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辞 JI · GLOSSARY
109 terms around cryptocurrencies, blockchain and Web3 – explained briefly and clearly.
109 terms
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A
An address is a string of letters and numbers to which transactions are sent on a blockchain network, similar to an account number. It can also be shown as a scannable QR code.
If you want to send cryptocurrency to another person or platform, you need their address: a wallet has one or more addresses, and so does an account on a crypto exchange. Because transactions can’t be reversed, always check an address carefully before sending.
A free distribution of tokens to the wallets of certain users, with or without prior notice. Projects typically use airdrops to reward early or loyal users, to spread tokens more widely or to draw attention to a particular token.
Be careful: tokens that arrive unsolicited can also be a scam, for example when they’re meant to lure you to a fake website.
“ATH” is short for “all-time high”. The term means the highest price an asset has ever reached. When a cryptocurrency reaches or exceeds its previous peak, people speak of a new ATH.
The ATH gives investors and analysts a reference point for putting price performance over time into context. A new all-time high can point to positive sentiment or rising demand; the distance from the ATH shows how far a price has fallen since its peak.
Example: if the highest price a cryptocurrency ever reached was 1,000 francs and the current price is 800 francs, it’s trading 20% below its ATH. The opposite is called an “all-time low” (ATL).
In finance, “alpha” is a measure of how much an investment or trading strategy outperforms or underperforms a benchmark, such as a market index.
A positive alpha means the return was higher than you’d expect given the market risk taken; a negative alpha means the opposite.
Alpha is often used together with beta: beta measures how strongly an investment moves with the overall market (systematic risk), alpha measures how far the return deviates from that.
In the crypto scene, “alpha” is also slang for exclusive or early information that promises an edge (“sharing alpha”). Treat such tips with a critical eye.
An umbrella term for all cryptocurrencies other than Bitcoin, such as Litecoin or Ether. Some altcoins started as forks of the Bitcoin code and differ from Bitcoin in details such as the maximum supply of coins, a different hash algorithm or extra features.
Many well-known projects such as Ethereum, Polkadot, Solana or Cardano, on the other hand, are built on independently developed code and their own blockchains.
B
Slang for the amount of a particular cryptocurrency that someone holds, usually a fairly large one. If you’re “holding bags”, you’re invested in a token. A “bagholder” is a mocking name for someone who keeps holding a token that has fallen sharply.
A bear market is a financial market in which asset prices tend to fall or stagnate over a longer period. Market participants are pessimistic, selling pressure is high and the general mood is negative.
On stock markets, a rule of thumb is to speak of a bear market when prices have fallen at least 20 per cent from their last high.
Typical features of a bear market are:
Bear markets can occur in various asset classes and have different causes, such as weak economic data, rising interest rates or political uncertainty. In the crypto world, regulatory uncertainty, security incidents or waning interest can trigger a bear market.
In the crypto world and in financial jargon generally, “bearish” (from “bear”) means a pessimistic attitude or the expectation of falling prices.
If you’re “bearish” on a cryptocurrency or a market, you expect prices to fall, or you already see a downward trend.
A “bearish” market or a “bearish” forecast suggests that market participants are worried and more inclined to sell. Reasons can include negative news, falling demand, weak fundamentals or other factors.
The opposite is “bullish”. The terms come from stock market imagery: the bull thrusts its horns upwards, the bear swipes its paws downwards.
Short for “Bitcoin Improvement Proposal”: a technical design document that proposes and describes new features, processes or changes to the Bitcoin protocol for the Bitcoin community.
Changes to the protocol are submitted as BIPs and discussed in public. Whoever writes a BIP is responsible for gathering feedback and working towards consensus.
The first and best-known cryptocurrency. Bitcoin was described by Satoshi Nakamoto in a whitepaper in 2008 and launched in 2009. The network runs on a public blockchain and is secured by the Proof-of-Work consensus mechanism. The total supply is capped at 21 million BTC.
A person or organisation convinced that, of all cryptocurrencies, only Bitcoin will last, or deserves to, in the long run. From this point of view, other cryptocurrencies are unnecessary or dubious. Often shortened to “maxi”.
A package of data in a blockchain that contains a set of confirmed transactions. Every block has a header with key information, including the hash of the previous block, a timestamp and, with Proof-of-Work, the nonce and the difficulty. The hash of the previous block links the blocks together into a chain.
An online tool that lets you look up current and historical data on a blockchain in real time, including blocks, transactions, addresses, fees and the hash rate. Well-known examples are Etherscan for Ethereum and mempool.space for Bitcoin.
The number of a particular block, counted from the first block of a blockchain, the genesis block (also called “block 0” or “height 0”). Block height therefore shows how many blocks come before a given block.
The reward a miner receives for a newly mined block. On Bitcoin it halves roughly every four years (see Halving): since April 2024 it has been 3.125 BTC per block, before that it was 6.25 BTC.
At the next halving, expected around 2028, it will drop to 1.5625 BTC. On top of the block reward, the miner receives the transaction fees in the block.
A decentralised, distributed register (ledger) made up of validated blocks linked into a chain in chronological order. Picture a table that isn’t kept by a single party but by a network of computers: new entries get a timestamp and are visible to everyone involved.
Because each block refers to the previous one, confirmed entries can practically no longer be changed without anyone noticing. The best-known blockchain is Bitcoin’s.
The room for transactions in a block. Because block size is usually limited, only a certain number of transactions can be processed per block.
This creates a market of supply and demand between users on one side and miners or validators on the other: users offer transaction fees, and miners or validators choose which transactions to include. When demand for blockspace is high, fees rise, on Ethereum for example in the form of higher gas fees.
A bull market is a financial market in which the prices of assets such as shares or cryptocurrencies tend to rise over a longer period. Market participants are optimistic, buying demand is strong and the general mood is positive.
On stock markets, a rule of thumb is to speak of a bull market when prices have risen at least 20 per cent from their last low.
Typical features of a bull market are:
Bull markets can occur in various asset classes and have different causes. On stock markets, these include strong economic data, low interest rates or rising corporate profits. In the crypto world, growing interest, positive regulatory developments or technological progress can drive a bull market.
In the crypto world and in financial language generally, “bullish” (from “bull”) means an optimistic attitude or the expectation of rising prices.
If you’re “bullish” on a cryptocurrency or a market, you expect prices to rise, or you already see an upward trend.
A “bullish” market or a “bullish” forecast suggests that market participants are confident and buying more. Reasons can include positive news, rising demand, strong fundamentals or other factors.
The opposite is “bearish”. The terms come from stock market imagery: the bull thrusts its horns upwards, the bear swipes its paws downwards.
“Burning” a token means sending it to an address from which nobody can send it on, because no known private key exists for it. Such addresses are called “burn” or “eater” addresses. The tokens are removed from circulation for good, and the available supply goes down.
C
“CEX” stands for “Centralised Exchange”, in other words a centralised crypto exchange. On such a platform, users trade cryptocurrencies through the operator, who acts as an intermediary, matches orders and usually holds the deposited funds in custody.
On a decentralised exchange (DEX), by contrast, users trade directly with each other. Well-known examples of CEXs are Coinbase, Binance and Kraken. Because the exchange holds the funds, users bear the risk of losing money if the exchange is hacked or goes bankrupt.
Keeping private keys on devices or media with no internet connection to protect them from hackers, for example on a hardware wallet, a dedicated offline computer or as a paper wallet. The opposite is “hot storage”, where the keys sit on a device connected to the internet. See also Cold Wallet.
A “cold wallet” is a wallet whose private keys are stored without a connection to the internet, such as hardware wallets or paper wallets. Because the keys are offline, they’re largely protected from hacking attacks over the internet; an attacker would need physical access.
Cold wallets are therefore considered a particularly secure way to store crypto. Because access is more cumbersome than with a hot wallet, they’re mainly used for holdings you plan to keep for longer.
Agreement between the nodes in a DLT network about which state of the shared ledger is valid, in other words which transactions count and in which order. It’s reached through a consensus mechanism such as Proof-of-Work or Proof-of-Stake, without a central authority having to decide.
A digital asset recorded on a blockchain or another DLT system with the help of cryptography. The term covers cryptocurrencies and tokens. Depending on how it’s designed, a crypto asset may or may not be regulated as a financial instrument.
Automated software for trading cryptocurrencies. A trading bot places buy and sell orders very quickly and around the clock, based on predefined rules or algorithms. Profits aren’t guaranteed: faulty rules or unexpected market moves can lead to losses just as quickly.
A form of digital money transferred via a DLT system such as a blockchain. The best-known cryptocurrency is Bitcoin. Many authorities and experts take the view that Bitcoin and other cryptocurrencies don’t fully perform the functions of money in the traditional sense, and therefore prefer the term “crypto asset”.
D
Short for “Decentralised Autonomous Organisation”: a digital form of organisation that isn’t run through traditional management structures such as a board or executive team, but through rules set out in smart contracts on a blockchain.
You usually become a member by holding the DAO’s governance token. This gives you voting rights, usually in proportion to the tokens you hold, and lets you vote on proposals. Often anyone with governance tokens may submit proposals; large DAOs increasingly require a minimum holding to do so. Approved proposals can be carried out directly by smart contracts programmed for that purpose.
Short for “decentralised application”: a software application that doesn’t run on a central server but on a peer-to-peer DLT network, usually via smart contracts. Well-known platforms for dApps are Ethereum and other open, permissionless blockchains such as Solana or Avalanche.
Dollar cost averaging (DCA) is an investment strategy in which a fixed amount is invested in an asset at regular intervals, regardless of the current price.
The aim is to smooth out the effect of price swings on the entry price.
How DCA works:
DCA is often used by investors who don’t want to spend time actively timing the market. The strategy doesn’t guarantee profits; the result depends on how the chosen asset performs.
An exchange where users trade cryptocurrencies and other crypto assets directly with each other (peer-to-peer), without a central intermediary. Trades are settled by smart contracts, and users keep their coins in their own wallet until the swap. A well-known example is Uniswap.
Blockchain-based financial services that work without central intermediaries such as banks, brokers or exchanges. DeFi is an ecosystem of smart contracts, crypto assets, stablecoins and other blockchain technologies that makes financial transactions such as trading, borrowing or lending possible directly between the parties involved.
It also comes with its own risks, such as bugs in smart contracts.
“Diamond hands” describes investors or traders who hold on to their cryptocurrencies or other investments despite sharp price swings and losses, and don’t sell.
The image behind it: their hands are as hard as diamonds and won’t let go.
The opposite is “paper hands”: investors who panic-sell at the first signs of falling prices.
“Diamond hands” is often used as praise for investors who stick to their long-term strategy and aren’t rattled by short-term swings. Whether holding makes sense in a given case, however, depends on the investment and your personal situation.
The problem of spending the same money twice: digital information can be copied at will. So how do you make sure digital money isn’t spent more than once?
For a long time this required a trusted central authority such as a bank. Bitcoin was the first to solve the problem without a central authority: the network agrees on a single valid order of transactions through its consensus mechanism.
“DYOR” stands for “Do Your Own Research”. The abbreviation is used in finance and crypto circles as a reminder to gather and check information yourself before making financial decisions.
DYOR stresses that you shouldn’t blindly trust information or advice from others, for example on social media. That said, people also tack it on as a disclaimer when they’re promoting a project.
E
Short for “Ethereum Improvement Proposal”, usually followed by a number, such as “EIP-1559”. An EIP is a document describing standards and changes for the Ethereum network. Many EIPs concern core functions of the protocol; standards for the application layer form a separate category, the ERCs (see ERC).
Short for “Ethereum Request for Comments”, usually followed by a number, such as “ERC-20”. ERCs are standards for Ethereum’s application layer: they define how things like tokens or wallets work, so that smart contracts and applications from different developers can work together.
There are various ERC standards for different use cases.
An ERC standard for a smart contract interface that can manage any number of fungible and non-fungible token types in a single contract. It lets you transfer several tokens in a single transaction, which saves fees. The standard is often used for games.
An ERC standard for fungible (interchangeable) tokens on Ethereum. It defines how such tokens are issued and transferred and which basic functions a token smart contract must offer, such as checking balances. Most tokens on Ethereum, including many stablecoins, follow this standard.
An ERC standard for non-fungible, in other words unique, tokens (NFTs) on the Ethereum blockchain. With fungible tokens, every token is worth the same and interchangeable; each ERC-721 token, by contrast, has its own identifier and is one of a kind.
The native cryptocurrency of the Ethereum platform. Ether is used to pay transaction fees (gas), for example for transfers or for running smart contracts.
Since the switch to Proof-of-Stake in September 2022, validators deposit Ether as collateral in order to propose and confirm blocks, and receive rewards in Ether in return.
An open-source, public blockchain platform for decentralised applications. Ethereum was conceived by Vitalik Buterin in 2013, developed together with other co-founders and launched in July 2015.
The platform supports smart contracts, which developers use to build and run dApps. Since September 2022 (“The Merge”), Ethereum has used Proof-of-Stake instead of Proof-of-Work.
F
The “Fear and Greed Index” is an indicator meant to measure the mood of market participants. It combines various factors into a single value on a scale from 0 (extreme fear) to 100 (extreme greed).
There are several such indices for the crypto market, and the calculation differs from provider to provider.
Typical factors are:
A high value can point to excessive optimism and an overbought market, a low value to excessive caution and an oversold market.
The index only captures part of market psychology and isn’t suitable as the sole basis for decisions.
Money that a state declares to be legal tender and that isn’t backed by a physical asset such as gold, for example the Swiss franc (CHF), the euro (EUR) or the US dollar (USD). Its value rests on trust in the state and the central bank.
“FOMO” stands for “Fear of Missing Out”: the worry of missing an opportunity that others are taking. The term is often used in connection with investments, social events or other opportunities.
In the crypto world, FOMO often describes the mood during rapid price rises: afraid of missing out on gains, some people buy in a rush. Buying at such high prices often leads to losses when prices fall again.
A split of a blockchain into two branches (a fork in the road). Forks happen naturally when two miners find a valid block at the same block height at almost the same time.
Such splits resolve themselves as soon as the following blocks build on only one of the two branches. Forks are also used deliberately to change the rules of a blockchain (see Hard fork and Soft fork).
Acronym for “Fear, Uncertainty and Doubt”. In the crypto scene, this jargon term means deliberately spreading negative, often exaggerated or false information about a project or token, frequently about a competing project. That said, legitimate criticism is sometimes dismissed as FUD too quickly.
A “FUDster” is someone who spreads FUD. “FUD” stands for “Fear, Uncertainty and Doubt”. It means someone who deliberately spreads negative information, rumours or doubts about something, often a cryptocurrency or a financial product, to sow uncertainty or undermine investor confidence.
FUDsters may try to influence prices this way, or to manipulate how certain projects are perceived. That’s why it pays to ask critically where a piece of information comes from and whether there’s evidence for it.
In online discussions, however, the terms “FUD” and “FUDster” are also used to brush off criticism wholesale: not every piece of bad news is FUD.
G
“GameFi” combines “game” and “finance”. It refers to blockchain games that combine game mechanics with elements of decentralised finance (DeFi).
In GameFi projects, players can earn tokens or other crypto assets through their activities (“play-to-earn”), which can be traded or used further in DeFi protocols. In-game items such as characters, equipment or virtual land are often represented as NFTs and therefore belong to the players themselves.
GameFi is a fairly young field. How it’s designed and how the term is used varies from project to project, and many in-game economies have proved rather unstable.
The unit measuring the computing effort that a transaction or the execution of a smart contract causes on Ethereum. Every transaction includes a gas limit and the price the user is willing to pay per unit of gas. The fee is paid in Ether. Validators prefer to include transactions with higher fees in a block.
The maximum number of gas units a user is willing to spend on a transaction. The limit has to be high enough to cover the computing effort needed to run it. If it isn’t, the transaction fails, and the gas already used is still paid for. Gas that isn’t used is not charged at the end of the transaction.
The price a user is willing to pay per unit of gas, stated in Gwei. Since 2021 (EIP-1559), on Ethereum it has been made up of a base fee, which the network sets and which is burned, and an optional tip (priority fee) for the validators.
A subunit of Ether. One Ether can be divided into 10¹⁸ (a quintillion) smallest units, called Wei. 1 Gwei (gigawei) equals 1 billion Wei, or one billionth of an Ether. Gas prices on Ethereum are usually stated in Gwei.
H
The Bitcoin halving is an event at which the reward for mining new Bitcoin blocks is cut in half. It happens every 210,000 blocks, roughly every four years.
The halving is built into the Bitcoin protocol and limits the number of new bitcoins entering circulation; the total supply is capped at 21 million BTC.
At the most recent halving, in April 2024, the reward per block fell from 6.25 to 3.125 BTC. The next halving is expected around 2028; the reward will then drop to 1.5625 BTC.
Because of the halving, new bitcoins are added more and more slowly, so Bitcoin’s inflation rate falls. In the past, halvings have several times coincided with rising Bitcoin prices. However, crypto markets are influenced by many factors, and past performance is no guarantee of future results.
A change to the protocol rules that isn’t backwards compatible: blocks or transactions that were previously invalid can become valid, or the other way round.
All nodes have to update to the new software version; nodes running the old version don’t recognise the new chain. A hard fork can be used to close security gaps, introduce new features or reverse transactions, as happened on Ethereum in 2016 after the hack of the organisation “The DAO”. If not everyone goes along with the change, two separate blockchains emerge: that’s how Ethereum Classic split from Ethereum in 2016 and Bitcoin Cash from Bitcoin in 2017.
Hardware wallets are dedicated devices for storing the private keys of cryptocurrencies. Usually it’s a small device the size of a USB stick with its own software and often a display or touchscreen.
The private keys never leave the device; transactions are confirmed directly on it. This keeps the coins protected even if the connected computer is compromised, while still making them quickly available when needed. Hardware wallets are considered one of the safest ways to store crypto, especially larger holdings. It’s important to keep the recovery phrase (seed phrase) safe and offline.
A hash is a kind of digital fingerprint of data. A hash function takes any input data and calculates a value of fixed length from it. The same input always produces the same hash, but you can’t work back from the hash to the original data.
If the input changes even slightly, the hash changes completely and unpredictably. Bitcoin’s consensus process relies on the SHA-256 hash algorithm.
An example with SHA-256: only the first letter is different, yet the hash is completely different:
“Watanabe”: 1a9d792ba3906821 c4fc633f652db42a 80af0f8a4663e278 827e8b3cf0fc8009
“watanabe”: 980cc4ecf43fd3ba ee9afaa662c2ec14 f744b18fe7d583df 623d6eb052040b72
“HODL” is a misspelling of “hold” that has become the standard crypto term for holding cryptocurrencies for the long term despite sharp price swings.
It comes from a post on the Bitcointalk forum in December 2013 titled “I AM HODLING”. In it, the author explained that he wanted to keep his bitcoin despite falling prices rather than sell or trade it.
The expression quickly became a meme and is often reinterpreted after the fact as “Hold On for Dear Life”.
HODL describes an attitude that focuses on the long-term picture and deliberately sits out short-term swings, with all the opportunities and risks that brings.
I
A form of funding in which a project sells digital tokens, usually in exchange for Ether, Bitcoin or other cryptocurrencies (also called a “token sale”).
The tokens can serve different purposes: in Switzerland, the Financial Market Supervisory Authority (FINMA) distinguishes between payment, utility and asset tokens. ICOs were especially common in 2017 and 2018; many projects from that time failed, and some turned out to be scams.
Short for “if you know, you know”. It hints that a post or message only makes sense to insiders. It’s also used ironically to tease someone who passes on common knowledge as if it were an insider tip.
K
Asymmetric cryptography (public-key cryptography) always works with a key pair: a public key and a private key. With cryptocurrencies, the private key is a secret number that belongs to an address.
It’s used to create a digital signature that proves mathematically that the holder is entitled to dispose of the coins at that address. Anyone can check this signature with the public key, without knowing the private key. See also Private key and Public key.
“KYC” stands for “Know Your Customer”, the process of identifying customers. Companies verify their customers’ identity and collect relevant information about them in order to prevent money laundering, fraud, terrorist financing and other illegal activities.
In many industries, including banks and crypto exchanges, this process is required by law; in Switzerland, the obligation arises from the Anti-Money Laundering Act (GwG), among others.
At crypto exchanges and other crypto service providers, KYC means users have to submit personal details and proof of identity before using certain services, such as an ID document, proof of address or a selfie for verification. This lets providers make sure their services aren’t misused and that they comply with the rules on combating money laundering and terrorist financing.
L
A layer 1 blockchain is the base layer or main chain of a blockchain platform, where transactions and data are fundamentally processed and secured.
In the blockchain world, people often distinguish between two levels:
So layer 1 provides security and consensus, while layer 2 helps overcome scalability bottlenecks and improve efficiency.
A register or book of accounts in which transactions are recorded. On a blockchain, the ledger isn’t stored centrally but distributed as identical copies across many nodes (distributed ledger).
M
A memecoin is a cryptocurrency based on humorous content, internet memes or pop culture. Usually the focus isn’t on any particular technological benefit or use case but on fun, community and going viral.
Many memecoins refer to particular meme characters or internet phenomena. Their value depends heavily on attention on social media and on the size of the community.
Memecoins are considered highly speculative: their prices are often driven by short-term trends and swing wildly. Well-known examples are Dogecoin and Shiba Inu.
Science fiction author Neal Stephenson coined the term in 1992 in his cyberpunk novel “Snow Crash”. There is still no generally accepted definition.
“Metaverse” usually means a persistent, shared digital environment with immersive experiences, for example through virtual reality, where people meet as avatars. In the crypto world, NFTs and tokens for digital ownership often play a part.
The process by which new blocks of transactions are checked and added to Proof-of-Work blockchains such as Bitcoin. Computers keep calculating hash values until they find one that meets the required difficulty.
Whoever manages it may add the next block and receives the block reward; new coins are created in the process. The computers involved and the people who run them are called “miners”.
The process of creating new tokens on a blockchain, used especially often in connection with NFTs. When you mint an NFT, a piece of digital content, such as an image, is linked to a newly created, unique token and thereby registered on the blockchain as a digital asset.
N
An NFT (non-fungible token) is a unique token that can’t be exchanged like for like. Unlike Bitcoin, where every unit is worth the same, every NFT is one of a kind.
NFTs are registered and traded on a blockchain, which keeps a traceable record of ownership and transfers. They’re used for things like digital art, collectibles, tickets or certificates. Important: owning an NFT doesn’t automatically give you the copyright to the linked content.
NGMI stands for “not gonna make it”. In the crypto scene, the abbreviation is often used as a mocking prediction that someone will fail because of a bad decision, for example when someone sells at the bottom even though plenty points to an upward trend.
It’s also used to poke fun at people who reject cryptocurrencies or don’t understand basic concepts. The opposite is “WAGMI” (“we’re all gonna make it”).
“No-coiner” is a disparaging name for someone who is very critical of cryptocurrencies and considers them worthless, a fad or a Ponzi scheme. No-coiners are convinced cryptocurrencies will fail, and so hold neither Bitcoin (BTC) nor Ether (ETH) nor any other cryptocurrency.
A computer connected to a DLT network. A node first downloads an up-to-date copy of the ledger and is then responsible for receiving, checking and passing on transactions and blocks to other nodes.
Thanks to this multiple, redundant distribution, with every participant checking, the data stays available at all times and invalid transactions are rejected.
Short for “number used once”: in cryptography, a number that is used only a single time. In Proof-of-Work mining, for example on Bitcoin, the nonce plays a central role: miners change it again and again until the hash of the block meets the required difficulty.
On Ethereum, a nonce also counts an account’s transactions so that no transaction is executed twice.
O
Refers to activity that takes place outside a blockchain, or to data stored outside it that the blockchain can still point to. Examples are transactions on a layer 2 solution, or the image file of an NFT stored on a separate server. The opposite is “on-chain”.
“OG” stands for “Original Gangster”. The expression comes from US street and gang culture and was popularised by the hip-hop scene. Today it’s a term of respect for someone seen as a pioneer or veteran of an industry or community.
In the crypto world, “OGs” are people, such as developers, investors or community members, who were there from the start or played an important part in building projects or communities.
There’s no fixed definition; the meaning depends on the context. The term is usually used informally and respectfully.
A service that feeds smart contracts on a blockchain with information from outside (off-chain), because smart contracts can’t access external data themselves.
An oracle can provide weather data, stock prices, flight data, registry information or readings from an Internet of Things device, for example. Because the smart contract trusts the data it receives, the oracle’s reliability is crucial.
P
“Paper hands” describes investors or traders who panic-sell at the first signs of falling prices or market swings and quickly give up their positions.
The image behind it: their hands are as weak as paper.
The opposite is “diamond hands”: investors who stick with their investments despite sharp swings and price drops.
The term is mostly used critically or mockingly to highlight a lack of staying power. Keep in mind, though, that investors have different risk appetites and strategies: selling to limit losses can also be a deliberate decision.
With a paper wallet, an address and its private key are generated offline and printed or written down on paper, often as a QR code too. Cryptocurrencies can then be sent to that address.
Instead of paper, the details can also be stamped into a metal plate, which holds up better against fire and water. The document has to be stored safely, for example in a safe. Because it’s easy to make mistakes when creating and redeeming a paper wallet, which can lead to losses, paper wallets are rarely used today; hardware wallets have mostly taken their place.
Digital tokens meant to serve as a means of payment for goods or services, or to enable transfers of money and value. In other words, they work as a virtual currency. The Swiss Financial Market Supervisory Authority (FINMA) calls them “payment tokens”; Bitcoin is the best-known example.
A DLT system that anyone can join without approval: anyone can run a node, submit transactions and take part in confirming new blocks. Bitcoin and Ethereum are permissionless. The opposite is a “permissioned” system with restricted access.
Acronym for “Proof of Attendance Protocol”. A POAP is an NFT that confirms someone attended a particular event or experience, a kind of digital keepsake or certificate of attendance.
A blockchain or DLT system that only certain participants can access. Only nodes approved in advance can access it, submit transactions and confirm them. A private blockchain is therefore always permissioned. Many enterprise solutions are built as private blockchains.
A secret, very large random number that, like a password, gives access to the cryptocurrencies in a wallet. The private key is used to sign transactions.
Only the owner should know it, because whoever knows the private key can dispose of the coins. If it’s lost, access is usually lost for good. Many wallets back it up with a recovery phrase (seed phrase) of 12 or 24 words.
An ironic way of saying that something is probably very important. The expression is often used to make fun of sceptics who dismiss a development in the crypto world as “probably nothing”.
A consensus mechanism and an alternative to Proof-of-Work.
Proof-of-Work mining needs a lot of computing power and therefore a lot of electricity.
With Proof-of-Stake, so-called validators deposit coins as collateral (a stake) instead. Who gets to propose and confirm new blocks depends mainly on how many coins are staked: if you’ve staked about 1% of all staked coins, you’ll be selected for roughly 1% of the blocks. Anyone who breaks the rules risks losing part of their stake (slashing). This makes attacks on the network expensive. Ethereum has used Proof-of-Stake since September 2022.
A consensus mechanism in which computers keep calculating hash values with different nonce values until they find a hash below a given target (the difficulty).
Whoever finds such a value may add the next block to the blockchain. As an incentive, the miners involved receive block rewards and transaction fees. Because the process is laborious and uses a lot of electricity, it would be extremely expensive to rewrite the blockchain’s history after the fact, for example to double-spend, or to break consensus. That protects the network. Bitcoin uses Proof-of-Work.
A blockchain or DLT system that is open to the public: anyone with a computer and internet access can run a node and view the data. A public blockchain can be permissionless or permissioned. Bitcoin and Ethereum are public and permissionless.
A cryptographic key that is calculated from the private key and may be publicly known. If you sign data with your private key, anyone who knows your public key can check that the signature is genuine.
The reverse doesn’t work: the private key practically can’t be calculated from the public one. A Bitcoin address is usually derived from the public key, mostly by hashing.
Q
Quantum computers are seen as a possible future threat to blockchain security. A sufficiently powerful quantum computer could crack methods that rely on hard mathematical problems such as prime factorisation or the discrete logarithm.
This would mainly affect the digital signatures that secure transactions, and with them much of the encryption used on the internet. Hash functions such as SHA-256 are considered far more robust. Today’s quantum computers are still too weak for this; work on quantum-safe methods (post-quantum cryptography) is already under way.
R
“Rekt” is a slang spelling of “wrecked”, meaning destroyed or ruined. In the crypto world, the expression describes someone who has suffered heavy losses, usually when trading cryptocurrencies.
If someone makes a bad trading decision and loses a lot of money, people say they got “rekt”. The term is often used humorously or self-mockingly, but can also express frustration about real financial losses.
Even though “rekt” is usually meant lightly, it’s a reminder of the high volatility and risks of crypto trading: losses up to losing everything are possible.
In the crypto world, a “rug pull” is a scam in which the people behind a project suddenly withdraw all or most of the funds, such as the liquidity from a trading pool or the money collected from investors.
The value of the associated token then usually collapses, and investors suffer heavy losses.
The name comes from the expression “to pull the rug out from under someone”.
Rug pulls are especially common with new tokens and DeFi projects that promise high returns. There, developers can often access the funds without any oversight. Lost money usually can’t be recovered. Typical warning signs are anonymous teams, unaudited smart contracts and unrealistic promises of returns.
S
“Shitcoin” is a derogatory slang term for cryptocurrencies seen as inferior, useless or fraudulent. It usually refers to projects with little or no real use, without convincing technology or without a sustainable foundation.
The label is subjective and interpreted in different ways. The criticism targets things like a lack of transparency, lack of innovation, fraudulent intent or a missing use case.
To protect yourself from such projects, the rule in the scene is to check a project’s technology, team and risks carefully before putting money in (see DYOR).
The pseudonym of the unknown person or group who published the whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008 and launched the first Bitcoin software in 2009. The whitepaper is the foundation of the Bitcoin protocol. Satoshi Nakamoto hasn’t appeared in public since 2011.
“Sats” is short for satoshis, the smallest unit of Bitcoin (BTC), named after the unknown inventor of Bitcoin, Satoshi Nakamoto. Like fiat currencies, cryptocurrencies can be divided into smaller units. Think of sats like the centimes in a Swiss franc: 1 franc is 100 centimes, while 1 bitcoin is 100 million satoshis.
The term “smart contract” is a little misleading: it usually isn’t a contract in the legal sense, although smart contracts can be used to automate parts of a legal contract.
A smart contract is a program stored on a blockchain and executed there. When certain conditions are met, it automatically carries out predefined instructions, such as releasing a payment. Once published, the code usually can’t be changed, so programming errors can be costly.
Unlike a hard fork, a soft fork is a backwards-compatible change to the protocol rules that only tightens them. Nodes that don’t update keep accepting new blocks and remain part of the network, but can’t use the new features. That creates an incentive to update. A well-known example is SegWit on Bitcoin (2017).
A software wallet is a program you install on your computer or smartphone. There are universal wallets that support many common cryptocurrencies, and coin-specific wallets that only work with one currency or network.
Because the private keys sit on your own device, you have full control, and you’re also responsible for keeping them safe. Since the device is connected to the internet, software wallets count as hot wallets.
A crypto asset that aims for a stable value relative to a particular asset or basket of assets. It’s usually pegged to a fiat currency such as the US dollar.
Stablecoins can be backed by reserves such as bank deposits or government bonds, collateralised by other crypto assets, or managed algorithmically by smart contracts. Stability isn’t guaranteed: some stablecoins, algorithmic ones in particular, have lost their peg in the past.
“Staking” means depositing (locking up) cryptocurrencies in order to validate transactions on Proof-of-Stake blockchains and keep the network secure.
In return, participants usually receive rewards in the form of additional coins.
Anyone who stakes coins is called a “staker” and helps maintain and secure the network. How exactly it works depends on the network. It’s usually based on Proof-of-Stake: the chance of being allowed to create a new block and earn rewards depends on the number of coins staked.
The basic steps:
Staking contributes to a network’s security and decentralisation and can generate income. But there are risks too: price swings of the staked coins, lock-up periods, penalties if a validator misbehaves (slashing) and, with platforms, the risk that the provider fails.
T
Tokens are digital assets or rights issued on an existing blockchain such as Ethereum, usually via a smart contract. Unlike a coin, they generally don’t have their own blockchain.
Tokens can serve different purposes: the Swiss regulator FINMA distinguishes payment tokens (see Payment tokens), utility tokens (see Utility tokens) and asset tokens. Asset tokens represent things like shares in companies or in real-world assets such as property (real world assets).
“Tokenomics” combines “token” and “economics” and describes the economic structure and design of a token or token platform.
This includes, among other things:
This determines whether a token is designed to be inflationary, deflationary or stable.
Tokenomics vary widely from project to project. They give clues about how a model is set up, but don’t guarantee any price performance.
U
A token that gives digital access to an application, product or service, much like a membership card or voucher. FINMA calls such tokens “utility tokens”.
W
A “hot wallet” is a wallet connected to the internet, such as a web wallet in the browser, a wallet on a trading platform or a smartphone app.
They’re usually very easy to use and give quick access, but are more vulnerable to hacking attacks than cold wallets. With web wallets on trading platforms, there’s more: using them requires the platform to be reachable and not to suspend trading, and often the provider, not the user, manages the private keys (custodial wallet).
The idea of a further developed, decentralised version of the internet. It rests on peer-to-peer technologies such as public blockchains, on decentralised forms of organisation such as DAOs, and on a token-based economy in which users own and manage digital assets themselves.
Whether, and in what form, Web3 will catch on remains open.
“Wen Lambo?” means “When are you buying yourself a Lamborghini?”, with “wen” a deliberate misspelling of “when”. The question alludes to the fact that, in the early days of cryptocurrencies, some successful crypto investors bought Lamborghinis as status symbols.
The Lamborghini became the symbol of quick crypto wealth. The phrase is mostly used ironically: to poke fun at people who only care about a coin’s price, or to ask when an investment will be worth enough to afford a Lamborghini. See also Wen Moon.
When the price of a cryptocurrency rises sharply, in crypto slang it goes “to the moon”. With “Wen Moon?” (“When are we going to the moon?”), crypto traders vent their impatience when a big price rise in a project they’ve invested in is slow to come.
“Wen Lambo?” is similar: the question of the price at which you could afford a Lamborghini. Both expressions are mostly used ironically.
Slang for a person or organisation that owns a very large amount of a cryptocurrency. Because whales hold so much, their buying or selling can noticeably move the price. That’s why large transactions from such addresses are often closely watched in the scene.
An information document that describes a project before it launches or before a token sale: its goals, philosophy, technology and often its tokenomics.
Whitepapers are meant to explain the project and generate interest; as a rule, no independent body has checked them. The best known is Satoshi Nakamoto’s Bitcoin whitepaper from 2008.
Z
A cryptographic method by which one party (the prover) can prove to another (the verifier) that a statement is true, without revealing the underlying secret information.
Example: you can prove that you’re over 18 without disclosing your exact age or date of birth. Zero-knowledge proofs are used for things like greater privacy or for ZK-Rollups on layer 2.
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