Basic Terms
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Blockchain
A distributed ledger technology where multiple participants each hold and jointly verify a copy of the transaction record.
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- Once a block is recorded, it is effectively impossible to alter, which is what makes it useful for preventing tampering.
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Bitcoin (BTC)
The first cryptocurrency, created in 2009 by Satoshi Nakamoto, with a supply permanently capped at 21 million coins.
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- New coins are mined through Proof of Work (PoW), with no company or government controlling issuance.
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Altcoin
A catch-all term for every cryptocurrency other than Bitcoin (short for "alternative coin").
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- Ethereum, XRP, Solana, and the many other coins that emerged after Bitcoin all fall into this category.
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Stablecoin
A cryptocurrency designed to hold a stable price pegged to another asset, typically the US dollar.
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- Tether (USDT) and USD Coin (USDC) are designed so that 1 coin β $1.
- Widely used to temporarily park funds between trades instead of holding a more volatile coin.
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Wallet
Software or hardware used to store and send/receive crypto assets.
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- Broadly split into an "exchange wallet" held inside an exchange, and a "personal wallet" you manage yourself.
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Private key / public key
The cryptographic key pair used to prove wallet ownership and sign transactions.
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- The public key (or an address derived from it) can be shared freely, but the private key must never be exposed.
- Losing your private key means permanently losing access to that wallet's assets.
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Seed phrase (mnemonic)
A sequence of 12β24 words used to recover a wallet, effectively functioning the same as a private key.
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- Anyone who knows this phrase can take everything in the wallet, so it should be stored offline β never photographed or saved online.
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Cold wallet / hot wallet
A way of categorizing wallets by whether they are connected to the internet.
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- Cold wallet: kept offline, disconnected from the internet (e.g. a hardware wallet) β lower hacking risk.
- Hot wallet: connected to the internet (exchange accounts, mobile apps) β convenient but relatively more exposed to hacking.
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Transaction (TX) hash
A unique identifier assigned to every individual transaction recorded on a blockchain.
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- Entering this value into a block explorer (like Etherscan) lets you look up the full details of that transaction.
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Contract address
The unique address at which a smart contract (a self-executing program) or a token is deployed on a blockchain.
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- Always verify the official contract address before trading, to avoid confusing a token with a fake copy of the same name.
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Gas fee
The fee paid to have a transaction processed on a blockchain network.
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- Gas fees tend to rise as the network gets more congested.
- A term used especially often on smart-contract platforms like Ethereum.
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Market cap
The current price multiplied by circulating supply β a coin's total market value.
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- Market cap = current price Γ circulating supply.
- Comparing coins by price alone is inaccurate β market cap should be considered together.
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Circulating supply / total supply
Circulating supply is the amount actually in the market and being traded right now; total supply is the maximum amount that could ever be issued.
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- Some coins like Bitcoin have a fixed total supply, while others have no hard cap at all.
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Hard fork / soft fork
A way of upgrading a blockchain's protocol rules.
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- Hard fork: a major change incompatible with the old rules, which can sometimes split the chain into two.
- Soft fork: a smaller, backward-compatible change that does not split the chain.
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Whitepaper
The official document explaining what a coin or project aims to solve, along with its technical design and planned token usage.
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- Commonly used as the primary reference for judging whether a project is substantive before investing.
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ICO / IDO / IEO
Methods of raising funds by selling a new coin or token to early investors.
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- ICO: an initial coin sale run directly by the project.
- IEO: a sale conducted through an exchange.
- IDO: a sale conducted through a decentralized exchange (DEX).
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Airdrop
An event where a project distributes coins or tokens for free to users who meet certain conditions.
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- Commonly used to attract early users, reward the community, or promote a new service.
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Staking
Depositing your coins into a network to help validate transactions, in return for a reward.
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- Mainly used on Proof of Stake (PoS) blockchains; your coins can be locked up and illiquid for the staking period.
Trading Terms
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Long / Short
Betting on a price rise is called going long; betting on a price decline is called going short.
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- Unlike simple spot trading, futures and margin trading let you use a short position to try to profit even in a falling market.
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Leverage
A multiplier that lets you trade with a larger position than the capital you actually have.
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- Both gains and losses are magnified, and hitting a certain loss threshold can trigger forced liquidation.
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Liquidation
When losses on a leveraged position exceed a set threshold, the exchange forcibly closes the position.
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- Liquidation can wipe out most or all of your principal, making it the single biggest risk of leveraged trading.
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Order book
A list showing the current buy and sell orders stacked up in the market, organized by price level.
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- The order book lets you see how much buy or sell volume is waiting at each price level.
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Slippage
The difference between the price you placed an order at and the price it actually filled at.
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- Slippage tends to be larger for coins with lower volume or higher volatility.
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Spread
The gap between the highest buy price on offer and the lowest sell price on offer.
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- A narrower spread means better liquidity and lower trading costs.
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Regional price premium
When the same coin trades at a noticeably higher price on one country's exchanges than on international exchanges (in Korea this is nicknamed the 'kimchi premium').
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- It arises from factors like capital-flow restrictions and local currency demand in that market, and when the reverse happens (locally cheaper), it's sometimes called a 'reverse premium.'
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FOMO
Short for "Fear Of Missing Out" β the impulse to buy in late while a price is surging.
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- FOMO buying that piles in near the top often leads to large losses if a sharp pullback follows.
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FUD
Short for "Fear, Uncertainty, Doubt" β negative rumors or exaggerated concerns spreading through the market.
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- It's worth judging whether a piece of FUD is grounded in real bad news or is just rumor designed to spook people.
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Averaging down
Buying more of a coin after its price has fallen, to lower your average purchase cost.
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- If the price recovers, you can recoup losses faster, but if it keeps falling, losses can grow larger too.
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Stop-loss / take-profit
Selling at a pre-set price to prevent further losses is a stop-loss; selling once a target profit is reached is a take-profit.
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- Setting stop-loss and take-profit levels before you buy is recommended to reduce emotional decision-making.
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Pump and dump
A scheme where a coordinated group deliberately pumps up a price, then sells (dumps) onto the late buyers who chased it, before exiting.
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- Coins with small market caps and low trading volume are especially vulnerable to this kind of manipulation.
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Whale
A large holder whose trades alone can move the market, due to holding a very large amount of a coin.
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- Whales' large-scale buys or sells are tracked via on-chain data and often have a big influence on market sentiment.
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Holder / diamond hands
An investor who keeps holding a coin long-term without wavering, even through sharp price drops.
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- The opposite β someone who sells at the first small dip β is sometimes jokingly called 'paper hands.'
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Meme coin
A coin that originated from an internet meme or a moment of viral attention rather than any clear technical purpose.
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- Dogecoin and Shiba Inu are well-known examples β their price is driven far more by community and buzz than by utility.
Ecosystem & Technology Terms
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Layer 1 / Layer 2
The blockchain itself is Layer 1; a network built on top of it to boost throughput is Layer 2.
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- Arbitrum and Optimism, built on top of Ethereum (Layer 1), are well-known Layer 2 examples.
- Layer 2 batches transactions together and records only the final result back on Layer 1, lowering fees and increasing speed.
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DeFi (Decentralized Finance)
Financial services β lending, deposits, trading β implemented via blockchain and smart contracts, without a bank or other middleman.
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- Decentralized exchanges (DEXs) and decentralized lending platforms are prominent examples of DeFi services.
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dApp (Decentralized App)
An application that runs on a blockchain instead of a centralized server.
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- Built on smart contracts, making it hard for any single company to unilaterally shut the service down or tamper with its data.
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DAO
A Decentralized Autonomous Organization that makes decisions through token holders voting, without a single leader or central manager.
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- Its rules and decision-making process are often transparently encoded and published in smart contract code.
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NFT
A Non-Fungible Token β a digital asset recorded on a blockchain that proves unique ownership and cannot be interchanged one-for-one with another.
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- Used to certify ownership or authenticity of digital art, music, in-game items, and more.
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DEX / CEX
A DEX (decentralized exchange) trades automatically via smart contracts with no central operator; a CEX (centralized exchange), like Coinbase or Binance, is run by a company.
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- A DEX lets you trade using just a personal wallet with no sign-up, though it can be somewhat more complex to use than a CEX.
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TVL (Total Value Locked)
A metric showing the total value of assets deposited into a DeFi service or blockchain ecosystem.
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- A higher TVL is often used as a reference signal that more capital trusts and is actively using that service.
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Tokenomics
The overall economic design of a coin or token β its supply, distribution method, and intended use (a blend of 'token' and 'economics').
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- Even similar projects can end up with very different long-term price stability depending on how their tokenomics are designed.
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Rug pull
A scam where developers raise funds from investors, then suddenly abandon the project and disappear with the money.
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- The risk is especially high with unverified, small, brand-new projects, so checking the team's background and whether funds are locked up is recommended before investing.
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On-chain / off-chain
A transaction or piece of data recorded directly on a blockchain is on-chain; one processed outside the blockchain is off-chain.
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- Transfers between users within the same exchange are usually processed off-chain and are often not actually recorded on the blockchain.
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Bridge
A service that lets assets or data move between two different blockchain networks.
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- For example, it converts an asset on Ethereum into a form usable on another chain and moves it over.
- Because of their technical complexity, bridge services themselves have sometimes been targeted by hackers, so caution is warranted.
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Web3
A vision for a blockchain-based internet where users directly own their data and assets, in contrast to today's internet (Web2), where platform companies control the data.
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- DeFi, NFTs, and DAOs are all commonly discussed as building blocks of this Web3 ecosystem.
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51% attack
A situation where a single group gains control of more than half of a network's total computing power (or stake), theoretically allowing it to tamper with transaction records.
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- For large networks with many, widely distributed participants, amassing that much of the network's resources is extremely difficult in practice.
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