Address
A string of alphanumeric characters that serves as the identifier for a crypto wallet on the blockchain. Used to send and receive funds. Derived from the public key via cryptographic hashing.
Airdrop
Free distribution of tokens to wallet addresses, usually as a marketing promotion or reward for early protocol users. Can also be used maliciously — see wallet drainers.
Altcoin
Any cryptocurrency other than Bitcoin. Includes Ethereum, Solana, BNB, and thousands of others.
AMM (Automated Market Maker)
A type of decentralized exchange protocol that uses liquidity pools and mathematical formulas to price assets instead of traditional order books. Uniswap is the most prominent example.
Air-gapped
A device that has never been connected to the internet or any external network. Used for maximum-security cold storage in cryptocurrency.
BIP-32 / BIP-39 / BIP-44
Bitcoin Improvement Proposals that define HD wallet standards. BIP-32 defines hierarchical deterministic wallets. BIP-39 defines the seed phrase wordlist. BIP-44 defines derivation paths for multiple coin types.
Block
A group of validated transactions bundled together and permanently recorded on the blockchain. Each block contains the hash of the previous block, creating the "chain."
Blockchain
A distributed, immutable ledger of transactions maintained across thousands of computers simultaneously. Transactions are grouped into blocks linked chronologically and cryptographically.
Bridge
A protocol that allows assets to move between different blockchains (e.g., from Ethereum to Arbitrum). Bridges have historically been major targets for hacks.
Cold Wallet / Cold Storage
A wallet that stores private keys completely offline, disconnected from the internet. Hardware wallets and paper wallets are forms of cold storage.
Consensus Mechanism
The method by which blockchain nodes agree on the valid state of the ledger. Major types include Proof of Work (Bitcoin) and Proof of Stake (Ethereum).
Custodial Wallet
A wallet where a third party (like an exchange) holds the private keys on your behalf. You have an account balance but don't control the underlying keys.
CoinJoin
A privacy technique for Bitcoin that combines multiple users' transactions into one, making it harder to trace individual payment history on the blockchain.
DAO (Decentralized Autonomous Organization)
An organization governed by smart contracts and token holder votes rather than centralized management. Decisions are made on-chain by token holders.
DeFi (Decentralized Finance)
Financial services (trading, lending, borrowing, earning yield) built on public blockchains using smart contracts, with no central intermediary.
Derivation Path
A notation that specifies how a specific key pair is derived from an HD wallet's master seed. Example: m/44'/60'/0'/0/0 for the first Ethereum address.
DYOR (Do Your Own Research)
A community principle encouraging users to verify information independently before investing or interacting with any protocol or project.
ECDSA (Elliptic Curve Digital Signature Algorithm)
The cryptographic algorithm used by Bitcoin and Ethereum to generate key pairs and sign transactions. A private key is a random 256-bit number; the public key is derived from it using elliptic curve multiplication.
ERC-20
The token standard on Ethereum for fungible tokens. Most DeFi tokens (USDC, LINK, UNI) are ERC-20 tokens.
ERC-721
The Ethereum token standard for non-fungible tokens (NFTs). Each token has a unique ID and cannot be replicated.
Entropy
Randomness used in key generation. Higher entropy means a more secure, less predictable private key.
Gas
The unit measuring computational effort required to execute a transaction or smart contract on Ethereum. Gas fees are paid in ETH and go to validators.
Gas Limit
The maximum amount of gas you're willing to spend on a transaction. If a transaction needs more gas than the limit, it fails but still consumes the gas.
Hash / Cryptographic Hash
A fixed-length output produced by a hash function from any input. Used to link blocks, verify data integrity, and derive wallet addresses. SHA-256 and Keccak-256 are common blockchain hash functions.
HD Wallet (Hierarchical Deterministic)
A wallet that generates a tree of key pairs from a single master seed. All keys can be recovered from the seed phrase. Standard in all modern wallets.
Hot Wallet
A wallet that maintains an internet connection. Includes mobile, desktop, and browser extension wallets. Convenient but more exposed to online threats than cold storage.
Layer 2 (L2)
A secondary network built on top of a blockchain (Layer 1) to improve scalability and reduce fees. Arbitrum, Optimism, and Base are Ethereum L2s.
Liquidity Pool
A smart contract holding reserves of two or more tokens that enables trading on a DEX without a traditional order book. Liquidity providers earn fees from trades.
Mempool
The "memory pool" — a waiting area where unconfirmed transactions sit until a miner/validator includes them in a block.
Mnemonic Phrase
Another term for a seed phrase — a human-readable sequence of words that encodes a master private key. Defined by the BIP-39 standard.
Multi-sig (Multi-signature)
A wallet security model requiring multiple private keys to authorize a transaction. For example, 2-of-3 multisig requires any 2 out of 3 designated keys to sign. Used for added security and shared ownership.
NFT (Non-Fungible Token)
A unique token on the blockchain representing ownership of a specific item. Unlike fungible tokens (where every unit is equal), each NFT is distinct.
Non-Custodial Wallet
A wallet where only you hold the private keys. You have full control and full responsibility for your funds. The opposite of a custodial wallet.
Nonce
In transactions: a sequential number preventing replay attacks. In mining: a value miners adjust when trying to produce a valid block hash.
Passphrase (BIP-39)
An optional additional word added to a seed phrase, creating an entirely different wallet. Acts as a "25th word" — provides significant additional security if kept separate from the seed phrase.
Private Key
A 256-bit number that gives complete control over all funds at the associated address. Must never be shared. Anyone with access to it owns the associated funds.
Proof of Stake (PoS)
A consensus mechanism where validators are selected to create blocks proportional to their staked cryptocurrency. Used by Ethereum post-Merge.
Proof of Work (PoW)
A consensus mechanism where miners compete to solve computationally expensive puzzles. Used by Bitcoin. Highly secure but energy-intensive.
Public Key
Mathematically derived from the private key. Can be safely shared and is used by others to verify transaction signatures. Wallet addresses are derived from public keys.
Seed Phrase (Recovery Phrase)
12 or 24 words that encode your master private key. Can restore your entire wallet on any compatible software. Must be stored securely offline.
Smart Contract
Self-executing code stored on the blockchain that automatically enforces predefined rules. Powers DeFi, NFTs, DAOs, and Web3 applications.
Stablecoin
A cryptocurrency designed to maintain a stable value, typically pegged to USD. Examples: USDC, USDT, DAI.
Wallet Address
The public identifier of a wallet — derived from the public key via hashing. Used to receive cryptocurrency. Safe to share publicly.
WalletConnect
An open protocol that allows mobile wallets to connect to desktop dApps via QR code. Enables hardware and mobile wallets to interact with Web3 applications.
Web3
The vision of a decentralized internet built on blockchain technology, where users control their own data and identity through cryptographic wallets rather than relying on centralized platforms.