Reference
Glossary: finance, fintech and crypto terms from A to Z
Short, plain definitions. Each term links to the explainer that covers it in depth.
97 terms
A
- Acquirer
- The bank or payment firm that signs up a merchant to accept cards and passes its transactions into the card network. Read the explainer →
- Airdrop
- A distribution of free tokens to wallet addresses, often to promote a project. Unsolicited airdrops are a common scam lure. Read the explainer →
- AML (anti-money laundering)
- The laws and controls financial firms use to detect and report money laundering and terrorist financing. Read the explainer →
- APR (annual percentage rate)
- The yearly cost of borrowing expressed as a percentage, before the effect of compounding within the year. Read the explainer →
- APY (annual percentage yield)
- The yearly return on savings once compounding within the year is included. For the same nominal rate, APY is higher than APR when interest compounds more than once a year. Read the explainer →
- Ask (offer)
- The lowest price at which a seller in the order book is currently willing to sell. Read the explainer →
- Attestation
- A report by an accounting firm on a company's statement at a point in time, such as a stablecoin issuer's reserves. It is narrower than a full audit. Read the explainer →
B
- Banking as a service (BaaS)
- An arrangement in which a licensed bank provides accounts or payments that a non-bank brand offers to its own customers. Read the explainer →
- Basis point
- One hundredth of a percentage point. A rate move from 5.00% to 5.25% is 25 basis points. Read the explainer →
- Bid
- The highest price at which a buyer in the order book is currently willing to buy. Read the explainer →
- Bid-ask spread
- The gap between the best bid and the best ask. It is a hidden cost of trading and widens when markets are thin. Read the explainer →
- Bitcoin
- The first cryptocurrency, with a fixed issuance schedule and a proof-of-work blockchain. Read the explainer →
- Block
- A batch of transactions added to a blockchain together, linked to the previous block by a cryptographic hash. Read the explainer →
- Blockchain
- A shared ledger copied across many computers, where new records are grouped in blocks and linked so that past entries are hard to change. Read the explainer →
- Bond
- A loan to a government or company that pays interest and returns the principal at maturity. Read the explainer →
- Bridge (cross-chain)
- Software that moves tokens or messages between two blockchains, usually by locking assets on one chain and issuing a representation on the other. Read the explainer →
- Buy now, pay later (BNPL)
- Short-term credit at checkout that splits a purchase into instalments, often interest-free if paid on time. Read the explainer →
C
- CBDC (central bank digital currency)
- Digital money issued directly by a central bank, as opposed to deposits created by commercial banks. Read the explainer →
- Central bank
- The public institution that issues a country's currency, sets its policy interest rate and oversees the banking system. Read the explainer →
- CFTC
- The US Commodity Futures Trading Commission, which regulates futures, swaps and other derivatives markets. Read the explainer →
- Circulating supply
- The number of units of a crypto-asset available to trade now, excluding locked or unissued units. Read the explainer →
- Cold wallet
- A crypto wallet whose private keys are kept offline, such as on a hardware device or paper. Read the explainer →
- Compound interest
- Interest earned on both the original amount and on interest already added, so growth accelerates over time. Read the explainer →
- Consensus mechanism
- The rules a blockchain's computers follow to agree on which transactions are valid and in what order. Read the explainer →
- Custody
- Holding and safeguarding assets on someone else's behalf. In crypto, whoever controls the private keys has custody. Read the explainer →
D
- DeFi (decentralized finance)
- Financial services such as lending and trading run by smart contracts on public blockchains instead of by intermediaries. Read the explainer →
- Derivative
- A contract whose value depends on an underlying asset, such as a future or an option. Read the explainer →
- Digital wallet
- An app that stores payment credentials, such as card tokens, so you can pay with a phone or online. Read the explainer →
- Dollar-cost averaging (DCA)
- Investing a fixed amount at regular intervals regardless of price, which spreads purchases over time. Read the explainer →
E
- Embedded finance
- Financial products such as payments, loans or insurance offered inside a non-financial company's app or checkout. Read the explainer →
- ERC-20
- The Ethereum token standard for fungible tokens, defining common functions such as transfer and balance. Read the explainer →
- ERC-721
- The Ethereum token standard for non-fungible tokens, where each token has a unique identifier. Read the explainer →
- ESMA
- The European Securities and Markets Authority, the EU body that coordinates securities supervision and plays a role under MiCA. Read the explainer →
- ETF / ETP
- An exchange-traded fund or product: a security listed on a stock exchange that tracks an asset or index. Read the explainer →
- Ether (ETH)
- The native asset of the Ethereum blockchain, used to pay transaction fees and to stake. Read the explainer →
- Exchange (crypto trading platform)
- A business that matches buyers and sellers of crypto-assets and often also holds customers' assets. Read the explainer →
F
- FATF
- The Financial Action Task Force, the intergovernmental body that sets global anti-money-laundering standards. Read the explainer →
- FCA
- The Financial Conduct Authority, the UK regulator of financial firms and markets. Read the explainer →
- Federal funds rate
- The interest rate at which US banks lend reserves to each other overnight, targeted by the Federal Reserve. Read the explainer →
- Fiat money
- Government-issued currency, such as the dollar or euro, that is not backed by a commodity. Read the explainer →
- Fintech
- Technology-driven financial services, from payments apps to online lending. Read the explainer →
- Fully diluted valuation (FDV)
- A token's price multiplied by its maximum supply, including units not yet issued. Read the explainer →
- Funding rate
- Periodic payments between long and short holders of a perpetual future that keep its price close to the spot price. Read the explainer →
- Futures contract
- An agreement to buy or sell an asset at a set price on a future date, traded on a regulated exchange. Read the explainer →
G
- Gas fee
- The fee paid to process a transaction or run a smart contract on Ethereum and similar blockchains. Read the explainer →
- GENIUS Act
- The US federal law that created a regulatory framework for payment stablecoins. Read the explainer →
H
- Halving
- The scheduled event, set by a fixed block count, that cuts the new-coin reward to Bitcoin miners in half. Read the explainer →
- Hash
- A fixed-length fingerprint of data produced by a one-way function; changing the data changes the hash completely. Read the explainer →
- Hot wallet
- A crypto wallet whose keys are on an internet-connected device. Convenient, but more exposed to hacking. Read the explainer →
- Howey test
- The US Supreme Court test for whether an arrangement is an investment contract, and therefore a security. Read the explainer →
I
- Inflation
- A general rise in prices over time, which reduces what a unit of money can buy. Read the explainer →
- Interchange fee
- A fee paid by the merchant's bank to the cardholder's bank on each card transaction. Read the explainer →
- Issuer (card)
- The bank that gives a customer a payment card and approves or declines each transaction. Read the explainer →
K
- KYC (know your customer)
- Checks a financial firm must run to verify who its customers are. Read the explainer →
L
- Layer 1
- A base blockchain, such as Bitcoin or Ethereum, that settles transactions itself. Read the explainer →
- Layer 2
- A system built on top of a base blockchain that processes transactions off the main chain and posts results back to it. Read the explainer →
- Leverage
- Using borrowed money to take a bigger position than your own funds allow. It magnifies gains and losses. Read the explainer →
- Limit order
- An order to buy or sell only at a stated price or better. Read the explainer →
- Liquidation
- The forced closing of a leveraged position when its collateral falls below the required level. Read the explainer →
- Liquidity
- How easily an asset can be bought or sold without moving its price. Read the explainer →
M
- Margin
- Collateral you put up to borrow or to hold a leveraged position. Read the explainer →
- Market capitalization
- Price multiplied by the number of units outstanding. For crypto it usually uses circulating supply. Read the explainer →
- Market maker
- A firm that continuously quotes both buy and sell prices, earning the spread for supplying liquidity. Read the explainer →
- Market order
- An order to buy or sell immediately at the best available price, with no price limit. Read the explainer →
- MiCA
- The EU Markets in Crypto-Assets Regulation, which sets licensing and disclosure rules for crypto-asset service providers and stablecoin issuers. Read the explainer →
- Miner
- A participant in a proof-of-work blockchain who uses computing power to propose new blocks and earn rewards. Read the explainer →
- Money market fund
- A fund that invests in short-term, high-quality debt such as Treasury bills. Read the explainer →
N
- Neobank
- A bank-like app, often operating through a licensed partner bank, that serves customers entirely online. Read the explainer →
- NFT (non-fungible token)
- A token with a unique identifier, often used to represent ownership of a digital item. Read the explainer →
- Node
- A computer that runs a blockchain's software and keeps a copy of its ledger. Read the explainer →
O
- OFAC
- The US Treasury's Office of Foreign Assets Control, which administers economic sanctions. Read the explainer →
- Open banking
- Rules and technology that let customers share their bank data with, or start payments through, authorised third parties. Read the explainer →
- Oracle
- A service that brings outside data, such as prices, onto a blockchain for smart contracts to use. Read the explainer →
- Order book
- An exchange's live list of unfilled buy and sell orders for an asset, sorted by price. Read the explainer →
P
- Perpetual future (perp)
- A futures-like contract with no expiry date, kept close to spot prices by funding payments. Read the explainer →
- Private key
- The secret number that controls a crypto address. Whoever has it can move the funds. Read the explainer →
- Proof of stake
- A consensus mechanism in which validators lock up tokens as collateral to propose and attest to blocks. Read the explainer →
- Proof of work
- A consensus mechanism in which miners compete to solve a computational puzzle to add the next block. Read the explainer →
- Public key
- A key derived from the private key that others can use to verify signatures and derive your address. Read the explainer →
R
- Real-time payments
- Payment systems that move money between bank accounts in seconds, at any hour. Read the explainer →
- Remittance
- Money sent by a person to family or others in another country. Read the explainer →
- Rollup
- A layer-2 design that executes transactions off-chain and posts compressed data and proofs to the base chain. Read the explainer →
S
- Sanctions
- Legal restrictions that bar dealings with listed people, entities or countries. Read the explainer →
- SEC
- The US Securities and Exchange Commission, which regulates securities markets and protects investors. Read the explainer →
- Security (financial)
- A tradable financial instrument such as a share, bond or investment contract, subject to securities law. Read the explainer →
- Seed phrase
- A list of words that encodes a wallet's private keys. Anyone with it can take the funds. Read the explainer →
- Slippage
- The difference between the price you expected and the price your order actually filled at. Read the explainer →
- Smart contract
- A program stored on a blockchain that runs automatically when its conditions are met. Read the explainer →
- Spot market
- A market where assets are bought and sold for immediate delivery. Read the explainer →
- Stablecoin
- A crypto token designed to keep a stable value, usually one US dollar, typically backed by reserve assets. Read the explainer →
- Staking
- Locking tokens to help secure a proof-of-stake network, usually in exchange for rewards and with risk of penalties. Read the explainer →
T
- Tokenization
- Representing ownership of an asset, such as a bond or fund share, as a token on a blockchain. Read the explainer →
- Travel rule
- The requirement that providers transferring funds or crypto pass on sender and recipient information. Read the explainer →
V
- Validator
- A participant in a proof-of-stake network that stakes tokens to propose and verify blocks. Read the explainer →
- Volatility
- How much and how quickly an asset's price moves up and down. Read the explainer →
Z
- Zero-knowledge proof
- A cryptographic method for proving a statement is true without revealing the underlying data. Read the explainer →