining, proof-of-stake, hash.

See also: mining, proof-of-stake, hash, consensus

A public key is the cryptographic counterpart of a private key, derived from it through a one-way math function (elliptic curve multiplication on most blockchains). It can be shared openly: anyone can use it to verify that a transaction was signed by the matching private key, without ever learning what that private key is. On Bitcoin and Ethereum, the wallet address you give out to receive funds is itself a hash or shortened form of the public key. Because the math runs in only one direction, knowing the public key reveals nothing useful about the private key. Public-key cryptography is what makes blockchains work without trusted middlemen: signatures prove authorization, and anyone in the world can check them. The same idea underlies HTTPS, SSH, and signed email. See also: private-key, address, hash.

See also: private-key, address, hash

A recovery phrase is another name for a seed phrase: the 12 or 24 ordinary English words that a wallet generates at setup and that can restore access on any compatible device or app. The standard format is BIP-39, defined in 2013, with a 2,048-word list. The words encode a master private key from which all of the wallet's addresses and child keys are derived deterministically. Anyone who reads the phrase can take all the funds, so it must be kept offline and private. Write the words on paper or stamp them into metal, store copies in two separate physical locations, and never type them into a website, photo, cloud note, or password manager that syncs online. Hardware wallets show the phrase only once during setup and never again. Treat any unsolicited request for a recovery phrase, even from 'support', as a scam. See also: seed-phrase, backup, wallet.

See also: seed-phrase, backup, wallet

Rewards are the new coins or fees paid out by a blockchain to participants who help operate it. On proof-of-work chains like Bitcoin, rewards go to miners and consist of newly issued coins (the block subsidy) plus the transaction fees in the block; the subsidy halves every four years (3.125 BTC per block after April 2024). On proof-of-stake chains, rewards go to validators and delegators and combine fresh issuance with priority fees and (on Ethereum) MEV tips. Stakers on Ethereum earn around 3%-4% APR; on Cosmos and Solana 5%-8%; on smaller chains often more, partly because higher inflation dilutes existing holders. Rewards are typically taxable as income in most jurisdictions when received, with a separate capital gains event when later sold. Headline rates can mislead: real return after issuance dilution is what matters, not the nominal APR. See also: staking, mining, apr.

See also: staking, mining, apr, validator

A rollup is a type of layer-2 that batches many transactions together, executes them off the main chain, and then posts a small proof or summary back to the layer-1 for security. The two main families are optimistic rollups, which assume transactions are valid by default and rely on a fraud-proof challenge window of about 7 days (Arbitrum, Optimism, Base), and ZK rollups, which post a cryptographic validity proof with every batch and so can finalize in minutes (zkSync, Starknet, Polygon zkEVM, Scroll). Both inherit Ethereum's settlement security: as long as the L1 is honest, you can always recover your funds even if the rollup operator goes offline or tries to censor you. Rollups have cut typical Ethereum gas fees from $5-$50 to a few cents and now process more transactions per day than the Ethereum mainnet itself. Trade-offs include trust in the sequencer (centralized in most rollups today) and bridge risks moving between chains. See also: layer-2, ethereum, smart-contract.

See also: layer-2, ethereum, smart-contract

A rug pull is a scam in which the team behind a crypto project collects investor money and then disappears or drains the funds. Common patterns include launching a token with most of the supply held by anonymous developer wallets, pumping the price with hype, then dumping all the held tokens onto buyers; deploying a smart contract with hidden admin functions that let the creators withdraw the entire liquidity pool; or simply abandoning the project after collecting fees. Memecoin launches and small DeFi yield projects are the most common venues. A few defenses: check whether the contract is verified and audited, look at how the token supply is distributed (a small number of wallets holding most of the supply is a red flag), check whether liquidity is locked or burned, and avoid 'too-high' yields with no clear revenue source. Rug pulls cost users billions of dollars across the 2021 and 2022 cycles. See also: phishing, smart-contract, governance-token.

See also: phishing, smart-contract, governance-token

A seed phrase (also called a recovery phrase or mnemonic) is a list of 12 or 24 ordinary English words that encodes the master private key for a wallet. The standard format, BIP-39, defines a 2,048-word list from which the phrase is drawn; the same phrase will restore the same wallet on any compatible app or device. Anyone who reads the phrase can take all the funds, so it must be kept offline and private. The strongest practice is to write the words on paper or stamp them into metal, store copies in two separate physical locations, and never type them into a website, photo, cloud note, or password manager that syncs online. Hardware wallets show the phrase only once during setup and never again. If you lose the phrase and the device, the funds cannot be recovered by anyone. Treat any unsolicited request for a seed phrase, even from 'support', as a scam. See also: private-key, wallet, hardware-wallet.

See also: private-key, wallet, hardware-wallet, backup

Slashing is a penalty in proof-of-stake networks where a validator's locked stake is automatically reduced for breaking the protocol rules. The two main offenses are double-signing (signing two different blocks at the same height, which suggests an attempt to attack the chain) and downtime (failing to participate when called). Penalties vary: on Ethereum the minimum slashing burn is 1 ETH and the validator is forcibly exited, with the total loss potentially much larger if many validators are slashed at once (a 'correlation penalty'). On Cosmos chains, double-signing typically costs 5% of stake, downtime 0.01%. Slashing is what makes proof-of-stake economically secure: misbehaving costs real money. For delegators, the validator's slashing also reduces your share, so picking reliable operators matters. Common causes are buggy software upgrades, running the same validator key on two machines by accident, or hosting outages. See also: proof-of-stake, validator, staking.

See also: proof-of-stake, validator, staking

Slippage is the difference between the price you expected when placing a trade and the price you actually got when it executed. It happens because order books and liquidity pools are not bottomless: a large buy walks up through the asks, and a large sell walks down through the bids. On thin markets even a small order can move the price a percent or more. Most DEX interfaces let you set a maximum slippage tolerance (often 0.5%-1%); orders that would exceed it revert and you only pay the gas. Setting tolerance too high invites 'sandwich attack' MEV bots that front-run and back-run your trade for profit. Sources of slippage include thin liquidity, fast-moving prices, and order size relative to pool depth. To reduce slippage, split a large order into smaller pieces, use a limit order, or route through an aggregator that splits across multiple pools. See also: liquidity, order-book, dex.

See also: liquidity, order-book, dex, amm

A smart contract is a small program that runs on a blockchain and executes automatically when its conditions are met. The term was coined by Nick Szabo in the 1990s and made practical by Ethereum in 2015, which introduced a general-purpose virtual machine (EVM) that can run arbitrary code on-chain. Smart contracts power DeFi (lending, swapping, derivatives), NFTs, DAOs, stablecoins, and most other on-chain applications. Once deployed, the code runs exactly as written and cannot be changed unless the developers built in an upgrade path; this is the basis of trust ('the contract behaves as everyone can read') but also the source of risk ('a bug becomes a permanent vulnerability'). Smart-contract bugs and exploits have caused billions in losses: the 2016 DAO hack ($60M, leading to the Ethereum/Ethereum Classic split), the Ronin Bridge ($625M, March 2022), and the Wormhole exploit ($325M, February 2022). Audits, formal verification, and bug bounties reduce but do not eliminate the risk. See also: ethereum, defi, dao.

See also: ethereum, defi, dao, erc-20

The spread is the difference between the highest price someone is willing to pay for an asset (the bid) and the lowest price someone is willing to sell it for (the ask). On a deep market like BTC/USD on a major exchange, the spread is often a few cents; on a small altcoin the spread can be several percent. A tight spread signals a liquid market and low cost to enter and exit; a wide spread signals thin liquidity and a hidden cost. If you market-buy and immediately market-sell, you pay the spread plus any exchange fees, so the round trip costs you whether the price moves or not. Some platforms hide their fee inside the spread rather than charging a visible commission, which is more expensive than it looks; always compare the displayed price against a reference like the Coinbase or Binance mid. See also: order-book, liquidity, slippage.

See also: order-book, liquidity, slippage

A stablecoin is a crypto token designed to hold a steady value, almost always pegged to a fiat currency like the US dollar. The market is dominated by USDT (Tether, around $110 billion in supply as of 2024) and USDC (Circle, around $33 billion), both backed mostly by short-term US Treasuries and cash. Stablecoins are used for trading (most crypto pairs quote against USDT or USDC), cross-border payments, DeFi collateral, and as a savings tool in countries with high inflation. Backing models vary: fiat-backed (USDT, USDC), crypto-backed (DAI), and algorithmic (TerraUSD/UST, which collapsed in May 2022 destroying about $40 billion in value). Risks include depegging (USDC briefly fell to $0.87 in March 2023 during the Silicon Valley Bank failure), reserve transparency questions, and regulatory action. The EU's MiCA regulation set reserve and disclosure rules for stablecoins from June 2024; US legislation is still in progress. See also: usdt, usdc, fiat-backed.

See also: usdt, usdc, dai, fiat-backed

Staking is the act of locking up coins to help secure a proof-of-stake blockchain in exchange for rewards. On Ethereum, solo stakers run a validator with 32 ETH and currently earn around 3%-4% per year in new ETH issuance plus tips; smaller holders pool their ETH through services like Lido, Rocket Pool, or Coinbase, accepting a fee in exchange for not running their own node. Other major staking networks include Solana, Cardano, Cosmos, and Polkadot, with annual yields typically between 4% and 12%. Staking is not risk-free: validators can be 'slashed' (lose part of their stake) for downtime or signing wrong blocks, the underlying coin price can fall by more than the yield, and unstaking takes days or weeks on most networks. Liquid-staking tokens (stETH, rETH) keep funds usable while staked. Tax treatment varies by country: many treat rewards as income at receipt. See also: proof-of-stake, validator, slashing.

See also: proof-of-stake, validator, slashing, rewards

A taxable event is any action that triggers a tax reporting obligation. In crypto, common taxable events include selling crypto for fiat, trading one crypto for another (yes, BTC to ETH counts in most countries), spending crypto on goods or services, receiving staking or mining rewards, getting an airdrop, and receiving payment in crypto for work. Holding crypto, transferring it between your own wallets, and (in most countries) buying with fiat are not taxable events on their own. The exact list varies by jurisdiction: the US Internal Revenue Service treats every crypto-to-crypto trade as a sale of the first asset and a purchase of the second; the UK and Germany do the same; some countries are more lenient. DeFi activity (lending, providing liquidity, wrapping) sits in a gray area in many jurisdictions. Track everything from day one; reconstructing years of activity later is painful and error-prone. See also: capital-gains, cost-basis, fifo.

See also: capital-gains, cost-basis, fifo

A token is a digital asset created on top of an existing blockchain rather than having its own chain. Most tokens live on Ethereum and follow a standard like ERC-20 (interchangeable units, e.g. USDC, UNI) or ERC-721 (unique items, e.g. NFTs). Tokens are issued by smart contracts, so anyone can launch one; the bar is low and quality varies hugely. Common token types include stablecoins (pegged to a currency), governance tokens (vote on protocol changes), utility tokens (pay for a service), and security tokens (represent ownership in a real asset, regulated like a stock). Because tokens share their host chain's security and tooling, they are cheaper to launch than a new blockchain, but they inherit that chain's fees and outages. Many tokens have no real use and trade purely on speculation; check the team, the contract code, and the holder distribution before buying. See also: erc-20, smart-contract, governance-token.

See also: erc-20, smart-contract, governance-token, coin

A blockchain transaction is a signed message that moves coins or tokens from one address to another, or that triggers a smart contract. Each transaction includes the sender, recipient, amount, a fee paid to whoever processes it, and a digital signature from the sender's private key. Once submitted, transactions sit in the mempool until a miner or validator includes them in a block; on Bitcoin a confirmed transaction usually settles in 10-60 minutes, on Ethereum in 12-60 seconds, and on faster chains like Solana in under a second. Fees rise during congestion and are paid in the chain's native coin. Transactions are practically irreversible once a few blocks have been built on top, so there are no chargebacks: send to the wrong address and the funds are usually gone. Every transaction is public on a block explorer, though the identity behind an address is not directly visible. See also: block, mining, address.

See also: block, mining, address, hash

The Travel Rule is a regulatory requirement that financial institutions share certain customer information when transferring funds above a threshold. FATF extended the rule to crypto in 2019 (Recommendation 16): regulated crypto businesses must include the sender's name, account number, and address, plus the recipient's name and account number, with transfers above the local threshold (1,000 USD/EUR in many jurisdictions, 3,000 USD in the US for crypto). When crypto moves from one regulated exchange to another, both sides must exchange this data; for transfers to and from self-custody wallets, regulated venues typically require additional information from the customer. Implementation has been bumpy because no single global messaging standard exists, and several competing protocols (TRP, Sygna, Notabene) compete to be the standard. The rule does not apply to peer-to-peer transfers between two self-custody wallets. See also: aml, kyc, fatf.

See also: aml, kyc, fatf

Total value locked (TVL) is the dollar value of crypto assets currently deposited in a DeFi protocol's smart contracts. It is the most widely cited metric for tracking DeFi adoption, comparable to assets under management at a traditional fund. DeFiLlama is the standard data source, breaking TVL out by chain, protocol, and category. Aggregate DeFi TVL crossed $180 billion in November 2021, dropped to about $40 billion through 2022 after Terra and FTX, and climbed back above $100 billion in 2024. TVL has limits as a ranking metric: it can be inflated by counting the same asset multiple times across linked protocols (deposit, borrow, redeposit), it goes up purely when token prices rise, and it does not capture protocol revenue. Pair TVL with fees, active users, and unique depositors for a fuller picture. See also: defi, liquidity-pool, yield-farming.

See also: defi, liquidity-pool, yield-farming

USDC (USD Coin) is a US dollar stablecoin issued by Circle, a US-based and regulated payments company, with around $33 billion in supply as of 2024. Each token is backed 1:1 by a reserve held in short-term US Treasuries and cash at regulated US banks. Circle publishes monthly attestations from a Big Four accounting firm and is regulated as a money services business in the US and as an electronic money institution in the EU. USDC is the second-largest stablecoin after USDT and is more dominant in regulated venues, US-facing DeFi, and corporate payments. The peg briefly broke in March 2023 when about $3.3 billion of Circle's cash sat at the failing Silicon Valley Bank; USDC fell to about $0.87 before regulators announced the bank's depositors would be made whole, and the peg restored within days. USDC is issued natively on Ethereum, Solana, Base, Arbitrum, and several other chains. See also: stablecoin, usdt, fiat-backed.

See also: stablecoin, usdt, fiat-backed

USDT (Tether) is the largest stablecoin by supply, with roughly $110 billion outstanding as of 2024, issued by Tether Limited, a company headquartered in the British Virgin Islands and El Salvador. Each token is meant to be redeemable for one US dollar, backed by a reserve that quarterly attestations show is mostly short-term US Treasuries plus smaller amounts of cash, secured loans, and other assets. USDT is the dominant trading pair on most non-US exchanges, settles tens of billions of dollars in volume per day, and is widely used for cross-border value transfer in emerging markets. Long-running concerns include the fact that Tether has never had a full audit (only attestations), past settlements with the New York Attorney General (2021) and CFTC (2021) over reserve disclosures, and limited direct redemption access for retail users. USDT is issued on Ethereum, Tron, and several other chains; supply by chain is a useful indicator of where activity sits. See also: stablecoin, usdc, fiat-backed.

See also: stablecoin, usdc, fiat-backed

A validator is a participant in a proof-of-stake blockchain that proposes and checks new blocks in exchange for rewards. Validators must lock up (stake) a minimum amount of the chain's coin as collateral; on Ethereum that minimum is 32 ETH per validator, on Solana there is no fixed minimum but more stake means more block leadership. The protocol selects who proposes each block based on stake size and a randomness source. Honest validators earn issuance plus a share of transaction fees and tips; dishonest or offline validators can be 'slashed', losing part of their stake. Most ETH holders do not run their own validator: they delegate to staking pools (Lido, Coinbase, Kraken) or use liquid-staking tokens. Trade-offs of solo staking: higher rewards and full control, but you must keep the node online 24/7 and protect the validator keys from theft. See also: proof-of-stake, staking, slashing.

See also: proof-of-stake, staking, slashing, delegated-staking

Volume is the total amount of an asset traded over a given period, usually quoted as the dollar value over the last 24 hours. High volume means active two-sided interest, tight spreads, and the ability to enter or exit large positions without moving the price much. Low volume means thin liquidity and bigger slippage. Bitcoin and Ethereum routinely see tens of billions of dollars in spot volume per day across major exchanges; smaller coins may trade only a few hundred thousand. Volume is a useful sanity check on price moves: a sharp rally on tiny volume is more easily reversed than one on heavy volume. Be aware of wash trading: some smaller exchanges and tokens inflate reported volume by trading with themselves. CoinGecko and Messari publish 'trusted volume' figures that try to filter this out. See also: liquidity, market-cap, exchange.

See also: liquidity, market-cap, exchange

A crypto wallet is software or a small device that stores the private keys used to sign blockchain transactions. The wallet itself does not hold coins; the coins live on the blockchain, and the wallet just proves you have the right to move them. Wallets fall into two main groups: hot wallets (always online, e.g. MetaMask, Phantom, exchange apps) which are convenient but more exposed to hacks, and cold wallets (offline, e.g. Ledger, Trezor hardware devices) which are safer for larger balances. Wallets can also be custodial (a company holds the keys, like Coinbase) or non-custodial (you hold the keys yourself, with full control and full responsibility). Setup typically generates a 12 or 24-word seed phrase that can restore access on any compatible wallet; lose the phrase and the funds are gone. Always write the seed down on paper or metal, never store it in a screenshot or cloud note. See also: private-key, seed-phrase, cold-wallet.

See also: private-key, seed-phrase, cold-wallet, hot-wallet

Yield farming is the practice of moving crypto between DeFi protocols to chase the highest available returns, often paid as a mix of trading fees, lending interest, and protocol token rewards. The phrase took off in summer 2020 when Compound launched its COMP token, which paid users for borrowing and lending and briefly produced advertised yields above 100%. Today's yields are much lower and more honest: lending stablecoins on Aave or Compound typically returns 3%-8%, providing liquidity on Uniswap or Curve adds trading fees, and staking earns 3%-5% on ETH. The risks scale with the yield: smart-contract bugs, impermanent loss in pools, depegging of stablecoins, and the value of reward tokens collapsing if the project fades. Yield farmers often track real APR (excluding token rewards) separately from total APY, since token incentives do not last. Always size positions you can afford to lose. See also: defi, apy, impermanent-loss.

See also: defi, apy, impermanent-loss, liquidity-pool

Two-factor authentication (2FA) requires a second piece of evidence on top of your password to log in, dramatically reducing the chance that a stolen password alone can take over your account. The strongest forms are hardware security keys (YubiKey, Nitrokey) using the FIDO2 / WebAuthn standard, followed by app-based codes from Google Authenticator, Authy, or 1Password. The weakest common form is SMS-based 2FA, which is vulnerable to SIM-swap attacks: criminals convince a phone carrier to port your number to them and then receive your codes. Several large crypto thefts have started with SIM swaps. On every crypto exchange, set up app-based or hardware-key 2FA and remove the SMS option if possible. 2FA only protects exchange and account-level access; it does not protect a self-custody wallet, where the seed phrase plays the equivalent role. Backup codes for your 2FA should be stored as carefully as a password. See also: phishing, custodial, wallet.

See also: phishing, custodial, wallet