Crypto Glossary

A 51% attack is when a single party controls more than half of a proof-of-work blockchain's mining power, or a large enough share of stake on a proof-of-stake chain, and uses it to rewrite recent history.

Address poisoning is a scam in which an attacker sends a tiny or zero-value transaction to your wallet from an address that looks almost identical to one you have recently used, matching its first and last few characters.

An airdrop is a distribution of free tokens to wallet addresses, typically to reward early users of a protocol, to decentralise token ownership or to promote a new project.

An algorithmic stablecoin tries to hold its peg, usually to the US dollar, through code and market incentives rather than by holding a full reserve of cash or other assets.

An all-time high is the highest price an asset has ever traded at.

"Altcoin" means any cryptocurrency other than Bitcoin.

Altcoin season, or "altseason", is a period when many altcoins (cryptocurrencies other than bitcoin) rise much faster than bitcoin.

Anti-money laundering (AML) refers to the laws, rules and procedures that aim to stop criminals from disguising the origin of illegal money.

APR (annual percentage rate) and APY (annual percentage yield) both describe a yearly return, but APY includes the effect of compounding and APR does not.

An ASIC (application-specific integrated circuit) miner is a computer built to do one thing: compute a particular hash algorithm as fast and efficiently as possible.

An automated market maker is a type of decentralised exchange that prices trades using a mathematical formula and a pool of tokens, instead of matching buyers and sellers.

A bear market is a prolonged period of falling prices and pessimism.

The bid-ask spread is the gap between the highest price a buyer is currently willing to pay (the bid) and the lowest price a seller is willing to accept (the ask).

Bitcoin is a decentralised digital currency and the network that runs it.

Bitcoin has several address formats, and the first characters tell you which one you are looking at.

Bitcoin dominance is bitcoin's share of the total market capitalisation of all cryptocurrencies, expressed as a percentage.

A bitcoin exchange-traded fund is a fund listed on a stock exchange that gives investors exposure to bitcoin's price through ordinary brokerage accounts.

The halving is a built-in rule that cuts the number of new bitcoins paid to miners per block by 50% every 210,000 blocks, which works out to roughly every four years.

Bitcoin Pizza Day, celebrated on 22 May each year, marks the first well-known purchase of physical goods with bitcoin.

A block is a batch of transactions that is added to a blockchain in one go.

A block explorer is a website that lets you search and read a blockchain in a human-friendly way.

The block reward is what a miner or validator earns for producing a new block.

Block time is the average interval between new blocks on a blockchain.

A blockchain is a record of transactions grouped into blocks, where each block contains a cryptographic hash (a kind of fingerprint) of the block before it.

An oracle is a service that brings outside information, such as asset prices, interest rates, sports results or weather data, onto a blockchain so that smart contracts can use it.

The blockchain trilemma, a phrase popularised by Ethereum co-founder Vitalik Buterin, is the idea that a blockchain struggles to achieve three goals at once: decentralisation, security and scalability.

BRC-20 is an experimental token standard that creates fungible tokens on Bitcoin using Ordinals inscriptions.

A bull market is a sustained period of rising prices and optimism.

A candlestick chart is the most common way of displaying price movements on crypto exchanges.

A central bank digital currency is a digital form of a country's official currency, issued and backed by its central bank.

Many tokens exist on several blockchains at once.

Circulating supply is the number of coins or tokens that are publicly available and moving in the market.

In crypto, a "coin" is usually the native asset of its own blockchain, such as BTC on Bitcoin, ETH on Ethereum or SOL on Solana, and is used to pay transaction fees and secure the network.

A cold wallet keeps private keys on a device that never exposes them to the internet.

Collateral is an asset pledged to secure a loan or a leveraged position.

A confirmation means a transaction has been included in a block.

A consensus mechanism is the set of rules a blockchain uses so that thousands of independent computers agree on a single version of the ledger, even if some participants are faulty or dishonest.

A cross-chain bridge lets you move tokens or data from one blockchain to another, for example from Ethereum to Arbitrum, or from Ethereum to Solana.

Arbitrage is buying an asset in one market and simultaneously selling it in another where the price is higher, to profit from the difference.

A crypto exchange is a platform where you can buy, sell and trade cryptocurrencies.

The Crypto Fear & Greed Index, published daily by Alternative.me, condenses market sentiment into a number from 0 to 100.

A futures contract is an agreement to buy or sell an asset at a set price on a future date.

Crypto inheritance is planning how your family will access your crypto if you die or become incapacitated.

Crypto lending lets you earn interest by lending your coins, and borrowing lets you take a loan using crypto as collateral.

Under India's VDA tax rules, losses from crypto cannot reduce your tax bill in the way stock market losses can.

Mining is the process by which proof-of-work blockchains such as Bitcoin add new blocks.

An option is a contract that gives the buyer the right, but not the obligation, to buy (a call option) or sell (a put option) an asset at a set price, called the strike price, on or before a set expiry date.

The Crypto-Asset Reporting Framework (CARF) is a global standard approved by the OECD in 2022 for the automatic exchange of tax information about crypto transactions between countries.

A crypto SIP (systematic investment plan) is a feature offered by many exchanges and apps that automatically buys a fixed amount of cryptocurrency at regular intervals, such as ₹500 every week or ₹5,000 every month.

A crypto wallet is software or hardware that stores the keys controlling your coins and lets you send and receive them.

A cryptocurrency is a digital asset that uses cryptography and a shared ledger, usually a blockchain, to record who owns what and to let people transfer value without relying on a bank or payment company to approve each payment.

In a custodial wallet, a third party such as an exchange or payment app holds the private keys and you hold an account with them.

A DAO is an organisation whose rules and treasury are managed by smart contracts and whose decisions are made by votes of token holders.

A dApp, or decentralised application, is an app whose core logic runs on smart contracts on a blockchain rather than on a company's private servers.

Decentralisation describes how widely control over a network is spread.

DeFi is the umbrella term for financial services built from smart contracts on public blockchains rather than run by banks or brokers.

Delegated proof of stake (DPoS) is a variant of proof of stake in which token holders vote for a limited number of delegates, also called block producers or witnesses, who validate transactions and produce blocks on their behalf.

A depeg is when an asset that is meant to track another, such as a stablecoin pegged to the US dollar or a liquid staking token pegged to ETH, trades significantly away from its target value.

A decentralised exchange is a smart-contract protocol that lets you swap tokens directly from your own wallet, without depositing funds with a company.

A DEX aggregator is a service that searches many decentralised exchanges and liquidity pools to find you the best price for a token swap.

The difficulty adjustment is the automatic mechanism that keeps Bitcoin's blocks arriving about every 10 minutes regardless of how much mining power is on the network.

"Digital gold" is the idea that bitcoin can work as a store of value much like gold: a scarce asset that people hold to preserve wealth over long periods, rather than mainly to spend.

A distributed ledger is a database that is copied and kept in sync across many computers, rather than held by one central authority.

Dollar-cost averaging, often called rupee-cost averaging or SIP-style investing in India, means investing a fixed amount at regular intervals, for example ₹2,000 every week, regardless of the price.

Double spending is the risk that the same digital money is spent twice.

"Dust" is an amount of crypto so small that it is worth less than the fee needed to spend it.

DYOR stands for "do your own research".

The e-rupee (e₹) is India's central bank digital currency (CBDC), a digital form of the rupee issued by the Reserve Bank of India.

EIP-1559 is an Ethereum Improvement Proposal that changed how transaction fees work.

ERC-20 is the technical standard for fungible tokens on Ethereum.

Ethereum is a programmable blockchain proposed by Vitalik Buterin in a white paper published in late 2013 and launched on 30 July 2015.

An Ethereum ETF is an exchange-traded fund that tracks the price of ether (ETH) and trades on a stock exchange, letting investors gain exposure through an ordinary brokerage account without buying or storing ETH themselves.

The Ethereum Virtual Machine (EVM) is the software environment that runs smart contracts on Ethereum.

Fiat currency is government-issued money, such as the Indian rupee, US dollar or euro, whose value comes from law and public trust rather than from being convertible into gold or another commodity.

Finality is the point at which a blockchain transaction can no longer be reversed or changed.

The Financial Intelligence Unit – India (FIU-IND), under the Ministry of Finance, is the national agency that receives and analyses reports of suspicious and large financial transactions under the Prevention of Money Laundering Act, 2002 (PMLA).

A flash loan is an uncollateralised loan in DeFi that must be borrowed and repaid within the same blockchain transaction.

FOMO, or fear of missing out, is the anxious urge to buy because prices are rising fast and everyone else seems to be making money.

A fork is a change to a blockchain's rules.

Fully diluted valuation (FDV) is what a cryptocurrency's market capitalisation would be if every token that will ever exist were already in circulation.

The funding rate is a periodic payment between traders holding long and short positions in perpetual futures.

Gas is the fee you pay to have a transaction processed on a blockchain.

The genesis block is the first block of a blockchain, the one from which every later block descends.

The GENIUS Act (Guiding and Establishing National Innovation for U.S.

Since 1 April 2022, virtual digital assets are covered by India's gift tax rules under section 56(2)(x) of the Income-tax Act, 1961.

A governance token gives its holders the right to vote on decisions about a crypto protocol, such as fee levels, which assets to support, upgrades to smart contracts and how a treasury is spent.

Goods and Services Tax (GST) in India applies to the services crypto platforms provide, not to the value of the crypto you buy or sell.

Gwei is a small denomination of ether (ETH) used mainly to quote gas prices on Ethereum.

A hardware wallet is a small physical device that stores the private keys for your crypto offline and signs transactions inside the device, so your keys never touch an internet-connected computer or phone.

A cryptographic hash function takes any input, from a single word to a large file, and produces a fixed-length output called a hash or digest.

Hash rate is the total computing power being used to mine a proof-of-work blockchain, measured in hashes per second.

HODL is crypto slang for holding an asset for the long term instead of trading it, especially through price crashes.

A honeypot token is a scam token whose smart contract lets people buy but blocks them from selling, or charges a sell tax close to 100%.

A hot wallet is any wallet whose private keys are stored on a device connected to the internet, such as a mobile app, desktop program or browser extension.

The Howey test is the legal standard used in the United States to decide whether an arrangement is an "investment contract", and therefore a security subject to securities laws.

An ICO, or initial coin offering, is a way for a crypto project to raise money by selling newly created tokens directly to the public, usually in exchange for bitcoin or ether.

Impermanent loss is the reduction in value a liquidity provider can suffer, compared with simply holding the tokens, when the prices of the tokens in an automated market maker pool move apart.

KYC is the identity verification that regulated financial firms, including crypto exchanges, must carry out before letting you use their services.

A layer 1 is a base blockchain that processes and finalises transactions on its own network using its own consensus mechanism and native coin.

A layer 2 is a network built on top of a base blockchain (layer 1) that processes transactions more cheaply and quickly while relying on the base chain for security or final settlement.

Leverage means trading with borrowed money to control a bigger position than your own capital would allow.

The Lightning Network is a layer-2 payment network for Bitcoin.

Liquid staking lets you stake proof-of-stake coins and receive a tradable token in return that represents your staked position and its rewards.

Liquidation is the forced closing of a leveraged position when your collateral no longer covers potential losses.

Liquidity describes how easily you can buy or sell an asset quickly without moving its price much.

A liquidity pool is a smart contract holding two or more tokens that traders swap against on a decentralised exchange.

Going long means buying an asset because you expect its price to rise.

MACD, which stands for moving average convergence divergence, is a trend and momentum indicator created by Gerald Appel in the late 1970s.

Most exchanges charge different fees depending on whether your order adds liquidity to the order book or removes it.

Margin trading is trading with funds borrowed from an exchange or other traders, using your own assets as collateral, called margin.

Market capitalisation is the current price of a coin multiplied by its circulating supply.

A market maker is a trader or firm that continuously offers to both buy and sell an asset, posting bids and asks on an order book.

A market order buys or sells immediately at the best price currently available.

Max supply is the largest number of coins that will ever exist under a cryptocurrency's rules.

A memecoin is a cryptocurrency inspired by an internet joke, meme, animal or celebrity, whose value comes almost entirely from community attention and speculation rather than any underlying use.

Some blockchains and exchanges require a memo, tag or destination tag in addition to the address when you send crypto.

The mempool (memory pool) is the waiting area for transactions that have been broadcast but not yet included in a block.

The metaverse is a loosely defined idea of persistent, shared virtual worlds where people interact through avatars, often with virtual reality or augmented reality.

MEV, or maximal extractable value, is the profit that block producers and specialised traders can make by choosing which transactions to include in a block and in what order.

MiCA, the Markets in Crypto-Assets Regulation, is the European Union's comprehensive law for crypto assets.

A mining pool is a group of miners who combine their hash power and share the rewards.

A moving average smooths out price data by calculating the average closing price over a set number of periods, updating with each new candle.

A multisig wallet requires signatures from several keys to approve a transaction, described as "m-of-n".

An NFT is a token that is unique and not interchangeable with others, unlike one bitcoin or one rupee, which are each identical to the next.

A node is a computer running a blockchain's software that keeps a copy of the ledger, checks new transactions and blocks against the rules, and relays them to other nodes.

A nonce ("number used once") is a value that can be used only one time for a particular purpose.

On-chain analysis is the study of public blockchain data to understand how coins are being used and held.

Open interest is the total value or number of derivative contracts, such as futures, perpetuals or options, that are currently open and have not been closed or settled.

An order book is the live list of buy orders (bids) and sell orders (asks) waiting on an exchange for a trading pair, such as BTC/INR, organised by price.

Ordinals is a protocol, launched by developer Casey Rodarmor in January 2023, that assigns a serial number to each individual satoshi based on the order in which it was mined.

Peer-to-peer (P2P) trading means buying or selling crypto directly with another person, usually through a platform that matches buyers and sellers and holds the crypto in escrow while the buyer pays the seller by bank transfer or UPI.

A passphrase, often called the "25th word" or "13th word", is an optional extra word or phrase you can add to a seed phrase under the BIP39 standard.

A peer-to-peer network is one in which computers connect directly to each other as equals, sharing data without a central server in the middle.

Perpetual futures, often called "perps", are futures contracts with no expiry date.

Phishing tricks you into giving away credentials or approving malicious actions by pretending to be a trusted service.

A pig butchering scam is a long-con investment fraud in which scammers build a relationship with a victim over weeks or months, then persuade them to invest in crypto through a fake platform.

Play-to-earn (P2E) games let players earn crypto tokens or NFTs by playing, which they can sell for money.

The Prevention of Money Laundering Act, 2002 (PMLA) is India's main anti-money-laundering law.

A Ponzi scheme pays existing investors with money from new investors rather than from real profits.

A privacy coin is a cryptocurrency designed to hide transaction details, such as sender, recipient and amount, that are publicly visible on blockchains like Bitcoin and Ethereum.

A private key is a secret number that gives control over coins at a blockchain address.

Proof of reserves (PoR) is a way for a crypto exchange or custodian to show that it actually holds the customer assets it claims.

Proof of stake is a consensus mechanism in which validators lock up ("stake") the network's own coins for the right to propose and confirm blocks.

Proof of work is a consensus mechanism in which participants (miners) compete to solve a computational puzzle to earn the right to add the next block.

A public key is derived mathematically from a private key and can be shared safely.

A pump and dump is a form of market manipulation in which organisers buy a low-priced, thinly traded token, hype it to attract buyers ("the pump"), and then sell their holdings at the inflated price ("the dump").

On 6 April 2018, the Reserve Bank of India issued a circular prohibiting banks and other regulated entities from dealing in virtual currencies or providing services to people and businesses dealing in them.

Real-world assets (RWAs) in crypto are traditional financial or physical assets, such as government bonds, money-market funds, private credit, real estate or gold, that are represented by tokens on a blockchain.

Replace-by-fee (RBF) is a Bitcoin feature that lets you replace an unconfirmed transaction with a new version that pays a higher fee.

Restaking means reusing staked assets, usually staked ETH or liquid staking tokens, to secure additional networks or services beyond the base blockchain in exchange for extra rewards.

A rollup is a type of layer 2 network that executes transactions outside a base blockchain, bundles ("rolls up") many of them together and posts the compressed data and results back to the base chain, usually Ethereum.

The relative strength index (RSI) is a momentum indicator developed by technical analyst J.

A rug pull is a scam in which the creators of a crypto project abandon it and take investors' money, metaphorically pulling the rug out from under them.

A satoshi, often shortened to "sat", is the smallest unit of bitcoin recorded on the blockchain.

Satoshi Nakamoto is the name used by the person or group who created Bitcoin.

Schedule VDA is the section of the Indian income tax return where you report income from transferring virtual digital assets such as crypto and NFTs.

Section 115BBH of India's Income-tax Act, 1961 set the special tax regime for income from the transfer of virtual digital assets (VDAs), including cryptocurrencies and NFTs.

Section 194S of India's Income-tax Act, 1961 requires anyone paying for the transfer of a virtual digital asset to a resident to deduct tax at source (TDS) at 1% of the consideration.

A seed phrase is a list of usually 12 or 24 ordinary words, generated by your wallet, that encodes the master secret from which all your wallet's private keys are derived.

SegWit, short for Segregated Witness, is a Bitcoin upgrade that activated on 24 August 2017 as a soft fork.

SHA-256 (Secure Hash Algorithm 256-bit) is a cryptographic hash function designed by the US National Security Agency and published by the US National Institute of Standards and Technology (NIST) in 2001 as part of the SHA-2 family.

A short squeeze happens when the price of an asset rises sharply and forces traders who bet on a fall (shorts) to buy back in order to limit their losses.

A SIM swap attack happens when a criminal convinces or bribes your mobile operator to transfer your phone number to a SIM card they control.

Slashing is a penalty in proof-of-stake blockchains in which part of a validator's staked coins is destroyed and the validator is removed from the network for provably malicious behaviour.

Slippage is the difference between the price you expect when you place a trade and the price you actually get.

A smart contract is a program stored on a blockchain that runs exactly as written when someone sends it a transaction.

A smart contract audit is a security review of a blockchain program's code, carried out by specialists who look for bugs, vulnerabilities and design flaws before or after it goes live.

Spot trading means buying or selling a cryptocurrency for immediate delivery at the current market price, the "spot" price.

A stablecoin is a token designed to hold a steady value, usually one US dollar.

Staking means locking up coins on a proof-of-stake network to help secure it, in exchange for rewards paid in that coin.

Stock-to-flow is a ratio that compares the existing supply of an asset (the stock) with new supply produced each year (the flow).

A stop-loss is an order that automatically sells (or, for a short position, buys back) when the price reaches a level you choose, called the stop or trigger price.

Support and resistance are price levels where an asset has repeatedly paused or reversed.

A take-profit order automatically closes a position once the price reaches a target level, locking in a gain.

Taproot is a Bitcoin upgrade that activated on 14 November 2021 at block 709,632, as a soft fork.

TDS, or tax deducted at source, on crypto is India's rule that the buyer of a virtual digital asset, or the exchange in practice, must deduct 1% of the sale consideration and pay it to the government on the seller's behalf.

Technical analysis (TA) tries to forecast price moves by studying past prices, trading volume and chart patterns.

A mainnet is a blockchain's live production network, where transactions are real and coins have value.

Tether (USDT) is the largest stablecoin by market capitalisation, designed to keep a value of one US dollar.

The Merge was the upgrade that switched Ethereum from proof of work to proof of stake.

A token approval, or allowance, is permission you give a smart contract to move a particular token from your wallet.

A token burn permanently removes tokens from circulation, usually by sending them to an address from which they can never be spent, or by destroying them through a smart contract.

Vesting is a schedule that releases tokens gradually to team members, early investors and advisers rather than all at once.

Tokenomics, a blend of "token" and "economics", describes how a cryptocurrency's supply and incentives are designed.

Total value locked (TVL) is the combined value of all crypto deposited in a DeFi protocol or blockchain's smart contracts, including liquidity pools, lending markets and staking contracts.

A trading pair shows which two assets are being exchanged in a market and how one is priced in terms of the other.

Trading volume is the total value or quantity of an asset traded over a period, most often the past 24 hours.

A transaction fee is the amount you pay the network to process a transfer.

A transaction ID, also called a TXID or transaction hash, is a unique string of letters and numbers that identifies a single transaction on a blockchain.

The Travel Rule is a requirement from the Financial Action Task Force (FATF), the global anti-money-laundering standard setter, that financial institutions pass on information about the sender and recipient when transferring funds.

Two-factor authentication (2FA) adds a second check when you log in or withdraw, on top of your password.

USDC is a dollar-pegged stablecoin issued by Circle, a US company.

A UTXO is an unspent transaction output: a chunk of bitcoin that has been received and not yet spent.

A validator is a participant in a proof-of-stake blockchain that locks up the network's coins as collateral and runs software to propose new blocks and vote on (attest to) the validity of blocks proposed by others.

"Virtual digital asset" is the legal term Indian tax law uses for crypto assets.

Volatility measures how much and how quickly a price moves.

Wash trading means buying and selling the same asset with yourself, or with a colluding party, to create misleading activity.

Web3 is a broad label for an internet built around blockchains, where users hold their own digital assets and identities in wallets instead of relying on platforms to store them.

A whale is an individual or entity that holds a very large amount of a cryptocurrency, enough that their trades can move the market.

If you sold, swapped or spent crypto in India during the financial year, you need to file an income tax return that includes Schedule VDA.

A white paper is a document published by a crypto project to explain what it does, how its technology works, and often how its token is distributed and used.

A wrapped token is a token on one blockchain that represents an asset from another blockchain, or a different format of the same asset, backed one-to-one.

Yield farming is the practice of moving crypto between DeFi protocols to earn the highest possible returns, typically by lending tokens, supplying liquidity to trading pools or staking, and collecting interest, trading fees and reward tokens.

A zero-knowledge proof is a cryptographic method that lets one party prove a statement is true without revealing any information beyond the fact that it is true.