.locker's Web3 Glossary for Beginners
Welcome to the .locker Web3 Glossary, your go-to resource for understanding the most common terms used across the Web3 ecosystem. From blockchain basics and digital identity to tokens, wallets, and decentralized applications, this glossary breaks down complex concepts into clear, easy-to-understand definitions so you can navigate Web3 with confidence.
A
Address
A public string of letters and numbers that represents where a digital asset can be sent or received. Think of it like a bank account number for a digital wallet.
AI Agent
An autonomous or semi-autonomous software entity that can perceive its environment, make decisions, and perform tasks on behalf of a user or system, often using artificial intelligence and machine learning models.
Airdrop
When free tokens or NFTs are automatically deposited into individuals' digital wallets. This is a promotional tactic used to grow awareness and engagement.
Altcoin
Any cryptocurrency that isn’t Bitcoin. Examples include Ethereum, and Solana.
All Time High (ATH)
The highest price a cryptocurrency has ever traded at in its history.
All Time Low (ATL)
The lowest price a cryptocurrency has ever traded at in its history.
B
Bearish
A market sentiment where prices are expected to go down. If someone is bearish, they believe an asset will lose value.
Block
A container of recent transactions that have been grouped together and verified by the network. Once a block’s verification is complete, it is added to the blockchain, linking it to the previous block using cryptography. Because blocks are linked together, changing information in one block would require changing every block that comes after it, which makes blockchains secure and resistant to tampering.
Block Height
The number of blocks that exist on a blockchain from the very first block (called the genesis block) to the most recent one. This helps show how long a blockchain has been running.
Block Time
The average amount of time it takes for a new block to be added to the blockchain. Faster block times usually mean quicker transaction confirmations.
Blockchain Explorer
A public tool or website that lets anyone view blockchain data like transactions, digital wallet addresses, blocks, and gas fees in real time.
BNS
Short for Bitcoin Name Service. It lets users replace long wallet addresses with easy-to-read names on the Bitcoin network.
Bitcoin (BTC)
The first and most well-known blockchain and cryptocurrency. Bitcoin is designed to be a decentralized digital currency that allows people to send digital assets without relying on centralized entities.
Bullish
A market sentiment where prices are expected to go up. If someone is bullish, they believe an asset will increase in value.
C
Coin
A native digital asset that runs on its own blockchain. Coins are typically used as money for payments, fees, or network security. Examples include BTC on Bitcoin and Ether on Ethereum.
Cold Wallet
A digital wallet that isn’t connected to the internet. Cold wallets are considered very secure and are commonly used for long-term storage. Hardware wallets are a popular type of cold wallet.
Consensus Mechanism
The process a blockchain uses to agree on which transactions are valid and which blocks are added to the chain. It allows a decentralized network of computers to stay in sync without a central authority. Common types include Proof-of-Work and Proof-of-Stake.
Cryptocurrency
A digital form of money that uses cryptography to secure transactions and operates on a blockchain. Cryptocurrencies are typically decentralized, meaning no single government or company controls them.
Cryptography
The practice of securing information from unauthorized access by changing readable text into unreadable code. Cryptography helps protect transactions, control access to funds, and ensure data cannot be altered.
D
Decentralized Applications (dApps)
Applications that run on a blockchain instead of being controlled by a single company or server. dApps use smart contracts to operate automatically and allow users to interact directly with the application.
Decentralized Autonomous Organization (DAO)
An organization that is built on a blockchain and governed by code and community members, as opposed to a centralized entity. Tokens are issued to community members, providing a stake in the organization and a mechanism for voting. Rules are embedded in code to automatically execute when conditions are met.
Decentralized Exchange (DEX)
A type of digital exchange that allows users to trade digital assets directly with each other without a central company holding their funds. Trades are executed using smart contracts.
Decentralized Finance (DeFi)
A collection of financial services built on blockchain technology that operate without traditional banks or intermediaries. DeFi allows users to lend, borrow, trade, and earn interest using digital assets.
Digital Asset
Any asset that exists in digital form and can be owned, transferred, or traded electronically. In Web3, digital assets often include cryptocurrencies, NFTs, and tokenized real-world assets.
Digital Identity
A way to represent and verify identity online using blockchain technology. Digital identities are human-readable addresses that replace the standard blockchain hexadecimal addresses, like "hello.locker."
Digital Wallet
Software or hardware that stores the private keys needed to access and manage cryptocurrencies and digital assets. A digital wallet allows users to send, receive, and interact with blockchain applications.
Domain Name System (DNS)
The foundational system of the internet that translates IP addresses into human-readable names (like hello.locker).
E
Encryption
A method of protecting information by converting it into a secure format that can only be read by someone with the correct key. In Web3, encryption helps keep data, wallets, and transactions private and secure.
ENS
Short for Ethereum Name System. ENS converts long hexadecimal Ethereum wallet addresses into human readable names, like .eth or .locker. ENS makes it easier to send and receive digital assets.
Ether (ETH)
The native cryptocurrency of the Ethereum blockchain. Ether is used to pay transaction fees and to interact with applications on the Ethereum network.
Ethereum
A decentralized blockchain platform that enables smart contracts and decentralized applications. Due to its ability to support smart contracts on its L1, Ethereum is considered the world’s computer. It allows developers to build financial tools, games, and digital marketplaces without intermediaries.
Ethereum Virtual Machine (EVM)
The global computing system that runs on Ethereum and compatible blockchains. The EVM executes smart contracts and ensures they run the same way across the entire network.
F
Fiat
Government-issued currency that is not backed by a physical commodity like gold. Examples include the US dollar, Euro, and Yen. Fiat is commonly used to buy and sell cryptocurrency.
Fractionalization
The process of dividing an asset into smaller pieces so multiple people can own a share of it. In Web3, fractionalization allows digital assets like NFTs or tokenized assets to be owned by many users while still maintaining transparency and immutability.
G
Gas
The unit that measures the amount of computational work required to process a transaction or run a smart contract on a blockchain.
Gas Fee
The cost paid to process a transaction on a blockchain. Gas fees compensate the network for the computing power needed to validate and execute transactions.
H
Hash
A unique string of letters and numbers created by running data through a cryptographic function. Hashes are used to secure data, link blocks together, and verify transactions on a blockchain.
Hash Rate
The speed at which a blockchain network or miner processes hashes. A higher hash rate generally means greater network security and more computing power supporting the blockchain.
Hexadecimal
A numbering system that uses 16 characters (0–9 and A–F). Hexadecimal is commonly used in blockchain addresses and hashes to represent large numbers in a compact format.
HODL
A term originating from crypto culture meaning to “hold on for dear life,” regardless of short-term market volatility. It reflects a belief in the asset’s long-term value rather than frequent trading.
Hot Wallet
A digital wallet that is connected to the internet. Hot wallets are convenient for frequent transactions but are generally less secure than cold wallets.
I
Immutability
The blockchain principle that states data cannot be altered, changed, or deleted after being recorded. This creates a trustworthy, permanent digital record of blockchain transactions.
L
Layer 1 (L1)
The base infrastructure where transactions are processed and finalized. Layer 1s must contain the foundational blockchain infrastructure, use a consensus mechanism, complete and settle transactions, and have a native token. Bitcoin and Ethereum are examples of L1s.
Layer 2 (L2)
A scaling solution built on top of a Layer 1 blockchain. L2 networks help increase transaction speed and reduce costs while still relying on the security of the underlying blockchain. L2s are particularly important for Bitcoin since it does not allow for smart contracts on its L1.
Ledger
A record of all transactions on a blockchain. The ledger is shared across the network and publicly verifiable, allowing anyone to view transaction history.
Liquidity
A measure of how easily an asset can be bought or sold without significantly affecting its price. High liquidity means there are many buyers and sellers, making trading smoother.
M
Mainnet
The fully operational version of a blockchain where real transactions occur. Mainnets are separate from testnets, which are used for development and testing.
Mining
The process of validating and adding transactions to a blockchain, usually on Proof-of-Work networks like Bitcoin. Miners compete to solve complex math problems and are rewarded with cryptocurrency for their work.
Minting
The process of creating a new digital asset or NFT and adding it to the blockchain. Minting is how digital assets are officially generated and recorded.
Multi-signature Wallet (Multi-sig Wallet)
A type of digital wallet that requires more than one signature of approval to authorize a transaction. Multi-sig wallets increase security and are often used by organizations or groups.
N
NFT (Non-Fungible Token)
A unique digital asset that represents ownership of a specific asset, such as art, collectibles, or virtual real estate. Unlike regular cryptocurrencies, NFTs cannot be exchanged one-to-one because each one is unique.
Node
A computer that participates in a blockchain network by storing a copy of the ledger and helping validate transactions. Distributed nodes help keep the blockchain decentralized and secure.
P
Peer-to-Peer (P2P) Network
A decentralized network where participants communicate and transact directly with one another without relying on a central server or intermediary.
Private Blockchain
A blockchain that is restricted to a specific group of participants. Only authorized users can read, write, or validate transactions. Private blockchains are often used by companies or organizations for internal purposes.
Private Key
A secret, unique string of letters and numbers that gives you full control over your cryptocurrency or digital assets. Never share your private key with anyone!
Proof-of-Stake (PoS)
A consensus mechanism where validators are chosen to create new blocks based on the amount of cryptocurrency they “stake,” or lock up as collateral. PoS is energy-efficient compared to Proof-of-Work.
Proof-of-Work (PoW)
A consensus mechanism where miners solve complex mathematical problems to validate transactions and add blocks to the blockchain. PoW is known to use significant computational power and energy.
Protocol
A set of rules that defines how a blockchain, network, or application operates. Protocols determine how transactions are verified, blocks are created, and participants interact.
Public Blockchain
A blockchain that anyone can access, read, and participate in. Public blockchains are fully decentralized, meaning there is no single entity controlling them. Bitcoin and Ethereum are examples.
R
Rug Pull
A type of Web3 scam where developers suddenly withdraw all funds from a project or token, leaving investors with worthless digital assets. Always research projects before investing.
S
Satoshi
The smallest unit of Bitcoin, equal to 0.00000001 BTC. Named after Bitcoin’s creator, Satoshi Nakamoto.
Seed Phrase
A series of 12–24 words that can be used to recover a digital wallet. Keeping your seed phrase safe is crucial. Anyone with it can access your funds.
Self-Sovereign Identity (SSI)
A digital identity model where individuals fully own and control their identity data, deciding when, how, and with whom it is shared without relying on centralized identity providers.
Solana (SOL)
A high-speed blockchain platform known for fast transactions and low fees. Its native cryptocurrency is SOL, used to pay for transactions and interact with applications.
Stablecoin
A cryptocurrency designed to maintain a stable value, often backed by fiat like the US dollar. Stablecoins allow users to transact onchain without the risk.
Stacks
A L2 that enables smart contracts and applications with Bitcoin as the secure base layer. This is the L2 that .locker uses in its solution.
Staking
The act of locking up cryptocurrency in a network to help validate transactions, usually earning rewards in return. Staking is common in Proof-of-Stake (PoS) blockchains.
T
Token
A digital asset that exists on top of another blockchain (unlike coins, which have their own blockchain). Tokens can represent value, access, or even ownership of real-world assets.
Tokenized Asset
A real-world or digital asset that has been converted into a token on a blockchain. Examples include tokenized real estate, art, or company shares.
Transaction Fee
The amount paid to a blockchain network to process and confirm a transaction. Fees can vary based on network activity and the blockchain used.
Trustless Transaction
A peer-to-peer transaction that doesn’t require trusting a middleman or central authority. Blockchain technology ensures security and verification automatically.
W
Web1
The earliest version of the internet where users could view static pages but had little ability to interact or create content.
Web2
The modern, interactive internet where users can create, share, and engage with content.
Web3
The next evolution of the internet, built on blockchain technology. Web3 emphasizes decentralization, digital ownership, and direct peer-to-peer interactions without intermediaries.
