Crypto 101: An Explanation of Crypto Glossary For Beginners

May 19, 2025

Crypto

Crypto 101: An Explanation of Crypto Glossary For Beginners

By Oyinkansola Odunsi

Everyone these days seems to be talking about crypto. If you do not see someone encouraging a friend to invest in a new token, you will see a tweet talking about the latest performance of the crypto market. Needless to say, crypto has caused a major shift in how we think about money, ownership, privacy and trust.

However, as a newbie, it is easy to feel confused about the industry, especially when there are so many strange terms flying around. If you want to have a better understanding of crypto technical jargon, then you are most welcome. In this article, I will explain the most popular words you would hear in the crypto world.

Make sure you read till the end so you will be in the know when next you are having a crypto-related conversation with a friend!

KEY TAKEAWAYS:

Crypto has caused a major shift in how we think about money, ownership, privacy and trust.

To get the best out of crypto, you need to at least know how to speak its language.

Common crypto words include blockchain, smart contracts, crypto exchanges, and mining.

Keep learning and asking questions to become an expert in crypto communication.

Table of Contents

The Ultimate Beginner’s Crypto Glossary

Cryptocurrency is a big deal today because it gives people more control over their money while giving them an opportunity to create wealth. But to reap its benefits, you have to at least know how to speak its language. Here is an overview of some of the popular crypto terms.

Cryptocurrency

This is a form of digital or virtual money that uses cryptography for security. Cryptocurrencies operate on the decentrlaized blockchain technology. Therefore, it is not controlled by any central authority, like a bank or government, which gives you greater financial freedom.

Blockchain

A blockchain is a digital ledger that records transactions in a decentralized, secure, and transparent way. Unlike centralized databases that are controlled by a single entity like a bank, blockchains are distributed across many computers or nodes across the world. Each transaction is recorded on a block, which is linked to the previous one, forming a chain. Hence, the name “blockchain.”

Wallet

A crypto wallet is a digital tool that allows you to store, send, and receive cryptocurrencies. There are two primary types of wallets: hot wallets and cold wallets. A hot wallet is connected to the internet, making it convenient for frequent transactions but more vulnerable to hacking and theft. On the other hand, a cold wallet is an offline storage option, which is much safer for long-term storage but less convenient for day-to-day transactions.

Public Key and Private Key

These keys both work together to secure your transactions on the blockchain. A public key is like your email address, and it is shared with others so they can send you cryptocurrency. However, a private key is the password to your wallet. It is a secret key that you must guard jealously because it grants access to your crypto funds.

Cryptocurrency Exchange

A cryptocurrency exchange is a platform that allows you to buy, sell, and trade cryptocurrencies. There are two primary types of exchanges: centralized exchanges (CEX) and decentralized exchanges (DEX). CEXs act as intermediaries, meaning they hold your assets and transactions are processed through their servers. In contrast, DEXs operate directly on the blockchain, allowing you to trade without an intermediary.

Altcoin

An altcoin is any cryptocurrency that is not Bitcoin. The term “altcoin” comes from “alternative coin,” meaning these coins are alternatives to Bitcoin. Altcoins can serve various purposes, including providing privacy, enabling decentralized finance (DeFi), or facilitating specific use cases like gaming or file storage.

Decentralized Finance (DeFi)

Decentralized Finance (DeFi) refers to a movement in the cryptocurrency space that aims to recreate traditional financial systems using blockchain technology. These include lending, borrowing, and trading, but without the need for intermediaries. DeFi platforms operate on smart contracts, which automatically execute transactions when certain conditions are met.

Smart Contracts

A smart contract is a self-executing contract with the terms and conditions directly written into code. It runs on a blockchain, typically on platforms like Ethereum, and automatically enforces the rules of an agreement when predefined conditions are met. They are highly transparent, as the code and the transaction history are visible on the blockchain.

FOMO and FUD

Fear of Missing Out (FOMO) and Fear, Uncertainty, and Doubt (FUD) are two emotions that often drive market behavior and influence investing decisions. FOMO happens when you buy into a cryptocurrency because you fear missing out on potential gains, often without proper research. On the other hand, FUD refers to negative news or rumors that cause fear and anxiety among investors, leading to selling or panic in the market.

HODL

HODL is an acronym for “Hold On for Dear Life.” It refers to the strategy of holding onto your crypto instead of selling it, particularly during times of market volatility. If you decide to HODL, you’ll be holding onto your crypto for the long haul, ignoring the daily price swings, and betting that your coins will appreciate over time.

Gas Fees

Gas fees are the payments required to execute a transaction or smart contract on a blockchain network. These fees are paid in the blockchain’s native cryptocurrency—like ETH for Ethereum. Gas fees help prevent spam and ensure that only serious transactions are processed.

Mining

Mining is the process by which transactions are verified and added to a blockchain. There are two primary consensus mechanisms in crypto mining: Proof of Work (PoW) and Proof of Stake (PoS). PoW, used by Bitcoin, requires miners to solve complex mathematical puzzles with powerful computers to validate transactions, while PoS involves validators staking coins to participate in the consensus process.

Coin/Token

A coin usually refers to a cryptocurrency that operates on its own independent blockchain, such as Bitcoin (BTC) or Ethereum (ETH). Coins are often used as a form of payment or store of value. In contrast, a token operates on top of an existing blockchain. They can have various functions, including serving as a currency within a specific platform, granting access to certain services, or representing a stake in a project.

Stablecoin

A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to an asset, usually a fiat currency like the US Dollar. The idea is to offer the benefits of cryptocurrencies, such as fast and low-cost transactions, while reducing the volatility often associated with them. Since their value is stable, they make for a more predictable medium of exchange and store of value compared to highly volatile cryptocurrencies.

Non-Fungible Token (NFT)

A Non-Fungible Token (NFT) is a unique digital asset that represents ownership or proof of authenticity of a specific item or piece of content, typically on the blockchain. They are non-fungible, meaning each token is unique and cannot be exchanged on a one-to-one basis. NFTs are most commonly used for digital art, collectibles, music, videos, and even virtual real estate in games.

Airdrop

An airdrop is a way for cryptocurrency projects to distribute free tokens or coins to the wallets of users. Airdrops are often used as a promotional tool or a way to reward loyal community members or early adopters. Typically, to qualify for an airdrop, users must meet certain requirements, such as holding a particular cryptocurrency, joining a community, or signing up for an event.

Whale

A whale is an individual or entity that holds a large amount of a particular cryptocurrency. Whales can have a significant influence over the market because their trades, whether buying or selling, can cause major price fluctuations. The exact amount required to be considered a whale varies depending on the cryptocurrency, but generally, it refers to someone holding tens of thousands, if not millions, of dollars in assets.

Rugpull

A rugpull is a type of cryptocurrency scam where the creators of a new project suddenly withdraw all of their liquidity, leaving investors with worthless tokens. Rugpulls are most common in DeFi projects or new altcoins that are not yet well-known or established.

Decentralized Autonomous Organization (DAO)

A DAO is an organization that operates through smart contracts on a blockchain, with decisions made collectively by its members rather than a central authority. DAOs are governed by the holders of the organization’s native token, who can vote on proposals that affect the direction of the project. These include changes to protocols, the allocation of funds, or the development of new features.

Liquidity Pool

A liquidity pool is a collection of funds locked in a smart contract that provides liquidity to decentralized exchanges (DEXs) or other DeFi platforms. Liquidity pools are typically used to facilitate trading by allowing users to swap one cryptocurrency for another.

Wrapping It All Up

Look at that, you made it through 20 of the most important crypto terms. Now, you understand more than the average person out there. Just make sure you keep learning and asking questions. Before you know it, you will start having full-blown crypto conversations using these crypto words and more!