Crypto glossary
Short, plain definitions of the words you meet when you use a crypto wallet, send USDT or trade P2P. Each term comes with an example, common mistakes and answers to frequent questions.
Crypto basics
- BlockchainA blockchain is a shared digital ledger, copied across many independent computers, that records transactions in blocks linked by cryptographic hashes, so past entries can’t be quietly changed and no single company controls the record.
- CryptocurrencyCryptocurrency is digital money that lives on a blockchain instead of in a bank account. Ownership is proven with cryptographic keys, so whoever holds the private key can spend the coins without asking a bank or company for permission.
- Bitcoin (BTC)Bitcoin (BTC) is the first cryptocurrency: a digital currency launched in 2009 that runs on its own proof-of-work blockchain, with no central issuer and a hard limit of 21 million coins.
- Ethereum (ETH)Ethereum is a programmable blockchain, launched in 2015, that runs smart contracts: small programs that hold and move funds by fixed rules. Its native coin, ether (ETH), pays the network fees, which are called gas.
- Toncoin (TON)Toncoin (TON) is the native coin of The Open Network, a fast proof-of-stake blockchain. TON pays every network fee on the chain, including the fees for sending USDT and other jettons, and secures the network through staking.
- StablecoinA stablecoin is a cryptocurrency designed to keep a steady price, usually 1 US dollar per token, by being backed by reserves or collateral. USDT and USDC are the best-known examples.
- Tether (USDT)USDT, or Tether, is a stablecoin designed to stay at 1 US dollar per token. Its issuer says each token is backed by reserves, and USDT exists on several blockchains, including Tron (TRC20), Ethereum (ERC20), TON and BNB Smart Chain (BEP20).
- Crypto tokenA crypto token is a digital asset created by a smart contract on an existing blockchain, rather than being that blockchain’s own native coin. USDT on Tron, ERC20 tokens on Ethereum and jettons on TON are all tokens.
- Market cap (market capitalization)Market cap (market capitalization) is a crypto asset’s current price multiplied by its circulating supply. It estimates the total market value of the coins in circulation and is the usual way to compare the size of different cryptocurrencies.
- Bitcoin halvingThe Bitcoin halving is a built-in event that cuts the reward miners receive for each new block in half every 210,000 blocks, roughly every four years. It slows the creation of new bitcoin until the 21 million limit is reached.
Wallets and security
- Crypto walletA crypto wallet is an app or device that stores the private keys controlling your cryptocurrency. Your coins stay on the blockchain; the wallet proves they are yours, shows your balance and signs the transactions that move them.
- Custodial vs non-custodial walletA custodial wallet is one where a company, such as an exchange, holds the private keys and controls the funds for you. In a non-custodial wallet you hold the keys yourself, usually through a recovery phrase, and nobody else can move your crypto.
- Hot walletA hot wallet is a crypto wallet whose private keys are stored on a device connected to the internet, such as a mobile app, desktop app or browser extension. It is convenient for everyday payments but more exposed to online attacks than a cold wallet.
- Cold wallet (cold storage)A cold wallet is a crypto wallet whose private keys are created and kept on a device that never connects to the internet, such as a hardware wallet. Transactions are signed offline, so malware on your computer or phone cannot reach the keys.
- Private keyA private key is a secret number, usually 256 bits long, that proves you own a crypto address and lets you sign transactions from it. Anyone who knows the private key controls the funds, and it cannot be reset or changed.
- Seed phrase (recovery phrase)A seed phrase, also called a recovery phrase or mnemonic, is a list of 12 to 24 words that encodes the master secret of a crypto wallet. Every private key and address in the wallet is derived from it, so whoever has the words has the funds.
- Wallet addressA wallet address is a public string of letters and numbers that identifies where crypto can be sent on a specific blockchain. It is derived from your public key, so you can share it freely, but it never lets anyone spend your funds.
- Address poisoningAddress poisoning is a scam in which an attacker plants a look-alike address in your transaction history, hoping you will copy it the next time you send. The fake address matches the first and last characters of one you really use, so a quick glance misses it.
- Crypto phishingCrypto phishing is a scam that impersonates a trusted wallet, exchange, project or support agent to trick you into revealing your recovery phrase or approving a harmful transaction. Because blockchain transfers are final, one mistake can empty a wallet.
Networks and transactions
- Gas feeA gas fee is the network fee you pay to have a transaction processed on a blockchain such as Ethereum. It pays the network, not your wallet app, and it is always paid in the network’s own coin, such as ETH or BNB, even when you send a token.
- TRC20TRC20 is the technical standard for tokens on the Tron blockchain, and “USDT TRC20” means Tether on Tron. TRC20 tokens live at Tron addresses that start with T, and their network fees are paid with TRX or with Tron’s energy and bandwidth.
- BEP20BEP20 is the token standard of BNB Smart Chain, an EVM-compatible blockchain. It works like Ethereum’s ERC20, so BEP20 tokens such as USDT use the same kind of 0x address, but they live on a separate network and their fees are paid in BNB.
- ERC20ERC20 is the most widely used standard for fungible tokens on Ethereum. It defines how a token contract reports balances, transfers tokens and lets other contracts spend them, so any ERC20 token, such as USDT, works in any Ethereum wallet.
- JettonA jetton is a fungible token on the TON blockchain, defined by the TEP-74 standard; USDT on TON is a jetton. Unlike ERC20 tokens, each holder’s balance sits in a small separate contract called a jetton wallet, and every transfer is paid for in TON.
- Memo / destination tagA memo, destination tag or comment is extra information attached to a transfer that tells the receiver, usually an exchange, which account the deposit belongs to. TON calls it a comment, the XRP Ledger a destination tag and Stellar a memo.
- TXID (transaction hash)A TXID, or transaction hash, is the unique identifier of a blockchain transaction: a long string of letters and numbers calculated from the transaction’s data. With it, anyone can look up the transfer on a block explorer and see its status, amount and addresses.
- Block confirmationA block confirmation is a measure of how settled a transaction is: it gets its first confirmation when it is included in a block, and one more for every block added after that. The more confirmations, the harder the transaction is to reverse.
- Block explorerA block explorer is a website that lets anyone search a blockchain’s public records: transactions, addresses, blocks and token contracts. Paste a TXID or an address and it shows the status, amounts, fees and confirmations, without any login.
- Smart contractA smart contract is a program stored on a blockchain that runs automatically when it receives a transaction, exactly as its code says. Tokens, decentralized exchanges and on-chain escrow are all smart contracts, and they carry out their rules without a middleman.
- EVM (Ethereum Virtual Machine)The EVM, or Ethereum Virtual Machine, is the computing environment that runs smart contracts on Ethereum. Many other blockchains, such as BNB Smart Chain, Polygon, Arbitrum, Optimism, Base and Avalanche C-Chain, run the same machine and are called EVM-compatible.
- Layer 2A layer 2 is a network built on top of a main blockchain, the layer 1, that processes transactions on its own and settles them back on that chain. On Ethereum, layer 2 networks such as Arbitrum, Optimism and Base charge far lower fees while relying on Ethereum.
- Cross-chain bridgeA cross-chain bridge is a protocol that moves value from one blockchain to another, for example from Ethereum to BNB Smart Chain. Blockchains can’t read each other directly, so the bridge locks, burns or swaps tokens on one side and releases them on the other.
- Tron energy & bandwidthTron energy and bandwidth are the two resources the Tron network charges for transactions: bandwidth pays for the size of every transaction, and energy pays for smart-contract work such as sending USDT TRC20. If you don’t have enough, TRX is burned to cover it.
Trading, DeFi and gold
- P2P tradingP2P (peer-to-peer) crypto trading is buying or selling cryptocurrency directly with another person, usually for local currency by bank transfer, instead of trading through an exchange’s order book. A platform matches the two sides, and an escrow protects them.
- Crypto escrowCrypto escrow is an arrangement in which a crypto payment is locked by a neutral party, often a smart contract, until the terms of a deal are met, and then released to the seller or refunded to the buyer. It lets two strangers trade without trusting each other first.
- Centralized exchange (CEX)A centralized exchange (CEX) is a company-run platform where users deposit crypto or money, trade with each other through an order book and withdraw to their own wallets. While funds sit on the exchange, the company holds the keys, not the user.
- Decentralized exchange (DEX)A decentralized exchange (DEX) is a set of smart contracts that lets people swap tokens directly from their own wallets, without depositing funds with a company. Prices usually come from liquidity pools rather than from an order book run by an operator.
- Crypto swapA crypto swap is a direct exchange of one cryptocurrency or token for another, such as TON for USDT, in a single step, without selling to cash first or placing orders on an exchange. You get a quote, confirm it and receive the new asset in your wallet.
- SlippageSlippage is the difference between the price you expect when you submit a trade and the price at which it actually executes. In crypto swaps it comes from price moves while your transaction waits and from the effect of your own trade on the market.
- LiquidityLiquidity is how easily an asset can be bought or sold quickly without moving its price much. A liquid market has many buyers and sellers or a deep pool of funds, so trades fill near the quoted price; an illiquid one has wide spreads and sudden price jumps.
- StakingStaking is locking up the coins of a proof-of-stake blockchain, such as TON or Ethereum, to help validate transactions and secure the network, in return for rewards paid in the same coin. You can run a validator yourself or, more often, stake through a pool.
- APY (annual percentage yield)APY (annual percentage yield) is the yearly return on a deposit or staked amount including compounding, meaning rewards are added to the balance and earn rewards themselves. In crypto, APY is used to quote staking, lending and liquidity-pool returns.
- KYC (Know Your Customer)KYC (Know Your Customer) is the process a financial service uses to verify who its customers are, usually by checking an ID document, a selfie and sometimes proof of address. In crypto, exchanges and P2P platforms run KYC; a self-custody wallet doesn’t need it.
- Tokenized goldTokenized gold is a crypto token that represents physical gold held in a vault by the token’s issuer, typically 1 token for 1 troy ounce. It lets you buy, hold and send gold in small fractions on a blockchain, at a price that tracks the global gold spot price.
- AirdropA crypto airdrop is a distribution of free tokens to many wallet addresses, used by projects to reward early users, spread ownership or promote a launch. Real airdrops exist, but fake ones are among the most common ways scammers try to empty wallets.
- NFT (non-fungible token)An NFT (non-fungible token) is a unique token on a blockchain that records who owns a specific item, such as a piece of digital art, a collectible, a ticket or a username. Unlike coins, one NFT can’t be swapped one-for-one for another, because each has its own identity.
- DeFi (decentralized finance)DeFi (decentralized finance) is a set of financial services, such as trading, lending, borrowing and earning yield, that run on public blockchains through smart contracts instead of banks or brokers. Anyone with a self-custody wallet can use them, with no account to open.
Put the terms into practice
Install Waletifi, write down your 24 words and see these ideas at work in your own non-custodial wallet.
Android 7.0 or later. Download only from waletifi.com, and check the address bar before you install.