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Active addresses
This refers to unique blockchain addresses that have been involved in a transaction within a specific timeframe (e.g., 24 hours,30 days). This metric provides an indication of the level of on-chain activity on a blockchain network.
Address
In the context of crypto, a (wallet) address is a unique identifier similar to a bank account number. It's a string of alphanumeric characters used to send, receive, and store cryptocurrencies on the blockchain network. It is thus a bit of a misnomer - your crypto does not technically "reside" at the address in your wallet but on the blockchain.
Aggregator
In the context of cryptocurrency, an aggregator is a service that collects data from multiple cryptocurrency exchanges and presents it to users in a single interface. This can be helpful for traders who want to compare prices across different exchanges before making a trade. CoinMarketCap is an example of an aggregator, as are 1Inch and Yearn Finance in the DeFi world.
Air-gapping
Air-gapping is a security measure that involves isolating a computer system from any network connection. This can be done to protect the system from malware or other security threats. Air-gapped systems are often used to store private keys for cryptocurrencies, such as air-gapped wallets.
Airdrop
The crypto equivalent of the marketing term "free gift," this refers to a distribution of free crypto used by projects or platforms to generate awareness and incentivize participation in their ecosystems. Do be careful, though. Scammers also love to use this word to entice you to give them your personal wallet details/addresses and drain your wallet!
Algorithmic stablecoins
Unlike the typical stablecoins pegged to fiat currencies like USDT or USDC, algorithmic stablecoins use smart contracts and algorithms to maintain a stable price. These programs automatically buy or sell the stablecoin depending on market conditions, aiming to keep its value close to a target price (e.g., $1 USD). DAI is one of the more established algo stablecoins, with the most (in)famous one being TerraUSD which collapsed in May 2022.
Algorithmic trading
This refers to trading by using automated software to execute trades based on pre-programmed rules and technical indicators. Traders define parameters like price points and trade volumes, and the software automatically places trades when market conditions meet that criteria.
All Time High (ATH)
Refers to the highest price a particular cryptocurrency has ever reached in its history. Traders often use ATHs to time their entries. For example, If a cryptocurrency is approaching its ATH and there's a strong upward trend with increasing trading volume, it might signal a potential breakout. This could be an entry point for traders who believe the price will continue to climb past the ATH. Conversely, breakouts above ATHs can be deceptive. Sometimes, prices spike and then fall back, creating "false breakouts" that trap traders who entered expecting a sustained climb.
Alpha
Alpha refers to the ability to generate returns that outperform the overall market. Investors who consistently achieve returns above a benchmark (like the S&P 500) are said to be generating alpha. In the crypto world, alpha can be achieved through various strategies like early investment in promising projects or skilled trading techniques. However, consistently generating alpha is challenging.
Altcoins
Short for "alternative coin," this refers to any cryptocurrency that is not Bitcoin.
Annual Percentage Rate (APR)
This term refers to the interest rate you earn on an investment over a one-year period. It's important to note that APR is typically quoted as a nominal rate, meaning it doesn't factor in compounding. For example, if you see an APR of 5%, that means you would earn 5% interest on your investment if the interest were paid out and compounded every year (which often isn't the case).
Annual Percentage Yield (APY)
APY takes compounding into account, providing a more accurate representation of the total return you can expect on your investment over a one-year period. APY considers the frequency of interest payments (e.g., daily, weekly, monthly). Therefore, the APY will usually be higher than the APR for the same investment.
Anti-fragile
This term, popularized by Nassim Nicholas Taleb, describes a system that not only benefits from stressors and challenges but actually becomes stronger as a result. In the context of blockchain, some argue that certain protocols or networks can be considered anti-fragile. For example, a network that becomes more secure and resilient after a hacking attempt could be seen as exhibiting anti-fragility.
Ape-ing
A slang term used to describe investing in a cryptocurrency without thorough research or due diligence. It implies a reckless, impulsive buying decision, often fueled by hype or listening to influencers blindly (hence the term "ape.")
Appchains
A specialized blockchain built on top of another, more established blockchain platform. Think of it as a separate blockchain with its own rules and functionality, but that is connected to and secured by the main chain. This allows appchains to inherit the security of the main chain while also offering greater flexibility and scalability for specific applications.
Application-Specific Integrated Circuit (ASIC)
ASICs are specialized computer chips designed to perform a specific task very efficiently. In the world of cryptocurrency mining, ASICs are powerful machines built specifically to solve the complex puzzles required to validate transactions and earn block rewards on proof-of-work blockchains (like Bitcoin). While highly efficient, ASICs can be expensive and contribute to mining centralization.
Arbitrage
A trading strategy that exploits price discrepancies between different markets. In the context of cryptocurrency, traders can buy a cryptocurrency on one exchange where it's cheaper and then sell it on another exchange where it's priced higher, profiting from the price difference.
Asset-backed tokens
These are tokens that represent ownership of a real-world asset, such as gold, real estate, or even intellectual property. The asset is held in a secure custody arrangement, and the token provides a tradable representation of that ownership on a blockchain. This allows for fractional ownership and potentially easier trading of the underlying asset.
Atomic swap
An atomic swap allows for the direct exchange of cryptocurrencies between two parties without relying on a middleman. It operates like a secure escrow service - both cryptocurrencies are locked in a smart contract until both sides fulfill the swap conditions.
Average daily trading volume (ADTV)
This metric represents the average amount of a cryptocurrency (or any tradable asset) that is bought and sold on an exchange over a 24-hour period. It's a helpful indicator of a crypto's liquidity and trading activity. A high ADTV suggests there are many buyers and sellers in the market, potentially leading to smoother and faster trade execution.
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Backtesting
A technique used to evaluate the performance of a trading strategy by applying it to historical market data. By running the strategy on past price movements, traders can assess its potential effectiveness and identify any weaknesses before deploying it with real capital.
Bank run
Unlike traditional banks, crypto exchanges and DeFi platforms aren't insured by the FDIC. A bank run in the crypto world refers to a situation where a large number of users try to withdraw their funds all at once, fearing insolvency or a security breach. This sudden surge in withdrawal requests can strain the platform's liquidity and potentially lead to a collapse if it can't meet everyone's withdrawal demands - which was exactly what caused the downfall of FTX.
Bear trap
A false signal where an asset's price appears to break below a support level, trapping short sellers who open positions only for the price to quickly reverse and rise.
BIP (Bitcoin Improvement Proposal):
A formal suggestion for modifying the Bitcoin protocol. BIPs can introduce new features, change existing rules, or fix bugs. The Bitcoin development community proposes and discusses BIPs, and miners ultimately decide whether to adopt them through a consensus mechanism.
Bitcoin Inscriptions
Bitcoin doesn't have a built-in way to store data beyond financial transactions. However, some workarounds have emerged to achieve a similar effect. These workarounds involve using a very small amount of Bitcoin (often just a fraction of a satoshi, the smallest unit of Bitcoin) to carry data encoded within the transaction itself. This data can be text, images, or other information. It's important to note that these inscriptions are not officially supported by the Bitcoin protocol and their long-term viability is uncertain.
Bitcoin maxi
A strong believer in Bitcoin's dominance and superiority over all other cryptocurrencies. Bitcoin maximalists (often shortened to "maxis") believe Bitcoin is the only digital currency with true value and potential, and that all other cryptocurrencies ("altcoins") are inferior or destined to fail. Also known as "toxic maxis" for their hostility toward any and all people working on other crypto projects, 80% of them can be identified by the laser eyes in their Twitter profile pics.
Bitcoin maximalist
A strong believer that Bitcoin is the only cryptocurrency with true value and that all other cryptocurrencies are inferior. Well-known maxis include Michael Saylor, Max Keiser and Jimmy Song.
Bitcoin Ordinals
Bitcoin Ordinals leverage the Bitcoin Taproot upgrade and Segregated Witness (SegWit) technology to directly inscribe data onto individual satoshis (the smallest unit of Bitcoin). They rely on a system called "Ordinal Theory" which assigns a unique number (ordinal) to each satoshi based on the order it was mined. This allows data to be permanently attached to specific satoshis, creating a kind of "Bitcoin NFT.
Bitcoin pizza
This refers to the first documented real-world transaction using Bitcoin. On May 22nd, 2010, a programmer paid 10,000 BTC for two pizzas ordered online. This event is considered a significant milestone in the history of Bitcoin as it demonstrated its potential for real-world use as a currency. Considering the current price of Bitcoin, the value of those two pizzas would be worth millions today, highlighting the significant price appreciation of Bitcoin over time.
Bitcoin realized cap
A metric that considers the total value of all Bitcoins ever transacted at the price they were traded. It differs from market capitalization, which uses the current price of all Bitcoins. The realized cap can be used to assess the overall network value of Bitcoin based on historical transactions.
Bitcoin Runes
Bitcoin Runes is a specific protocol built on top of Bitcoin that allows for the creation and management of fungible tokens (tokens where each unit is identical) on the Bitcoin network. Unlike inscriptions, Runes leverage the existing Unspent Transaction Output (UTXO) model of Bitcoin to attach data to specific outputs. This approach is considered more efficient and secure compared to inscriptions. Bitcoin Runes launched in April 2024 and it's still a relatively new concept,so its long-term adoption and impact on the Bitcoin ecosystem remain to be seen. Both Bitcoin Inscriptions and Bitcoin Runes deal with attaching data to the Bitcoin blockchain.
Block explorer
A blockchain explorer is a search engine specifically designed for blockchain technology. You can use it to track transactions, view wallet balances, and explore blockchain data for specific blocks or addresses. Think of it like a web browser for the blockchain. For starters, check out Blockchain.com Explorer, a popular one for BTC, and Etherscan for ETH.
Block height
The number of blocks added on top of a genesis block in a blockchain. Imagine it as the floor number in a high-rise building, with the genesis block being the ground floor. Bitcoiners, for example, like to geek out by referencing the current block height of Bitcoin to denote time e.g. "It's now Block Height 840792!"
Block reward
The incentive awarded to miners or validators for successfully adding a new block to a blockchain.
Bridge
A bridge allows you to transfer cryptocurrencies between different blockchains, essentially connecting them. Imagine it as a bridge between two islands, enabling movement between them. Bridges aim to solve one of the most pressing issues in blockchain - interoperability.
Bull trap
A false signal where an asset's price appears to break out above a resistance level, trapping buyers who open long positions only for the price to quickly reverse and decline.
Burn
Burning refers to the process of permanently removing tokens from circulation. This can be done for a variety of reasons, such as to reduce the total supply of tokens or to distribute them as rewards.
Buy the dip
A popular strategy among crypto enthusiasts based on the belief that short-term price drops present buying opportunities. Essentially, dippers believe they are "buying on sale" with the potential for significant profits once the price recovers. Often used with a healthy dose of optimism (and a dash of bravado) in crypto communities.
Byzantine Fault Tolerance (BFT)
BFT is a property of a computer system that guarantees it can continue to function correctly even if some nodes (computers on the network) are Byzantine faulty. Byzantine faulty nodes can exhibit arbitrary behavior, including failing,providing inconsistent information, or even actively trying to mislead other nodes. BFT systems are essential for ensuring the reliability and security of distributed systems, especially those involving financial transactions.
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Candlestick chart
These charts use bars to show price movements of an asset over various timeframes, from 5 to 10, 15, 30 minutes, or daily, weekly and monthly, depending on a trader's strategy. Green bars mean the price went up, red bars mean it went down.
Capitulation
Capitulation refers to a rapid and dramatic decline in the price of a cryptocurrency. It's often used to describe a situation where investors panic and sell their holdings in a frenzy, driving the price even lower. Imagine a stampede of investors all rushing to sell their crypto at the same time, causing a chaotic price drop. In a seller capitulation, prices go higher. In a buyer capitulation, prices go lower.
CBDC
CBDC stands for Central Bank Digital Currency. It's a digital version of a country's fiat currency issued and controlled by its central bank. Think of it as a digital USD dollar issued by the Federal Reserve, but instead of physical bills and coins, it would exist on a blockchain or similar technology.
Chain of Custody
A chain of custody is a documented record that tracks the movement and handling of evidence or an asset over time. It is used to ensure that the evidence or asset has not been tampered with and to establish its origin and legitimacy. In blockchain technology, the chain of custody can be used to track the movement of digital assets, such as tokens or cryptocurrencies.
Circulating supply
This refers to the number of cryptocurrency tokens or coins that are currently available in the market and actively traded. It's essentially the total number of coins that are in public hands and not locked up or lost. The circulating supply can fluctuate over time as new coins are mined or burned (removed permanently from circulation).
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24H volume
This metric refers to the total amount of cryptocurrency traded on an exchange or the entire market within the past 24 hours. It's a measure of the trading activity for a particular cryptocurrency or the overall market. High 24H volume indicates a lot of buying and selling activity, while low volume suggests a more stagnant market will not-quick-as-healthy liquidity.
51% attack
In the context of blockchain technology, a 51% attack refers to a situation where a malicious actor gains control of more than half of the computing power on a blockchain network. This allows them to potentially disrupt the network's operations, such as by reversing transactions or preventing new ones from being confirmed.