Crypto Glossary: 20 Key Terms Every Beginner Should Know

In this blog, we will dive into the most common terms that you will often see and hear in the crypto space. Understanding these terms will provide you with a quick start up in the learning process helping you to navigate the crypto space more confidently. 

I've used a blend of formal and casual tone in this blog, along with examples to help you better understand these key terms.

1. Altcoins

Any cryptocurrency other than Bitcoin is an altcoin. Each altcoin has its own set of rules for operation, properties, and use cases. For example, Ethereum, ADA, XRP, SHIBA INU, and LINK are all altcoins.

2. Anti-Money Laundering (AML)

AML refers to regulations designed to prevent illegally obtained funds from appearing clean. In the context of crypto, all centralized exchanges and financial institutions must follow AML protocols to ensure compliance.

3. ATH (All-Time High)

ATH refers to the highest price point that a cryptocurrency has ever reached. Reaching an ATH can generate excitement, leading to increased buying activity and sometimes FOMO.

Bitcoin’s last all-time high (ATH) was on November 10, 2021, at around $69,000. It reached a new ATH of $73,000 in March 2024. Many believe we will see even higher ATHs in the coming years as the market continues to develop.

4. ATL (All-Time Low)

ATL, on the other hand, represents the lowest price a cryptocurrency has ever traded at, marking the lowest value an asset has reached in the market over time.

This term is crucial for investors looking to find potential buying opportunities or assess the overall health of a digital asset.

For example, Bitcoin’s last all-time low occurred on December 12, 2022, when its price fell to approximately $15,588. This date refers to the most recent ATL, not the overall ATL in its history.

5. Bulls and Bears

Bulls are investors who believe that the price of an asset or crypto will rise; they hold an optimistic sentiment about the market.

Bears, on the other hand, expect prices to fall and hold a pessimistic view of the market.

When we say that the crypto market is bullish, it means the market is optimistic and prices are rising due to increased buying activity – bulls are in power. Conversely, when we say the market is bearish, it means the market is pessimistic and prices are falling due to high selling activity – bears are in power.

The battle between bulls and bears (market forces – supply and demand) largely determines cryptocurrency prices.

6. Bull Trap

Have you ever experienced a situation where a friend promised to help you but ghosted at the last moment, leaving you high and dry? That’s exactly what a bull trap feels like!

In the crypto market, prices rise, and you think, “Oh, this looks great! I can get in now!” But as soon as you jump in, the prices drop even faster, leaving you with huge losses.

Just like that ghosting friend, a bull trap lures you in with false hope, only to leave you feeling abandoned and regretful.

7. Bear Trap

A bear trap works in the opposite way. It signals you to sell your crypto in response to falling prices, but just when you do, the price unexpectedly reverses and starts to climb.

For example, let’s say you bought some crypto at $50 per coin. The price begins to drop below $50, and at $45, you decide to sell your entire holding, taking a $5 loss per coin. Shortly after, to your surprise, the price bounces back above $50 and even shoots up to $70.

This leaves you thinking, "What just happened?" Well, you’ve just experienced a bear trap!

8. DYOR (Do Your Own Research)

DYOR is a vital reminder in the cryptocurrency space. Influencers and media outlets may have different incentives, so it’s essential to assess whether the information you consume is unbiased and accurate.

Always prioritize your own research to make informed investment decisions.

9. dApp (Decentralized Applications)

dApps are applications that run on top of blockchain networks, using smart or automated contracts and leveraging real-world data from oracle services to provide various services.

10. Fundamental Analysis

This is a way of evaluating the value or worth of an asset. In the context of crypto projects, this includes considering the project’s purpose, the team behind it, technology, use cases, partnerships, competitors, tokenomics, and regulatory compliance.

11. FOMO (Fear of Missing Out)

FOMO is a very common term in this space. It’s the anxiety and fear of missing out on a profitable financial opportunity. The problem with FOMO is that it drives you by emotion rather than rational thinking, leading you to make irrational or poor decisions.

Here are a few examples where your FOMO might kick in:

• You see Bitcoin and crypto prices skyrocketing, and in huge excitement, you decide to jump in with a large buy order.
• Scrolling through social media, your favorite celeb shouts about a hot crypto coin. FOMO kicks in - “Get in, get in!” and you decide to buy.

In these cases, you’ve just boarded the FOMO express, headed straight for “What was I thinking?”

12. FUD (Fear, Uncertainty, and Doubt)

This refers to information that causes people to adopt a pessimistic view of the market. FUD leads to panic selling, especially among new investors, pushing market prices down and creating buying opportunities for other players.

In 2021, China’s crypto crackdown led to panic selling, dropping prices. Larger investors then bought in at these lower levels, and prices eventually rebounded.

13. Gas Fee

Gas fees are charges incurred for executing operations on the Ethereum network, such as sending transactions or deploying and interacting with smart contracts. These fees are typically measured in Gwei, a small unit of Ether (the native currency of the Ethereum blockchain).

14. HODL (Hold on for Dear Life)

The term comes from misspelling the word "hold." HODL has become an acronym for “Hold On for Dear Life.” It means keeping crypto rather than selling during market fluctuations.

This mentality is popular among long-term investors who believe in the utility of their cryptocurrencies. When the right time comes, they’ll sell, likely at higher returns, without worrying about short-term market panics and volatility.

15. KYC (Know Your Customer)

KYC refers to the process of verifying client identities to prevent fraud, money laundering, and other illegal activities. Many centralized cryptocurrency exchanges require KYC to comply with regulations.

16. Market Capitalization

Market capitalization, or market cap, is the total value of an asset, calculated by multiplying its current price by the circulating supply. It serves as a measure of a project's success and market position.

For example, if Bitcoin is priced at $60,000 and there are 19 million Bitcoins in circulation, the market cap would be $1.14 trillion (60,000 x 19,000,000).

17. Trading Pair

A trading pair is two cryptocurrencies that can be traded for each other, like BTC/ETH (Bitcoin and Ethereum). It shows how much of one currency is needed to buy the other.

Each trading pair involves a base currency (the first asset) and a quote currency (the second asset). For example, BTC/ETH shows how much Ethereum is required to buy one Bitcoin.

18. Transaction Fee

Transaction fees are charges that crypto users pay to have their transactions processed and confirmed on a blockchain network. These fees go directly to miners and validators who process and confirm transactions.

19. White Paper

Most cryptocurrency projects have white papers, which are detailed documents explaining the project's purpose. They typically address current market problems, outline the project’s objectives, and explain how it intends to solve these issues.

White papers give potential users or investors a clear understanding of the product or service, its use case, and its benefits.

20. Whale

A "whale" refers to significant players in the cryptocurrency markets, such as institutional investors, hedge funds, or affluent individuals. These entities hold substantial amounts of cryptocurrency, impacting market dynamics through their trading actions.

Final Thoughts

While there are countless terms in the crypto space to explore, I’ve covered some essential, easy-to-understand ones here. Providing overly brief definitions for complex terms wouldn’t offer much value, so I’ve focused on clarity and simplicity.

As you explore my blog, you’ll find many more terms explained in an easy-to-understand style, allowing you to gradually build your knowledge. Dive in and enjoy learning more about the world of crypto!

If you'd like to dive deeper into the crypto lingo, check out our Cryptocurrency Glossary for a quick reference.

Disclaimer: The contents of this article are for informational purposes only and are not financial advice. The views here are just the author’s opinions. The crypto market is volatile, so be sure to do your own research before investing.