Crypto Terms: What You Need to Know

Crypto Terms: What You Need to Know

As far as modern tech innovations go, there are few that have changed the world with the swift abruptness that cryptocurrency has. The blockchain is barely over a decade old, but it’s changed the way people around the world think about trade, value, and currency.

Are you just coming around to the cryptocurrency world? If yes, you might feel a little out of the loop with all the involved discussions going on around this topic every week.

Of course, it’s never too late to get familiar – there are plenty of crypto terms to learn that can help to fill in the gaps in your knowledge. The more you get aligned mentally with the terminology, the easier you’ll be able to soak in additional knowledge about the world of crypto.

What do you need to know? Read on and we’ll walk you through a quick and easy crypto 101 lesson.


Let’s start with a term that you’ve likely already been familiarized with, but is important to fully grasp. Bitcoin was the very first cryptocurrency, which hit the scene on January 3, 2009.

Its existence is the basis of all cryptocurrencies that have come after. While many have tried to improve upon what Bitcoin started, there’s no denying that it is the currency that changed everything, and stills retain huge value because of that.

It’s a name that traders know and trust.

The genius idea behind Bitcoin at the time was that it was a form of payment that existed out of the control of any person, group, or government. It couldn’t be traced, and it couldn’t be pulled into the political sphere of any world government.

This was a huge change – it had never existed before in the world of finance. Many people thought Bitcoin could be huge in terms of financial security. It wouldn’t be tied to the US dollar or any national marketplace, and those who invested in it could not be poked or prodded by any outside group.

Another crazy thing about Bitcoin was that it was unleashed upon the world by a completely anonymous developer. He released it under the name Satoshi Nakamoto, but the true identity of the developer remains completely unknown.

In the years since 2009, Bitcoin has ballooned in value to a huge degree. Prices have always fluctuated somewhat wildly, but the to-dollar value of a Bitcoin remains massive, making many early investors rich.

The blockchain model that Bitcoin was based on also remains the main backbone of most cryptocurrencies available today, even if some have adjusted the workings of this system somewhat.


But what is blockchain? In many ways, understanding blockchain technology is probably more important than understanding the ins and outs of Bitcoin. Bitcoin is an application of what blockchain tech can do – but the tech itself is really what is the massive world-changer.

In short, blockchain is a sort of digital ledger. This ledger records all of the transactions made with a cryptocurrency. This ledger is permanent, unchangeable, and maintained by a network of hundreds of thousands of computers from around the world.

It is, essentially, unhackable and immovable.

Traditionally, transactions are verified by computers around the world via incredibly complicated computer processing. This process produces new bitcoin for the users who do this work. This process is also known as mining, which we’ll talk a bit more about later.

Each cryptocurrency has its own blockchain. So there is a Bitcoin blockchain, an Ethereum blockchain, and so forth.

Cryptocurrency Exchange

A cryptocurrency exchange is a business that allows users to trade currencies for other currencies. Think of it as a digital version of the currency exchange booth at the airport. It’s a place you can go to trade the US dollar for Bitcoin, Bitcoin for Ethereum, and so forth.

Every exchange is a little different which is why it’s difficult to speak broadly about them. The rules, regulations, and working process of each exchange vary, so it’s important to do your research ahead of time before using one.

Even the fees and transaction costs associated with these exchanges can vary to a great degree. An exchange might accept credit card payments, wire transfers, checks, and others may accept only one or none of these forms of payment.

Typically, an exchange will take the market bid-ask spreads as the transaction commission for the service it is providing. Other exchanges might just charge a flat fee.

Some businesses and applications have become cryptocurrency exchanges that initially weren’t. Other businesses have simply integrated this capability into their other market offerings. For example, many stock applications, such as Robinhood, now allow for cryptocurrency exchanges.

Even tech giants as big as PayPal allow for cryptocurrency exchanges within their platforms.

However, most of these applications do not allow for cryptocurrency withdrawals. They are intended for investing but not for using crypto to make purchases. Many don’t have functionality that includes withdrawal to a digital wallet.

Digital Wallet

It’s all there in the name. A digital wallet is essentially the virtual version of your standard wallet. It’s a digital storage device that keeps all of your crypto assets safe and secure.

Generally, this wallet is accessible via a digital device, like your phone or your computer, but not always.

While it’s helpful to think of this wallet as storing your crypto, that isn’t actually the case. Remember, your holdings of crypto all live on the public ledger of the blockchain. That’s the only place they are stored, per se.

However, your wallet provides your key to access these assets. Your key proves your ownership over your crypto assets and it allows you to make transactions. In many ways, it can be helpful to think of your wallet as more of a key than as… well, a wallet.

A VERY IMPORTANT NOTE: if you lose access to your wallet (lose your key), you can lose access to your crypto assets. This is why it’s so important to keep your wallet information safe and sound.

It’s also why many people get wallets through a trusted provider, such as Coinbase.

Hot vs. Cold Wallets

A crypto wallet can be a hot wallet or a cold wallet. A hot wallet is one that is connected to the Internet. As you can imagine, this version of a crypto wallet is much more accessible.

It’s easy to access anywhere that you have a digital device. At the same time, hot wallets are also more susceptible to hacking and attacks. This is similar to the pros and cons of cloud computing – easier access, yet more threats.

A cold wallet, on the other hand, is completely untethered from the internet. Generally speaking, these take the form of physical drives (like hard drives) that store your essential wallet information.

This is a bit more like keeping your cash under your mattress – your crypto is physical and with you. It’s nowhere else. Just make sure you don’t lose it!

Public Key

Speaking of wallets as keys, this term does refer to the digital wallet. Your public key is basically an address for your wallet.

You can think about it like a bank account number. You can provide your key to people or businesses and they can send or take money from your account when authorized.

In order to make any transactions on the blockchain, you’ll need to know and have your public key ready when needed.


Of course, more than a decade after the introduction of Bitcoin, it is no longer the only option on the block. There are actually hundreds of new cryptocurrencies out there, each promising different variations on the setup that Bitcoin started.

Of these many cryptocurrencies (and there really are many), the one that has likely caught the attention of most is Ethereum. Ethereum launched a few years after Bitcoin and promised to use the format but improve upon many concerns associated with the original cryptocurrency.

The biggest improvement was to curb the huge energy costs associated with the creation of Bitcoin. The computing power required to mine Bitcoin was immense, and Ethereum set out to find a less energy-heavy way to create their tokens.

This also came with the added benefit of improved scalability.

Today, some experts predict that Ethereum might outlast Bitcoin and move on to become the biggest of all the cryptocurrencies. Or, perhaps, it’ll be something new altogether. It’s important to learn these terms to recognize how vast the world of crypto really is.

Blockchain Fork

The world of cryptocurrency is still a new one. Users around the world are still trying to perfect the idea of cryptocurrency usage, and blockchain usage.

For this reason, it’s not wise to imagine that everything will always remain as is and set in stone. Progress marks the path forward. Changes can be made and already have during the decade or so since Bitcoin was first introduced.

When a major change to the rules of a cryptocurrency is made, a fork is usually the result. A fork refers to a fork in the road, between the new and the old.

What a fork actually refers to is the splitting between an old blockchain ledger and a new one. Since there is no larger entity controlling Bitcoin, changes made can only be optional to those trading.

Generally speaking, a new blockchain will be made with new rules, but the old one will continue to exist. Users can decide which blockchain to trade on.


Most crypto traders will tell you that if you want to make money in crypto, you need to be in it for the long haul. Cryptocurrencies go through huge surges and falls in price, and it can be a lot to weather.

It can be better to HOFDL, as some users say: hold on for dear life. This phrase refers to the need for long-term holdings if you want to have sustainable profit from cryptocurrency trading.

Learning what to expect and how to weather these surges and falls will be important as you enter the crypto trading world. You’ll need to get used to experiencing slippage.

Slippage, essentially, is the difference between what a crypto trader expects to earn and the actual price of their crypto.

The crypto market moves so fast, that even if you work fast, you might end up getting a different trade price than when you tried to start your trade. You might end up buying or selling at less than you’d expect (or more!).

This difference due to the rapid movement of the market is known as slippage.

It’s important to be aware of this trend as you begin trading so you aren’t caught off guard in the moment of a trade. You can take a look at this article to learn more about slippage and the tactics you can take to combat it.

Bitcoin Cash

The most famous example of a fork made from the original Bitcoin blockchain.

After a few years of Bitcoin growth, many users found that Bitcoin was too volatile to use reliably for transactions. Even by the time a transaction was through, the value of Bitcoin might have changed dramatically.

Bitcoin Cash was a fork off into a new blockchain that was intended to be better used for transactions. The blocks are much smaller, token insurance is built in, and the algorithm used to process transactions is simpler.

Basic Crypto Terms To Get Familiar With

If you’re still new to the world of cryptocurrency, there can feel like there’s so much to learn. Sometimes, the easiest way to go about getting familiar with all this new information is to start with a few basic terms.

The above crypto terms can help to provide a foundation for your crypto knowledge. If you know what these terms mean and how they apply to crypto trading, you’ll be well on your way to becoming a true trader.

Need more crypto advice and information? Keep scrolling our blog for more.

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