New to crypto? Not for long — start with these guides and explainers
Definition Volatility is a measure of how much the price of an asset has moved up or down over time. Generally, the more volatile an asset is, the riskier it’s considered to be as an investment — and the more potential it has to offer either higher returns or higher losses over shorter periods of time than comparatively less volatile assets.
Definition A stablecoin is a digital currency that is pegged to a “stable” reserve asset like the U.S. dollar or gold. Stablecoins are designed to reduce volatility relative to unpegged cryptocurrencies like Bitcoin.
Definition A smart contract, like any contract, establishes the terms of an agreement. But unlike a traditional contract, a smart contract’s terms are executed as code running on a blockchain like Ethereum. Smart contracts allow developers to build apps that take advantage of blockchain security, reliability, and accessibility while offering sophisticated peer-to-peer functionality — everything from loans and insurance to logistics and gaming.
This string of 12 to 24 words is literally the key to your crypto — learn how to use and protect it
Private key A private key is like a password — a string of letters and numbers — that allows you to access and manage your crypto funds.
“Proof of work” and “proof of stake” are the two major consensus mechanisms cryptocurrencies use to verify new transactions, add them to the blockchain, and create new tokens.
Definition Protocols are basic sets of rules that allow data to be shared between computers. For cryptocurrencies, they establish the structure of the blockchain — the distributed database that allows digital money to be securely exchanged on the internet.
Definition NFTs (or “non-fungible tokens”) are a special kind of cryptoasset in which each token is unique — as opposed to “fungible” assets like Bitcoin and dollar bills, which are all worth exactly the same amount. Because every NFT is unique, they can be used to authenticate ownership of digital assets like artworks, recordings, and virtual real estate or pets.
Definition Mining is the process by which networks of specialized computers generate and release new Bitcoin and verify new transactions.
Definition For a cryptocurrency like Bitcoin, market capitalization (or market cap) is the total value of all the coins that have been mined. It’s calculated by multiplying the number of coins in circulation by the current market price of a single coin.
Definition Inflation is the process by which a currency like the dollar or Euro loses value over time, causing the price of goods to rise. Bitcoin (and some other cryptocurrencies) are designed to experience predictable and low rates of inflation.
Definition Cryptocurrencies like Bitcoin and Ethereum are powered by decentralized, open-source software called a blockchain. A fork happens whenever a community makes a change to the blockchain’s protocol, or basic set of rules.
Definition Exchange-traded funds — better known as an ETFs — are similar in many ways to mutual funds. They generally track the price of an asset (like gold) or basket of assets (like the S&P 500). And as their name suggests, they trade on exchanges and can be bought and sold like stock via a traditional brokerage account.
Definition A decentralized exchange (or DEX) is a peer-to-peer marketplace where transactions occur directly between crypto traders. DEXs fulfill one of crypto’s core possibilities: fostering financial transactions that aren’t officiated by banks, brokers, or any other intermediary. Many popular DEXs, like Uniswap and Sushiwap, run on the Ethereum blockchain.
Definition Short for decentralized finance, DeFi is an umbrella term for peer-to-peer financial services on public blockchains, primarily Ethereum.
Definition Cryptography is the study and practice of sending secure, encrypted messages between two or more parties. Cryptography allows digital currency transactions to be pseudonymous, secure, and “trustless” – with no bank or other intermediary required.
Definition CeFi, short for centralized finance, offers some of the yield benefits of DeFi with some of the ease of use and security of traditional financial-services products. With CeFi, you can earn interest on savings, borrow money, spend with a crypto debit card, and more.
Definition Cardano is one of the biggest cryptocurrencies by market cap. It’s designed to be a flexible, sustainable, and scalable blockchain platform for running smart contracts — which will allow the development of a wide range of decentralized finance apps, new crypto tokens, games, and more.
Definition Every four years, the amount of bitcoin awarded to miners is reduced by half, until all 21 million bitcoin have been virtually mined (probably around the year 2140). The halving mechanism helps make bitcoin a scarce, inflation-resistant resource.
Definition Axie Infinity is a crypto-meets-Pokémon game in which players raise, battle, and trade cute NFT pets called Axies. It features two native cryptocurrencies: Axie Infinity Shards (AXS), which can be bought and sold on exchanges like Coinbase, and Small Love Potion (SLP), which is awarded to players for spending time in the game.
Definition Markets experiencing sustained and/or substantial growth are called bull markets. Markets experiencing sustained and/or substantial declines are called bear markets. Each presents its own set of opportunities and pitfalls
Definition Technically, “token” is just another word for “cryptocurrency” or “cryptoasset.” But increasingly it has taken on a couple of more specific meanings depending on context. The first is to describe all cryptocurrencies besides Bitcoin and Ethereum (even though they are technically also tokens). The second is to describe certain digital assets that run on top of another cryptocurrencies’ blockchain, as many decentralized finance (or DeFi) tokens do. Tokens have a huge range of potential functions, from helping make decentralized exchanges possible to selling rare items in video games. But they can all be traded or held like any other cryptocurrency.
Cryptocurrencies like Bitcoin and Ethereum are powered by a technology called the blockchain. At its most basic, a blockchain is a list of transactions that anyone can view and verify. The Bitcoin blockchain, for example, contains a record of every time someone sent or received bitcoin. Cryptocurrencies and the blockchain technology that powers them make it possible to transfer value online without the need for a middleman like a bank or credit card company.
From how to buy it and how it works to smart contracts and ETH2, a complete beginner's guide to the second-biggest cryptocurrency
