It can be quite a challenge to keep pace with all the latest developments and trends. This quick reference is a handy guide when learning about blockchain, cryptocurrencies and crypto trading.
We prepared this resource to be easy to follow, making sure the explanations bring in the most current information available today. Come back here for quick reference whenever needed.
Enjoy learning about cryptocurrencies from our DEXFIN Crypto Encyclopedia. We hope that you find it to be a helpful tool as you’ll be making your way through the crypto markets.
2FA: Two-Factor Authentication
In simple terms, two-factor authentication is a second layer of security where a unique code is generated on an app on your phone or other electronic device. That code, together with your username and password, is then used to log into your accounts on which you have set up your 2FA.
A 51% attack is a potential attack on a blockchain network where a single entity or organization can take control of over 50% of a blockchain network’s computing power, which can cause a network disruption. A 51% attack needs a lot of resources, so it is difficult to make it happen. If successful, one predominant group could change the blockchain transaction records and close the confirmations of new transactions.
An address is a cryptocurrency address on a blockchain. It comprises 26-35 alphanumeric characters. The address functions as your unique identifier whenever you send or receive cryptocurrencies. Your private keys stay private, but this address is listed publicly on the blockchain.
Some ICOs reward their early adherents for sharing the news about their project through affiliate links, referral programs or similar offers. An affiliate might earn tokens for bringing new clients to the company – a predetermined amount of tokens or a certain percentage from the tokens such a new client buys. If used, affiliate programs typically run during a pre-sale phase of an ICO.
A cryptocurrency airdrop is a marketing process during which you can receive free coins or tokens to your wallet. This way, the issuer increases the recognition of this new virtual currency. Small volumes of these new coins or tokens are sent to wallets for free or in return for a small service such as sharing a post prepared by the company issuing the currency or inviting friends to this opportunity. During an airdrop, the platform sends out coins or tokens to the wallets all at once and for free. A legitimate crypto airdrop never looks for capital investment in the currency. The aim of airdrop is purely promotional.
There is just one original blockchain and one first cryptocurrency: Bitcoin. Naturally, Bitcoin enjoys supremacy and a special status. All the other virtual currencies came after Bitcoin. That’s why any other cryptocurrency is taken as an alternative cryptocurrency coin, or an alternative coin, or altcoin.
AML: Anti-Money Laundering
AML focuses on tax evasion, market manipulation, public fund misappropriation, trade of illicit goods and other activities of this kind. AML regulations require financial institutions to continuously conduct due-diligence procedures to detect and prevent malicious activities.
API stands for Application Programming Interface. An API is a program that enables one software application to interact with another. In simple terms, an API is a messenger that takes requests and tells a system what you want it to do, and then returns the system’s response back to you. For example, API can be used for automatic trading by trading bots at an exchange.
An app coin is a cryptocurrency token native to a decentralized application (DApp). Put another way, an app coin fuels or is used on a particular decentralized application. DApps applications can be monetized by their creators who use a specific token that was built e.g. on Ethereum. The more this app coin is used on the DApp, the higher its value may become.
An arbitrage is a practice where a trader takes advantage of a price difference between two or more markets: The trader is buying an asset in one market while simultaneously selling it on another market, profiting from the differences between the prices. Arbitrage is considered a low-risk investment because the period in which the price could fluctuate is very short. Arbitrage was often used with fiat currencies, bonds and stocks. As there can be price differences between various crypto exchanges, the arbitrage is also used with cryptocurrencies.
ASIC / ASIC Mining
ASICs (Application-Specific Integrated Circuits) are dedicated hardware units designed to carry out only one specific activity. (By contrast, most personal computers have multiple uses.) ASICs are made to mine a particular currency. Thus, a Bitcoin ASIC unit will typically mine only Bitcoins.
Asset classes are groups of investments with similar characteristics that abide by the same regulations. Traditionally, there were 3 major asset classes: fixed income bonds, equities, and cash equivalents, e.g. CDs and US treasury bills. There are also newer asset classes such as commodities, real estate, and cryptocurrencies. When diversifying a portfolio, it is often recommended to invest in more than one asset class.
ATH: All-Time High
The all-time high (ATH) is the highest price of a cryptocurrency (e.g. Bitcoin), so far. It is nothing unusual to see a market correction once a new ATH has occurred.
This is a modified variant of Base 58 binary-to-text encoding. Base58check is primarily used to encode Bitcoin addresses. Thanks to this type of encoding, 160-bit hashes are converted into P2PKH addresses.
Basis point (“bp”, “bps” or “bips”) is 1/100th of a percent (0.0001), or one percent of one percent. A fractional basis point simply means a fraction. For example, 2.5 basis points would equal 0.025% or 0.00025. In the field of finance, e.g. in fixed income markets, figures are commonly stated in basis points.
A bear market is a situation or time period in which sentiment in a market or asset prices are in a negative downward trend. The prices are going down or are expected to go down. Bear markets were usually experienced when trading stocks. But a similar situation can now be seen with a new asset class, with cryptocurrencies. “Bearish” investors in a crypto bear market will often sell off their assets, which creates a cycle of negative price action. The opposite: Bull Market.
Bitcoin is the first cryptocurrency, a decentralized means of payment. Transactions can be sent from one user to another user through the blockchain, with no intermediaries. All transactions can be transparently checked on the blockchain that serves as a public ledger. The white paper was published by its mysterious creator Satoshi Nakamoto in 2008 when the Bitcoin Network also started. Bitcoin is enjoying a cryptocurrency market dominance of over 50% of the entire cryptocurrency ecosystem. Bitcoin is designed in such a way that offers the world a decentralized, peer-to-peer payment system that significantly cuts costs and speeds up financial transactions, with no need for central authority.
Bitcoin dust relates to the small amount of Bitcoin which is lower than the minimum limit of a valid transaction. Bitcoin dust is the relatively smaller amounts of Bitcoin lying in a particular wallet or address whose monetary value is so tiny that it is even lower than the amount of the fee required to spend the Bitcoin. It makes the transaction impossible to process.
Bitcoin script is a stack-based scripting programming language used within the Bitcoin protocol for transaction processing. The script utilizes systematic processes that make it possible for Bitcoin transactions to function. It has found application within the protocol due to its limited complexity and minimal processing requirements. The Script programming language is Turing incomplete and lacks the functionalities of modern programming languages, such as loops. However, this limited functionality is intentional as it prevents what are known as infinite loops from occurring.
A block is a fundamental element of any blockchain. The individual blocks contain transactional data records which are stored on the blockchain. All the blocks are linked together using cryptography. The blockchain starts from the first block (the genesis block), and all the subsequent blocks are connected by a cryptographic hash.
Block height is defined as the number of blocks in the chain between any given block and the very first block in the blockchain. The genesis block (the very first block) has a block height of 0. The subsequent block’s height is 1, and so on. Information about the block height can be found on blockchain explorers.
A block reward refers to the number of Bitcoins miners get if they successfully mine a block of the currency. The amount of the reward halves every 210,000 blocks, or roughly every four years. Once a miner mines a block of the currency he can earn the block reward – he can get newly mined cryptocurrency. In the beginning, the miner’s reward was 50 BTC. After the 1st halving of block reward in November 2012, the reward was 25 BTC; after the 2nd halving in July 2016, the reward went down to 12.5 BTC; after the 3rd halving in May 2020, the reward is 6.25 BTC.
Blockchain can be described as a data structure that holds transactional records, while ensuring security, transparency, and decentralization. You can visualize it as a chain or records stored in the forms of blocks which are controlled by no single authority. It is a digital public ledger where all transactions are recorded immutably and kept transparently. The immutability is thanks to the fact that a specific blockchain is distributed across countless computers that are all linked together, making a specific Blockchain Network. The blockchain is based on two fundamental concepts: (1) the block with transactional information, (2) the chain, which connects all the blocks in a blockchain through a cryptographic hash.
Thanks to a blockchain explorer, you can view all the current and past transactions on the specific blockchain online. You can also see the blockchain’s hash rate, the history of a particular address, recently mined blocks, the block height, etc.
A bond is a contract between two parties. Companies or governments issue bonds because they need to borrow large amounts of money. They issue bonds and investors buy them (thereby giving the people who issued the bond money). This means that the bond issuer has to pay the principal back to investors at the end of the term.
BTD: Buying the Dip
Buying the dip (BTD) means buying an asset when the price goes down, or dips. Traders buy the dip since they expect the price to go up in the future and to sell the asset and make a profit.
A bull market is a situation or time period in which sentiment in a market or asset prices are in a positive upward trend. The prices are going up or are expected to go up. Bull markets were usually experienced when trading stocks. But a similar situation can now be seen with a new asset class, with cryptocurrencies. “Bullish” investors in a crypto bull market will be buying more of their assets in expectation to make a profit in the future. The opposite: Bear Market.
Buy wall is a large block of orders for an asset at a specific price. Those who can use massive amounts of an asset can create a buy wall (a large block of orders) at a specific price to fill the order book and to push the other traders to buy at a higher price.
The token issuer buys back previously issued tokens, effectively reducing supply, increasing demand and market price. In this manner, the issuers are investing and showing trust in their own projects. There is also a downside to buyback: In case the company ends up owning a major volume of their asset, such a project might become too centralized, which goes against the main idea behind cryptocurrencies.
A call option, often simply referred to as a “call,” is an option to buy an asset at an agreed price on or before a particular date. It is a contract between the buyer and the seller to exchange a security at a set price. A call option is a right, but not an obligation, to buy the asset, so traders are not obliged to buy if they choose not to. In the future, call options might be used for cryptocurrencies, as well. The opposite: Put Option.
A capital gain is the amount by which the selling price of an asset exceeds the purchase price; the gain is realized when the asset is sold.
A capital loss is the amount by which the purchase price of an asset exceeds the selling price; the loss is realized when the asset is sold.
CBDC (Central Bank Digital Currency)
Digital currency, digital cash, digital fiat currency, CBDC (Central Bank Digital Currency) is an electronic version of notes and coins. Digital currencies are regulated and centralized through a central entity, typically a bank that oversees and regulates the transactions carried out within the network. By their design, digital currencies are not transparent. Digital currencies also aim to deal with difficulties in tracking and fraud and with the high costs of cash handling and issuance.
CFFA: The Computer Fraud and Abuse Act was enacted in 1986, as an amendment to the first federal computer fraud law, to address hacking. According to the CFAA, users cannot intentionally access a computer if they are not authorized to do so.
A chart pattern or price pattern is a pattern within a chart where prices are shown in a graph. Traders consult these repeated patterns to see and estimate the possible future price movements of traded assets. Three main types of chart patterns are currently used during technical analysis: candlestick pattern, harmonic pattern and traditional pattern.
Circular Tokenomics / Circular Economics
Tokenomics is a new, transparent, token-based economy using blockchain technology. Users participate in the project by helping build the entire ecosystem around this basic token. On one side of circular tokenomics is the user who uses tokens and trades them for other assets, on the other side are tokenized companies that offer users the opportunity to invest in their projects. Users can earn or buy tokens that can be used for membership benefits or for discounted fees on the platform. They can trade tokens on the open market and can also use them for all kinds of services. The circulation of tokens among users within tokenomics strengthens trust, reduces transaction costs, and leads to an overall higher attractiveness of the platform. The circular tokenomics is the basis for growth, the extension of platform users, and is a key element of the circular tokenomics ecosystem.
Circulating Supply refers to the amount of coins or tokens available for daily use. Max Supply refers to the maximum amount of coins of a given cryptocurrency that will ever exist. Total Supply is the total amount of coins or tokens that exist at this time (without any coins that have been burned).
A coin is typically a cryptocurrency with its own blockchain. The coins are the digital equivalent of cash; they have the same characteristics as money: they are fungible, divisible, acceptable, portable, resilient and have a limited supply. The coins might be sent, received or mined. The foremost example is Bitcoin with the very first blockchain that was unleashed in 2009. More examples of coins are: Litecoin (LTC) is a peer-to-peer payment cryptocurrency with faster transaction time than BTC. Monero (XMR) has several privacy-enhancing features that improve upon Bitcoin to be secure, private, and untraceable. Zcash (ZEC) is a privacy coin for absolutely private and anonymous payments. Some more coins: Bitcoin Cash (BCH), Cardano (ADA), NEO (NEO), Stellar (XLM), NEM (XEM), Ripple (XRP). The term „coin“ does not necessarily mean a large market capitalisation. Some coins have a relatively big market cap (e.g. BTC, XRP, BCH), some coins lag behind.
Staking is similar to keeping money on your term deposit. With cold staking, you can begin staking cryptocurrencies but hold them on a secure wallet that is not linked to the internet at all times, i.e., on a hardware wallet. Naturally, cold staking is much simpler, easier and safer than regular staking. The process is quite straightforward: Load your assets into your wallet and go offline. Open your wallet weeks or months later and see the staking rewards that you have made.
Cold storage is an offline wallet used for storing cryptocurrencies. The point is to store the cryptocurrencies in a wallet that is not connected to the internet. This way, the wallet is protected from unauthorized access and other vulnerabilities. An example of cold storage is Trezor hardware wallet and paper wallets. The opposite: Hot Storage.
A commodity is an item that is traded on the market, such as wheat, copper, iron, gold, silver, oil, coffee, or sugar. To put it simply, a commodity is a useful or valuable thing, it is a raw material or product that is bought and sold commercially in large quantities. Thanks to cryptocurrencies, a new field is emerging: A cryptocurrency-backed commodity.
A confirmation denotes that there is an agreement, or a consensus, on the network that the cryptocurrencies transferred (e.g. Bitcoins) have been sent to the intended receiver and are considered his property. When making a cryptocurrency transaction, one or more confirmations are required before the transaction can be confirmed and go through. Once confirmed, the transaction can be checked, or verified, and stored as a legitimate transaction on the blockchain.
Consensus is an agreement reached by a group as a whole. With blockchains, there are no third parties or central authorities to approve or verify the validity of the transaction. Instead, an automated mechanism is used among all the blockchain network users by which consensus is achieved. Proof of Work (PoW) and Proof of Stake (PoS) are just two examples of these consensus mechanisms.
A cryptocurrency is a digital currency, an internet-based means of payment where cryptographic functions are used to carry out financial transactions. By utilizing blockchain technology, cryptocurrencies can be decentralized, transparent, and immutable. Cryptographic and encryption technologies regulate how many units of cryptocurrency will be available and how transactions will be performed. The payments are carried out directly peer-to-peer, with no need for any bank, institution, third party or central authority.
Cryptocurrencies can be backed by commodities such as precious metals, minerals, and natural resources. This is a demanding process: each token must represent an actual physical object (or a corresponding financial asset), so extensive tracking and auditing is necessary.
CUSIP / CUSIP Number
CUSIP stands for Committee on Uniform Securities Identification Procedure. A CUSIP is an ID number with nine alphanumeric characters to identify North American financial securities.
A cypherpunk is an advocate of cryptography as a tool to achieve social change. Cypherpunks want to uphold privacy, freedom and human rights. They do not welcome authorities or regulations.
Dandelion is an added layer of privacy used by the MimbleWimble Protocol with the aim to make cryptocurrency transactions untraceable. Dandelion spreads transactions out in a random way similarly to the dandelion flower dispersing its fluffy “parachute” seeds in the wind. As a result, there are many random steps before a transaction is sent on to the blockchain. These random dandelion hops enhance the privacy and security of the transaction.
DAO: Decentralized Autonomous Organization
DAO (sometimes called DAC: Decentralized Autonomous Corporation) is a decentralized organization governed by rules and laws encoded as a computer program. This program is not controlled by any central authority but by the users and is absolutely transparent. As expected, all DAO’s transaction records and rules are maintained publicly on a blockchain.
DApp: Decentralized Application
Decentralized applications, or DApps, are computer applications that run on a distributed computing system. DApps are often referred to as smart contracts on Ethereum blockchain, where they have been popularized. DApps have no central authority and enable peer-to-peer functionalities.
DCA: Dollar Cost Averaging
With DCA approach, the investor buys a fixed dollar amount of an asset (usually stock) on a regular schedule, regardless of the price. This strategy allows automation, removes stressful emotions, waiting for the lowest price and spreads risks. DCA is also known as the constant dollar plan, pound-cost averaging, and it is also described as unit cost averaging, the cost average effect or incremental trading.
DCEP, DC/EP, Digital Currency / Electronic Payments
DCEP aims to be the equivalent of banknotes and coins. In case DCEP is used and you have 125.00 Canadian Dollars, you will actually have 2 DCEP of CAD $50.00, 1 DCEP of CAD $20.00, and 1 DCEP of CAD $5.00. Thus, DCEP is a real electronic Canadian Dollar, a replacement of M0, the base money supply of central banknotes and coins.
DDoS Attack stands for a distributed denial-of-service (DDoS) attack. It is a cyber attack with multiple sources flooding the targeted system, usually one or more web servers, so it is impossible for users to access their network. Such an attack cannot be stopped by blocking a single source. DDoS can come in many forms. Early threat detection is one of the best preventive measures.
Decentralized Exchange (DEX)
DEX is a cryptocurrency exchange without any central authority or a third party service. These decentralized exchanges allow trading directly between users, peer-to-peer, with no intermediary. The advantage is their “trustless” nature – you don’t have to trust the exchange since it is you who holds the funds in your personal wallet. They also provide privacy, since you can stay anonymous.
The opposite of encryption. The act of making data clear or converting data from coded, unreadable format (ciphertext) into plain text.
DeFi (Decentralized Finance)
New monetary and financial decentralized system built around the public blockchains. This decentralized system keeps identical records on a peer-to-peer network, with no single point of failure (as in centralized systems). It is permissionless (it doesn’t need permission of anybody, including any authority), and resistant to censorship. DeFi makes use of decentralized applications (DApps) – programs functioning within decentralized networks. Thanks to DeFi, current, traditional financial services can be transferred and built on open, public blockchains, such as Bitcoin and Ethereum. These services include margin trading, Bitcoin lending, prediction markets, etc. Currently, some ot the largest functions of DeFi are: Creating monetary banking services, e.g., issuance of stablecoins. Providing peer-to-peer or pooled lending and borrowing platforms. Enabling advanced financial instruments such as DEX, tokenization platforms, derivatives and predictions markets.
If an asset is delisted, it means that it is removed from listing at a stock exchange. It could be a decision made by the exchange or a request from the project team.
Demand / Law of Demand
Demand describes readiness of consumers to buy specific goods or services for a specific price. For example, Bitcoin pricing is influenced by its limited supply and market demand for it.
The keys in a deterministic wallet are derived from a “seed” – a sequence of up to 24 random words. If you have installed a wallet e.g. for DXF (DEXFIN token) you were asked to write down and save a string of 24 words. This seed makes it very easy to back your wallet up. In case you lose your wallet, you don’t lose your coins or tokens. Just restore your wallet from the seed and you have your balance back in your wallet.
Difficulty in the field of cryptocurrency refers to the difficulty required to mine a block. Proof of Work (PoW) blockchains implement certain rules that cause this to rise or fall depending on the amount of hashing power on the network. This is done to ensure that blocks are not produced too quickly, and to ensure the ongoing security of the network. Bitcoin, for instance, sets the block time at roughly ten minutes (the average time it takes to find a new block). If blocks are consistently taking longer to find, the target will be increased. If blocks are found too quickly, it will be decreased.
The term “difficulty bomb” refers to the gradual increase in Ethereum mining difficulty as part of its migration to a Proof of Stake (PoS) system. When mining, users guess at the solution to a puzzle that the protocol sets out. The puzzle is designed so that it takes a fixed amount of time for miners to solve it (10-20 seconds in Ethereum). Needles to say, that the more users guessing, the faster they’ll find the solution. To remedy this, the protocol increases the difficulty of the puzzle when hashing power is increased.
A distributed ledger is a database of shared and synchronized digital data spread across several locations or among multiple nodes (participants) in a computer network. On the other hand, a centralised database works from a fixed location, thus having a single point of failure. However, a distributed ledger is decentralized, with no central administrator or centralized data storage.
Divergence is when the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, or is moving contrary to other data. Divergence warns that the current price trend may be weakening, and in some cases may lead to the price changing direction. Positive divergence shows that a move higher in the price of the asset is possible. Negative divergence signals that a move lower in the asset is possible.
The act of introducing variety in investments in order to reduce the overall risks. It is a strategy of spreading capital investments amongst a variety of assets.
A dividend is part of the earnings of a corporation that is distributed to its shareholders, usually paid out quarterly. In the field of cryptocurrencies, dividends sometimes refer to the staking of coins or running masternodes.
A dividend yield shows the overall value of a stock. It is the sum a company pays its shareholders (over the course of a year) for owning a share of its stock divided by its current stock price. Dividend yield is shown as a percentage.
Double Spending / Double Spend
Double-spending is a potential shortcoming in cryptocurrency system in which the same single digital coin would be spent more than once. New counterfeit money would be created by this step which would lead to inflation. Such double spend could be accomplished in an attack where a specific amount in cryptocurrency would be spent in more than one transaction. As an example, double spending can be performed if an attacker takes control of at least 51% of the hash power of the network.
DYOR: Do Your Own Research
This piece of advice is often used at internet crypto forums. Instead of taking everything at face value, the participant is reminded to do his own research to make an informed decision.
EMA: Exponential Moving Average
EMA is an indicator used in trading, in technical analysis. It helps to see the price changes by following trends based on historical prices, where more weight is applied to the most recent prices. Thanks to this, EMA reacts faster to more recent price changes.
Encryption is basically the process of converting clear information into code in order to prevent unauthorized parties to access it. Encryption is useful for protecting sensitive information like names, addresses, phone numbers, private messages, and social security numbers. If hackers infiltrate a computer network and access a system, they will be unable to decipher this data without a decryption key.
ERC-20 / ERC20
ERC20 is an official protocol for the Ethereum (ETH) network. ERC stands for Ethereum Request for Comment, and 20 is the proposal identifier. ERC-20 is the universal code or language that all tokens on the Ethereum network use. It allows one token to be traded with another. The ERC-20 is extremely important, since it defines a common set of rules for all Ethereum tokens. This makes it easier for developers to come with new ERC-20 compliant tokens.
ERC-721 / ERC721
A non-fungible token based on Ethereum. ERC721 type is a little bit more developed than ERC20. Each ERC721 token is unique, not interchangeable. ERC721 tokens, more commonly referred to as Non-Fungible Tokens (NFTs) allow developers to tokenize ownership of any arbitrary data, drastically increasing the design space of what can be represented as a token on the Ethereum blockchain. The biggest differentiator of Non-Fungible tokens is that each one is tied to a different identifier, making each token unique to its owner. This is much different to tokens leveraging the ERC20 token standard, which is a token standard for fungible tokens, meaning each token is interchangeable. In the ERC20 token standard, developers can create any number of tokens within one contract, but in the ERC721 token standard, each token within the contract holds a different value.
An escrow account is basically a temporary account held by a third party until a transaction between two parties is final. The money is held in this temporary account until the transaction is completed – until the conditions between the contractual parties have been met. Smart contracts on Ethereum can be used to administer escrow accounts for crypto.
ETF: Exchange-Traded Fund
ETF is an investment fund that follows a mixture of assets. You can go to exchanges and trade ETFs like stocks. In the field of crypto, there are developments to include Bitcoin, Ether and other cryptocurrencies in ETFs.
Ethereum is an open-source, decentralized, blockchain-based platform. Thanks to its nature, hundreds of projects, decentralized cryptocurrencies and decentralized applications (DApps) can be built on this platform, with no need to build their own blockchains. Smart contracts are an essential part of Ethereum, with Ether as its native cryptocurrency.
EVM: Ethereum Virtual Machine
EVM makes it possible for participants to access the Ethereum blockchain globally. It consists of hundreds of nodes, or computers, which run the network in a distributed manner. Users can earn new cryptocurrency through the Proof of Stake (PoS) system.
A marketplace, an online platform in which you can exchange one kind of digital asset for another based on the market value of the given assets. Users can buy and sell coins here.
Exchange coins and tokens are typically used as “fuel” for the home exchange platform, offering benefits to its users. Most exchange coins and tokens provide similar benefits, primarily discount on fees if you pay the fees on the crypto exchange with the exchange specific token. The discounts on fees can be as high as 50 percent, which can be very attractive for traders, since they can save a lot of money by using the exchange specific coin. Since these coins and tokens are quite useful, their price might grow over time.
A fiat currency is money that a government has declared to be legal tender. As it is not backed by anything tangible or physical, such as gold or silver, it can be freely printed “out of thin air.” That’s why it is susceptible to inflation. It is valuable only as long as it is supported by the government who stands behind it. The term fiat comes from the Latin fiat (“let it be done”).
Finality is the assurance or guarantee that cryptocurrency transactions cannot be altered, reversed, or canceled after they are completed. Finality is used to measure the amount of time one has to wait for a reasonable guarantee that crypto transactions executed on the blockchain will not be reversed or changed.
FinTech / fintech
FinTech stands for Financial Technology, which is now used to describe businesses that offer financial services using software and modern technology. Some FinTech developments have improved traditional services. Examples of FinTech: Mobile banking using smartphones, investing services, Forex trading, and cryptocurrencies. FinTech brings financial services closer to the general public, to the end user.
First-Mover Advantage (FMA)
A first mover is a business or a project that comes the first to market with their product or service, thus, gaining a competitive advantage. An example is Bitcoin which came first, and first mover advantage matters a lot.
Fiscal policy is the means by which a government adjusts the tax rates of a country and its spending levels of public funds to influence and monitor a nation’s economy.
The Flappening is defined as the transition of Litecoin growing bigger, more important, and more valuable than Bitcoin Cash (not Bitcoin). The Flappening is a word created by Litecoin’s founder, Charlie Lee.
The Flippening is defined as the transition of other cryptocurrencies such as Ethereum (ETH) growing bigger, more important, and more valuable than Bitcoin (BTC).
FOMO: Fear Of Missing Out
FOMO is an apprehension that you might overlook a rewarding or profitable opportunity. In the field of crypto, it is the feeling of anxiety that you have when you see an enormous percentage growth on a cryptocurrency chart and you don’t have that coin or token.
A fork takes place when a blockchain splits into two separate chains. After that, a new cryptocurrency is created (e.g. Bitcoin vs. Bitcoin Cash). There can be several reasons for a fork: A planned fork, a disagreement (split) in consensus, etc. A fork can take a form of a contentious hard fork (i.e. Ethereum vs. Ethereum Classic); a planned hard fork (SegWit); a soft fork (Litecoin).
Formal Verification is a highly specialized process that mathematically proves the security and correctness of blockchain smart contracts. Formal Verification attempts to prove or disprove that the intended algorithms, protocols or business functionalities are working the way they’re supposed to be.
FUD: Fear, Uncertainty and Doubt
FUD is a feeling of fear, uncertainty and doubt. As a marketing strategy with worrisome information, it can be evoked intentionally among investors, traders and customers. An example of FUD could be someone who says that Bitcoin is a bubble.
Any computer that connects to the Bitcoin network is called a node. Nodes that fully verify all of the rules of Bitcoin are called full nodes. Among the benefits of a Bitcoin user running a full node are: Higher privacy and security, a choice during a fork, handling their own transactions with no need to rely on a 3rd party server.
While technical analysis focuses on price movements, fundamental analysis assesses the intrinsic value of an asset. This means investors use fundamentals as their investment strategy, researching and looking at things affecting profitability, such as business’s assets, liabilities, and earnings, overall health, potential, competitors, markets, etc.
Fungibility is the property of an asset where individual units are the same in terms of value and functionality. Fungible cryptocurrencies and tokens are digital assets built so that each individual token (or fraction of a token) is equivalent to the next. This makes fungibility essential to the concept of currency, whether they be crypto or otherwise.
Futures / Futures Contract
A futures contract is an agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date; the contract can be sold before the settlement date. Recently, new programs were launched for cryptocurrency futures.
Gas refers to the fee required to successfully carry out a transaction or execute a smart contract on the Ethereum platform. More simply put, it is the fuel needed in order to conduct transactions. The exact price of the gas is determined by the network’s miners, who verify and process these transactions on the blockchain, and receive gas for these computational services. They can decline to process a transaction if the gas price does not meet their threshold.
Gas limit refers to the maximum amount of gas you’re willing to spend on a particular transaction. A higher gas limit means that more computational work must be done to execute the smart contract. A standard ETH transfer requires a gas limit of 21,000 units of gas.
Genesis (from Greek root gene meaning “give birth, beget”) block is the very first block in a blockchain. Genesis block is Block 0, it has no blocks before it. All the subsequent blocks are connected to this genesis block through a hashing system.
GitHub is a web-based version-control and collaboration platform for software developers. GitHub, which is delivered through a software-as-a-service (SaaS) business model, was started in 2008 and was founded on Git, an open source code management system created by Linus Torvalds to make software builds faster.
GNU or GPL: General Public License
The GNU General Public License (GNU GPL or GPL) is a series of widely used free software licenses that guarantee end users the freedom to run, study, share, and modify the software. Historically, the GPL license family has been one of the most popular software licenses in the free and open-source software domain.
If an investor is going long, he is buying an asset expecting to sell it at a higher price in the future and make a profit. Such a trader is “bullish” about that specific asset. The opposite: Going Short.
If an investor is going short, he is selling an asset before buying it, with the aim to repurchase the asset at a lower price and make a profit. This is an advanced, speculative strategy where the intent is to profit from a decreasing price of an asset, which can include cryptocurrencies nowadays. The opposite: Going Long.
A gossip protocol is a procedure or process of computer peer-to-peer communication that is based on the way epidemics spread. Some distributed systems use peer-to-peer gossip to ensure that data is disseminated to all members of a group.
Gwei stands for gigawei; it is a very small amount of Ethereum coin (ETH) used to calculate transaction fees for sending Ethereum. 1 ETH = 1,000,000,000 Gwei.
A hacker is someone who tries to obtain unauthorized access to a computer, network or data.
Halving / Bitcoin Halving
Bitcoin halving is an anti-inflationary measure that is a part of the Bitcoin protocol. Only 21,000,000 Bitcoins will ever be mined, with the last BTC mined sometime in the year 2140. As the miners mine new Bitcoins, their reward is cut in half (i.e. “halving”) after every 210,000 blocks. Halving takes place about every four years. At start, the miner’s reward was 50 BTC. After the 1st halving in November 2012, the reward was halved to 25 BTC; after the 2nd halving in July 2016, the reward was halved again to 12.5 BTC; after the 3rd halving in May 2020 the reward is 6.25 BTC. As the halving affects the miner’s reward, it can influence the price of Bitcoin, as well.
Hard cap refers to the maximum volume of money a project or a development team plans to raise during the initial stage of funding of their ICO (Initial Coin Offering).
A hard fork takes place after a fundamental change in the code of a blockchain network. An example is Bitcoin vs. Bitcoin Cash – out of the original Bitcoin forked a spin-off, Bitcoin Cash. After the fork, the original blockchain stays in its place, and a new blockchain is created. Those who have coins on the original blockchain typically receive new coins, copying the volume of their holdings on the original blockchain which they keep as well.
A hardware wallet is similar to a USB flash drive, it is a physical device to store your cryptocurrencies safely offline. Anytime you need to work with your crypto, just connect the wallet to your device (laptop, desktop, smartphone, etc.), check your balance, make the transaction, disconnect the wallet and store it in a safe place offline. All your private keys are kept safe in this hardware wallet. In case you lose your wallet, you can easily restore your balance on a new device by using your mnemonic seed (12-24 phrase words).
Hash / Hashing
Hashing is a process during which a computer scrambles a large input of data (numbers, letters, symbols) into a totally different data of a specified length (hash, hash value, hash code). Mathematical functions and algorithms are used to generate the required output. SHA-256 algorithm is used in Bitcoin Network. The purpose of hashing is to safeguard the data security during the transmission and to provide a method to store the values efficiently.
Hash rate, or hash power, refers to a processing speed of a computer system when solving hashing algorithms on a blockchain network. At the input, there is a string of data, at the output, there is a hash code (hash value, or hash) of specified length.
HODL came about as a wrong spelling of the word HOLD when talking about crypto fans who hold their coins long term, rather than selling them. HODLers (or hodlers) are bullish and just expect the price of their crypto assets to go up. HODL is also explained to mean Hold On for Dear Life.
Hot Storage / Hot Wallet
A hot wallet is an online platform where the keys to your cryptocurrency are stored. Such an online platform can be an online wallet or a cryptocurrency exchange. The disadvantage is that your keys are online. It is much safer to have your keys in cold storage – in a hardware wallet (such as Trezor) or a paper wallet. The opposite: Cold Storage.
ICO: Initial Coin Offering
ICO is a fundraising process in which new projects sell their underlying crypto tokens in exchange for Bitcoin and Ether. It is a fundraising or crowdfunding approach that new cryptocurrency projects use to get support from new investors.
IEO: Initial Exchange Offering
An Initial Exchange Offering is conducted on the platform of a cryptocurrency exchange. Contrary to Initial Coin Offerings (ICOs), an IEO is administered by a crypto exchange on behalf of the startup that seeks to raise funds with its newly issued tokens.
Immutability can be defined as the ability of a blockchain ledger to remain unchanged, for a blockchain to remain unaltered and indelible. In other words, the data contained in the blockchain cannot be modified in any way.
Index is a useful financial tool to follow the price of a specific asset or basket of assets. Crypto index funds – similar to the Nasdaq 100 or Dow Jones Industrial Average – are a representation of a market index, specifically the cryptoasset market. Most crypto index funds use a weighted portfolio for the top ten crypto assets according to total network/market value.
Interoperability is the ability to share information across blockchain systems. Interoperability makes it possible for blockchains to be mutually compatible and utilize the best features and use-cases. The future of the distributed web lies in the ability of blockchain networks to interact and integrate with each other. This is the concept of Blockchain interoperability.
IOU is an informal debt instrument, representing “I owe you.”
IPO: Initial Public Offering
Initial public offering (IPO) or stock market launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors.
Issuance means to create something and make it available. In the crypto space, issuance refers to the generation of new cryptocurrency tokens or coins, which can occur in all kinds of ways, according to the parameters specified by the creators of the project.
KYC: Know Your Customer
Know your customer or KYC is a process of identifying and verifying identities of customers by businesses to comply with KYC/AML (Anti-Money Laundering).
With the investment strategy of laddering, the traders can move in and out of positions. Instead of buying all at once at the current market price, they can set up incremental buy and sell limit orders. Thanks to laddering, it is possible to spread your buy-in or sell volume anywhere between the price now and the expected future price.
LApps: Lightning Applications
LApps are software applications that utilize the Lightning Network as part of the service or product they are providing. The advantage of Lightning Network is better support for payments. Thus, LApps may advance crypto adoption amongst the merchants by enabling them to accept multiple types of payments with cryptocurrencies.
Latency is simply any delay or lapse of time between a request and a response. In trading, latency directly influences the amount of time it takes for a trader to interact with the market (before the first confirmation of acceptance by the network). The timely reception of pertinent market information and the ability to act upon its receipt are often greatly impacted by latency issues.
Ledger / Public Ledger
A public ledger derives its name from the age-old record-keeping system that was used to record information like agriculture commodity prices, news and analysis. It was available for general public viewing as well as for verification. The public ledger is used as a record keeping system that maintains participants’ identities in secure and (pseudo-)anonymous form, their respective cryptocurrency balances, and a record book of all the genuine transactions executed between network participants.
You can earn interest from your assets that you lend out. The provision can be interesting for holders who are just keeping their crypto assets in a wallet and not using them. To this end, you send your coins to a crypto exchange where you enter your assets to a chosen lending program. For instance, you can lend your assets to traders. You can lend out your Bitcoin, Ether or Altcoins, using a smart contract. There are peer-to-peer (P2P) lending platforms where you can lock your funds up for a period of time to collect your interest payments later on.
The blockchain has two layers: Layer 1 – an application layer and Layer 2 – an implementation layer. The lightning network belongs to Layer 2 – the implementation layer. The Lightning Network is a payment protocol that was created on top of blockchain-based cryptocurrencies (e.g. Bitcoin). It reduces the number of interactions on the blockchain and thus enables faster transactions and higher levels of scalability. Lightning Network as a second layer technology for Bitcoin uses micro-payment channels to scale its blockchain’s capability to conduct transactions. Transactions conducted on lightning network are instant and will significantly enhance Bitcoin’s utility as a medium for daily use.
The lightning network belongs to Layer 2 – the implementation layer of the blockchain (Layer 1 is an application layer). The Lightning Network reduces the number of interactions on the blockchain and thus enables faster transactions and higher levels of scalability. It is possible to make small earnings by running these Lightning Nodes, although setting up a Lightning Node requires some investment and technical knowledge that an average Bitcoin user might not have. At this time, the profit per transaction can be just a fraction of a cent (e.g. $0.001 per transaction). Thus, the node has to route many payments for other users to be really profitable. To put it simply, the more a lightning node is utilized, the bigger the returns can be.
A buy limit order means that a trader sets up the buying price for an asset below a certain threshold (for example, below the market price) to buy at the price he wants. A sell limit order means that a trader sets up the selling price for an asset above a certain threshold to sell at the price he wants.
In the context of cryptocurrencies, liquidity refers to the ability of a coin to be converted into cash or other coins easily. Liquidity is important for any tradable assets including cryptocurrencies.
A step when an asset (coin, token) is added to a crypto exchange. The listing could have been requested from the project team or the decision was just made by the crypto exchange. Such an asset must first pass certain thresholds for financial and regulatory viability in addition to a degree of trust from the exchange. Thus, by the act of listing, the exchange is signaling that the shares of the company/asset are known to be of a base threshold of quality.
LockTime / Lock Time
LockTime of a Bitcoin transaction is the time at which a specific transaction can be added to the blockchain. A transaction can be added to the block in the blockchain only after the LockTime has elapsed.
Mainnet (from main network) is the original and functional blockchain where actual transactions take place in the distributed ledger and the native cryptocurrencies possess real economic value. In other words, the mainnet refers to the actual open-sourced blockchain itself that is publicly verifiable.
Mainnet swap consists of switching from one blockchain network to another. In most cases, the swap takes place when a cryptocurrency project migrates from a third party platform (e.g. from Ethereum) to their own native blockchain network.
A maker is a trader who places limit orders on the order books at an exchange. That order is executed (sells or buys) once another customer places an order that matches yours. In that case, you are considered the maker.
Short for MALicious softWARE, malware applies to software programs designed to perform damaging or unwanted actions on a computer system.
The term margin trading describes a process whereby a trader borrows from a broker to buy more than he can really afford. This gives the trader a much higher buying power. However, this is a two-edged sword: If the asset price goes up, the trader makes twice the amount. But if the price dips, the investor loses twice the amount.
The market cap (market capitalization) applies to the total value of all company’s shares. For example, a company with 10 million shares selling at $200 a share would have a market cap of $2 billion. The equation to calculate the market cap of a cryptocurrency is as follows: Circulating supply of coins or tokens multiplied by the current token price.
The term market correction applies to a sharp decrease (typically greater than 10% drop) in the price of an asset. While market corrections are often viewed negatively, they can mean a healthy readjustment of an asset that was overvalued.
The capacity of a certain market to keep a steady rise or decline in price within a given timeframe.
A market order serves to buy or sell cryptocurrency coins and tokens for whatever the going price is. The goal of a market order is to fill the order at any cost. Traders use it if they want to be sure the order will execute and not get hung up.
To begin with, a master node, like any other node, is a server within a decentralized network. Nodes are important because they can process transactions and store the blockchain. However, masternodes are able to perform tasks that a normal node cannot, among others they can process anonymous and confidential transactions, they are entitled to participate in governance and have voting rights, etc.
The maximum supply of a cryptocurrency applies to the maximum volume of tokens or coins that will ever exist. This means that once the maximum supply is reached, there won’t be any new coins mined, minted or produced in any other way. For example, only 21,000,000 Bitcoins will ever be mined.
Mempool (from memory and pool) is a node’s mechanism. It is something like a “waiting room” for transactions. Once a node verifies a transaction, such a transaction sits inside this “waiting room” until a Bitcoin miner picks it up and inserts it into a block.
Merged mining allows two different crypto currencies based on the same algorithm to be mined together, without sacrificing the overall mining performance. This makes it possible for low-hash powered cryptocurrencies to increase their network’s hashing power by bootstrapping on more popular cryptocurrencies.
Metadata is data (information) about data. It is basically a summary of what’s contained e.g. in a file, on a web page, in a document, etc. It can also be a short explanation about what this data is.
This protocol got its strange name after Harry Potter’s spell. Bitcoin transactions are public, since anybody can see the input and output values.The MimbleWimble protocol relies on strong cryptography and supports truly Confidential Transactions (), providing a wonderful base for privacy, scalability, and fungibility on blockchain.
Cryptocurrency mining is a process in blockchain technology that involves confirming transactions and minting new coins to miners. With Bitcoin, miners receive newly minted cryptocurrency in return for performing computational work to help the network run according to its rules. With Ethereum, miners earn by staking coins (or holding them in a special wallet) and verifying transactions. Miners use their computers, special software, and often hardware units such as ASICs to verify transactions and add blocks to the blockchain following that particular cryptocurrency’s protocol.
Mining farm is a data center with mining rigs (dedicated machines) to mine Bitcoins or other cryptocurrencies. Mining farms came up as a result of the demands of the mining process, which requires ever better technical equipment, more energy and financial resources.
A mining rig is usually a dedicated computer hardware – specially designed to perform “mining.” The term can also refer to any computer used to process the distributed digital ledger, even if used just casually or part-time.
The term monetary policy is used for processes and policies adopted, created and maintained by state authorities to control the size and rate of growth of the money supply and interest rates of a country.
Moon / To to the Moon
“To the Moon” is an exclamation used when cryptocurrency prices are rising off the charts. In a similar way, when a coin’s price is “mooning,” that means that the price has hit a peak.
Multipool mining is performed by a mining rig or a miner that can mine in different pools for different cryptocurrencies. Miners analyze the network’s mining power to determine which cryptocurrency is the most profitable to mine during a particular time period.
Multisignature (also multi-signature, multisig) refers to requiring multiple keys to authorize a Bitcoin transaction, rather than a single signature from one key. It is much harder for malicious attackers to accomplish their goal, if more than one signature is required. Multisig with Bitcoin means that more than one private key is required for transactions to be authorized.
Native Exchange Token
This is a token native to an exchange ecosystem. These tokens offer many benefits to users. An example is DXF token (DEXFIN token), ERC20 token based on Ethereum. Some benefits: When you use DFX token to pay your trading fees at an exchange, you get a 50% discount. If you use DXF for staking (lock your DFXs on the DEXFIN exchange) you receive an interest on the locked volume in the amount of 8 to 11% per year. This way, you can create an additional simple residual income from digital currencies you already own. Holders of min. 10,000 DXF tokens will take part in Airdrops on newly listed tokens, distributed among active merchants.
NFT: Non-fungible Token
A non-fungible token (NFT, also known as a “nifty”) is a type of cryptographic token that represents a unique asset. Fungibility refers to the attribute of an asset where all the units are interchangeable and essentially indistinguishable from each other. For example, all fiat currencies, such as USD or Euro, are fungible. On the other hand, non-fungible tokens are unique.
A node is any computer connected to a cryptocurrency network. The node or computer supports the network through validating and relaying transactions. The nodes carry out all kinds of tasks, for example verifying transactions and voting on protocol changes, depending on the type of node (a regular node, a full node or a masternode).
A nonce is an arbitrary cryptographic number that can be used only once in a cryptographic communication. It is often a random or pseudo-random number released in an authentication protocol to secure that old communications cannot be used again in replay attacks.
OCO: One Cancels the Other Order
A one-cancels-the-other order (OCO) is a pair of orders stipulating that if one order executes, then the other order is automatically canceled. An OCO order combines a stop order with a limit order on an automated trading platform.
Off-chain transactions refer to those transactions occurring on a cryptocurrency network which move the value outside of the blockchain. Due to their zero/low cost, off-chain transactions are gaining popularity, especially among large participants. Off-chain transactions can be contrasted with on-chain transactions.
On-chain transactions refer to those cryptocurrency transactions which occur on the blockchain – that is, on the records of the blockchain – and remain dependent on the state of the blockchain for their validity.
An order book refers to the list of pending orders that people are putting on a particular exchange and a specific token. It is a digital list of pending buy and sell orders for a particular coin or token on a marketplace.
Orphan blocks, often referred to as stale blocks, are blocks that are not accepted into the blockchain network due to a time lag in the acceptance of the block in question into the blockchain, as compared to the other qualifying block. Orphan blocks are valid and verified blocks but have been rejected by the chain.
A peer-to-peer transaction is carried out directly between two parties, with no 3rd party or intermediary. Traditionally, when sending money abroad through a banking system, you would have to use several intermediaries, all of whom would charge a fee. In the crypto world, two individuals can carry out a transaction directly, with no intermediary, peer-to-peer, from any place in the world to any place in the world, almost instantly and with a low fee.
A paper wallet is an offline cold storage method of saving cryptocurrency. It includes printing out or writing down your public and private keys on a piece of paper and storing them in one or more secure locations.
A currency where the price is set to stay the same as a particular asset. An example is USDT (Tether), where 1 USDT is pegged to 1 USD. Such pegged currency is also described as a stablecoin.
A malicious attack in an electronic communication, a fraudulent attempt to access sensitive information such as passwords, usernames, login and credit card details under the disguise of a trustworthy entity.
Plasma refers to a framework that allows the creation of ‘child’ blockchains that use the main Ethereum chain as a trust and arbitration layer. In Plasma, child chains can be configured to match the demands of specific use cases, specifically those that aren’t feasible on Ethereum today. Thanks to this framework, the capabilities of Ethereum’s transactions per second can be notably increased.
PoS: Proof of Stake
Proof of Stake (PoS/POS) concept states that you can mine or validate block transactions according to how many coins you hold. This means that the more coins or tokens a miner owns, the more mining power he has.
PoSpace: Proof of Space
Also called Proof of Capacity (PoC) or Proof of Storage; a concept where a storage space on a hard drive is allocated – instead of computing power in the Proof of Work approach.
PoW: Proof of Work
Proof of Work requires proof that work of some kind occurred, usually meaning a processing time from a computer. Such a computer has to process data which is difficult and costly to produce but easy for others to verify. Bitcoin uses PoW consensus mechanism. During this Proof of Work process, new blocks are added to the blockchain, for which miners earn a reward – newly mined Bitcoins each time a block is added.
Presale takes place before the new asset is offered to the general public at public sale. The discounts and bonuses are typically lower than at the private sale phase. Still, presale is attractive for many because of discounts and bonuses compared to public sale. With a new token, the sales phases can be: Private Sale, Presale, Public Sale.
In the crypto world, each crypto wallet has two sets of keys, a public key, and a private key. Private key (a string of alphanumeric characters) is something like a secure password to your banking. Thanks to your private key, you generate your receiving addresses to receive payments and sign transactions. If you lose your private keys, you lose access to your wallet for good. That’s why you need to store your private key securely. On the other hand, public keys are accessible for anybody online, on the blockchain; you provide them to others to make transactions. Public key is similar to your bank account number that you give to others to receive payments from them. Only deposits to your wallet can be made based on your public key, no withdrawals.
Private sale usually applies to larger investors who are given an opportunity to purchase a new asset (token) before it is offered to the general public. These early investors often get the highest possible discount on the asset. With a new token, the sales phases can be: Private Sale, Presale, Public Sale.
In crypto world, public keys work together with private keys. You give your public keys to others to receive payments from them. So, the public key is like your bank account number. Only deposits to your wallet can be made based on your public key, no withdrawals. On the other hand, a private key is something like a secure password to your banking. Thanks to your private key, you generate your receiving addresses to receive payments and sign transactions. If you lose your private keys, you lose access to your wallet for good. That’s why you need to store your private key securely.
Public sale is a crowd sale where the new asset is offered to the general public. The discounts and bonuses are lower than during private sale and presale phases. With a new token, the sales phases can be: Private Sale, Presale, Public Sale.
A put option, often simply referred to as a “put,” is an option to sell an asset at an agreed price by a particular date. It is a contract between the buyer and the seller to exchange a security at a set price. A put option is a right, but not an obligation, to sell the asset. In the future, put options might be used for cryptocurrencies, as well. The opposite: Call Option.
PWA: Progressive Web Application
A progressive web app (PWA) is a website that looks and behaves as if it were a mobile app. PWAs are built to take advantage of native mobile device features, without requiring the end user to visit an app store, make a purchase and download software locally.
Race attack takes place when there are two transactions, made at the same time, with the same funds, with a malicious intention to spend the same funds twice. By the rules, the network accepts only one of the transactions. This is called a race attack, since there is a race which transaction will be accepted first.
Ransomware is a form of malware in which rogue software code effectively holds a user’s computer hostage until a “ransom” fee is paid. Ransomware often infiltrates a PC as a computer worm or Trojan horse that takes advantage of open security vulnerabilities.
A slang term meaning a total financial loss. It is an intentional misspelling of “wrecked.” Rekt is an online gaming phrase, which meant someone was severely beaten by an opponent. In cryptocurrency, rekt is typically used when a person loses a lot of money.
A term used in TA (Technical Analysis). A price that has been going up, finds a resistance. This price level is typically compared with the previous highest price(s).
A roadmap is a strategic plan that defines a goal and includes the major steps and milestones needed to reach it. It also displays comprehensive plans of one cryptocurrency project for future growth in all their stages and sets out completion date ranges.
ROI: Return on Investment
ROI is a way to evaluate the efficiency of an investment. ROI is calculated in percentages with this basic formula: Net Profit divided by Total Investment, multiplied by 100.
The RSA algorithm (from Rivest-Shamir-Adleman) encrypts and decrypts messages for secure data transmission, using an asymmetric cryptographic algorithm. Asymmetric means that the algorithm uses two keys: A public key for encryption (you can share it freely with anyone) and a private (secret) key for decryption.
RSI: Relative Strength Index
RSI is a technical indicator that shows the speed and change of price movements, using the closing prices of a recent trading period. Thanks to RSI, the traders can see the overbought (RSI above 70) or oversold (RSI below 30) stocks.
SAFT: Simple Agreement for Future Tokens
SAFT makes it possible to raise finances for cryptocurrency startups who want to offer their projects to accredited investors. Under SAFT, such tokens are offered to authorized investors. SAFTs are considered securities and fall under securities regulations.
SAFU: Secure Asset Fund for Users
Safu is a term used to denote “safe” in the cryptosphere. SAFU became popular after a misspelling of “safe” on Twitter: “Funds are safu.” In no time, this mishap spread through a YouTube video, and the word “safu” became a part of the crypto dictionary.
The smallest unit of a Bitcoin, called after Satoshi Nakamoto. 1 Satoshi equals 0.00000001 BTC.
Satoshi Nakamoto (an unknown individual or a group of people) is behind the creation of the Bitcoin, the very first cryptocurrency, and the Bitcoin Blockchain, decentralized, public, peer-to-peer payment system.
SEC: Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent federal government agency responsible for protecting investors, maintaining fair and orderly functioning of the securities markets, and helping in capital formation.
A deep analysis to assess the safety of a system (e.g. blockchain, smart contract, etc.) when it comes to attacks or technical failures.
Security tokens represent „securities“ – a kind of crypto world stock. Security tokens are issued and function on top of some third-party blockchain network (e.g. Ethereum) and typically represent real material assets, for example, square feet or meters of real estate or ounces or grams of silver or gold or other precious metal, and non-material assets, such as companies’ shares. Security tokens are generated in a process called security token offering (STO) – a type of fundraising that is executed by a company offering tokenized securities. Securities and Exchange Commission (SEC) would prefer to put all ICOs (Initial Coin Offering) into one bag and consider all of them as security. This is mainly because securities are subject to very strict laws. Hence, if it were officially decided that ICOs could only be understood as securities, then such undertakings would have to be highly regulated.
A seed phrase (seed recovery phrase / backup seed phrase / mnemonic phrase, seed passphrase) is a list of up to 24 words which store all the information needed to recover your cryptocurrency funds on-chain. From this seed phrase, both your private and public keys in a cryptocurrency wallet are generated. Wallet software will typically generate a seed phrase and instruct the user to write it down on paper and store it securely. The pros are that it is secured from phishing software. The cons are that the safe can be cracked or burnt. But you can write your seed phrase on several sheets of paper and store these in various locations.
SegWit: Segregated Witness
SegWit is a process where the transaction signatures are separated from Bitcoin transactions. Thanks to this, more transactions can fit within one block. Using SegWit-enabled wallets is preferable because the blocks of transactions processed by miners serving these wallets have a higher weight (i.e., density of transactions), resulting in speed and cost-effectiveness.
Selfish mining is a strategy for mining Bitcoin in which groups of miners collude to increase their revenue. Bitcoin was invented to decentralize production and distribution of money. But selfish mining can result in centralization of Bitcoin mining operations.
A sell wall is a massive volume of sell orders at a certain price. Such a sell wall should make others feel that there is a strong supply. Until this sell wall is filled, other traders cannot sell at any higher price. The aim of this manipulative strategy is to push other traders to start selling at a lower price.
The overall point of view or mood of a community or investors regarding an asset, cryptocurrency or a particular financial market. Sentiment is a huge driving factor in the cryptocurrency market. It was found that when there’s an increase in crypto prices, people share positive messages across social media. And when the prices go down, people go all negative and share negative posts on social media platforms.
In blockchain technology, sharding breaks the blockchain ledger into smaller pieces (rows called shards) that are processed independently and separately. Sharding allows for faster, more efficient transactions. Zilliqa is a good example of a project that uses sharding.
The Sharpe ratio is a tool that enables investors to examine the overall risk-adjusted return of a portfolio or an asset. It has been widely used in traditional financial markets. Now more crypto traders have adopted this mechanism and have a better understanding of how much risk to take.
Smart contracts are contracts that are performed for two parties by means of a computer protocol without any 3rd party, intermediary, regulatory entity, legal system, etc. Still, they are absolutely transparent, immutable and traceable. The principle behind smart contracts is “if…then” condition. For instance, a condition XYZ must be met before money can be transferred from A to B.
The term snapshot refers to the ability to record the state of a computer system or storage device at a specific point in time. In cryptocurrencies, a snapshot often describes the act of recording the state of a blockchain on a particular block height.
Social trading helps investors to follow or copy the trades of others, in this case of more experienced or more successful traders. Unlike with traditional trading, information sharing and networking is recommended. The users are provided with more helpful trading information, since historical trading data and predictions are available publicly.
A “soft fork” is a blockchain update that is compatible with earlier versions, in other words it is backward compatible. A “hard fork” is a software update that isn’t backward compatible, so any blocks coming after the activation of the software update will have to follow the new rules in order to be considered valid.
Stablecoin is a cryptocurrency designed to maintain a stable value and to minimize the volatility of its price, relative to some “stable” asset or basket of assets. Stablecoins attempt to peg their market value to some external reference such as the U.S. dollar or to a commodity’s price such as gold. Two examples of stablecoins are USDT (Tether) and USDC (USD Coin); their price is set to stay at 1 USD.
Staking is the process of holding funds in a cryptocurrency wallet on a crypto exchange to support the operations of a blockchain network. The principle is similar to keeping money on your term deposit. The coins or tokens you deposit are locked for a certain period. Staking can be nearly as profitable as the mining or trading of cryptocurrencies, and without risk. All you have to do is stake (buy and hold) some coins or tokens in order to get added to the mining pool. The actual profits you can make from staking will depend on how much you stake and for how long. You get a staking reward, similar to mining reward. For example, if you use DXF for staking (lock your DFX tokens on the DEXFIN Exchange) you receive up to 11% per year on your locked volume. In general, staking is similar to mining, but you don’t need mining equipment. You just need a certain amount of coins that is proposed by the rules, and you can start staking. The primary benefit of staking coins is that it removes the need for purchasing expensive hardware. On the other side, the tokens or coins are locked up for some time (typically a year), and you are not able to manage them as long as they are at stake.
Staking Pool utilizes the combined resources of stakeholders, thereby increasing their staking power and how fast they can validate a new block thanks to this pool. Staking Pools are focused on making the most out of the combined staking capacity. Generally, the bigger the staking pool, the more chances are there that the staking pool will be picked and verify a block.
Stocks are a form of capital raised by a corporation through the issue of shares entitling holders to an ownership interest (equity). While you can sell your stocks privately, they are mostly traded on stock exchanges. Compared to other types of investments, stocks tend to perform very well. That’s why stocks are part of modern portfolios.
A stop-limit order is a stop order that designates a price limit. It is a conditional type of trading stocks where the features of a stop order and a limit order are combined. Once an asset reaches the stop price, a limit order is automatically triggered to buy/sell at a specific target price.
Store of Value
A store of value is an asset that can maintain its value without depreciating over time, including precious metals like gold or silver and interest-bearing assets like bonds. In contrast, currency has no inherent value.
A network of manufacturers, suppliers and distributors involved with a particular product and serving customers.
Support, or support level is used in technical analysis, referring to the price level that an asset does not fall below for a period of time. An asset’s support level is created by buyers entering the market whenever the asset dips to a lower price.
TA: Technical Analysis
Technical analysis helps traders assess statistical data on price changes and traded volume. TA is useful to see patterns and trends that may be taken as trading opportunities. While fundamental analysis focuses on evaluating the strengths of an asset or a company, technical analysis is concerned mainly with the history of trades and price movements to figure out the probable future trends.
Taker is a buyer or a potential buyer. In trading, the taker is the trader who places an order that is immediately matched with an order on the order book.
Tanking stands for a decrease in value. If a cryptocurrency “tanks”, the price drops considerably.
TestNet also known as “testnet” is a network where decentralized crypto projects can be tested. While the main blockchain is housed on the mainnet, developers can test their project on the testnet with no impact to the main blockchain. In case of an “incentivized testnet”, new tokens can be issued to carry out tests.
A type of pegged currency where the price is set to stay the same as a particular asset. 1 USDT is pegged to 1 USD.
Ticker / Ticker Symbol
Ticker is an official abbreviation (in capital letters) assigned to an asset, coin or a token. For example: DXF (DEXFIN token).
A timestamp is an immutable record of the time the transaction occurred on blockchain. Timestamping is a security measure, safeguarding the blockchain from manipulation since the information is public and such transactions cannot be altered or deleted.
When talking about cryptocurrencies, we speak about coins and tokens. There is one major difference. A coin is generally a cryptocurrency with its own standalone blockchain (e.g. Bitcoin, Litecoin). On the other hand, a token is usually a cryptocurrency that uses and is built on an already existing blockchain (e.g. DXF, DEXFIN token, which is built on Ethereum). A token can also represent a share in ownership, a share in a company, etc. That’s why tokens can be used very well to tokenize a business.
The term token lockup refers to a specific period of time in which cryptocurrency tokens cannot be transacted or traded. Typically, these lockups are used as a preventive strategy to maintain a stable long-term value of a particular asset.
A token sale is a limited period when new crypto tokens are offered and sold to the public. It can have several phases, such as Private Sale, Presale, Public Sale.
Tokenization means emitting tokens and assigning them a specific value. Tokenization is a new form of crowdfunding for companies and a new opportunity for investors to participate in promising projects at an early stage to benefit from their growth and future profit. The most simple example is to convert the value of traditional money into the Blockchain network; e.g. for 1 million USD, you can emit 1 million tokens with each valued at 1 USD. In a similar way, tokens can represent the value of real estate or shares in a company. Tokenization allows to divide one ownership right (e.g. to a factory) into individual tokens. Since tokens have up to 18 decimals, it is very easy to support your favorite company by buying a fraction of their shares in the form of their tokens. Tokens can also be connected with a project, used as loyalty points, means of payment, etc. All these transactions are immutable and always transparently accessible on blockchain (a public ledger).
Tokenomics / Circular Tokenomics / Circular Economics
Tokenomics is a new, transparent, token-based economy using Blockchain technology. Users participate in the project by helping build the entire ecosystem around this basic token. On one side of circular tokenomics is the user who uses tokens and trades them for other assets, on the other side are tokenized companies that offer users the opportunity to invest in their projects. Users can earn or buy tokens that can be used for membership benefits or for discounted fees on the platform. They can trade tokens on the open market and can also use them for all kinds of services. The circulation of tokens among users within tokenomics strengthens trust, reduces transaction costs, and leads to an overall higher attractiveness of the platform. The circular tokenomics is the basis for growth, the extension of platform users, and is a key element of the circular tokenomics ecosystem.
Total Supply is the total amount of coins or tokens that exist at this time (without any coins that have been burned). Max Supply refers to the maximum amount of coins of a given cryptocurrency that will ever exist. Circulating Supply applies to the amount of coins or tokens available for daily use.
TPS: Transactions Per Second
By TPS we can measure how many transactions can be processed each second through an information system (e.g. through a blockchain network).
Trading bot is a piece of software designed for automatic trading. This is especially useful and helpful in crypto markets, which are volatile and run 24/7. These bots monitor changes on the market and can be set up to execute buy and sell orders automatically 24/7. The automation is possible through API (Application Programming Interface) that connects the bot to a crypto exchange. Trading bots cannot work with a long trading history in crypto (since crypto trading is quite a new field), thus, automation does not have to mean sure profits.
A trustless system means that the participants involved need not know or trust each other or a third party for the system to function. Trustless also means that “trust” just doesn’t come into play in this system at all, since all transactions are transparently verified on a distributed public ledger. On the other hand, the current banking system is a trusted system, since each transaction must be verified by a central authority.
TXID: Transaction ID / Transaction Identifier
TXID is also referred to as a transaction hash (Tx Hash). It is basically an identification number for a cryptocurrency (e.g. Bitcoin) transaction. TXID serves as a reference ID to any transaction on a blockchain.
UI: User Interface
User interface is a visual part of computer application that helps a user to use this application.
Unit of Account
In economics, unit of account is one of the functions of money. The value of something is measured in a specific currency. This allows different things to be compared against each other; for example, goods, services, assets, liabilities, labor, income, expenses. It lends meaning to profits, losses, liability, or assets.
A type of pegged currency where the price is set to stay the same as a particular asset. 1 USDT is pegged to 1 USD.
Utility is the quality of being of practical use. Thus, utility tokens are tokens of practical use, allowing access to a service or product. Therefore, they should not be seen as investments and they should not be confused with security tokens. Some examples of utility tokens: Civic Token (CVC) furnishes access to identity verification-related services in a decentralized ecosystem. Storj (STORJ) aims to provide unlimited cloud storage at a fraction of the cost of traditional data-centers. Siacoin (SC) is a utility token (it is a token, although „coin“ appears in its name) to enable smart storage contracts on the decentralized network. DEXFIN Token (DXF) is a hybrid utility token with many practical uses: instant payments with NFC payment card or contactless NFC ring, saving of 50% on fees, receiving up to 11% annual interest for staking (holding) DXF, etc.
UTXO: Unspent Transaction Output
Basically, it is the amount of leftover cryptocurrency change that you receive from each transaction. This unspent amount is sent back to your wallet and can then be used for future spending. Your crypto wallet balance most likely includes one or more UTXO. Therefore, your wallet balance is made up of the sum of all your UTXOs (unspent transactions).
Verification code is an authentication code (MAC: Message Authentication Code), also called a tag, serving to authenticate a message – in other words, to confirm that the message came from the stated sender and that its authenticity has not been changed.
An emulated computer system, a virtual machine (VM) is a program which emulates a computer system. It has a virtual CPU, memory, and storage and appears, from the outside, to be no different from a physical machine with the same hardware. An example is Ethereum Virtual Machine (EVM) that makes it possible for participants to access the Ethereum blockchain globally. EVM consists of hundreds of nodes, or computers, which run the network in a distributed manner..
Volatility describes price fluctuations of an asset over a certain period of time. The bigger the difference between the highest and the lowest values, the greater the volatility of the asset.
Volume shows how active a coin or a token is on crypto exchanges, typically within a 24-hour window. High volumes can indicate high liquidity, which means that many traders buy and sell such an asset.
In the crypto world, you need a wallet to store your public and private keys safely. Only thanks to these keys will you be able to access your cryptocurrencies. There are two main types of wallets: Online wallets (also called “hot”) and offline wallets (also called “cold”). If you choose an online wallet, you will store your keys online. With an offline wallet, you will store your keys offline, in a hardware wallet that looks and works similarly to a thumb drive. Alternatively, you can also use a paper wallet, so you will write your keys down on a piece of paper and store it in a safe location. Online wallets can be quite convenient to use but are not the safest, since your keys are somewhere online.
A trader who uses wash trading buys an asset through one broker and sells an asset through another broker. In other words, such an investor is a buyer and a seller of an asset at the same time. Wash trading is considered illegal, since its aim is to manipulate the market.
“Weak hands” is used for traders and investors who lack patience to hold their position and follow their plans. They drop their strategy at the first sign of a possible loss. They aren’t strong enough to hold their asset until the price goes up.
Wei is the smallest unit of Ether (ETH), the cryptocurrency on the Ethereum network. 1 Ether = 1,000,000,000,000,000,000 Wei. 1 Wei = 10^-18 Ether.
A cryptocurrency whale is a term used to refer to individuals or entities that hold a sizable amount of a particular cryptocurrency. Bitcoin Whales are considered market players with significant funds that are able to affect the cryptocurrency market.
Whitelist is a list of approved items, for example e-mail addresses, websites, applications, cryptocurrency addresses, etc., that are trusted or assumed to be virus and spam free.