Pillar 1
Crypto Basics
What cryptocurrency is, how a blockchain works, and what a wallet actually holds.
Reference
Crypto Terms and Digital Finance Glossary
Plain-language definitions, written for people who are still deciding what any of this means. No jargon used to explain jargon.
How to use this page
Type in the box below to filter, or jump to a letter. Every entry is tagged with the part of the site it belongs to, and terms covered in depth elsewhere link to the full guide.
Scam names are defined here on purpose. A reader who cannot name a tactic cannot recognise it, so each of those entries is written so the definition itself is the warning.
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- Address
- A string of letters and numbers identifying where a payment on a network should go. It works like an account number rather than a name, it is public, and a payment sent to a wrong address normally cannot be recovered by anyone.
- Read: Exchanges vs Wallets Basics
- Airdrop
- A distribution of tokens to many addresses at once, usually for marketing. Fraudsters imitate airdrops to get people to connect a wallet or approve a transaction, so an unexpected one is a reason for caution rather than excitement.
- Read: Common Crypto Scams Security
- Altcoin
- Informal term for any cryptocurrency other than Bitcoin. It describes a category and nothing else, and says nothing about whether a particular asset is sound.
- Basics
- AML Also: anti-money laundering
- The laws and procedures regulated financial businesses follow to detect and report suspected money laundering. It is the reason an exchange asks for identity documents before letting you trade.
- Basics
- Annual percentage yield Also: APY
- A figure describing a return over a year including compounding. In crypto it is usually advertised by a platform offering to pay you for depositing assets. An advertised yield is a marketing number rather than a promise, and the platform offering it carries risk of its own.
- Read: Should I Invest in Crypto? Readiness
- Approval Also: token approval
- Permission you grant a smart contract to move tokens held in your wallet. Approvals stay in force until revoked, which is how some wallets are emptied long after the transaction that granted one.
- Read: Is Cryptocurrency Safe? Security
- Bear market
- Informal term for an extended period of falling prices. It is a description applied after the fact, not a forecast.
- Basics
- Bitcoin
- The first widely used cryptocurrency, launched in 2009, and the network it runs on. Capitalised it usually means the network; lowercase it usually means the unit.
- Read: Bitcoin, Ether & Stablecoins Basics
- Block
- A batch of transactions recorded together, linked to the batch before it. The chain of these batches is what gives a blockchain its name.
- Read: What Is Blockchain Basics
- Block explorer
- A free public website for looking up transactions, addresses and blocks on a network. Because the records are public, anyone can confirm a payment happened without asking the sender to prove it.
- Basics
- Blockchain
- A shared record of transactions kept in linked batches and maintained by many computers at once rather than by one company. Each batch carries a fingerprint of the one before it, so altering old entries becomes visible.
- Read: What Is Blockchain Basics
- Bridge
- A service that moves value between two separate networks. Bridges hold large pooled balances, which has made them a repeated target of large thefts.
- Security
- Bull market
- Informal term for an extended period of rising prices. Like its opposite, it is a label applied looking backwards.
- Basics
- Centralized exchange Also: CEX
- A company that lets customers buy, sell and hold crypto on its own platform, holding the keys on their behalf. Convenient, and it means your access depends on that company staying solvent and online.
- Read: Exchanges vs Wallets Basics
- Chargeback
- The card-network process letting a bank reverse a payment after the fact. Crypto has no equivalent, which is why a crypto refund has to be issued as a new payment.
- Read: Business Crypto Payments Business
- Cold storage
- Keeping private keys on a device or medium that is not connected to the internet, so remote attackers cannot reach them.
- Read: Crypto Wallets Security
- Confirmation
- Evidence that a transaction has been included in a block and built on by later blocks. More confirmations makes a transaction progressively harder to undo.
- Basics
- Consensus
- The process by which computers on a network agree which transactions are valid and in what order, without a central authority deciding.
- Basics
- Custodial wallet
- An arrangement where a company holds the private keys for you. You have an account with that company rather than direct control of the asset.
- Read: Exchanges vs Wallets Basics
- Custody
- Who holds the keys that can move an asset. Most crypto risk comes back to this single question, which is why the site returns to it repeatedly.
- Read: Exchanges vs Wallets Basics
- Cryptocurrency
- A digital asset recorded on a shared network and secured by cryptography, rather than issued by a government and settled by banks.
- Read: What Is Cryptocurrency? Basics
- Cryptography
- The mathematics of securing information. Here it is what lets you prove a transaction was authorised by the holder of a key without revealing the key itself.
- Basics
- DApp Also: decentralized application
- Software that runs against smart contracts on a network instead of on a single company's servers.
- Basics
- DeFi Also: decentralized finance
- Financial services such as lending and trading built out of smart contracts rather than companies. There is usually no customer support, no regulator standing behind it and no recovery if something goes wrong.
- Security
- Decentralized exchange Also: DEX
- Trading that happens directly between wallets through smart contracts, with no company holding your assets and no account to recover.
- Basics
- Dollar-cost averaging
- Buying a fixed dollar amount at regular intervals instead of all at once. It describes a way of timing purchases; it does not reduce the risk of the asset being bought.
- Readiness
- Double spend
- Spending the same funds twice. Preventing it without a central bookkeeper is the core problem a blockchain exists to solve.
- Read: What Is Blockchain Basics
- Dusting attack
- Sending tiny amounts to many addresses and then watching how the recipients move them, as a way of linking addresses to people.
- Security
- Ether
- The unit used to pay for activity on the Ethereum network. The network is Ethereum; the unit is ether.
- Read: Bitcoin, Ether & Stablecoins Basics
- Ethereum
- A network built to run smart contracts as well as payments, which is why most tokens and most on-chain applications live on it or on something like it.
- Read: Bitcoin, Ether & Stablecoins Basics
- Exchange
- A business where crypto is bought and sold. Whether it holds your keys is the difference that matters, not the word on the sign.
- Read: Exchanges vs Wallets Basics
- Exit scam
- A platform that operates normally until its operators disappear with customer funds. The usual sequence is withdrawals slowing, then explanations, then silence.
- Read: Common Crypto Scams Security
- Fee Also: network fee, transaction fee
- The amount paid to have a transaction processed by a network. It rises and falls with demand, and it is separate from anything a company charges on top.
- Basics
- Fiat currency
- Government-issued money such as the US dollar. The word simply distinguishes it from crypto and carries no judgment either way.
- Basics
- FOMO Also: fear of missing out
- Slang for the pressure to act before an opportunity passes. It appears in this glossary because manufactured urgency is the most reliable feature of crypto fraud.
- Read: Scam Red Flags Security
- Fork
- A change to a network's rules that splits its history or its community, sometimes leaving two networks where there was one.
- Basics
- Full node
- A computer keeping a complete copy of a blockchain and checking new transactions against the rules itself, rather than trusting somebody else's answer.
- Basics
- Gas
- The unit of computational work on some networks, and informally the fee paid for it. A transaction can fail and still cost gas.
- Basics
- Giveaway scam
- A fake offer to multiply any crypto you send, normally impersonating a well-known person or company. Nothing is ever sent back, and the irreversibility of the first payment is the whole point.
- Read: Common Crypto Scams Security
- Halving
- A scheduled reduction in the new supply issued to Bitcoin miners, written into the network's rules from the start.
- Basics
- Hardware wallet
- A dedicated device that stores private keys and signs transactions without exposing those keys to the computer it is plugged into.
- Read: Crypto Wallets Security
- Hash
- A fixed-length fingerprint calculated from data. Change the data and the fingerprint changes, which is how tampering with an old record becomes obvious.
- Read: What Is Blockchain Basics
- Hot wallet
- A wallet on an internet-connected device. More convenient than cold storage and more exposed, which is why the two are often used for different amounts.
- Read: Crypto Wallets Security
- HODL
- Internet slang for holding rather than selling, originating in a misspelling. It is a joke that became a slogan, and it is not a strategy or advice.
- Basics
- Immutable
- Describes a record that cannot be altered once written. It is a property of the record, not a guarantee that what was recorded was correct.
- Basics
- Impersonation scam
- Fraud that borrows the name, logo or staff identity of a real company or government agency to make a demand look official. Verifying through a number or address you found yourself is the defence.
- Read: Common Crypto Scams Security
- Irreversible
- The property that matters most in practice. A completed crypto transaction cannot be recalled by you, by the recipient, by an exchange or by a bank.
- Read: Keys & Seed Phrases Security
- Jurisdiction
- Which country's rules a platform operates under, and whose authorities oversee it. A service can be perfectly legal where it is based and still sit outside the protections you would expect at home, which is why "offshore" tells you more than it sounds like it does. What any of it means for your own position is a question for a qualified attorney.
- Read: Exchanges vs Wallets Security
- Key
- The secret, or its public counterpart, that controls an address. See private key and public key, which are the two halves people usually mean.
- Read: Keys & Seed Phrases Basics
- KYC Also: know your customer
- Identity verification that regulated financial businesses perform when opening an account. A platform that skips it is not being generous with your privacy.
- Basics
- Layer 1
- A base network that settles its own transactions, such as Bitcoin or Ethereum.
- Basics
- Layer 2
- A network built on top of a layer 1 to process transactions more cheaply, periodically settling back down to the base network.
- Basics
- Ledger
- A record of transactions. A distributed ledger is one maintained by many parties at once, which is the arrangement a blockchain implements.
- Basics
- Liquidation
- The forced sale of a position when borrowed money can no longer be supported by its collateral. It is how borrowing to hold a volatile asset turns a temporary price move into a permanent loss.
- Read: Should I Invest in Crypto? Readiness
- Liquidity
- How easily something can be bought or sold without moving its own price. Thin liquidity is why some assets are easy to buy and hard to get out of.
- Basics
- Mainnet
- The live network where real value moves, as distinct from a test network where the units are worthless on purpose.
- Basics
- Market capitalization Also: market cap
- Units in circulation multiplied by the current price. It is a rough size measure, not a measure of money invested and not a measure of safety.
- Basics
- Memo Also: destination tag
- An extra reference some platforms require alongside an address so they can credit the right customer. Leaving out a required memo is a common way a deposit goes missing.
- Basics
- Mempool
- The waiting area of transactions that have been broadcast but not yet included in a block.
- Basics
- Mining
- Competing to add the next block on a proof-of-work network, in exchange for newly issued units and the fees in that block.
- Basics
- Mixer Also: tumbler
- A service that pools transactions together to obscure where funds came from. Using one can carry legal exposure depending on the service and your jurisdiction.
- Security
- Multisignature Also: multisig
- An arrangement requiring more than one key to authorise a transaction. Businesses use it so that one person leaving, or losing a device, does not strand the funds.
- Read: Business Crypto Payments Security
- NFT Also: non-fungible token
- A token recording ownership of one specific item rather than an interchangeable amount. The token and the thing it points to are not the same object, which is where most confusion about them starts.
- Basics
- Node
- Any computer taking part in a network, whether it keeps a full copy of the records or only part of them.
- Basics
- Off-chain
- Activity recorded in a company's own books rather than on the network. Trades inside an exchange are usually off-chain, which is why they do not appear on a block explorer.
- Basics
- On-chain
- Recorded on the network itself, and therefore publicly verifiable by anyone with the transaction reference.
- Basics
- Paper wallet
- Keys written or printed on paper. Offline, and therefore vulnerable to fire, water, fading, loss and anyone who happens to find it.
- Read: Crypto Wallets Security
- Passphrase
- An extra secret some wallets allow on top of a seed phrase. It adds protection and it adds a second thing that, if lost, puts the funds permanently out of reach.
- Read: Keys & Seed Phrases Security
- Peer-to-peer
- Directly between two parties, with no intermediary holding the funds in the middle.
- Basics
- Phishing
- Messages or websites built to look legitimate in order to capture a password, a seed phrase or a wallet approval. The fake is normally a near-perfect copy, so the check has to be the address you typed yourself.
- Read: Is Cryptocurrency Safe? Security
- Pig butchering
- A long-running fraud in which a stranger builds trust over weeks, often romantically, then introduces an investment platform that displays fake gains and will not permit a withdrawal. Small test withdrawals sometimes succeed, which is part of the method.
- Read: Common Crypto Scams Security
- Private key
- The secret that authorises spending from an address. Whoever has it controls the funds, and no legitimate company, support agent or government agency ever needs yours.
- Read: Keys & Seed Phrases Security
- Proof of stake
- A consensus method in which validators are selected in proportion to the assets they have committed as collateral, rather than by spending energy.
- Basics
- Proof of work
- A consensus method in which computers spend energy solving a puzzle to earn the right to add the next block.
- Basics
- Public key Also: public address
- The shareable counterpart of a private key, from which an address is derived. Safe to hand out, and giving it to someone does not let them spend anything.
- Read: Keys & Seed Phrases Basics
- Pump and dump
- Coordinated promotion to drive up a thinly traded asset's price so that the organisers can sell into the buying they created. The people who arrive because of the promotion are the exit.
- Read: Common Crypto Scams Security
- Quote window
- The short period during which a payment processor honours a stated conversion rate. Pay after it closes and the amount received can differ from the amount owed.
- Read: Business Crypto Payments Business
- Recovery phrase
- Another name for a seed phrase. The word recovery makes it sound like a backup held by someone else, which it is not.
- Read: Keys & Seed Phrases Security
- Romance scam
- Fraud that builds a relationship first and asks for money later, now frequently with crypto as the requested payment method because it cannot be reversed.
- Read: Common Crypto Scams Security
- Rug pull
- Insiders removing the funds that supported a token's price, leaving holders unable to sell at any meaningful value. Often preceded by heavy promotion and a rapidly growing community.
- Read: Common Crypto Scams Security
- Satoshi
- The smallest unit of bitcoin, one hundred millionth of one. Also the pseudonym of Bitcoin's anonymous creator.
- Basics
- Seed phrase Also: recovery phrase, mnemonic
- A list of ordinary words that can regenerate a wallet's private keys. For practical purposes it is the wallet: anyone who reads it can take the funds, and nobody legitimate will ever ask for it.
- Read: Keys & Seed Phrases Security
- Self-custody
- Holding your own keys rather than relying on a company to hold them. Full control, and full responsibility, with no password reset.
- Read: Exchanges vs Wallets Basics
- Settlement
- The point at which a payment is final and the money is actually yours. In card payments that point arrives much later than the approval screen suggests; in crypto it arrives sooner and cannot be undone.
- Read: Business Crypto Payments Business
- SIM swap
- An attacker transferring your phone number onto their own device in order to intercept text-message codes. It is the reason app-based or hardware two-factor is stronger than SMS.
- Read: Is Cryptocurrency Safe? Security
- Smart contract
- Code deployed to a network that runs automatically when its conditions are met. It does exactly what it says, including when what it says is a mistake.
- Basics
- Manipulating a person rather than defeating a system. Most crypto losses begin here, which is why urgency and secrecy matter more as warning signs than technical detail.
- Read: Scam Red Flags Security
- Stablecoin
- A token designed to track the value of something else, usually a national currency. Whether it holds depends on what backs it and who manages that backing, which varies between them.
- Read: Bitcoin, Ether & Stablecoins Basics
- Staking
- Committing assets to help secure a proof-of-stake network in exchange for rewards. Assets can be locked for a period, rewards are not guaranteed, and the underlying asset can still fall in value while locked.
- Read: Should I Invest in Crypto? Readiness
- Token
- A unit issued on an existing network rather than having a network of its own. Creating one takes very little, which is why the existence of a token implies nothing about its value.
- Read: Bitcoin, Ether & Stablecoins Basics
- Transaction ID Also: TXID, transaction hash
- The unique reference for a transaction, used to look it up on a block explorer. A sender who will not give you one has not sent anything.
- Basics
- Two-factor authentication Also: 2FA, two-step verification
- A second step beyond a password when signing in. App-based codes and hardware keys resist SIM swapping; text messages do not.
- Read: Is Cryptocurrency Safe? Security
- Unconfirmed transaction
- A transaction that has been broadcast to the network but not yet included in a block. It is not final and can still fail.
- Basics
- Unhosted wallet
- The regulatory term for a self-custody wallet, meaning one no company operates on your behalf.
- Read: Crypto Wallets Basics
- Validator
- A participant that proposes and checks blocks on a proof-of-stake network, with its own committed assets at risk if it misbehaves.
- Basics
- Volatility
- How sharply a price moves over short periods. It is the reason money needed soon, or money that is already committed elsewhere, does not belong in a volatile asset.
- Read: Should I Invest in Crypto? Readiness
- Wallet
- Software or hardware that stores keys and signs transactions. It holds keys, not coins, which is why a wallet can be replaced without the assets moving.
- Read: Crypto Wallets Basics
- Wallet drainer
- Malicious code on a website that empties a wallet once it has been connected and a transaction approved. The approval is what does the damage, not the connection by itself.
- Read: Is Cryptocurrency Safe? Security
- Watch-only wallet
- A wallet loaded with public addresses only, so balances can be checked without any ability to spend from it.
- Read: Crypto Wallets Security
- Whitepaper
- A document describing a project's design and intentions. It is a statement of plans rather than evidence of them, and anybody can write one.
- Basics
- Withdrawal allowlist Also: address whitelist
- A platform setting that restricts withdrawals to addresses you approved in advance, usually with a delay before a new one becomes usable.
- Read: Is Cryptocurrency Safe? Security
- xpub Also: extended public key
- A key that can generate every receiving address a wallet will ever use, without being able to spend from any of them. It is what a watch-only wallet runs on. Sharing one hands over your entire transaction history even though it cannot move a cent, so it is safer than a private key and not harmless.
- Read: Crypto Wallets Security
- Yield
- A return paid for depositing or committing assets. A quoted yield tells you what is being offered, not whether it will be paid, and a higher offer usually means more risk sitting somewhere in the arrangement.
- Read: Should I Invest in Crypto? Readiness
- Zero-knowledge proof
- A method of proving a statement is true without revealing the information behind it. Used for privacy and for compressing what a network has to verify.
- Basics
Reading the language
Four Notes On How These Words Get Used
A definition tells you what a word means. It does not tell you how the word is being used on you, and in this field the two often differ.
Slang is not strategy
HODL, FOMO and similar terms describe moods that spread through communities. They are defined here so you recognise them, not because they are approaches worth adopting. Nothing on this site tells you to hold, sell or buy anything.
Technical words are not credentials
Fluency in this vocabulary is easy to fake and tells you nothing about whether someone is honest. Fraud is usually fluent, because the vocabulary is free and the documents are public.
Some of these words appear mainly in sales pitches
Guaranteed yield, insider allocation, risk-free arbitrage and similar constructions are not technical terms. If a word only ever reaches you from someone who wants a decision today, treat the word itself as part of the pressure.
When a definition contradicts a claim, trust the definition
Irreversible means irreversible. A transaction nobody can reverse cannot also be covered by a recovery service, and a key only you hold cannot also be restored by support. Where a pitch requires a definition on this page to be false, the pitch is what is wrong.
Where to verify this
Primary Sources
Definitions here follow the usage in federal agency guidance, which is published free and worth reading directly.
- Consumer Financial Protection Bureau Consumer-facing explanations of payments, accounts and digital assets, plus complaint data. consumerfinance.gov
- Federal Trade Commission Guidance on crypto fraud patterns and the language they use, and the place to report them. ftc.gov and reportfraud.ftc.gov
- Securities and Exchange Commission, Investor.gov Investor education on digital assets, offering fraud and the warning signs common to both. investor.gov
- FBI Internet Crime Complaint Center Reporting for crypto-enabled fraud, and annual reporting that names the tactics in current use. ic3.gov
- Internal Revenue Service Official terminology and guidance on digital asset reporting obligations. irs.gov
A note on dates
Vocabulary in this field changes faster than the underlying mechanics. New names appear for old tactics, so this page carries a last-reviewed date and gains terms as they come into common use. If something is missing, the contact page is the place to say so.
Common questions
Questions About The Terminology
I know none of this. Where should I start?
Four terms carry most of the weight: cryptocurrency, blockchain, wallet and custody. Once those are clear, most of the rest of this page is detail rather than new ideas.
Start Here puts them in order, and What Is Cryptocurrency? takes the first one slowly.
Why are scam names defined in a glossary?
Because a reader who cannot name a tactic cannot recognise it happening. Pig butchering, rug pull and giveaway scam are the working names for specific, repeatable methods, and knowing the shape of each is most of the defence.
Each of those entries is written so the definition itself is the warning, rather than being a neutral description with a caution bolted on afterwards.
Is a coin the same thing as a token?
Not quite, and the distinction is useful. A coin usually has its own network; a token is issued on somebody else's network.
The practical point is that issuing a token takes very little effort, so the existence of one tells you nothing about whether anything stands behind it.
What is the real difference between a wallet and an exchange?
Who holds the keys. An exchange account is a balance with a company; a self-custody wallet is direct control with no password reset and nobody to appeal to.
Both arrangements are normal and both have failure modes. Exchanges vs Wallets compares them properly.
Why does this glossary never say which assets are worth owning?
Because that would be individual investment advice, which this site does not provide and is not licensed to provide. Ninja Credit Consultants LLC is an educational company, not an investment adviser or broker.
A definition is the same for everyone. A recommendation would depend on circumstances this page cannot see.
How often is this page updated?
It is reviewed on the date shown near the title and gains terms as new vocabulary comes into common use, which in this field happens regularly.
Fraud names in particular change while the underlying method stays the same, so new entries are often new labels for tactics already described here.
Keep going
Where These Terms Come From
Pillar 2
Crypto Security
The tactics behind the scam terms above, and how to protect keys and accounts.
Pillar 3
Financial Readiness
Volatility, yield and liquidation in the context of money you already have committed.
Pillar 4
Business & Payments
Settlement, chargebacks and quote windows from the side of a business getting paid.
Free educational worksheet
Vocabulary Is The Easy Part
Knowing the words does not answer the question underneath them, which is whether your own position can absorb a loss. The Financial Readiness Checklist walks through that in plain language. It is not a score, not a plan and not a credit check, and it asks for nothing sensitive.
Important Disclaimer
What Is Crypto Currency? is an educational resource operated by Ninja Credit Consultants LLC. Everything published here is general education only. It is not investment advice, financial advice, tax advice, legal advice, accounting advice, credit repair advice, or a recommendation to buy, sell or hold any asset or to use any particular platform or service. A definition of a term is not an endorsement of the thing defined.
Ninja Credit Consultants LLC is not a lender, broker, investment adviser, broker-dealer, law firm, accounting firm or tax adviser. Entries mentioning Bitcoin, Ethereum, ether, stablecoins or tokens appear because a glossary has to define the words in use, not as recommendations. No price, return, yield or future outcome is predicted or promised anywhere on this site.
Entries describing fraud are included so that readers can recognise these tactics, and nothing here should be read as instructions for carrying any of them out. We will never ask for your seed phrase, private keys, passwords, account credentials, or Social Security number. Read our full disclosures.