The world of cryptocurrency remains in the spotlight as Bitcoin reaches a new high of $120,000, spurred by a more crypto-friendly stance from former U.S. President Donald Trump. However, the sector is filled with complex terminology, from blockchains and ETFs to cold wallets, which can be difficult for newcomers to understand. This guide explains some of the key terms essential for navigating the digital asset landscape.
### Bitcoin
Bitcoin is the world’s first and most well-known cryptocurrency, a form of digital money that operates independently of central banks or financial institutions. This decentralized nature is a major draw for proponents who see it as a path to financial freedom. However, it also makes Bitcoin highly volatile, with its value fluctuating based on buyer and seller sentiment.
Donald Trump, who once called Bitcoin a “scam,” has since pledged to support the industry. The cryptocurrency’s price surpassed the $100,000 threshold in December 2024 and climbed to $120,000 in mid-July 2025 as U.S. lawmakers prepared to debate digital asset regulation. Despite these highs, its value has historically been prone to rapid and significant drops.
### Blockchain
Blockchain is the foundational technology for all cryptocurrencies and related digital assets like non-fungible tokens (NFTs). It functions as a distributed digital ledger, or database, that records every transaction in “blocks” which are then cryptographically linked together in a chronological “chain.”
A vast network of volunteers, known as miners, uses powerful computers to verify and add new transactions to the blockchain. The first miner to validate a block of transactions is rewarded with new Bitcoin. This process, while potentially lucrative, is controversial due to its immense energy consumption.
### Bitcoin ‘Halving’
Unlike traditional currencies, Bitcoin has a finite supply capped at 21 million coins. To manage this scarcity, a “halving” event is programmed to occur approximately every four years. This event cuts the Bitcoin reward for miners in half, slowing the rate at which new coins are created.
The most recent halving occurred on April 20, 2024, reducing the reward from 6.25 to 3.125 bitcoins per block. This mechanism is designed to increase demand over time by constricting supply. However, the reduced rewards can also challenge the financial viability of mining operations.
### Crypto Exchange
A crypto exchange is a digital marketplace where users can buy, sell, and trade cryptocurrencies. Functioning similarly to a traditional stock brokerage, an exchange allows individuals to convert fiat currency, such as U.S. dollars or British pounds, into digital assets like Bitcoin and Ethereum. Most transactions on these platforms incur a fee.
### Crypto Wallet
A crypto wallet is a digital tool used to store and manage cryptocurrencies. There are two primary types: hot wallets and cold wallets.
Hot wallets are software-based and connected to the internet, offering convenient access for frequent trading and transactions. Cold wallets are physical hardware devices, similar to a USB drive, that store assets offline. They are considered more secure for long-term storage as they are isolated from online threats.
### Ethereum
Ethereum is the second-largest cryptocurrency platform by market capitalization. It refers to both the blockchain network and its native digital token, Ether (ETH). The Ethereum blockchain is highly versatile, supporting a wide range of decentralized applications and assets, including NFTs. While it functions similarly to Bitcoin, Ethereum transitioned in 2022 to a more energy-efficient operating system that significantly reduced its environmental impact.
### Exchange-Traded Funds (ETFs)
An ETF is an investment fund traded on stock exchanges, much like an individual stock. It holds a portfolio of assets—such as stocks, bonds, or commodities—and allows investors to gain exposure to them without owning the underlying assets directly.
A spot Bitcoin ETF invests directly in Bitcoin at its current market price. In January 2024, U.S. regulators approved several spot Bitcoin ETFs, opening the door for major investment firms and their clients to invest in Bitcoin through traditional brokerage accounts, removing the need to manage digital wallets or use crypto exchanges.
### Meme Coins
Meme coins are cryptocurrencies created as a tribute to or joke about an internet trend or viral meme. These tokens are highly speculative and often created for entertainment rather than utility.
Critics highlight the significant risks associated with meme coins, as many lack long-term value and are susceptible to “rug pulls”—a scam where developers abandon a project and disappear with investors’ funds after artificially inflating the price. Several celebrities have faced public criticism for promoting such volatile assets.
### Stablecoins
As their name suggests, stablecoins are a type of cryptocurrency designed to maintain a stable value. They achieve this by pegging their price to a reserve asset, most commonly a fiat currency like the U.S. dollar or the pound sterling.
In theory, this link provides more price stability than unbacked cryptocurrencies. Transactions are recorded on digital ledgers, and while some view them as the future of digital finance, the collapse of prominent stablecoins has attracted significant regulatory scrutiny over their claimed stability and the risks they pose to investors.
### XRP
XRP is the native cryptocurrency of the XRP Ledger, a payment platform created in 2012 by the founders of Ripple Labs. It was designed to be a faster, cheaper, and more scalable alternative to Bitcoin, particularly for financial institutions and cross-border payments.
XRP launched with a fixed supply of 100 billion coins, which are periodically released into the market by Ripple. Unlike Bitcoin’s mining process, XRP transactions are validated through a consensus mechanism where a majority of trusted validators must agree on their legitimacy. This system allows for high-speed, low-cost transactions but has also subjected XRP to regulatory challenges and sharp price volatility.
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