Key cryptocurrency terms and what they mean

Bitcoin’s worth reaching a brand new excessive of $120,000 (£89,000) – buoyed by US President Donald Trump’s crypto-friendly stance – has stored the buzzy world of cryptocurrencies within the highlight.

But it surely additionally accommodates complicated terms akin to ETFs, blockchains and chilly wallets, that may make the subject considerably tough to navigate.

Fear not.

In case you’re listening to these for the primary time, or just want a refresher, listed here are a number of key terms and what they mean.

Whereas many might battle with the finer factors of crypto, just about everybody has heard of its most well-known product: Bitcoin. However what truly is it?

Bitcoin is a cryptocurrency, which is to say a kind of digital foreign money. Not like conventional currencies, Bitcoin is just not managed by centralised monetary establishments.

This makes it standard for individuals who assume decentralisation can carry monetary freedom, however it additionally makes it extraordinarily unstable with it rising and falling in worth on the whim of Bitcoin patrons and sellers.

Donald Trump has pledged to make the US the “crypto capital of the world” – backtracking on his earlier declare that Bitcoin was a “rip-off”.

Its worth topped a much-awaited threshold of $100,000 in December 2024.

In mid-July 2025, the value rose to $120,000 as US politicians ready to start debating payments that may regulate digital belongings.

However its worth has been identified to plummet simply as shortly because it spikes.

Blockchain is the expertise underpinning all cryptocurrencies, and many associated merchandise like non-fungible tokens (NFTs). In essence, it’s a digital spreadsheet on which all of the shopping for and promoting of crypto is recorded. They’re organized in blocks linked collectively in a large chain – therefore the identify.

Each cryptocurrency transaction is individually recorded onto the blockchain by an enormous community of volunteers verifying its authenticity through the use of pc programmes.

The motivation to do that for Bitcoin’s community is that the primary individual to validate transactions is rewarded in Bitcoin. This doubtlessly profitable course of, generally known as mining, can also be controversial due to the incredible amount of energy used as individuals the world over race to be the primary to efficiently replace the blockchain.

The blockchain is sustained by rewarding so-called “miners” – whose job it’s to validate transactions – by paying them with the cryptocurrency.

Nonetheless, in contrast to another digital currencies, there may be not an infinite provide of Bitcoins. The quantity that may be mined is capped at 21 million, and most are already in circulation.

So roughly each 4 years – or when the Bitcoin blockchain reaches a sure measurement – the variety of bitcoins rewarded to those that efficiently validate transactions is minimize in half. The latest Bitcoin “halving” (or “halvening”) occasion occurred on 20 April 2024, decreasing the reward for miners from 6.25 bitcoins to three.125.

This ensures Bitcoin’s provide is drawn out for longer whereas demand, in idea, goes up over time. However with fewer rewards for miners, it might probably additionally lead some to think about whether or not it’s financially worthwhile for them to proceed the pricey operation of operating their highly effective computer systems.

A crypto change is the digital platform the place traders should purchase, promote and commerce cryptocurrencies.

Just like conventional investing, a crypto change acts as a brokerage the place individuals can switch conventional cash, like kilos or {dollars}, in change for cryptocurrencies like Bitcoin or Ethereum. Most transactions are accompanied by charges.

A crypto pockets is a spot the place traders maintain their cryptocurrency. There are two varieties, a sizzling pockets and a chilly pockets.

Scorching wallets are linked to the web, and thus extra accessible for fast transfers and quick access.

Chilly wallets are bodily units like specifically designed USB sticks that retailer crypto offline usually for safer and long run storage.

Ethereum is used to explain each the second largest cryptocurrency after Bitcoin, represented by the Ether token, and the blockchain underpinning it. This helps an array of various purposes and digital belongings, akin to non-fungible tokens.

It capabilities in an identical strategy to Bitcoin and different cryptocurrencies, however in 2022 switched to a greener operating system requiring less computers and energy.

ETFs are portfolios that permit traders guess on a number of belongings with out having to purchase any themselves. Traded on inventory exchanges like shares, their worth will depend on how the general portfolio performs in actual time. They will comprise a mixture of gold and silver bullion, for instance, or a mixture of shares in each expertise and insurance coverage firms.

A spot Bitcoin ETF buys the cryptocurrency straight, “on the spot”, at its present worth, all through the day.

Whereas some ETFs already contained Bitcoin not directly, the US approved several spot Bitcoin ETFs in January 2024. This allowed new traders, akin to funding administration corporations like Blackrock and Constancy, to enter the speculative world of Bitcoin with out having to fret about digital wallets or navigating crypto exchanges.

Meme cash are a type of cryptocurrency used for enjoyable and hypothesis.

They’re usually created to capitalise on social media developments or viral memes – akin to for internet-famous pygmy hippo Moo Deng.

However meme cash are closely criticised for his or her speculative nature and the danger concerned for traders, as they typically have little prospect of accumulating worth over time.

They may also be vulnerable to “rug pulls” – the place promoters of a cryptocurrency attract patrons to lift the value of their coin, solely to cease buying and selling exercise and make off with the cash raised from gross sales.

Some celebrities have confronted backlash after launching meme cash.

“Steady” is the important thing phrase right here – this cryptocurrency differs from others as it’s intends to be much less unstable in worth.

This usually works by the value being linked to an current asset, for example currencies just like the US greenback or pound sterling, which in idea ought to make them extra steady in worth than cryptocurrencies that aren’t backed by belongings.

Stablecoins themselves are often managed by firms that present them, with transactions recorded on digital ledgers. Whereas held up by some as the way forward for finance, high profile price collapses of stablecoins have alerted regulators to dangers for traders and prompted scrutiny over their supposed stability.

XRP is a cryptocurrency utilized by a platform referred to as the XRP Ledger. It was created by the co-founders of monetary companies firm Ripple Labs in 2012 as a less expensive, quicker different to Bitcoin.

The cryptocurrency has a set provide of 100 billion cash, which had been created when it launched. A lot of it’s held by Ripple and periodically launched into circulation.

Not like cryptocurrencies akin to Bitcoin, transactions made utilizing XRP are verified by means of consensus – whereby nearly all of validators on its peer-to-peer community should agree whether or not or not a transaction is legitimate earlier than it’s added to its blockchain.

This has been credited with permitting many transactions to happen concurrently, at excessive pace and low value – making it interesting to monetary establishments or for processes like cross-border funds. However as with different cryptocurrencies, XRP has received regulatory scrutiny and seen sudden, sharp declines in value.