Crypto Glossary
A comprehensive dictionary of cryptocurrency and blockchain terminology. Every term explained in plain English for beginners and experts alike.
Address
A unique string of characters representing a destination for cryptocurrency transactions. Like a bank account number but for crypto. Solana addresses are base58-encoded public keys.
Airdrop
Free distribution of cryptocurrency tokens to wallet addresses, often used to promote new projects or reward loyal users. Many successful projects started with airdrops to build community.
Altcoin
Any cryptocurrency other than Bitcoin. Solana (SOL), Ethereum (ETH), and thousands of others are considered altcoins. The term comes from 'alternative coin'.
APY
Annual Percentage Yield - the total return on an investment over one year, including compound interest. Used in DeFi to measure staking and lending rewards.
ATH
All-Time High - the highest price a cryptocurrency has ever reached. Solana's ATH was $260 in November 2021.
Blockchain
A decentralized, distributed digital ledger that records transactions across many computers. Each block contains transaction data and is cryptographically linked to the previous block, creating an immutable chain.
Block
A collection of transaction data that is bundled together and added to the blockchain. Solana produces blocks approximately every 400 milliseconds.
Bridge
A protocol that allows transferring assets between different blockchain networks. For example, moving tokens from Ethereum to Solana requires a bridge.
Burn
Permanently removing cryptocurrency tokens from circulation by sending them to an inaccessible address. Burning reduces supply and can increase scarcity.
Buy the Dip
A strategy of purchasing cryptocurrency when prices drop significantly, anticipating future price recovery. Popular among long-term investors.
Cold Wallet
A cryptocurrency wallet that is not connected to the internet, providing maximum security for long-term storage. Hardware wallets like Ledger are cold wallets.
Consensus
The mechanism by which blockchain networks agree on the current state of the ledger. Solana uses Proof of Stake combined with Proof of History for consensus.
Cryptocurrency
A digital or virtual currency that uses cryptography for security and operates on a decentralized network (blockchain). Bitcoin was the first cryptocurrency, created in 2009.
Custodial
A service where a third party holds your private keys on your behalf. Exchanges are custodial - 'not your keys, not your coins' warns against this.
DAO
Decentralized Autonomous Organization - an organization governed by smart contracts and token holder votes rather than traditional management. Many DeFi protocols are DAOs.
dApp
Decentralized Application - an application built on blockchain that operates without a central authority. Examples include decentralized exchanges and lending platforms.
DeFi
Decentralized Finance - financial services built on blockchain without traditional intermediaries like banks. Includes lending, borrowing, trading, and earning interest on crypto.
DEX
Decentralized Exchange - a cryptocurrency exchange that operates without a central authority. Raydium and Jupiter are popular DEXs on Solana.
Diamond Hands
Slang for holding cryptocurrency through extreme price volatility without selling. The opposite of 'paper hands' who sell at the first sign of trouble.
DYOR
Do Your Own Research - a reminder to investigate projects thoroughly before investing. Never rely solely on others' recommendations in crypto.
Faucet
A platform that distributes small amounts of cryptocurrency for free, typically to help new users get started. Solana Faucet is an example - you claim free SOL every hour.
Fiat
Government-issued currency like USD, EUR, or GBP. In crypto, fiat refers to traditional money as opposed to cryptocurrency.
FOMO
Fear Of Missing Out - the anxiety that drives people to buy cryptocurrency during price rallies, often at unfavorable prices. A common psychological trap in crypto.
FUD
Fear, Uncertainty, and Doubt - negative information spread to cause panic selling. Some FUD is legitimate concern; some is manipulation.
Fungible
Interchangeable and identical in value. One SOL equals any other SOL. NFTs are non-fungible because each is unique.
Gas
Transaction fees paid to process operations on a blockchain. Solana has extremely low gas fees (fractions of a cent) compared to Ethereum.
Genesis Block
The first block in a blockchain. Solana's genesis block was created on March 16, 2020.
Governance Token
A token that grants voting rights in a DAO or protocol. Holders can propose and vote on changes to the protocol.
HODL
Hold On for Dear Life - a misspelling that became crypto slang for holding cryptocurrency long-term regardless of price volatility. Originally from a 2013 Bitcoin forum post.
Hot Wallet
A cryptocurrency wallet connected to the internet for convenient transactions. More vulnerable to hacks than cold wallets but easier to use daily.
Hash
A unique string of characters generated by a cryptographic function. Each block has a hash that links it to the previous block, ensuring blockchain integrity.
Layer 1
The base blockchain network (like Solana, Ethereum, Bitcoin). Layer 1s handle transaction processing and security directly.
Layer 2
Scaling solutions built on top of Layer 1 blockchains to increase transaction speed and reduce costs. Less common on Solana due to its native speed.
Liquidity
How easily an asset can be bought or sold without affecting its price. High liquidity means smoother trading with less price impact.
Liquidity Pool
A collection of funds locked in a smart contract that enables decentralized trading. Users provide liquidity and earn fees from trades.
Market Cap
The total value of a cryptocurrency, calculated by multiplying price by circulating supply. Solana's market cap ranks in the top 10 cryptocurrencies.
Memecoin
Cryptocurrency created as a joke or based on internet memes. Dogecoin is the most famous. Many memecoins launch on Solana due to low fees.
Mining
The process of validating transactions and creating new blocks on Proof of Work blockchains. Solana uses Proof of Stake instead, so SOL is not mined but staked.
Moon
Slang for a dramatic price increase. 'Going to the moon' means expecting huge gains. 'When moon?' asks when prices will rise.
NFT
Non-Fungible Token - a unique digital asset representing ownership of items like art, music, or collectibles. Each NFT is distinct and cannot be exchanged 1:1 like fungible tokens.
Node
A computer that maintains a copy of the blockchain and validates transactions. More nodes mean greater decentralization and security.
Non-Custodial
A service where you retain control of your private keys. Non-custodial wallets like Phantom give you full control over your crypto.
Private Key
A secret cryptographic code that proves ownership of cryptocurrency and authorizes transactions. Never share your private key with anyone - it's like the password to your funds.
Proof of History
Solana's unique consensus mechanism that creates a historical record proving events occurred in sequence, enabling incredibly high transaction speeds.
Proof of Stake
A consensus mechanism where validators stake tokens as collateral to process transactions. More energy-efficient than Proof of Work mining.
Public Key
A cryptographic code derived from your private key that serves as your wallet address. Safe to share - it's like your account number.
Pump and Dump
A manipulation scheme where a group buys an asset to inflate its price, then sells at the peak, crashing the price. Illegal in traditional markets, common in unregulated crypto.
Rug Pull
A scam where developers abandon a project and steal investor funds. Common in DeFi - always research projects thoroughly before investing.
RPC
Remote Procedure Call - the interface applications use to interact with blockchain nodes. Solana's RPC enables developers to build dApps.
Seed Phrase
A series of 12-24 words that can recover your entire wallet. Store it securely offline - anyone with your seed phrase controls your funds.
Smart Contract
Self-executing code on a blockchain that automatically enforces agreement terms. Powers DeFi, NFTs, and most blockchain applications.
SOL
The native cryptocurrency of the Solana blockchain. Used to pay transaction fees, stake for network security, and participate in DeFi applications.
Solana
A high-performance blockchain platform capable of 65,000+ transactions per second with sub-second finality and fees under $0.01. Founded by Anatoly Yakovenko in 2020.
Staking
Locking up cryptocurrency to support network operations and earn rewards. On Solana, staking helps secure the network and typically earns 5-8% APY.
Stablecoin
Cryptocurrency designed to maintain a stable value, usually pegged to USD. USDC and USDT are popular stablecoins on Solana.
Token
A digital asset created on an existing blockchain. SOL is Solana's native coin; USDC on Solana is a token built using the SPL standard.
Tokenomics
The economic design of a cryptocurrency including supply, distribution, and utility. Good tokenomics are crucial for long-term value.
TPS
Transactions Per Second - a measure of blockchain speed. Solana can handle 65,000+ TPS, compared to Ethereum's ~15 TPS.
TVL
Total Value Locked - the amount of assets deposited in DeFi protocols. A measure of ecosystem health and user trust.
Validator
A node operator who stakes tokens and processes transactions on a Proof of Stake blockchain. Solana has over 1,900 validators securing the network.
Volatility
The degree of price fluctuation. Cryptocurrency is known for high volatility - prices can swing dramatically in short periods.
Wallet
Software or hardware that stores your private keys and allows you to interact with blockchains. Phantom, Solflare, and Backpack are popular Solana wallets.
Web3
The decentralized internet built on blockchain technology. Encompasses crypto, DeFi, NFTs, and dApps - a new paradigm for digital ownership and interaction.
Whale
An individual or entity holding large amounts of cryptocurrency. Whale movements can significantly impact market prices.
Whitelist
A list of approved addresses for exclusive access to token sales, NFT mints, or other opportunities. Getting whitelisted often requires community participation.
Yield
Returns earned on cryptocurrency investments, typically from staking, lending, or providing liquidity. Expressed as APY (Annual Percentage Yield).
Yield Farming
Moving crypto between DeFi protocols to maximize returns. Can be profitable but carries smart contract and impermanent loss risks.
About This Glossary
This glossary is maintained by the Solana Faucet education team and updated regularly to reflect the evolving cryptocurrency landscape. Our definitions prioritize clarity and accuracy, making complex concepts accessible to everyone. Last updated: January 2025.