Explainer A Crypto Glossary

airdropThink of getting free samples when you shop at a store. Crypto projects give tokens for free to users in exchange for their having taken actions that could be seen as assisting the idea, such as interacting with the code. Airdrops are also a way to build interest in new coins, since they are only valuable if they have a community of users – ideally, airdrop recipients have an incentive to promote interest in coins they’ve been given.

aped inThis refers to the act of investing a significant amount of money in a cryptocurrency without doing much research about it. When the prices go up, investors tend to act on impulse or follow the crowd. The term is not related to the Bored Ape Yacht Club, one of the most popular purveyors of nonfungible tokens (NFTs).

Bitcoin maximalistsThese crypto investors believe the original digital coin is the only one the world will ever need. They’re sticking with that vision and dismiss concerns over its volatility and vast energy consumption.

crypto bridgesThese are software platforms connecting crypto services that can’t otherwise talk to each other. They allow users to move tokens from one blockchain, or digital ledger, to another. These links make it easier for crypto users to invest in a multitude of different projects. They also make the ecosystem more interconnected — which can mean making it more vulnerable if weaker entities run into trouble. And then there’s their vulnerability to theft: In the first half of 2022, over $1 billion was stolen from bridges.

crypto winterThis reference to a prolonged decline in crypto markets was used for the 2018 slump that wiped as much as 88% of the market value of all crypto assets. It reemerged in 2022 as digital tokens collapsed again, with Bitcoin falling 76% from its peak in November 2021 to mid-November 2022. While 2024 began as a crypto spring, many are convinced that winter will come again.

cold storage/hot walletCautious crypto users keep the keys to their coins offline, in so-called cold storage, typically on a hard drive that isn’t connected to the internet, so they are harder for hackers to steal. Hot wallets are where funds are kept online or with an exchange and ready for trading. When crypto exchange FTX filed for bankruptcy in November 2022, it moved some customers’ digital assets into cold storage to safeguard the accounts.

dappDapps stand for decentralized applications – software programs built on top of a blockchain such as Ethereum. They are decentralized because the underlying blockchains are powered by many computers distributed globally. Dapps operate autonomously as “smart contracts” – rules defined in code recorded on the blockchain that set out actions to be taken when certain conditions are met, without a person or intermediary required. In a maximalist vision, dapps can replace banks and other TradFi middlemen.

DeFiDecentralized finance platforms allow people to lend or borrow crypto assets, trade them or bet on changes in their value. DeFi typically functions via automated smart contracts. But the collapse of a number of DeFi platforms, like Anchor, which succumbed after the implosion of a related stablecoin, TerraUSD, in 2022, left some wondering if DeFi was mainly a venue for decentralized frauds promising Ponzi-level returns.

diamond handsIt’s a popular mantra – as seen on Reddit and X posts – that roughly means bullish gumption, or a call to hold tight to an investment even during a plunge in prices or an onslaught of headwinds. Traders will frequently use diamond and hand emojis in conjunction when posting about it online.

FOMOThe fear of missing out is a powerful force in all markets, but is especially potent in a field where, to TradFi eyes, there’s no such thing as fundamental value. Crypto fans often cite FOMO as one of the reasons investors might buy cryptocurrencies when they’re in the midst of a rally.

gasGas refers to the fee required to conduct a transaction on the blockchain. Gas fees are usually denoted in a small denomination of the cryptocurrency of the blockchain. For example, Ethereum’s gas fees are measured in “gwei,” a fraction of Ether. Gas fees can be quite substantial at times when crypto and blockchain activity is at a peak. Crypto users sometimes can pay hundreds of dollars to get their transactions through on the blockchain.

halvingThis is sometimes referred to as halvening – a planned reduction in rewards miners receive (the action is embedded in Bitcoin’s code). Halvings happen once every four years or so – more precisely, every 210,000 blocks of transactions. As the name suggests, each one cuts in half the amount of Bitcoin miners receive per block reward. The practice serves to maintain scarcity. Bitcoin’s halving in 2020 was followed by an eventual rise in its price.

hodl“Hold” as it was misspelled by a frenzied Bitcoin trader on an online forum in 2013. It’s become the mantra of cryptocurrency believers during market routs, meant to reassure nervous traders that they should ride out any given slump because of Bitcoin’s long-run advantages. Anyone willing to stomach the volatility is thought to be hodling.

left curveIn the crypto world, there is a surprising amount of respect for people who appear to know nothing about the industry. They’re known as the “left curves.” The nickname comes from a popular meme in crypto that shows a bell curve with investors on the left who know nothing, or very little, and those in the fat middle of the curve who know something about crypto. On the right are investors who seemingly know everything. In the crypto rebound of early 2024, when a coin with no real utility, just a cute picture of a dog wearing a hat, increased its value by more than 1,400 times in three months, winners appeared to be concentrated on the left curve.

memecoinsUnlike other well-known cryptocurrencies such as Bitcoin and Ether, which were created with specific financial goals or technological designs, memecoins often start as jokes — like Dogecoin, the biggest memecoin of all. (Its meme is a picture of a skeptical looking Shiba Inu dog.) Some of the most speculative cryptocurrencies introduced in the last few years are trading at record highs, making the jokes expensive ones. The total market value of all memecoins topped $50 billion in March, according to CoinMarketCap’s data. The least useful of these are sometimes referred to as shitcoins. To make things more confusing, there’s an actual cryptocurrency called Shitcoin. But however silly they sound, real money has been made by investors who employ a strategy one described as “being the first idiot in the door.”

mixersCrypto transactions tend to be quite transparent as long as they’re carried out on publicly visible blockchains. Mixers are platforms that have been developed to blend tokens deposited by several users to obscure their transaction history and ownership. They are hated by regulators and law enforcement bodies. The operator of one mixer, Bitcoin Fog, was convicted in March on US charges of helping to launder tens of millions of dollars. In a 2020 report, Europol said mixers don’t make cybercriminals invulnerable, but make “cryptocurrency tracing much more challenging.”

NFTA nonfungible token confirms unique ownership of a digital asset. NFTs have been most popularly used for digital art or collectibles such as video clips, memes or items used in online games. At the height of crypto mania in early 2022, NFT series such as Bored Ape Yacht Club and CryptoPunks were fetching millions of dollars, fired up by endorsements from celebrities such as Paris Hilton and Snoop Dogg. Within months, prices of many NFT collections had collapsed. There were signs of a rebound in early 2024, but at levels well below the 2022 peak.

normieThe opposite of a Bitcoin maximalist. Many in crypto hope that adding TradFi elements, like ETFs, to the field will bring a flood of normies into the field.

probably nothingThe phrase is usually used ironically. Crypto users say “probably nothing” when they downplay a major event, such as Ethereum successfully completing its software upgrade. It’s popular in crypto because a lot of events in the crypto world are very technical and can be overlooked by many people who are not technologically savvy. The phrase can also be used to suggest that a conspiracy lies behind some seemingly random event.

stablecoinsSome crypto tokens aim to peg their value to another asset to make them more stable than highly volatile currencies like Bitcoin. Most issuers of stablecoins say they maintain their stability by buying safe assets like US Treasuries. However, the largest stablecoin project, Tether, was fined by the US Commodity Futures Trading Commission in 2021 for misleading customers when it claimed the token’s value was “fully backed” by fiat assets. Interest in another category, algorithmic stablecoins, plummeted when the system used by the TerraUSD token for managing supply and demand failed catastrophically.

stakingOnly one person can hold a gold coin at a time. But digital currencies could easily be duplicated without a system for ordering transactions. Bitcoin relies on a “proof of work” system in which massive amounts of electricity and computing power are expended on solving puzzles in a way that generates a reliable record of transactions. Ethereum, the network that uses Ether, switched in 2022 to a “proof of stake” system. Computer systems known as “validators” pool assets and are given financial incentives for working together to create such a record through what’s known as staking. Someone who tried to game the system could lose the coins that were staked.

tokenizationA token is something that represents something else, the way a souvenir of the Eiffel Tower is a token of a trip to Paris. The term was adopted by the developers of cryptocurrencies. The concept was then applied to digital art through NFTs, non-fungible tokens. More recently, a wide range of financial players have taken up the idea of “real-world asset tokenization.” That’s the process of representing real assets like bonds, stocks, art or even ownership shares in office buildings as digital tokens on a blockchain. Ownership can be moved easily and almost instantly by simply moving the token from one wallet to another, without the need for complicated clearing transactions.

TradFiYou know, like banks and stuff?

web3A pitch for a more decentralized World Wide Web built on crypto technology that shifts power back to internet users from giant technology companies. Proponents say the current model, known as web 2.0, gives too much control to a handful of platforms that track our online activity and monetize the information via advertising. Web 1.0 refers to the early days of the internet, when it was simply a way of remotely accessing static pages of text and images. Skeptics say web3 is mostly a term for venture capitalists to hype their latest investments without any reference to their actual utility.

whaleIn a wide range of markets, whales are investors whose holdings are so large that their every trade makes waves. It’s a term that sometimes comes with a suspicion of market manipulation. So, too, with crypto whales, or people who hold a lot of crypto. Some estimates show that in the case of many tokens, just a handful control a large percentage of the market, so they have the power to move prices.

yield farmingRisk-taking crypto investors put their coins onto yield farming platforms to make a profit. A typical strategy involves lending a token, borrowing another and earning yet another token. At one point, investors were earning triple-digit returns from platforms before a general collapse across the field in 2022. But by late 2023, exchanges ranging from GMX to Binance were offering double-digit incentives as a way to jump-start yield-farming activity after months of stagnation. “It’s always gonna be this way,” said Zaheer Ebtikar, founder of crypto fund Split Capital. “People can’t help it. [Crypto] is literally the most FOMO industry ever.”

51% attackA 51% attack refers to a situation in a blockchain where a single person or group controls 51% or more of the computing power being used to order transactions on a particular blockchain. Having majority control allows the person or group to manipulate the blockchain in several ways, including through so-called double spending where the attacker can spend the same token twice.