Crypto exchange glossary for beginners

Account recovery

The process an exchange uses to restore account access after a lost password, device, email, or authentication method.

Anti-phishing code

A user-chosen code that some exchanges include in genuine emails so customers can more easily identify impersonation attempts.

KYC

Know Your Customer checks used to verify identity and support legal or compliance obligations. Requirements vary by provider, country, and service.

Proof of address

A document or data check used to confirm a person's residential address during account verification.

Two-factor authentication (2FA)

A second login factor beyond a password, such as an authenticator app or security key. SMS is generally more exposed to phone-account attacks.

Withdrawal allowlist

An account control that limits withdrawals to previously approved wallet addresses, often with a waiting period for changes.

Ask price

The lowest price currently offered by a seller in an order book.

Bid price

The highest price currently offered by a buyer in an order book.

Limit order

An instruction to buy no higher than a chosen price or sell no lower than a chosen price. It may not execute.

Liquidation

The forced closing of a leveraged position when margin no longer meets the platform's requirements.

Margin

Collateral used to open or maintain a leveraged position. Margin trading can magnify losses.

Market order

An instruction that prioritizes immediate execution against available liquidity rather than a specific final price.

Order book

A list of open buy and sell orders organized by price on a trading market.

Perpetual futures

Derivative contracts without a fixed expiry that track an underlying market and commonly use periodic funding payments.

Spot trading

Buying or selling an asset for settlement in the spot market, generally resulting in an exchange account balance of the asset.

Trading pair

Two assets quoted against each other, such as BTC/USDT. The first is the base asset and the second is the quote asset.

Bid-ask spread

The difference between the highest bid and lowest ask. It is a trading cost even when not listed as a separate fee.

Card processing fee

A charge associated with buying or depositing through a debit or credit card, separate from possible spreads and issuer charges.

Funding rate

A periodic payment between long and short perpetual-contract positions intended to help keep contract prices close to the underlying market.

Maker fee

A fee associated with an order that adds liquidity to an order book under the exchange's execution rules.

Network fee

A blockchain transaction cost that may be passed to users when they withdraw or transfer crypto.

Slippage

The difference between an expected price and the average execution price, often affected by liquidity, volatility, and order size.

Taker fee

A fee associated with an order that immediately matches existing order-book liquidity under the exchange's rules.

Withdrawal fee

An amount charged by a platform when assets leave an account. It may differ from the underlying blockchain network cost.

Blockchain confirmation

A record added after a transaction is included in a block. Platforms may require multiple confirmations before crediting a deposit.

Crypto address

A destination identifier used to receive an asset on a particular blockchain network. Transfers are generally irreversible.

Deposit memo or tag

An additional identifier used by some exchanges and networks to assign a shared deposit address to the correct customer account.

Minimum deposit

The smallest amount a platform will credit for a specific asset and network. Smaller deposits may not be recoverable.

Network

The blockchain route used for a transfer. Sending and receiving platforms must support the same asset on the exact same network.

On-ramp

A service or method used to convert traditional currency into crypto, such as a bank transfer or card purchase.

Off-ramp

A service or method used to convert crypto into traditional currency and withdraw it through an available payment route.

Test transfer

A small initial transaction used to check an address, network, memo, and receiving process before sending more.

Transaction ID (TXID)

A blockchain identifier used to inspect a transaction in a compatible block explorer.

Cold wallet

A wallet setup that keeps signing keys offline or isolated from internet-connected devices for much of the time.

Custodial exchange

A platform that controls the private keys for assets shown in customer accounts.

Hot wallet

A wallet connected to an internet-enabled device, usually convenient for transactions but exposed to online threats.

Private key

Secret cryptographic data used to authorize transactions. Anyone who obtains it may be able to control the associated assets.

Seed phrase

A human-readable recovery backup used by many self-custody wallets. It should never be shared or entered into an untrusted website.

Self-custody

Holding crypto with keys controlled by the user rather than an exchange or other custodian.

Counterparty risk

The risk that a platform or other party cannot or does not fulfill its obligations.

Leverage

Exposure larger than the collateral committed. It magnifies gains and losses and can lead to liquidation.

Liquidity

The ability to buy or sell without causing a large price change. Lower liquidity can increase spreads and slippage.

Phishing

Impersonation intended to steal credentials, authentication codes, seed phrases, or persuade users to approve malicious actions.

Volatility

The degree and speed of price movement. Crypto markets can move sharply in either direction.