Glossary

A comprehensive glossary of blockchain, cryptocurrency, and DeFi terminology. Over 150 terms defined.

Quick Navigation

[A](#a) | [B](#b) | [C](#c) | [D](#d) | [E](#e) | [F](#f) | [G](#g) | [H](#h) | [I](#i) | [K](#k) | [L](#l) | [M](#m) | [N](#n) | [O](#o) | [P](#p) | [R](#r) | [S](#s) | [T](#t) | [U](#u) | [V](#v) | [W](#w) | [Y](#y) | [Z](#z)

A

Address A unique identifier (public key hash) for receiving cryptocurrency, typically 42 characters starting with 0x on Ethereum.

Airdrop Free distribution of tokens to wallet addresses, often used for marketing or community building.

AMM Automated Market Maker - A DEX mechanism using liquidity pools and mathematical formulas instead of order books.

AML Anti-Money Laundering - Regulations requiring financial institutions to detect and report suspicious transactions.

Atomic Swap A trustless exchange of cryptocurrencies between different blockchains without intermediaries.

B

Bitcoin The first decentralized cryptocurrency, created by Satoshi Nakamoto in 2008, using Proof of Work consensus.

Block A data structure containing a batch of transactions, linked to previous blocks via cryptographic hashes.

Blockchain A distributed ledger technology where data is stored in cryptographically linked blocks across a network of nodes.

Block Explorer A web tool for viewing blockchain data including transactions, addresses, and blocks (e.g., Etherscan).

Bridge A protocol enabling asset transfers between different blockchain networks.

Burning Permanently removing tokens from circulation by sending them to an unspendable address.

Byzantine Fault Tolerance A system's ability to function correctly even when some nodes are faulty or malicious.

C

CBDC Central Bank Digital Currency - A digital form of fiat currency issued by a central bank.

Collateral Assets pledged as security for a loan, commonly used in DeFi lending protocols.

Cold Wallet Cryptocurrency storage not connected to the internet, providing enhanced security (e.g., hardware wallets).

Consensus The mechanism by which distributed network nodes agree on the state of the blockchain.

Cross-Chain Technology enabling communication and asset transfers between different blockchain networks.

Cryptography Mathematical techniques for securing communication and data, fundamental to blockchain technology.

Custodial A service where a third party holds and manages private keys on behalf of users.

D

DAO Decentralized Autonomous Organization - An organization governed by smart contracts and token holder voting.

dApp Decentralized Application - An application running on a blockchain with smart contract backend.

DeFi Decentralized Finance - Financial services built on blockchain without traditional intermediaries.

DEX Decentralized Exchange - A peer-to-peer marketplace for trading cryptocurrencies without intermediaries.

Digital Signature A cryptographic proof that a message was created by a specific private key holder.

DLT Distributed Ledger Technology - A database shared and synchronized across multiple nodes.

Double Spending The risk of spending the same digital currency twice, solved by blockchain consensus.

E

EIP Ethereum Improvement Proposal - A design document for proposing new Ethereum features or standards.

ERC-20 The standard interface for fungible tokens on Ethereum, defining transfer and approval functions.

ERC-721 The standard for non-fungible tokens (NFTs) on Ethereum, each token being unique.

ERC-1155 A multi-token standard supporting both fungible and non-fungible tokens in one contract.

Ethereum A programmable blockchain platform supporting smart contracts and decentralized applications.

EVM Ethereum Virtual Machine - The runtime environment for executing smart contracts on Ethereum.

F

Faucet A service providing free testnet tokens for development and testing purposes.

Finality The guarantee that a transaction cannot be reversed or altered after confirmation.

Flash Loan An uncollateralized loan that must be borrowed and repaid within a single transaction.

Fork A change to blockchain protocol rules; hard forks are incompatible, soft forks are backward-compatible.

Fungible Interchangeable and identical in value (e.g., one ETH equals any other ETH).

G

Gas The unit measuring computational effort on Ethereum; users pay gas fees for transactions.

Gas Limit Maximum gas a user is willing to spend on a transaction.

Gas Price The amount of ETH per unit of gas a user is willing to pay (in Gwei).

Genesis Block The first block in a blockchain, hardcoded into the protocol.

Governance Token A token granting voting rights in a protocol's decision-making process.

Gwei A denomination of ETH equal to 10^-9 ETH, commonly used for gas prices.

H

Halving The periodic 50% reduction in Bitcoin block rewards, occurring every 210,000 blocks.

Hard Fork A protocol change incompatible with previous versions, requiring all nodes to upgrade.

Hash A fixed-length output from a hash function; used for data integrity and block linking.

Hash Function A one-way function converting input of any size to fixed-size output (e.g., SHA-256).

Hash Rate The computational power used in Proof of Work mining, measured in hashes per second.

HODL Slang for holding cryptocurrency long-term regardless of price volatility.

Hot Wallet Cryptocurrency storage connected to the internet, convenient but less secure.

Howey Test US legal test determining whether an asset qualifies as a security.

I

Immutability The property that blockchain data cannot be altered once confirmed.

Impermanent Loss Temporary loss experienced by liquidity providers when token prices diverge.

IPFS InterPlanetary File System - A decentralized storage network, commonly used for NFT metadata.

K

KYC Know Your Customer - Identity verification requirements for financial services.

L

Layer 1 The base blockchain protocol (e.g., Ethereum, Bitcoin).

Layer 2 Scaling solutions built on top of Layer 1 (e.g., rollups, state channels).

Ledger A record of transactions; in blockchain, distributed across all network nodes.

Lending Protocol A DeFi protocol enabling users to lend and borrow crypto assets (e.g., Aave, Compound).

Liquidity The ease of buying or selling an asset without significant price impact.

Liquidity Mining Earning rewards by providing liquidity to DeFi protocols.

Liquidity Pool A smart contract holding token reserves for decentralized trading.

M

Mainnet The primary public blockchain network where real transactions occur.

Market Cap Total value of a cryptocurrency (circulating supply x current price).

Mempool The waiting area for unconfirmed transactions before inclusion in a block.

Merkle Tree A data structure enabling efficient verification of large datasets in blockchains.

MetaMask A popular browser extension wallet for interacting with Ethereum and EVM chains.

MiCA Markets in Crypto-Assets - EU regulatory framework for crypto assets effective 2024.

Mining The process of validating transactions and creating new blocks in Proof of Work systems.

Minting Creating new tokens or NFTs on the blockchain.

Multi-sig A wallet requiring multiple private key signatures to authorize transactions.

N

NFT Non-Fungible Token - A unique digital asset with verifiable ownership on blockchain.

Node A computer participating in the blockchain network, validating and relaying transactions.

Nonce A number used once in cryptographic operations; in mining, varied to find valid block hashes.

O

Off-Chain Activity occurring outside the main blockchain, often for scalability.

On-Chain Activity recorded directly on the blockchain.

OpenSea The largest NFT marketplace by trading volume.

Oracle A service providing external data to smart contracts (e.g., Chainlink price feeds).

P

P2P Peer-to-peer - Direct interaction between participants without intermediaries.

Permissioned A blockchain requiring authorization to participate (enterprise use).

Permissionless A blockchain open to anyone without authorization (public blockchains).

Private Key A secret number allowing control of cryptocurrency; must never be shared.

Proof of Stake Consensus mechanism where validators stake tokens as collateral to participate.

Proof of Work Consensus mechanism requiring computational effort to validate blocks (mining).

Protocol The rules governing blockchain operation and participant interaction.

Public Key A cryptographic key derived from private key, used to receive funds.

R

Reentrancy A smart contract vulnerability where external calls allow repeated function execution.

Remix A browser-based IDE for developing and testing Solidity smart contracts.

Rollup A Layer 2 scaling solution bundling transactions off-chain with on-chain settlement.

Royalties Automatic payments to NFT creators on secondary sales, enforced by smart contracts.

RWA Real World Assets - Physical assets tokenized on blockchain (real estate, commodities).

S

Satoshi The smallest unit of Bitcoin (0.00000001 BTC); also the pseudonym of Bitcoin's creator.

Scalability A blockchain's ability to handle increasing transaction volume efficiently.

Scalability Trilemma The trade-off between decentralization, security, and scalability.

Seed Phrase A 12-24 word backup for recovering cryptocurrency wallets.

Sepolia An Ethereum testnet used for development and testing.

Sharding Splitting blockchain data across multiple partitions to improve scalability.

Slashing Penalty mechanism in Proof of Stake for validator misbehavior.

Slippage Price difference between expected and executed trade price.

Smart Contract Self-executing code on blockchain that runs when conditions are met.

Solidity The primary programming language for Ethereum smart contracts.

Stablecoin A cryptocurrency designed to maintain stable value, typically pegged to USD.

Staking Locking tokens to participate in Proof of Stake consensus and earn rewards.

T

Testnet A blockchain network for testing without real value at stake.

Token A digital asset created on an existing blockchain (vs. native coins like ETH).

Tokenomics The economic design of a token including supply, distribution, and incentives.

Transaction Fee Payment to network validators for processing transactions.

TVL Total Value Locked - The total assets deposited in a DeFi protocol.

U

Uniswap The leading decentralized exchange using the AMM model.

UTXO Unspent Transaction Output - Bitcoin's model for tracking coin ownership.

V

Validator A node in Proof of Stake responsible for proposing and attesting to blocks.

Vesting A schedule for gradual release of tokens over time.

Volatility The degree of price variation in an asset over time.

W

Wallet Software or hardware for storing private keys and interacting with blockchain.

Web3 The vision of a decentralized internet built on blockchain technology.

Wei The smallest unit of ETH (10^-18 ETH).

Whitepaper A technical document describing a blockchain project's concept and implementation.

Wrapped Token A token representing another asset on a different blockchain (e.g., WBTC).

Y

Yield Farming Maximizing returns by moving assets between DeFi protocols.

Z

Zero-Knowledge Proof Cryptographic proof verifying truth without revealing underlying data.

ZK-Rollup A Layer 2 solution using zero-knowledge proofs for transaction validity.

Related Pages

• Resources - Books, tools, and documentation
• Module A - Core blockchain concepts
• Module E - DeFi terminology