Common Crypto Terms Explained
1. Essential Basic Terms
Cryptocurrency
A digital currency that uses cryptography to secure transactions and control the creation of new units.
Decentralization
A network structure where power and control are distributed among numerous participants, rather than being held by a single central authority (like a government or bank)
Decentralized Exchange (DEX)
A trading platform that doesn't rely on any central authority or intermediary to hold user funds or match trades. All transactions are executed automatically through "smart contracts," allowing users to trade peer-to-peer (P2P) directly from their own crypto wallets.
Blockchain
A decentralized, public digital ledger composed of a chain of "blocks" arranged in chronological order that are immutable and used to record transactions.
Bitcoin (BTC)
The first cryptocurrency, created by Satoshi Nakamoto, often called "digital gold" due to its scarcity.
Ethereum
A decentralized blockchain platform that allows developers to build applications on it.
Ether (ETH)
The native token of the Ethereum blockchain. It's not just a currency but is also used to pay for the costs of executing operations on the Ethereum network.
Consensus Mechanism
A set of rules and protocols that ensures all participants (nodes) on a network can keep their ledger information consistent, synchronized, and trustworthy. In simple terms, it's the "democratic decision-making process" of the blockchain world.
PoS (Proof of Stake)
A consensus mechanism that allows token holders to validate transactions and secure the network by "staking" their assets (coins), for which they receive rewards.
PoW (Proof of WorK)
A consensus mechanism that requires participants (miners) to perform intensive computations to validate transactions and generate new blocks. Bitcoin uses this mechanism.
Public Chain
A completely open blockchain where anyone can read data, participate in transactions, and perform validation. Examples include Bitcoin and Ethereum.
Private Chain
A permissioned blockchain where access is strictly controlled. Only authorized members can participate, typically used within enterprises.
Hybrid Chain
A blockchain that combines features of public and private chains, where some data is public while other data remains private.
Consortium Chain
A semi-decentralized blockchain managed jointly by multiple pre-selected trusted institutions, positioned between a public and private chain.
Gas Fee
The fee paid to miners or validators for processing a transaction or executing a smart contract on the blockchain.
Hot Wallet
A cryptocurrency wallet connected to the internet (like a mobile app or browser extension). It's convenient for quick transactions but carries a relatively higher risk.
Cold Wallet
A physical cryptocurrency wallet that is not connected to the internet (like a USB device). It offers the highest level of security and is suitable for long-term storage of assets.
Public Key
Like a bank account number, it can be shared publicly and is used to receive cryptocurrency.
Private Key
Like a bank account password or ATM PIN, it's the sole credential for accessing and controlling your crypto assets and must never be disclosed.
Mnemonic Phrase
A backup form of a cryptocurrency wallet's "private key," which allows you to restore and recover all your crypto assets.
Fiat Currency
Legal tender issued and backed by a government, such as the New Taiwan Dollar (TWD) or the US Dollar (USD).
Stablecoin
A type of cryptocurrency whose value is pegged 1:1 to a specific asset (usually the US dollar), such as USDT or USDC. It is used for hedging and as a medium of exchange in the crypto world.
KYC (Know Your Customer)
The identity verification process required by exchanges, which usually involves submitting identification documents to comply with financial regulations.
Dollar-Cost Averaging, DCA
An investment strategy of investing a fixed amount of money into a specific asset at regular intervals (e.g., weekly or monthly), regardless of the market price at the time.
Whitepaper
The official detailed document of a cryptocurrency project. It contains its concept, goals, technical architecture, team background, and tokenomics, and is a key resource for pre-investment research.
2. Crypto Culture and Internet Slang
HODL
Originated from a misspelling of "HOLD," it has become a belief and a long-term investment strategy of "holding on for dear life" and not selling, regardless of market volatility.
FOMO (Fear of Missing Out)
The anxiety-driven emotion of impulsively buying a coin when its price is rising rapidly, out of fear of missing out on potential profits.
Leek
A slang term for novice investors who always lose money and are easily "cut" (i.e., suffer losses) by the market.
DYOR (Do Your Own Research)
A reminder that anyone must personally research a project before investing, rather than trusting others.
To the Moon
An expression of hope or belief that a cryptocurrency's price will skyrocket.
FUD (Fear, Uncertainty, Doubt)
Refers to the act of spreading negative, unverified news in the community to create panic, undermine investor confidence, and trigger a sell-off.
Whale
An individual or institution that holds a huge amount of cryptocurrency.
BTD (Buy The Dip)
An investment strategy of buying an asset after its price has experienced a downturn or correction, in anticipation of a future rebound.
ATH (All-Time High)
The highest price a cryptocurrency has ever reached.
ATL (All-Time Low)
The lowest price a cryptocurrency has ever reached.
Pump and Dump
A market manipulation scheme where large holders or project owners first buy a large amount of a token, then "pump" the price through various promotional tactics to attract retail investors, and then "dump" their holdings for a profit, causing the price to crash.
Mint
The process of "creating" a new NFT on the blockchain.
Diamond Hands
Describes investors who are extremely resilient, able to withstand huge paper losses or market volatility without selling their assets.
Paper Hands
The opposite of "diamond hands," describing investors with weak conviction who panic-sell their assets at the first sign of a price drop.
3. Advanced Exploration
DeFi (Decentralized Finance)
A series of financial services built on the blockchain. It's like an automated banking system without traditional financial intermediaries, where all rules are executed by smart contracts.
GameFi (Game Finance)
The fusion of DeFi's earning models with video games, creating a "Play-to-Earn" model. Players can earn cryptocurrency or NFTs as rewards through gameplay.
NFT (Non-Fungible Token)
A unique digital certificate of ownership for an asset. It is used to prove your ownership of a specific item (like an image, video, or in-game item).
DAO (Decentralized Autonomous Organization)
An organization managed by code and its community members, without a traditional corporate hierarchy or central leader. All decisions are made transparently through member voting.
DAPP (Decentralized Application)
An application that runs on a blockchain or peer-to-peer network. Its backend is composed of smart contracts and is not controlled by any single entity.
Airdrop
A marketing strategy where a project distributes its tokens for free to the wallet addresses of specific users to promote the project or reward the community.
Staking
The act of locking your cryptocurrency in a protocol or wallet to support the operation and security of the blockchain network (especially in a PoS mechanism), in return for earning additional tokens as "interest."
Metaverse
A persistent, shared virtual space that merges virtual reality (VR), augmented reality (AR), and the internet.
Smart Contract
A piece of code deployed on a blockchain that automatically executes according to preset rules. It is the foundation for implementing DeFi, NFTs, and DAOs.
Mining
Specifically in a PoW (Proof of Work) mechanism, the process where participants (miners) provide computing power to solve complex mathematical problems to validate transactions and add new blocks to the chain, with the successful miner earning newly issued cryptocurrency as a reward.
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Investing in virtual assets carries risks related to price volatility and liquidity. The above content is for reference only and does not constitute any financial advice. Please carefully assess your financial situation before investing and be cautious of potential fraud.
