Crypto glossary: Bitcoin and blockchain terms explained

63 crypto terms explained simply: blockchain, wallet, satoshi, halving, seed phrase, stablecoin and more.

51% attack: Seizing more than half of a network's mining or validating power to rewrite transaction history. Extremely costly on large networks, but it has happened on small ones.
Airdrop: A free token giveaway used for promotion. Fake "claim your free tokens" airdrops are a common way to drain wallets.
All-time high (ATH): The highest price a coin has ever reached. Big falls after an all-time high have happened many times in crypto.
Altcoin: Any cryptocurrency other than Bitcoin, such as ether, Solana or XRP.
Bear market: A market where prices keep falling for a long period. Crypto bear markets have seen falls of 70–80%.
Bitcoin: The first cryptocurrency, launched in 2009. No bank or government controls it, and its supply is capped at 21 million. Symbol BTC.
Block: One page of a blockchain, holding a batch of transactions plus the hash of the previous block.
Block reward: The new bitcoin paid to the miner who adds a block. Since the 2024 halving it is 3.125 BTC.
Blockchain: A digital ledger kept on many computers at once, with transactions grouped into blocks linked like a chain. Recorded data is practically impossible to change.
Bull market: A market where prices keep rising for a long period. Fraudulent projects are promoted hardest at these times.
CBDC: A digital form of a country's official currency issued by its central bank. It is not a cryptocurrency.
Centralised exchange (CEX): An exchange run by a company that holds its customers' coins.
Cold wallet: A wallet whose keys stay offline, such as a hardware wallet or keys written on paper. Harder to hack, but it can be lost.
Crypto exchange: An online marketplace for buying and selling crypto. No crypto exchange is approved in Bangladesh.
Crypto wallet: An app or device that holds the secret keys needed to spend crypto. Despite the name, coins live on the blockchain; the wallet holds the keys.
Cryptocurrency: A digital currency or asset that runs on a blockchain and is secured with cryptography. Bitcoin, ether and USDT are examples.
Custodial wallet: A wallet whose keys are held by a company, usually an exchange. If the company fails, is hacked or freezes accounts, your coins are stuck.
Decentralisation: Spreading control among many participants instead of one organisation. Bitcoin has no central authority, which also means nobody can reverse mistakes.
Decentralised exchange (DEX): An exchange that runs on smart contracts, with coins staying in users' own wallets. Carries risks from code bugs and fake tokens.
DeFi: Financial services such as lending and token swaps that run on smart contracts without banks or middlemen. High risk of hacks and fraud.
ETF: A fund traded on a stock exchange that tracks an asset's price. Spot Bitcoin ETFs were approved in the United States in January 2024.
Ethereum: A programmable blockchain that runs smart contracts. Its currency is ether (ETH), the second-largest crypto by market value.
Fiat currency: Government-issued legal money such as the taka or the dollar, backed by the state and its central bank.
FOMO: "Fear of missing out": rushing to buy so as not to miss a chance. Scammers exploit exactly this emotion.
FUD: "Fear, uncertainty and doubt": information that spreads worry. Promoters often dismiss fair criticism as "FUD", which is itself a warning sign.
Gas fee: The fee for running a transaction or program on Ethereum and similar blockchains, rising when the network is busy. Scammers often ask victims to send a "gas fee".
Halving: The cut in half of Bitcoin miners' reward roughly every four years (every 210,000 blocks). The latest was in April 2024.
Hardware wallet: A small device built to keep crypto keys offline. A device handed to you already "set up" by someone else can be a scam.
Hash: A fixed-length digital "fingerprint" calculated from any data. Changing the data even slightly changes the hash completely.
HODL: Crypto slang for holding on regardless of price. It began as a misspelling of "hold" in a 2013 online post.
Hot wallet: A wallet app on an internet-connected phone or computer. Convenient, but more exposed to hacks, fake apps and phishing.
KYC: "Know your customer": identity checks by financial firms. Scammers collect NID cards and photos in the name of fake "KYC updates".
Layer 2: A separate network built on top of a main blockchain to make transactions faster and cheaper, such as Bitcoin's Lightning Network.
Legal tender: Money that must legally be accepted to settle debts. In Bangladesh the taka is legal tender; cryptocurrency is not.
Leverage: Using borrowed money to take a position several times your own funds. Gains and losses are both multiplied, and a small adverse move can wipe you out.
Liquidation: When a leveraged trader's losses exceed their collateral, the exchange force-sells the position. Waves of liquidations can crash prices fast.
Liquidity: How easily an asset can be bought or sold without moving its price much. Small coins have little liquidity, so selling can crash the price.
Market cap: A coin's current price multiplied by the number of coins in circulation. A big market cap is not a safety guarantee, but small ones are easier to manipulate.
Meme coin: A crypto born from an internet joke or trend, with almost no real use. Prices are extremely volatile and pump-and-dumps are common.
Mining: Adding new blocks to the Bitcoin network by doing hard computations on specialised machines, earning new bitcoin as a reward.
MLM: A structure that pays commissions for recruiting new members. Crypto Ponzi schemes often spread through MLM structures.
NFT: A unique digital token on a blockchain, usually used as an ownership record for an image or digital item.
Node: A computer on a blockchain network that keeps a copy of the ledger and checks transactions.
P2P trading: Two people trading crypto directly, with payment made outside the exchange. In Bangladesh, using banks or mobile financial services for it is prohibited, and fraud is…
Phishing: Stealing passwords, OTPs or seed phrases with fake messages, websites or apps that impersonate real organisations.
Pig butchering: A scam that builds an online friendship or romance, then gradually draws the victim into investing on a fake crypto platform.
Ponzi scheme: A fraud that pays old investors' "profits" with new investors' money and collapses once new money stops. MTFE in Bangladesh is a widely discussed example.
Private key: A long secret number used to sign transactions and spend coins. Whoever holds it effectively owns the coins.
Proof of stake: The method where validators who lock up coins as collateral are chosen to add new blocks. Ethereum has used it since 2022.
Proof of work: The method where miners spend electricity and hardware solving puzzles to earn the right to add the next block. Bitcoin uses it.
Public address: An address, like a bank account number, that others can send coins to. It cannot be used to spend coins, but its transaction history is public.
Pump and dump: Hyping a coin to push its price up (pump), then the organisers selling the coins they bought earlier (dump). Late buyers take the loss.
Rug pull: The creators of a new token or project suddenly vanish with investors' money, leaving the token worthless.
Satoshi: The smallest unit of bitcoin. 1 bitcoin = 100 million satoshi, so 1 satoshi = 0.00000001 BTC. Named after Bitcoin's creator, Satoshi Nakamoto.
Seed phrase: A list of 12 or 24 words from which all of a wallet's keys can be regenerated. Anyone who knows it can take every coin, so never share it.
Smart contract: A program on a blockchain that runs automatically by pre-written rules. A bug in the code can lose large sums.
Stablecoin: A crypto designed to hold a steady value, usually $1. Stability is not guaranteed; it depends on the issuer and its reserves.
Token: A digital asset built on another blockchain, such as USDT on Ethereum. Creating tokens is easy, so fake ones are plentiful.
Trading volume: The total value traded over a period, usually 24 hours. Shady exchanges often inflate their volume.
Two-factor authentication (2FA): A second check on top of a password, such as a code from a phone app. Sharing the code with anyone defeats the protection.
USDT (Tether): The largest stablecoin, designed to stay worth $1 and issued by a private company called Tether. USDT-themed scams are common in Bangladesh.
Volatility: A measure of how fast and how far a price moves. Crypto is among the most volatile assets in the world.
Whale: Someone holding a very large amount of a coin. Whales can move prices with big trades, especially in small coins.