Beginner: Wallet Terms
- Wallet: A digital tool that stores your public and private keys, allowing you to send, receive, and manage cryptocurrency.
- Private Key: A secret cryptographic code that proves ownership of your cryptocurrency. Never share it with anyone.
- Public Key: A cryptographic code derived from your private key. Used to generate your wallet address and verify transactions.
- Wallet Address: A string of characters that serves as your “account number” for receiving cryptocurrency.
- Seed Phrase: A 12 or 24-word recovery phrase generated when you create a wallet. Used to restore access if your device is lost.
- Hot Wallet: A wallet connected to the internet. Convenient for frequent transactions but more vulnerable to attacks.
- Cold Wallet: A wallet stored offline, such as a hardware device. More secure for long-term storage.
- Gas Fee: A transaction fee paid to network validators for processing your cryptocurrency transaction.
- Confirmation: The process of a transaction being verified and added to the blockchain.
- Non-Custodial Wallet: A wallet where you control your private keys and funds. No third party can access your assets.
- Bitcoin: The first and most well-known cryptocurrency, created in 2009 by Satoshi Nakamoto. Operates on a decentralized network without central authority.
- Blockchain: A distributed digital ledger that records all transactions across a network of computers. Provides transparency and immutability.
- Exchange: A digital marketplace where users can buy, sell, and trade cryptocurrencies.
- Luno Exchange: A cryptocurrency exchange platform that allows users to buy, sell, and store Bitcoin and Ethereum. Available in multiple countries with mobile-first approach.
- Centralized Exchange (CEX): A platform operated by a company that controls user funds. Requires identity verification (KYC).
- Decentralized Exchange (DEX): A peer-to-peer platform that operates without a central authority. Users trade directly from their wallets.
- Order Book: A list of buy and sell orders for a specific cryptocurrency pair. Shows current market depth and price levels.
- Market Order: An instruction to buy or sell immediately at the best available current price.
- Limit Order: An instruction to buy or sell at a specific price or better. Only executes when the market reaches your price.
- Trading Pair: Two cryptocurrencies that can be traded against each other. Example: BTC/USDT.
- Liquidity: The ease with which an asset can be bought or sold without significantly affecting its price.
- Spread: The difference between the highest buy price (bid) and lowest sell price (ask).
- Slippage: The difference between the expected price of a trade and the actual execution price.
- KYC: Identity verification requirements imposed by regulated exchanges. Involves submitting government ID and proof of address.
- Fiat On-Ramp: A service that allows conversion of traditional currency into cryptocurrency.
- Fiat Off-Ramp: A service that allows conversion of cryptocurrency back into traditional currency.
- Staking: Locking up cryptocurrency to support network operations and earn rewards.
- Yield Farming: Providing liquidity to DeFi protocols in exchange for interest or token rewards.
- Arbitrage: Profiting from price differences for the same asset across different exchanges or markets.
- Volume: The total amount of a cryptocurrency traded within a specific time period.
