Basics

Fundamentals

• Blockchain — A shared digital ledger that records transactions across many computers, so no single record can be changed without agreement from the network.
• Cryptocurrency — A digital asset that exists only as an entry on a blockchain, without a central bank or company issuing it.
• Wallet — An app or device that holds the keys needed to access and send your crypto — it doesn't store the coins themselves, the blockchain does.
• Address — A public identifier, similar to an account number, that others use to send you crypto on a specific network.
• Private Key — A secret code that proves ownership of a wallet and authorizes sending funds. Anyone with your private key controls your funds.
• Seed Phrase — A list of 12–24 words that can restore an entire wallet. It should never be shared or stored online — it is equivalent to your private keys.
• Phishing — A scam in which a website, app, or fake support agent poses as a trusted party to trick you into revealing a seed phrase, private key, or password, or into signing a malicious transaction. No legitimate wallet or exchange will ever ask for your seed phrase.

Keys & Encryption

• Public & Private Keys — A mathematically linked pair used in asymmetric cryptography: the public key (and the address built from it) can be shared freely, while the private key stays secret and is used to sign transactions. Anyone can verify a signature with the public key, but no one can work out the private key from it.
• Entropy — The randomness a wallet uses to create a seed phrase — 128 bits for 12 words, 256 bits for 24 — usually taken from the device's secure random number generator. A short checksum from its SHA-256 hash is appended, so a mistyped phrase is normally caught on restore. Words picked by a person carry far less randomness and can be guessed.
• BIP-39 — A widely used standard (BIP stands for Bitcoin Improvement Proposal) that turns a random number into a 12–24 word phrase drawn from a fixed list of 2,048 words. Each word encodes 11 bits, and the same phrase always restores the same wallet in any compatible app.
• PBKDF2 (Key Derivation) — A key derivation function that runs the seed phrase (plus the passphrase as a salt, if any) through 2,048 rounds of HMAC-SHA512 to produce a 512-bit master seed from which all keys are derived. It is a deterministic, one-way step; the real protection against guessing comes from the phrase's entropy, not from the number of rounds.
• Passphrase (25th Word) — An optional extra word or password that is mixed into the seed phrase (as a salt) when the master seed is created, so each different passphrase opens a different wallet. It is not stored inside the phrase itself: if it is lost, those funds cannot be recovered, and a wrong one simply opens an empty wallet.
• HD Wallet (BIP-32/44) — A hierarchical deterministic wallet derives a practically unlimited tree of private keys and addresses from a single seed, following set derivation paths (BIP-32, BIP-44) for each coin and account. Backing up one seed phrase therefore restores every address at once.

How It Works

• Transaction — A transfer of value or data recorded on a blockchain, signed by the sender's private key.
• Block — A batch of transactions bundled together and added to the blockchain at once.
• Network Fee (Gas) — A small payment to the network for processing a transaction; it varies with how busy the network is.
• Mining — The process of validating transactions and creating new blocks by solving computational puzzles, used by Proof of Work networks like Bitcoin.
• Staking — Locking up coins to help validate transactions on a Proof of Stake network, earning rewards in return.
• Consensus Mechanism — The rules a network's computers follow to agree on which transactions are valid, without a central authority.
• Smart Contract — Code stored on a blockchain that runs automatically when its conditions are met, without needing a middleman.

Market Terms

• Coin vs. Token — A coin runs on its own blockchain (e.g. Bitcoin, Ethereum); a token is built on top of an existing blockchain (e.g. most ERC-20 assets on Ethereum).
• Altcoin — Any cryptocurrency other than Bitcoin.
• Stablecoin — A cryptocurrency designed to hold a steady value, usually pegged to a currency like the US dollar.
• Market Cap — The total value of all coins in circulation for an asset — price multiplied by circulating supply.
• Volatility — How quickly and sharply an asset's price moves; crypto is generally far more volatile than traditional assets.
• CEX vs. DEX — A centralized exchange (CEX) is a company you trade through and trust with your funds; a decentralized exchange (DEX) lets you trade directly from your own wallet.
• HODL — Slang for holding a crypto asset long-term rather than selling during price swings, originally a misspelling of 'hold'.

Beyond Trading

• DeFi — Short for 'decentralized finance' — financial services like lending and trading run by code on a blockchain instead of a bank or broker.
• NFT — Short for 'non-fungible token' — a blockchain record proving ownership of a unique digital or digital-linked item.
• Whale — A wallet or entity holding a very large amount of a given cryptocurrency, large enough to noticeably move its price.
• KYC — Short for 'Know Your Customer' — identity checks (ID, proof of address) that centralized exchanges are legally required to run before letting you trade or withdraw.
• AML — Short for 'Anti-Money Laundering' — rules and monitoring exchanges use to detect and block illegally obtained funds from moving through the financial system, crypto included.