Crypto glossary: plain meanings of crypto and DeFi terms

The first widely used crypto asset, which runs on its own public blockchain with no central issuer.

A shared digital ledger that records transactions in linked blocks. Copies are held by many computers, so past entries are very hard to change.

A digital representation of value or rights that uses cryptography and a distributed ledger such as a blockchain. Bitcoin, ether and stablecoins are all crypto assets.

Money issued by a government, such as the Australian dollar. Crypto assets, including Australian dollar stablecoins, are not legal tender in Australia.

A crypto asset designed to keep a steady value against another asset, often the US dollar. Stable does not mean safe: it depends on the issuer and its reserves. Read more: What is a stablecoin?

A unit of a crypto asset. The word often means an asset that runs on another blockchain rather than its own.

A wallet that keeps private keys offline, such as a hardware wallet. It is harder to hack remotely but can be lost or damaged. Read more: Hot vs cold wallets

A wallet where a platform holds the private keys for you. If the platform fails or is hacked, you may lose access to your crypto.

A small physical device that stores private keys offline and signs transactions without exposing the keys to your computer. Read more: Hardware wallets

A wallet connected to the internet, such as a phone app or browser extension. It is convenient for frequent use but more exposed to hacking. Read more: Hot vs cold wallets

The secret code that controls the crypto in a wallet. Anyone who has it can move the funds, and losing it usually means losing the crypto.

The string of characters you share so others can send crypto to your wallet. It is safe to share, unlike the private key.

A list of words that can restore a wallet and its private keys on a new device. Anyone who sees it can take your crypto, so never type it into a website or share it.

Holding your own private keys instead of leaving crypto on a platform. You keep control, but nobody can recover the funds if you lose the keys.

Crypto tokens sent to wallets for free, often to promote a new project. Unexpected airdrops can also be part of a scam.

Financial services such as lending, borrowing and trading that run on smart contracts instead of through a bank or broker.

A platform where you buy, sell or swap crypto assets for money or other crypto. Exchanges set their own fees, spreads and withdrawal rules. Read more: How to check a crypto exchange

The network fee paid to process a transaction on a blockchain such as Ethereum. It changes with how busy the network is.

A pot of tokens locked in a smart contract so others can trade against it. People who add tokens may earn fees but also face losses if prices move.

Code on a blockchain that runs automatically when set conditions are met. Bugs in the code can lead to lost funds.

The gap between the price a platform buys at and the price it sells at. It is a cost on top of any stated fee.

Locking crypto to help validate transactions on a proof of stake blockchain in return for rewards. Staked crypto may be locked for a period and can lose value. Read more: Crypto staking in Australia

Exchanging one crypto asset directly for another, on an exchange or through a DeFi app.

A token on one blockchain that represents an asset from another, such as wrapped bitcoin on Ethereum. It depends on the custodian or bridge that holds the original.

The tax on a capital gain when you dispose of an asset. The ATO says investors' crypto assets are generally CGT assets, and there are no special tax rules just for crypto. Read more: Crypto tax in Australia

A reduction in the taxable capital gain that individuals may get when they held the asset for at least 12 months before disposing of it, under the ATO's rules. Read more: Crypto tax in Australia

The point at which a capital gain or loss happens for tax. For crypto it includes selling for money, swapping one crypto for another and using crypto to pay for things.

What an asset cost you for tax purposes, generally the purchase price plus certain costs. The ATO says crypto received as a staking reward has a cost base equal to its market value when you receive it.

Income taxed in the year you receive it, rather than as a capital gain. The ATO treats the money value of staking rewards as ordinary income at the time you receive the tokens. Read more: Crypto staking in Australia

A crypto asset kept or used mainly to buy items for personal use. The ATO's exemption for these is narrow and does not usually cover crypto held as an investment.

The records the ATO expects you to keep for each crypto transaction, such as dates, amounts in Australian dollars and what the transaction was for. Read more: ATO crypto record keeping

Registration a business must hold before it provides virtual asset services in Australia, such as exchanging crypto for money. It is an anti-money laundering registration, not a licence or a safety rating. Read more: How to check a crypto exchange

A Moneysmart list of websites and businesses that ASIC believes may be unlicensed or scams. Not being on the list does not make a platform safe. Read more: Crypto scams

A fake message or website that tries to get your password, private key or recovery phrase. Scammers often pose as an exchange, a wallet maker or the ATO.

A scam where the people behind a crypto project take investors' money and disappear, often after promoting the token heavily. Read more: Crypto scams

AUSTRAC's term for a business that, for example, exchanges crypto for money or other crypto, or keeps crypto safe for customers. It must be registered with AUSTRAC.