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Exchange glossary

Glossary

Short answers to the words you meet when exchanging crypto: networks, fees, checks, rate. Each explanation is a few lines, with no run-up.

A

AMLAML stands for anti-money-laundering rules. In crypto exchange it means checking where the funds came from: the sender's address is matched against databases and scored for links to theft, sanctions or darknet marketplaces. It is the money that is checked, not the person — that is what separates AML from KYC.

B

BEP20BEP20 is the token standard on BNB Smart Chain. The fee is paid in BNB and usually amounts to a fraction of a dollar. The address looks exactly like an Ethereum address, starting with 0x, so the network has to be selected and checked by hand when you send.BlockchainA blockchain is a shared record of every transfer, kept not by one organisation but by thousands of independent participants at once. Records are gathered into blocks, and each block refers to the one before it. An old record cannot be altered unnoticed: it will not match everyone else's copy.

C

Cold and hot walletsA cold wallet keeps your keys offline, on a separate device or on paper. A hot wallet works online: an app or a browser extension. Cold is safer and slower, hot is more convenient and more exposed; most people keep both.CryptocurrencyCryptocurrency is money that exists only as records on a blockchain, with no bank and no central issuer. Ownership is proven by a key, not by a document: whoever holds the key holds the funds. A transfer goes straight between addresses and cannot be reversed.

E

ERC20ERC20 is the token standard on the Ethereum network. Most tokens in existence were issued under it, USDT and USDC among them. The fee is paid in ETH and moves with network load: from a few dollars to tens of dollars regardless of the amount being sent.Exchange reserveReserve is the amount an exchange service holds in a given direction right now. An order larger than the reserve will not settle immediately, even if the rate is displayed. That is why the reserve is checked before an order is created, not after.

F

FiatFiat is ordinary state money: the hryvnia, the dollar, the euro, the zloty. Its value rests not on gold but on trust in the state that issues it. In crypto exchanging, "fiat" means everything that is not crypto: a card, cash, a bank account.

K

KYCKYC is customer identity verification: "know your customer". A service asks for a document and sometimes a selfie to confirm that a person is who they claim to be. It checks the person, unlike AML, which checks where the funds came from.

L

LiquidityLiquidity is the ability to exchange the volume you need quickly and without losing on price. High liquidity means your amount will be taken at the quoted rate. Where it is low, a large order moves the price itself, and the outcome turns out worse than the one shown.

M

Memo and tagA memo (or tag) is a short marker added to a transfer on networks such as XRP, XLM and TON. It states which of an exchange's customers the payment is meant for: the address is shared by everyone, the marker is unique to each. A transfer to such an address without the marker is usually lost.

N

Network feeThe network fee is the charge for getting a transfer into the blockchain. It goes not to an exchange service or a trading platform but to those who keep the network running. Its size depends on the network and its load, not on the amount sent: on Ethereum it is called gas.

P

P2P exchangeP2P is an exchange directly between people: one sends hryvnia to a card, the other hands over cryptocurrency. The platform holds the crypto in escrow until both sides confirm settlement. The rate can beat an exchange service, but the risk and the time are on you.

S

SpreadSpread is the difference between the buy rate and the sell rate. An exchange buys USDT cheaper than it sells it, and that difference is its earnings. The narrower the spread, the better the deal: a fee may be absent entirely, but a spread is always there.StablecoinA stablecoin is a cryptocurrency pegged to an ordinary currency, most often the dollar. One USDT or USDC is worth about one dollar and barely moves in calm times. Such coins are used to hold money in crypto without depending on price swings.StakingStaking is locking coins in a network in return for a reward. The locked funds take part in confirming transfers, and the owner receives a share of new coins for it. The income is not guaranteed, and staked coins are usually unavailable for sale while they are locked.

T

TokenA token is a digital unit issued on top of someone else's blockchain. A coin has its own network: bitcoin lives on the bitcoin network, ether on Ethereum. A token has no network of its own, it uses another one and pays its fee, which is how USDT, USDC and thousands of others work.Transaction hash (TXID)TXID is the unique ID of a transfer on the blockchain. Anyone can use it to verify that the transfer happened: the amount, the time, the sender and recipient addresses. It is exactly what exchange support asks for when a payment needs to be found.TRC20TRC20 is the token standard on the TRON network. USDT is most often transferred on it: a transfer takes about a minute and the fee is usually under a dollar. A TRC20 address accepts only funds from this same network, so the same USDT on another network will not arrive there.

V

VolatilityVolatility is the range of price swings over a period of time. For bitcoin it is high: ten percent in a day is ordinary. For stablecoins it is close to zero. Volatility is exactly why an exchange rate is locked for a few minutes rather than forever.

W

Wallet addressA wallet address is the string funds are sent to, much like an account number. Every network has its own address format, and a transfer will only travel inside the network the address was issued for. Sending to a wrong address cannot be undone.