Crypto Terms in Plain English, in the Order You Meet Them

These are the words you meet in the first fortnight, in roughly the order you meet them. Each entry says what the word means and, where it matters, what tends to go wrong.

The words on the sign-up screen

KYC — proving who you are with a photo of an ID document and a face scan. On Binance, for example, a new account can't deposit or trade until verification is approved; each exchange sets its own rules.

2FA — a second check on top of your password, most often a one-time code. From an authenticator app the code is generated on your device; by SMS it depends on your phone number, which is why SIM-swap fraud exists.

Authenticator recovery key — the backup some authenticator apps give you during setup. Keep it somewhere safe and find out how the app restores your codes before you change phones. It is not the same thing as a wallet seed phrase.

Anti-phishing code — a phrase you choose so you can tell exchange emails apart from fakes. Seeing it is a good sign, not proof; anything unexpected still gets checked in the official app or site you opened yourself.

Whitelist — a list of approved withdrawal addresses. While it's on, withdrawals can only go to those addresses. Double-check every address you add and look at any waiting-period setting; someone who takes over your account can still put your funds at risk.

The words on the trading screen

Spot — buying or selling the asset itself. If you paid with your own money and haven't pledged the coins as collateral, a falling price can't get them liquidated. You still carry the price risk, plus the risk of wherever the coins are held.

Futures / margin / leverage — related, but not the same thing. Futures are contracts; margin trading can mean trading with borrowed money; leverage makes your position bigger than the money you put in. If your margin runs short, the position can be liquidated and the losses can be large.

Liquidation — the platform shrinking or closing your position because its margin rules say so. It can take part of the position or all of it, and depending on how your account is set up, it can reach other funds in the account too.

Market order — buy or sell now at whatever prices are available. It can fill at several prices or only partly, and the platform's order protections may hold it back.

Limit order — you set the price you'll accept. It might fill straight away (as a taker), sit on the book, fill partly, or never fill at all.

Maker / taker — you are a maker when your order sits and waits, a taker when it eats an order that was already sitting there. Exchanges usually charge takers slightly more.

Order book — the live list of what people are offering to buy and sell at.

Liquidity / depth — how much is on offer at each price in the order book. Hold it up against the size of your order; even a deep book can't promise zero slippage.

Spread — the gap between the best buy price and the best sell price. Buy and sell in the same breath and you lose that gap even with zero fees.

Slippage — the difference between the price you saw and the price you got. On obscure coins this can be your largest cost.

The words about moving money

Stablecoin (USDT, USDC) — a token that tries to hold a fixed value against a currency, usually the dollar. It is the cash layer of the crypto world. The peg rests on the issuer's reserves, not on physics.

Fiat — ordinary government money. "Fiat on-ramp" means turning it into crypto.

P2P — buying from another person with the exchange holding the coins in escrow until payment is confirmed. Whether you can use it depends on where you live and which payment methods are supported.

Wallet address — a long string that receives funds. Public, shareable, and worth checking character by character before you send anything.

Private key / seed phrase — the private key controls the account; the seed phrase can rebuild the keys that came from it. Never share either. Losing your phone or deleting the app doesn't lose the wallet as long as you still have some way to restore it; lose every way to restore it and a traditional self-custody wallet is generally gone for good. Your wallet's official recovery instructions say what it will accept.

Network / chain — Ethereum, BNB Chain, Tron and the rest are separate systems. The same coin often exists on several.

Choosing the network on a withdrawal — make sure the receiving side supports both the coin and the network, then check the whole address and any memo. Send on a route they don't support and the funds may never show up, or may be lost. A small test transfer still has to clear both sides' minimums after fees.

Gas / network fee — the blockchain’s transaction cost. What an exchange charges you to withdraw is its own number and doesn't have to match the network fee it actually pays; the withdrawal confirmation shows yours.

Confirmations — the network's way of showing your transaction has made it onto the chain and how many blocks have been added after it. When a transfer counts as final depends on the network, and how many confirmations an exchange waits for before crediting a deposit is set by that exchange, per coin and network, so there's no single standard transfer time.

Words you will see in scam messages

Token approval — letting a specific spender move one specific token for you, up to the limit you grant. Before signing, look at which token, who the spender is and how much; a misleading request can put valuable assets within reach. It doesn't automatically hand over every token in your wallet.

Proof of reserves — a snapshot of the assets held and the liabilities they cover, at one point in time. Read what the report includes and how it was put together; it isn't a full audit, and it doesn't promise the exchange will stay solvent.

Airdrop — free tokens, sometimes genuine, sometimes bait, and nothing in your wallet tells you which. An unfamiliar token arriving in your wallet is a reason to ignore it, not to investigate it.

Words you can safely postpone

DeFi, NFTs, liquidity mining, Layer 2, bridges and restaking can wait until you have a specific need and understand their risks. Reading up on them costs nothing and needs no deposit or signature.

Read next

• What a $2,500 crypto trade actually costs you — spread and slippage in practice
• Signing up for Binance — why these settings belong on day one
• Crypto scam messages: seven examples and how to respond — the scam vocabulary in context