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.

Nevertheless it additionally comprises complicated phrases reminiscent of ETFs, blockchains and chilly wallets, that may make the subject considerably tough to navigate.

Fear not.

When you’re listening to these for the primary time, or just want a refresher, listed here are a couple of key phrases and what they imply.

Whereas many might wrestle 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 sort of digital forex. In contrast to conventional currencies, Bitcoin just isn’t managed by centralised monetary establishments.

This makes it fashionable for individuals who assume decentralisation can convey monetary freedom, nevertheless it additionally makes it extraordinarily risky 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 recognized to plummet simply as shortly because it spikes.

Blockchain is the expertise underpinning all cryptocurrencies, and plenty of 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 title.

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

The motivation to do that for Bitcoin’s community is that the primary particular person to validate transactions is rewarded in Bitcoin. This doubtlessly profitable course of, referred to as mining, can be controversial due to the incredible amount of energy used as folks 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 lower in half. The newest Bitcoin “halving” (or “halvening”) occasion came about on 20 April 2024, lowering the reward for miners from 6.25 bitcoins to three.125.

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

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

Much like conventional investing, a crypto change acts as a brokerage the place folks 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 scorching pockets and a chilly pockets.

Scorching wallets are related 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 sometimes 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, reminiscent of non-fungible tokens.

It capabilities in the same method to Bitcoin and different cryptocurrencies, however in 2022 switched to a greener operating system requiring less computers and energy.

ETFs are portfolios that allow traders wager on a number of belongings with out having to purchase any themselves. Traded on inventory exchanges like shares, their worth relies on how the general portfolio performs in actual time. They will comprise a mix 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 instantly, “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, reminiscent of 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 sometimes created to capitalise on social media tendencies or viral memes – reminiscent of 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 usually 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 boost 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 risky in worth.

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

Stablecoins themselves are normally 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 known as the XRP Ledger. It was created by the co-founders of monetary providers firm Ripple Labs in 2012 as a less expensive, sooner different to Bitcoin.

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

In contrast to cryptocurrencies reminiscent of Bitcoin, transactions made utilizing XRP are verified via 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.