Crypto Tech in Plain English: Everything in Crypto Simplified for The Common

Reposted with permission from original author @SuhailKakar

look, i get it. you're sitting there watching crypto twitter explode over something called "zk-rollups" or "account abstraction" and thinking, "what the actual fk are these people talking about?"

crypto's not complicated. it's just explained by people who suck at explaining - or worse, want you to stay confused

i've been there. in the early days i just nodded along in crypto conversations while understanding maybe 10% of what was being said. it's exhausting, and frankly, embarrassing.

so i finally decided to learn this, it's not that complicated. it's just wrapped in the most unnecessarily technical language imaginable. classic tech bros making simple things sound complex to seem smart.

this guide is my attempt to translate crypto-speak into actual human language. no bullshit, no showing off, just plain explanations of what these things actually are.

btw, this is my biggest article so far (~3000 words) and i spent a lot of time on it - lmk what you think. definitely want to do more like this :)

let's get into it.

the absolute basics (stuff you should actually know)

• blockchain: it's just a database that nobody owns. imagine a google spreadsheet that tracks who has what, except instead of google controlling it, thousands of computers maintain identical copies. and once something's written in it, it can't be changed. that's it. that's the revolutionary technology everyone's losing their minds over.
• cryptocurrency: internet money that lives on a blockchain. bitcoin was the first, but now there are thousands, most of which are complete garbage.
• bitcoin: the original cryptocurrency, created in 2009 by someone (or a group) using the name satoshi nakamoto. limited to 21 million coins ever. started this whole mess we're in.
• ethereum: the second major crypto, but more importantly, it lets people build apps on its blockchain. like if bitcoin is digital gold, ethereum is digital legos. most of the stuff in crypto is built on ethereum.
• wallet: doesn't actually store your coins (those live on the blockchain). it's just an app that holds your private keys. think of it as your crypto login info.
• private key: the actual password to your crypto. if someone gets this, your money is gone. if you lose it, your money is gone. no customer service to call. yes, this is terrifying and yes, people lose millions this way all the time.
• public key/address: your crypto username that people can send stuff to. looks like a random string of characters. safe to share.
• mining: computers solving some math problems to validate transactions and add them to the blockchain. wastes enough electricity to power small countries. bitcoin still does this.
• gas fees: the cost to do anything on a blockchain. sometimes reasonable, sometimes $200 to send $50. completely unpredictable. one of crypto's biggest problems.
• smart contract: code that automatically executes when certain conditions are met. like a digital vending machine that can hold, send, or receive money based on rules. cool in theory, catastrophically buggy in practice.
• cold storage: keeping your crypto offline, away from internet connection. like putting your money in a safe instead of your wallet. paranoid but smart.
• hot wallet: a wallet connected to the internet. convenient but less secure. the crypto equivalent of walking around with your life savings in cash.
• hardware wallet: a physical device that stores your private keys offline. looks like a usb stick. the least sexy $100 purchase you'll ever make, but probably the most important.
• seed phrase: a series of words (usually 12 or 24) that can recover your private keys if you lose access to your wallet. write this down physically, never digitally. yes, people have tattooed these on their bodies. no, that's not a good idea.
• fiat: regular government money like dollars or euros. crypto people say this with the same tone most people reserve for "cockroach."
• satoshi (sats): the smallest unit of bitcoin, equal to 0.00000001 btc. named after bitcoin's creator. bitcoin maximalists measure everything in sats because they think dollars won't exist in 10 years (they're correct).
• gwei: the smallest unit of ethereum, used to measure gas prices. pronounced "gway" though nobody will correct you because nobody talks about crypto in real life.

consensus mechanisms (how blockchains agree on stuff)

• proof of work (pow): miners compete to solve pointless math problems, winner gets to add the next block and receive rewards. uses enough electricity to power argentina. bitcoin's approach.
• proof of stake (pos): validators put up their own crypto as collateral to verify transactions. if they try to cheat, they lose their stake. like having skin in the game. uses 99.9% less energy than pow, which is why ethereum switched to it.
• delegated proof of stake (dpos): like proof of stake, but token holders vote for a small group of validators. basically a crypto oligarchy. faster but less decentralized.
• proof of authority (poa): a small group of pre-approved validators confirm transactions. doesn't even pretend to be decentralized. mostly used for private blockchains that corporations love.
• proof of history (poh): creates a historical record that proves events occurred in a specific order. solana's secret sauce for being fast. also solana's achilles heel for constantly breaking down.

scaling solutions (making blockchains faster and cheaper)

• layer 1: the main blockchain itself (like ethereum or bitcoin). usually slow and expensive when lots of people use it.
• layer 2: systems built on top of layer 1 to make it faster and cheaper. like adding express lanes to a congested highway.
• rollups: bundle many transactions together and submit them to the main chain as one transaction. like carpooling for blockchain transactions. the current darling of ethereum scaling.
• optimistic rollups: assume all transactions are valid unless proven otherwise within a challenge period. faster but has withdrawal delays. arbitrum and optimism are the big ones here.
• zk-rollups: use complex math proofs to verify transactions are valid without revealing the actual data. faster finality than optimistic rollups. zksync and starknet are examples. crypto engineers get weirdly excited about these.
• sidechains: separate blockchains that run parallel to the main chain. polygon is the most successful one. cheaper than ethereum but with weaker security guarantees. you get what you pay for.
• state channels: private channels between users to conduct many transactions off-chain, only settling the final result on the main chain. like running a tab at a bar instead of paying for each drink. great in theory, barely used in practice.
• sharding: splits the blockchain into smaller pieces (shards) that can process transactions in parallel. ethereum's long-term scaling plan that's been "coming soon" for about 5 years now.

defi (decentralized finance) terms

• defi: financial services built on blockchains without traditional middlemen like banks. peaked in 2021, and still kinda interesting (i'm a huge fan)
• dex: decentralized exchange, lets you trade crypto without a central authority. uniswap is the biggest. fees are usually painful.
• amm: automated market maker, uses math formulas and liquidity pools instead of order books to determine prices. clever but sometimes gets exploited.
• liquidity pool: a collection of funds locked in a smart contract, used to facilitate trading, lending, etc. where defi degens park their money hoping to get rich while they sleep.
• yield farming: providing your crypto to protocols to earn rewards. the crypto equivalent of chasing bank account signup bonuses, but with way more risk.
• staking: locking up your crypto to help secure a network and earn rewards. passive income that sometimes isn't so passive when things go wrong.
• lending protocol: platforms where you can lend your crypto to earn interest or borrow against your crypto as collateral. aave and compound are the big ones.
• impermanent loss: potential loss faced by liquidity providers if asset prices change significantly after depositing. called "impermanent" because in theory it could reverse, but in practice it usually doesn't.
• tvl: total value locked, the total amount of assets deposited in a defi protocol. the crypto equivalent of assets under management.
• liquidation: when your collateral gets sold off because your loan-to-value ratio becomes too risky. the defi equivalent of a margin call. has ruined many a defi degen's day.
• flash loan: loans that are borrowed and repaid within a single transaction, with no collateral needed. sounds impossible but works because of how blockchains process transactions. mostly used for arbitrage and exploits.

tokens and token economics

• token: a unit of value created on an existing blockchain. like a casino chip but for specific crypto platforms.
• fungible token: tokens that are identical and interchangeable. like dollars – any dollar is the same as any other dollar.
• non-fungible token (nft): unique digital assets that can't be exchanged on a 1:1 basis. digital proof of ownership for unique items. peaked with bored apes, now mostly a punchline.
• erc-20: the standard format for creating tokens on ethereum. like 95% of tokens use this standard.
• erc-721: the standard format for creating nfts on ethereum. enabled the whole jpeg speculation craze.
• tokenomics: the economics of a token - how it's distributed, what gives it value, inflation/deflation mechanisms. usually an afterthought until the token price crashes.
• utility token: tokens designed to serve a specific function within an ecosystem. what every token claims to be to avoid being classified as a security.
• governance token: tokens that give holders voting rights in a protocol. in theory, decentralized governance. in practice, whales control everything.
• security token: tokens that represent ownership in an external asset or company. what the sec thinks most tokens actually are.
• stablecoin: tokens designed to maintain a stable value, usually pegged to a fiat currency like usd. the only crypto most normal people actually want to use.
• wrapped token: a token that represents another cryptocurrency on a different blockchain (like wrapped bitcoin on ethereum). a hack to make blockchains talk to each other.

privacy tech

• zero-knowledge proof (zk-proof): a method to prove you know something without revealing what that something is. like proving you're over 18 without showing your actual birthdate. crypto's most legitimately impressive tech.
• zk-snark: a specific type of zero-knowledge proof that's compact and quick to verify. what zcash uses. requires a trusted setup which makes some people paranoid.
• zk-stark: another type of zero-knowledge proof that doesn't require a trusted setup but is larger than snarks. what starknet uses. crypto engineers argue about snarks vs starks like normal people argue about sports teams.
• ring signature: mixes your transaction with others to hide which input corresponds to which output. what monero uses. actually works pretty well.
• stealth address: generates one-time addresses for each transaction to improve privacy. another monero feature. the irs hates this one.
• confidential transactions: hides the amount being transferred while still proving the transaction is valid. what the bitcoin core developers have been promising for years but never delivered.
• mixer/tumbler: services that pool together many people's crypto and then send it back out, breaking the transaction trail. tornado cash was the biggest until it got sanctioned by the us government.

dao and governance

• dao: decentralized autonomous organization, an internet-native organization collectively owned and managed by its members through voting. like a digital co-op but with way more drama.
• governance: the process by which decisions are made in crypto protocols, usually through voting. sounds democratic but usually isn't.
• proposal: a suggested change to a protocol that token holders can vote on. ranges from minor parameter tweaks to complete overhauls.
• quorum: the minimum number of votes needed for a governance decision to be valid. often not reached because most token holders can't be bothered to vote.
• multisig wallet: requires multiple signatures to approve transactions, commonly used for dao treasuries. the crypto equivalent of requiring multiple keys to launch nuclear weapons.

infrastructure and development

• node: a computer that participates in a blockchain network by maintaining a copy of the blockchain. the backbone of decentralization.
• full node: stores the entire blockchain history. takes up hundreds of gigabytes for bitcoin and terabytes for ethereum.
• light node: stores only headers and a small portion of the blockchain to verify transactions. what most people actually run if they run a node at all.
• validator: in proof of stake systems, a node that stakes crypto to validate transactions. the new crypto equivalent of miners.
• api: application programming interface, how different software components communicate with each other. how your dapp talks to the blockchain.
• rpc: remote procedure call, how applications interact with a blockchain. what breaks every time there's high network traffic.
• oracle: services that bring off-chain data onto the blockchain (like price feeds). chainlink is the biggest. the bridge between crypto and the real world.
• ipfs: interplanetary file system, a decentralized way to store and share files. where most nfts actually store their images (not on the blockchain itself, despite what nft bros claim).
• dapp: decentralized application, an app that runs on a blockchain. usually has worse ux than web2 apps from 2005.

advanced concepts

• mev: maximal extractable value, profit that can be extracted from reordering transactions. the dark forest of crypto where bots fight over fractions of pennies.
• front-running: seeing pending transactions and inserting your own transaction ahead of them to profit. like seeing someone about to buy something and rushing to buy it first.
• sandwich attack: a type of front-running where attackers place orders before and after a large trade to profit from price movements. the crypto equivalent of insider trading but completely legal.
• slippage: the difference between expected price and executed price due to market movement. why your trades never execute at exactly the price you see.
• gas war: when users compete by offering higher gas fees to get their transactions processed first. like a bidding war but for blockchain space. nft mints often trigger these.
• hard fork: a major change to a blockchain's protocol that makes previously invalid blocks/transactions valid (or vice-versa), requiring all nodes to upgrade. how ethereum became ethereum and ethereum classic.
• soft fork: a change that is backward-compatible, allowing non-upgraded nodes to still participate. less dramatic than a hard fork.
• bridge: infrastructure that allows tokens to move between different blockchains. frequently hacked for hundreds of millions.
• interoperability: the ability of different blockchain systems to communicate and work together. the holy grail that everyone talks about but nobody has fully solved.
• composability: the ability to combine different protocols and applications like lego blocks. what makes defi interesting despite all its problems.

emerging trends

• modular blockchains: blockchains that separate different functions (consensus, execution, data availability, settlement) into specialized layers. the hot new blockchain design philosophy.
• data availability layers: specialized blockchains focused on storing and making data available. celestia is the poster child here.
• zkevms: virtual machines that use zero-knowledge proofs to verify computation, enabling more efficient scaling. the current bleeding edge of ethereum scaling.
• intent-based transactions: expressing what you want to achieve rather than how to achieve it, letting the system figure out the best execution. like saying "i want to buy $100 of eth at the best price" instead of specifying exactly how.
• real world assets (rwas): bringing traditional assets like real estate or stocks onto blockchains. what institutions actually care about, not jpeg monkeys.
• decentralized physical infrastructure networks (depins): networks that coordinate physical infrastructure (like wifi hotspots or storage) through crypto incentives. helium was the pioneer here before they pivoted a dozen times.
• AI agents: autonomous programs that use ai to interact with blockchain protocols.
• social finance (sofi): financial applications with social components, like group investing or social trading. because finance wasn't already stressful enough, now you can lose money with friends!

wrapping up

here's the truth: crypto isn't actually that complicated. it's just explained terribly by people who either don't understand it themselves or have an interest in making it seem more complex than it is.

most of these concepts are pretty straightforward once you strip away the jargon. a blockchain is just a database with no owner. defi is just banking without banks. nfts are just digital receipts.

the next time someone tries to impress you by dropping terms like "zk-rollups" or "impermanent loss" in conversation, you'll know they're not as sophisticated as they sound. they're just talking about bundling transactions together with fancy math, or the risk of providing liquidity when prices change.

and remember: the people who explain things simply are the ones who truly understand them. those who hide behind complexity are often just trying to sound smart.

now go forth and speak crypto with confidence! or better yet, go outside and touch grass. there's more to life than magic internet money.

did i miss any terms you're curious about? drop them in the comments and i'll explain those too!