Crypto glossary
Every term below is defined in plain language and linked to the page where we measure it, so a definition ends on live numbers rather than another definition. 69 terms, grouped by what they describe.
Market data
10 terms
- Market capA coin's price multiplied by the number of units in circulation — the market's total valuation of that asset.
- Circulating supplyThe number of units of a cryptocurrency that are publicly available and tradable right now.
- Fully diluted valuationWhat a project would be worth if every token that will ever exist were already in circulation at today's price.
- Trading volumeThe total value of an asset traded over a period, usually quoted over the last 24 hours.
- LiquidityHow much can be bought or sold without moving the price much.
- Market dominanceOne asset's share of the total crypto market capitalisation, most often quoted for Bitcoin.
- All-time highThe highest price an asset has ever traded at, on the venues being tracked.
- Order bookThe live list of buy and sell orders waiting to be filled at each price on an exchange.
- Bid-ask spreadThe gap between the highest price a buyer will pay and the lowest a seller will accept.
- SlippageThe difference between the price you expected and the price you actually got.
Trading
12 terms
- Spot tradingBuying or selling the asset itself for immediate settlement, rather than a contract based on its price.
- Crypto exchangeA venue that matches buyers and sellers of cryptocurrency and holds the order book for each trading pair.
- Limit orderAn instruction to trade only at a specified price or better.
- Market orderAn instruction to trade immediately at whatever prices are currently available.
- Stop-lossA resting instruction that triggers a sale once the price falls to a chosen level.
- Maker and taker feesThe two-tier fee model charging less to orders that add liquidity than to orders that remove it.
- LeverageBorrowed funds that increase position size relative to the capital actually posted.
- MarginThe collateral posted to open and maintain a leveraged position.
- Long positionA position that profits when the price rises.
- Short positionA position that profits when the price falls.
- LiquidationThe forced closure of a leveraged position when its collateral no longer covers the loss.
- ArbitrageProfiting from the same asset trading at different prices in different places.
Derivatives
6 terms
- Perpetual futuresA futures contract with no expiry date, held to the spot price by a recurring funding payment.
- Funding rateA periodic payment between long and short holders of a perpetual contract that keeps its price near spot.
- Open interestThe total value of derivative contracts currently open and not yet closed or settled.
- Futures contractAn agreement to buy or sell an asset at a set price on a set future date.
- BasisThe gap between a futures contract's price and the spot price of the same asset.
- Mark priceA smoothed reference price used to value derivative positions and trigger liquidations.
DeFi
9 terms
- DeFiFinancial services — trading, lending, borrowing — run by smart contracts rather than by a company.
- Decentralized exchangeAn exchange run entirely by smart contracts, where traders keep custody of their assets.
- Liquidity poolA smart contract holding two assets that traders swap against, funded by depositors who earn the fees.
- Automated market makerThe formula a liquidity pool uses to set prices from the balance of the assets it holds.
- Impermanent lossThe shortfall a liquidity provider takes when the two pooled assets change in price relative to each other.
- Yield farmingMoving capital between DeFi protocols to earn the highest available return in fees and token rewards.
- StakingLocking tokens to help secure a proof-of-stake network, in exchange for a share of its rewards.
- Total value lockedThe value of all assets deposited in a DeFi protocol at current prices.
- Governance tokenA token granting votes over how a protocol is run.
Blockchain
10 terms
- BlockchainA shared ledger, copied across many computers, where new records are appended in batches that cannot be quietly altered.
- Consensus mechanismThe rules by which a distributed network agrees on which transactions are valid and in what order.
- Proof of workA consensus mechanism where miners spend computing power to earn the right to add the next block.
- Proof of stakeA consensus mechanism where validators post tokens as collateral instead of spending computing power.
- MiningCompeting to produce valid blocks on a proof-of-work chain in exchange for newly issued coins and fees.
- Hash rateThe total computing power securing a proof-of-work network.
- NodeA computer that keeps a copy of the blockchain and checks incoming transactions and blocks against the rules.
- Smart contractA program stored on a blockchain that runs exactly as written whenever it is called.
- Gas feeThe payment made to a network for the computation and storage a transaction consumes.
- Block timeThe average interval between blocks being added to a chain.
Tokens
9 terms
- StablecoinA token designed to hold a steady value, almost always one US dollar.
- AltcoinAny cryptocurrency other than Bitcoin.
- MemecoinA token whose value rests on community attention and humour rather than on any product or cash flow.
- Coin vs tokenA coin is native to its own blockchain; a token is issued by a smart contract on someone else's.
- ERC-20The standard interface that Ethereum tokens implement so wallets and exchanges can handle them uniformly.
- NFTA token representing a specific, individual item rather than an interchangeable unit.
- Wrapped tokenA token on one blockchain that represents an asset held on another.
- Token burnPermanently removing tokens from circulation by sending them to an unspendable address.
- Token unlockA scheduled date on which previously locked tokens become transferable.
Wallets and safety
6 terms
- Crypto walletSoftware or hardware that stores the private keys controlling your crypto.
- Private keyThe secret number that authorises spending from a blockchain address.
- Seed phraseA list of ordinary words that encodes every private key in a wallet.
- Cold storageKeeping private keys on a device that never connects to the internet.
- Custodial walletA wallet where a company holds the private keys on your behalf.
- Rug pullA scam where a token's creators take the liquidity or dump their holdings, leaving buyers unable to sell.
Market cycles
7 terms
- Bull marketAn extended period of rising prices and broad optimism.
- Bear marketAn extended period of falling prices and weak sentiment.
- VolatilityHow much and how quickly a price moves, regardless of direction.
- HalvingA scheduled reduction of the new coins paid to miners, cutting the issuance rate in half.
- AirdropA distribution of free tokens to wallets meeting some criterion.
- WhaleA holder whose position is large enough to move the market on its own.
- Fear and Greed IndexA composite score from 0 to 100 summarising crypto market sentiment.