Crypto Glossary

Account abstraction makes crypto wallets work more like regular accounts — gas-free transactions, social recovery, and no seed phrases. It's the future of wallet UX.

A crypto airdrop is a free distribution of tokens to wallet addresses, usually as a marketing strategy or reward for early users of a protocol.

Airdrop farming means using crypto protocols early and actively to qualify for future token airdrops. It's speculative — there's no guarantee of a payout.

An altcoin is any cryptocurrency other than Bitcoin. The term covers thousands of coins including Ethereum, Solana, Cardano, and meme coins like Dogecoin.

APY is the real rate of return on an investment over one year, accounting for compound interest. In DeFi, APY includes token rewards and can range from 3% to 100%+.

ATH is the highest price a cryptocurrency has ever reached in its entire history. Bitcoin's ATH changes with each bull cycle.

An AMM is a DEX mechanism that uses liquidity pools and math formulas instead of order books to set prices. Uniswap pioneered this model.

A bear market is a prolonged period of falling prices, typically defined as a 20%+ decline from recent highs. In crypto, bear markets (or "crypto winter") can last 1-2 years.

Bitcoin is the first and largest cryptocurrency, created in 2009 by Satoshi Nakamoto. It operates on a decentralized peer-to-peer network with a fixed supply of 21 million coins.

A Bitcoin halving cuts the mining reward in half every 210,000 blocks (~4 years). It reduces new BTC supply, historically triggering bull runs within 6-18 months.

A blockchain is a distributed, immutable digital ledger that records transactions across a network of computers. Each block contains a batch of transactions linked to the previous block via cryptographic hashes.

An oracle feeds real-world data (prices, weather, sports scores) to smart contracts on the blockchain. Chainlink is the largest oracle network.

A breakout occurs when a cryptocurrency's price moves decisively above a resistance level or below a support level, often accompanied by high volume, signaling a new trend.

A bull market is a sustained period of rising prices and positive investor sentiment. In crypto, bull runs can see 5-10x gains across major coins within months.

A candlestick chart displays price movements using colored "candles" showing open, high, low, and close (OHLC) prices for each time period. Green = price went up, Red = price went down.

A CBDC is a digital currency issued by a central bank. India's Digital Rupee (e₹), launched as a pilot in 2022 by RBI, is India's CBDC.

A CEX is a crypto exchange operated by a company that holds user funds and processes trades. CoinDCX, Binance, and Coinbase are centralized exchanges.

Circulating supply is the number of coins currently in public circulation and available for trading. It's used with price to calculate market cap.

A cold wallet is a crypto storage device that keeps your private keys offline, making it immune to online hacking. Ledger and Trezor are the most popular hardware wallets.

A consensus mechanism is the method a blockchain uses to agree on the state of the ledger. The two main types are Proof of Work (used by Bitcoin) and Proof of Stake (used by Ethereum).

A bridge lets you move crypto from one blockchain to another — like transferring ETH from Ethereum to Polygon. Bridges carry significant security risk.

A crypto exchange is a platform where you can buy, sell, and trade cryptocurrencies. In India, CoinDCX is a leading FIU-registered exchange that supports UPI deposits and INR trading.

Mining is the process of using computational power to validate transactions and add new blocks to a proof-of-work blockchain like Bitcoin. Miners are rewarded with newly minted coins.

Crypto phishing tricks you into revealing your seed phrase, private key, or signing a malicious transaction. Never share your seed phrase with anyone, ever.

A crypto portfolio is your collection of cryptocurrency holdings. Diversification across different coins and sectors reduces risk — don't put all your money in one coin.

India taxes cryptocurrency profits at 30% flat rate under Section 115BBH, with an additional 1% TDS on transactions above ₹10,000. Losses cannot be set off against any other income.

A crypto wallet is software or hardware that stores your private keys and lets you send, receive, and manage cryptocurrencies. It does not actually store coins — those exist on the blockchain.

Cryptocurrency is a digital or virtual currency secured by cryptography that operates on decentralized blockchain networks, independent of central banks.

A DAO is an organization governed by smart contracts and token holder votes instead of a CEO or board. Members vote on proposals proportional to their token holdings.

A dApp is an application that runs on a blockchain instead of a centralized server. Uniswap, Aave, and OpenSea are all dApps — no company can shut them down.

Decentralization means distributing control across many participants rather than a single authority. In crypto, it means no government, bank, or company can control or censor the network.

DeFi is a financial system built on blockchain that replaces banks and brokers with smart contracts. It enables lending, borrowing, trading, and earning interest without intermediaries.

DePIN uses blockchain to coordinate real-world physical infrastructure — like decentralized wireless networks, storage, and compute. Examples: Helium (wireless), Filecoin (storage), Render (GPU compute).

A DEX is a crypto exchange that operates without a central authority, using smart contracts for peer-to-peer trading. Uniswap, PancakeSwap, and Jupiter are popular DEXs.

Diamond hands means holding your crypto through extreme volatility without panic-selling. The opposite — selling during dips — is called "paper hands."

DCA is an investment strategy where you invest a fixed amount at regular intervals regardless of price. It reduces the impact of volatility and removes the need to time the market.

DCA means investing a fixed amount at regular intervals regardless of price. It removes emotion from investing and smooths out volatility over time.

DYOR means investigating a crypto project yourself before investing — reading the whitepaper, checking the team, tokenomics, and community — rather than blindly following tips.

An EMA is a type of moving average that gives more weight to recent prices, making it more responsive to new information than a Simple Moving Average (SMA).

Ethereum is the second-largest cryptocurrency and the leading smart contract platform. Created by Vitalik Buterin in 2015, it powers DeFi, NFTs, and thousands of decentralized applications.

Fiat currency is government-issued money not backed by a physical commodity. The Indian Rupee (INR), US Dollar (USD), and Euro (EUR) are all fiat currencies.

A flash loan lets you borrow millions in crypto with zero collateral — but you must repay it in the same transaction block. Used for arbitrage and exploits.

FOMO is the anxiety of missing a profitable opportunity, causing impulsive buying during price rallies. It's one of the biggest psychological traps in crypto investing.

FUD refers to negative information (real or fabricated) spread to cause fear and drive prices down. "Don't fall for FUD" is common crypto advice during market panics.

The funding rate is a periodic payment between long and short traders in perpetual swaps. It keeps the perpetual price aligned with the spot price.

Crypto futures are contracts to buy or sell a cryptocurrency at a predetermined price on a future date. They enable leveraged trading and betting on both rising (long) and falling (short) prices.

Gas fees are transaction costs on blockchain networks (especially Ethereum) paid to validators for processing your transaction. Higher network congestion = higher gas fees.

Gas optimization means reducing the transaction fees you pay on blockchains like Ethereum. Strategies include timing transactions, using Layer 2s, and batching.

A gas war occurs when many users compete to have their transactions processed first, bidding up gas fees dramatically. Common during popular NFT mints or token launches.

HODL means "Hold On for Dear Life" — a crypto strategy of buying and holding long-term regardless of short-term price drops. It originated from a misspelled Bitcoin forum post in 2013.

A hot wallet is a crypto wallet connected to the internet — convenient for daily use but more vulnerable to hacking than cold wallets. MetaMask and Trust Wallet are popular hot wallets.

An ICO is a crypto fundraising method where a project sells tokens to early investors before launch. Most ICOs in 2017-18 were scams — be extremely careful.

Impermanent loss occurs when the price ratio of tokens in a liquidity pool changes after you deposit. The bigger the price change, the more value you lose compared to simply holding.

Inscriptions embed data (images, text, code) directly into Bitcoin transactions. Bitcoin Ordinals brought NFTs to Bitcoin, creating BRC-20 tokens and a new ecosystem.

KYC is the identity verification process required by crypto exchanges to comply with anti-money laundering laws. In India, KYC requires PAN, Aadhaar, and a selfie.

A Layer 1 is the base blockchain — like Ethereum, Bitcoin, Solana, or Avalanche. It handles consensus, security, and final settlement of transactions.

Layer 2 solutions are built on top of existing blockchains (like Ethereum) to process transactions faster and cheaper while inheriting the base layer's security. Examples: Polygon, Arbitrum, Base.

Leverage lets you trade with borrowed funds, amplifying both gains and losses. 10x leverage means a 10% move doubles your money — or liquidates you.

A limit order lets you set the exact price at which you want to buy or sell crypto. It only executes when the market reaches your specified price.

Liquid staking lets you stake crypto and receive a tradeable token (like stETH) in return. You earn staking rewards while keeping your capital usable in DeFi.

Liquidation occurs when a leveraged position is forcibly closed because losses have consumed your margin (collateral). It means you lose your entire invested amount on that trade.

A liquidity pool is a collection of crypto funds locked in a smart contract that enables decentralized trading on DEXs. Liquidity providers earn fees from every trade.

MACD is a trend-following momentum indicator that shows the relationship between two moving averages. A bullish signal occurs when the MACD line crosses above the signal line.

Market cap is the total value of a cryptocurrency, calculated as current price × circulating supply. Bitcoin has the highest market cap, followed by Ethereum.

A market order buys or sells crypto immediately at the best available price. Fast execution, but you don't control the exact price you get.

Meme coins are cryptocurrencies created around internet jokes or cultural memes, with value driven by community hype rather than fundamental utility. Dogecoin and Shiba Inu are the most famous.

MEV is profit that block producers can extract by reordering, inserting, or censoring transactions. It's why your DEX swap sometimes gets a worse price than expected.

A multisig wallet requires multiple private keys to authorize a transaction — like a bank safe that needs 2 out of 3 keys to open. Much safer than single-key wallets.

An NFT is a unique digital asset on a blockchain that represents ownership of a specific item — art, music, collectibles, or in-game items. Unlike crypto coins, each NFT is one-of-a-kind.

In crypto, a nonce is a number used once — either to sequence your transactions on Ethereum or as part of the mining puzzle in Proof of Work blockchains.

On-chain analysis studies blockchain data (wallet activity, exchange flows, whale movements) to predict market trends. It's like reading the blockchain's body language.

An order book is a real-time list of buy and sell orders on an exchange, organized by price. It shows market depth — how much buying/selling pressure exists at each price level.

P2P trading lets you buy/sell crypto directly with another person using local payment methods like UPI or bank transfer, with the platform acting as escrow.

Paper trading means practicing trading with virtual money. No real funds at risk. Fedha Academy offers a free paper trading simulator with live market data.

A perpetual swap is a crypto futures contract with no expiration date. You can hold it indefinitely, but pay or receive a funding rate every 8 hours.

A private key is a secret cryptographic code that proves ownership of cryptocurrency and authorizes transactions. Whoever controls the private key controls the funds — never share it.

Proof of Stake is a consensus mechanism where validators stake (lock up) their coins as collateral to validate transactions. It uses 99.95% less energy than Proof of Work.

Proof of Work is a consensus mechanism where miners compete to solve cryptographic puzzles to validate transactions. Bitcoin uses PoW. It's secure but energy-intensive.

A public key (or wallet address) is your crypto "account number" — share it to receive funds. Unlike a private key, it's safe to share publicly.

RWA tokenization puts real-world assets like government bonds, real estate, and commodities on the blockchain, making them tradeable 24/7 with fractional ownership.

Restaking lets you use already-staked crypto (like staked ETH) to secure additional protocols, earning extra yield. EigenLayer pioneered this concept.

Risk management in crypto trading means controlling potential losses through position sizing, stop-losses, diversification, and never investing more than you can afford to lose.

RSI is a momentum indicator measuring speed and magnitude of price changes on a scale of 0-100. Above 70 = overbought (potential sell signal), below 30 = oversold (potential buy signal).

A rug pull is a crypto scam where developers abandon a project and steal investor funds. Common with new, unaudited tokens — always do your own research (DYOR).

A satoshi (sat) is the smallest unit of Bitcoin — 0.00000001 BTC (one hundred millionth). Named after Bitcoin's creator Satoshi Nakamoto.

A seed phrase is a 12 or 24-word backup that can restore your entire crypto wallet. It generates all your private keys. Store it offline and never share it with anyone.

Self-custody means holding your own private keys instead of trusting an exchange. "Not your keys, not your crypto" is the golden rule — self-custody gives you full control.

A crypto SIP means investing a fixed rupee amount into cryptocurrency at regular intervals — similar to mutual fund SIPs popular in India. It applies the DCA strategy to crypto.

Slippage is the difference between the price you expected and the price your trade actually executes at. It happens in fast-moving or illiquid markets.

A smart contract is self-executing code stored on a blockchain that automatically enforces the terms of an agreement when conditions are met — no intermediary needed.

A social recovery wallet lets trusted contacts (guardians) help you recover your wallet if you lose access — no seed phrase needed. Vitalik Buterin advocates for this approach.

Solana is a high-performance Layer 1 blockchain known for fast transactions (~400ms) and very low fees (<$0.01). It competes with Ethereum as a platform for DeFi and NFTs.

Spot trading means buying or selling crypto at the current market price for immediate settlement. You own the actual asset, unlike futures where you trade contracts.

A stablecoin is a cryptocurrency pegged to a stable asset (usually the US Dollar). USDT, USDC, and DAI maintain a ~$1 value, providing stability in the volatile crypto market.

Staking means locking up your cryptocurrency to help validate blockchain transactions. In return, you earn staking rewards — similar to earning interest.

A stop-loss is an automatic sell order triggered when an asset drops to a specified price, limiting potential losses on a trade.

Support is a price level where buying pressure tends to prevent further decline. Resistance is a level where selling pressure tends to cap rises. They are key levels for placing trades.

A take-profit order automatically sells your asset when it reaches a target price above your entry, locking in gains.

1% TDS is deducted at source on all crypto transactions above ₹10,000 in India. It's not an additional tax — it's an advance tax deducted by the exchange that can be claimed while filing ITR.

Technical analysis studies price charts, patterns, and indicators to predict future price movements. It assumes all information is already reflected in the price.

A token is a digital asset created on an existing blockchain (like Ethereum) rather than its own. Tokens can represent utility, governance rights, assets, or even memes.

Tokenomics is the economic model of a cryptocurrency — its supply, distribution, utility, and incentive structure. Good tokenomics are essential for a token's long-term value.

TVL is the total amount of crypto deposited in a DeFi protocol. Higher TVL generally means more trust and liquidity, but it's not a guarantee of safety.

A trading pair shows which two assets can be exchanged against each other — e.g., BTC/INR means you can trade Bitcoin for Indian Rupees.

Volume is the total amount of an asset traded in a given period. High volume confirms price moves; low volume suggests weak momentum.

VDA is the legal term for cryptocurrency in Indian tax law. Any crypto, NFT, or token you hold is classified as a Virtual Digital Asset under Section 2(47A) of the IT Act.

Volatility measures how much and how quickly an asset's price changes. Crypto is highly volatile — Bitcoin can move 5-10% in a single day, and altcoins even more.

Web3 is the vision of a decentralized internet where users own their data, identity, and digital assets through blockchain. It contrasts with Web2 (centralized platforms like Google, Meta).

A crypto whale is an individual or entity holding a very large amount of cryptocurrency — enough to influence market prices when they buy or sell.

A whitepaper is a detailed document explaining a crypto project's technology, use case, tokenomics, and roadmap. Bitcoin's 2008 whitepaper by Satoshi Nakamoto started it all.

A wrapped token represents a cryptocurrency from one blockchain on another. WBTC (Wrapped Bitcoin) lets you use Bitcoin on Ethereum for DeFi.

Yield farming is earning rewards by providing your crypto to DeFi protocols — through lending, liquidity provision, or staking. APYs can range from 5% to 100%+ but carry significant risk.

A zero-knowledge proof lets you prove something is true without revealing the underlying data. It's used for privacy and scaling (zk-rollups like zkSync and Scroll).