A potential attack on a blockchain where a single entity gains control of more than half of the network’s computing power, allowing them to manipulate or halt transactions.

2 Factor Authentication is a double layer security measure. Most crypto exchanges use it. To log in, you not only need to enter a password, but also a code that you receive from the Google authenticator for example.

An address is an alphanumeric string denoting the location of a digital asset on the blockchain. The address is communicated from payee to payor for the payor to send funds to that address. The address specifies where the digital asset’s ownership data is stored and it is where changes are registered upon transaction. In Bitcoin, addresses are derived hashes of public keys that are more compact than the public key itself.

An air gap is a method of securing a network or computer by physically isolating it from the public internet and unsecured networks. An air gapped computer or network has no connections to any other network. The term “air gapped” refers to the fact that there is physical space between the network or computer and other networks or the broader internet.

An airdrop is a token distribution from a team, project, company, or smart contract, which requires no purchase to receive and is delivered to a set of predefined addresses.

Any cryptocurrency that is not Bitcoin. Since Bitcoin was the first decentralized digital asset, all subsequent digital currencies are known as alternative coins, or “altcoins.”

Anti-money laundering regulations are procedures, policies, and laws enacted by governing bodies to stop financial crime. These regulations include “Know Your Customer” rules.

International institutions mandate that financial organizations apply the required safety measures so that these organizations can recognize and eliminate profit from illegal activities. Illegal activities include tax evasion, scams, market manipulation, fraud, money laundering, and more.

In the crypto domain, governing bodies can enact AML regulations to varying levels. Currently, most centralized exchanges operate under former rules or have had new regulations enforced. However, the majority of criminal activity in crypto is found on decentralized exchanges which are still relatively unregulated and rely upon self-checking.

Automated market makers are decentralized exchanges that utilize liquidity pools and complex mathematical formulae to maintain asset liquidity and reduce price slippage. 

AMMs don’t use a traditional “order book” model that requires buyers and sellers to be available and agree on an asset price to complete trades. This approach is unreliable for small, decentralized exchanges with a small number of users. 

Instead, AMMs allow their users to “donate” their funds to liquidity pools. The combined users’ currencies are then made available to buyers, thus creating high levels of liquidity. 

Liquidity pools eliminate the need for exchanges to use complex matching engines to price assets. Instead, they rely on a constant product formula and smart contract technology to regulate assets’ values.

API is the acronym for Application Programming Interface. This refers to an interface of applications or websites to easily get data or push data or commands back. This is a widely used system inside and outside the crypto market. For example, Youtube and Telegram have handy API’s, but in the crypto space pretty much each crypto exchange has one for getting price data and even make trades with external programs like 3Commas. Block explorers, like Etherscan.io for example, also have API’s to retrieve transaction, wallet and coin supply details.

Arbitrage trading is the legal act of profiting from disparate buy and sell prices of assets. Traders usually exploit market discrepancies by buying an asset on one exchange and selling it on another. 

Exchanges price assets in different ways and often have varying liquidity levels. This variance causes market inefficiencies, and the same currencies become available at different prices, making arbitrage trading feasible. 

There are various types of arbitrage in the crypto sphere. These include simultaneously buying and selling assets on different exchanges, utilizing cryptocurrency pairs for triangular arbitrage, and using decentralized exchanges.

An application-specific integrated circuit (ASIC) is an integrated circuit chip designed for a specific purpose. An ASIC miner is a computerized device that uses ASICs for the sole purpose of “mining” digital currency. Generally, each ASIC miner is constructed to mine a specific digital currency. So, a Bitcoin ASIC miner can mine only bitcoin. One way to think about bitcoin ASICs is as specialized bitcoin mining computers optimized to solve the mining algorithm.

All-Time High, the highest value reached by an asset at any point in its history.

The direct exchange of one cryptocurrency for another at current rates, powered by smart contract technology, without a centralized intermediary like an exchange.

An audit is an official examination of an organisation’s accounts. The organisation’s records are examined and checked to ensure that they fairly and accurately reflect the transactions that have been made. This is normally carried out by an independent body. If it is done by employees themselves, it is called an internal audit.

An automated liquidity protocol is a method used by decentralized exchanges to improve asset liquidity. 

Small, decentralized exchanges can’t effectively implement an order book model for transactions because doing so requires a large number of users on the exchange to match buy and sell orders. If there aren’t enough traders available for an asset, it will have low liquidity. 

Decentralized exchanges run on an automated market maker system that utilizes mathematical formulae and smart contracts. These automated protocols employ liquidity pools that allow exchange users to lock in their funds to create a constantly available cryptocurrency supply. 

The bid-ask spread is the difference between an asset’s lowest asking price and its highest bidding price. The “bid” refers to the buying price, while the “ask” is the selling price. 

When trading assets like stocks or cryptocurrencies, there are no set asset prices. Instead, prices fluctuate depending on an array of market factors. As a result, bid and ask values are unstable.

Bid-ask spreads are indicative of an asset’s liquidity. A smaller difference between bid and ask values typically signifies high asset liquidity and large trading volume. A larger difference points to the opposite.

Binance is an exchange platform for cryptocurrencies and tokens. It is one of the leading exchanges by market volume and offers a wide range of trading pairs and altcoins. 

In 2019, Binance launched a blockchain called Binance Chain, with the Binance Coin (BNB) as its native currency. 

Binance created a second blockchain called Binance Smart Chain that runs parallel to the Binance Chain, creating a “dual-chain” system of two interacting blockchains. This dual-chain supports smart contracts and is compatible with the Ethereum Virtual Machine. 

Binance’s main exchange is centralized. However, Binance has also released a decentralized exchange, Binance DEX, that runs as a dApp on the Binance Chain.

A binary hash tree, or Merkle tree, contains cryptographic hashes in a data structure used to summarize and verify the integrity of large amounts of data.

Bitcoin means the first system of global, decentralized, scarce, digital money as initially introduced in a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System by Satoshi Nakamoto, released on the Cypherpunk Mailing List on October 31, 2008. When written with a capital “B,” Bitcoin denotes the system, the protocol, and the network. When written with a lower-case “b,” bitcoin denotes the currency and unit of account.

Blocks are files containing data that are linked together in a chain to create a blockchain. Used to record information, a block is like a page of a ledger. On Bitcoin’s blockchain, each block contains a cryptographic hash code, the hash from the block before it, a timestamp, signature, and some additional data. 

New blocks are connected to previous blocks chronologically. Whether or not each new block is verified is decided by an algorithm, most commonly the Proof of Work or Proof of Stake algorithms. These consensus mechanisms rely on a peer-to-peer network to verify the content of a block before publishing.

The block height specifies the number of blocks created to date. The first block in a blockchain is the genesis block, which has a block height of zero.

A reward given to a miner who successfully calculates the hash in a block during mining. It consists of newly created coins and transaction fees.

A blockchain is a very specific type of distributed database. The technology was first prototyped by the creators of Bitcoin in 2008. This newer type of database consists of individual blocks linked together in a chronological chain. 

Blockchains can be used to store a variety of information types. To date, it has most commonly been used as a public ledger for cryptocurrency transactions. A peer-to-peer network made up of individual nodes utilizes a consensus mechanism to maintain the security and validity of the blockchain. Each node on the network stores a copy of the data publicly and immutably.

A “protocol” is a set of rules and systems which govern the operation of a blockchain. A protocol is essentially a framework in which nodes on a network communicate and add new blocks to a distributed ledger. 

There are three main foundational blockchain protocols (or consensus mechanisms): Proof of Work (Pow), Proof of Stake (PoS), and Delegated Proof of Stake (DPoS). 

It’s possible to introduce new protocols onto existing blockchains. The term “protocol” may refer to the underlying parameters that determine how nodes communicate. Alternatively, it may describe the specific mechanisms that work on top of existing blockchains, such as smart contracts on the Ethereum network. 

Competing blockchains have different protocols, each with their benefits and drawbacks.

Bots are automated applications designed to complete specific functions. Developers utilize application processing interfaces (APIs) to program bots to communicate with exchanges. In the crypto domain, bots have a variety of uses. 

Traders leverage trading bots to analyze data, create investment strategies, arbitrage trade, automize transactions, and more. Bots can also be used for the illegal practice of front running, in which a trader uses insider information to get ahead of a shift in an asset’s value. 

Overall, bots are a cost-effective, time-saving, round-the-clock option for traders. That said, they often have associated fees and large computing requirements, forcing traders to keep their funds on an exchange. 

Bridges enable different blockchains to communicate with each other. They can be trusted (custodial and controlled by a central entity) or trust minimized (non-custodial and powered by smart contracts) and enable users to transfer information and assets between two different blockchains or blockchain layers. Given the complexity of integrating blockchains with different designs, bridges are especially vulnerable to hacks and many of the largest crypto thefts have been from hacks on bridges.

BTC is the original currency code used for bitcoin, used by cryptocurrency exchanges as an indicator linked to the current value of bitcoin. (Some organizations use XBT as bitcoin’s currency code, because the International Organization for Standardization [ISO] denotes currency not connected to a country with an X.)

A property of a distributed computing system that ensures it can function correctly even when some components are unreliable or malicious.

CBDC stands for ‘Central bank digital currency’ and is the fully digital form of fiat money. Unlike at Bitcoin, this type of currency would be created by a centralised authority like a central bank or a monetary authority. It might or might not have a distributed ledger. Each central bank in the world can have a custom implementation. Currently, it is still in test phase or just a concept on paper.

Centralized finance (CeFi) is a system in which a single governing body controls a financial institution. Most banks and exchanges are CeFi institutions. CeFi institutions are intermediaries that customers trust to undertake financial activities and secure assets. CeFi organizations must also adhere to Know-Your-Customer and Anti-Money-Laundering regulations.

Despite cryptocurrencies running on decentralized blockchains, many crypto exchanges are CeFi. They require users to provide identification and surrender custody of their private keys. CeFi crypto exchanges offer individuals a more manageable trading experience compared to decentralized exchanges. However, they are more likely to be subject to government regulations and can be more susceptible to certain cyberattacks and market manipulations. 

Centralized cryptocurrency exchanges are platforms run by companies as intermediaries for cryptocurrency transactions and storage. 

On a centralized exchange, customers don’t have access to their private keys and surrender custody of their funds. 

The exchange keeps a record of all buy and sell orders and tracks users’ orders internally, only transforming them into actual currency when withdrawn. 

Centralized exchanges are currently responsible for the vast majority of cryptocurrency transactions due to their convenience, speed, and cost for users. However, some view these exchanges as the antithesis of the ideals of cryptocurrencies such as Bitcoin. 

What’s more, there are risks due to the amount of funds exchanges store. These concerns include wash trading, price manipulation by exchanges, hacking theft, and government censorship.

Examples of centralized exchanges include Binance and Gemini. 

The total number of cryptocurrency coins or tokens that are publicly available and circulating in the market.

A coin is a cryptocurrency or digital asset that is independent of any other platform, native to its own blockchain, e.g. BTC, ETH, LTC, XRP.

Cold wallets – also referred to as offline wallets – are cryptocurrency wallets that are not connected to the internet. Cold wallets enable users to store their private keys offline in the form of either a paper wallet, hardware wallet, or offline software wallet. Most cold wallets are hardware wallets and take the form of a USB stick. 

Cold wallets attract long-term cryptocurrency traders because they are less likely to fall victim to cyberattacks than hot wallets. To increase security, digital cold wallets are often open source. This allows users to check their code for malicious activity. Security is crucial when managing cryptocurrency because exchanges and wallets are less regulated than traditional financial institutions. Often, they will refuse to reimburse customers’ cryptocurrency when it is stolen during security breaches. 

Decentralized networks create verified, authentic, and unified databases using consensus mechanisms, which are also called consensus algorithms or protocols. 

Individual nodes on a peer-to-peer network undertake sets of tasks to authorize data. These tasks are determined by the nature of the mechanism being used. Cryptocurrency blockchains reward certain nodes – also called validators or miners – with native cryptocurrency for completing consensus tasks. These algorithms rely on nodes to prove ownership of expensive resources, such as computational power or high stakes in a cryptocurrency.

The two dominant types of consensus mechanisms are the Proof of Work and Proof of Stake algorithms. Other mechanisms include the Delegated Proof of Stake mechanism, Proof of Authority, and Proof of Activity. 

Consensus mechanisms provide protection against some types of economic attacks, such as 51% attacks.

Cold storage means the storage of private keys in any fashion that is disconnected from the internet. Common cold storage examples include offline computers, “hardware wallets,” USB drives, or paper records.

Cryptocurrency refers to cryptographic currencies like Bitcoin and alternative coins or ‘altcoins,’ launched after the success of Bitcoin. This category of digital asset is designed to work as a medium of exchange, store of value, or to power applications. This category is distinct from others like security tokens, non-fungible digital collectibles, or governance tokens.

Crypto is a broad term for any cryptography and is often used today to refer to the components of a cryptocurrency market, system, application, or decentralized network.

Cryptography is the study and method of using tactics to secure information in the presence of adversaries. From the Greek kryptós (hidden, secret) and graphein (to write, study), cryptography has been utilized as early as 1900 B.C.E. and primarily relied upon linguistic lexicographic patterns. Modern cryptography relies on computation, number theory, abstract algebra, and other forms of advanced mathematics and engineering.

Custodial and non-custodial refer to methods for storing private cryptographic keys and therefore digital assets. Custodial services are provided by third-parties who facilitate user access to digital assets via some off-chain process in which the user is relieved from storing the private keys to their digital assets and instead relies on that third party to do so on their behalf. Non-custodial services, such as Bitcoin hardware wallets, allow users to manage their private keys and therefore digital assets without relying on any third-party.

A dApp is an application that runs on a P2P network of computers rather than a central computer, thus uncontrolled by any single entity.

A DAO is an organization run by rules hard-coded in smart contracts, which define what actions the organization can or will take. DAOs are one type of emergent dApp built on public blockchains.

A ‘Dead Cat Bounce’ is a term used in finance and now also in the crypto markets. It refers to a brief price recovery before a major crash.

Decentralization is the practice of removing intermediaries in a process and pushing power over a process or system to the edges of the system. Decentralization occurs when individuals or nodes work collectively in a distributed manner to achieve an objective without reliance on a centralized intermediary.

A financial contract whose value derives from an underlying asset, such as a cryptocurrency. Common examples include futures and options.

DeFi refers to a peer-to-peer, decentralized, and software-based network of protocols that can be used to facilitate traditional financial services like borrowing, lending, trading derivatives, insurance and more through non-custodial smart contracts carried on public blockchain networks.

Decentralized exchanges allow peer-to-peer exchanges to take place without a centralized intermediary. 

Decentralized exchanges leverage smart contracts and blockchain technologies to provide the opportunity and security necessary to exchange coins and tokens. 

This type of exchange allows cryptocurrency owners to maintain custody of their funds and private keys. 

Decentralized exchanges can be a safer option than using centralized intermediaries because it decreases the risk of theft through hacking. However, DEXs are more complex for users to employ, and there is more risk of price slippage and front-running. 

Exchanges can be partially decentralized and still utilized centralized elements. 

Airswap is an example of a decentralized exchange. 

Digital assets are any asset built using blockchain technology, including cryptocurrencies, stablecoins, non-fungible digital collectibles, and security tokens.

A ledger that is stored across a network of decentralized nodes, ensuring transparency and reducing the risk of centralized control.

Double spending is the act of spending the same coins twice. If money can be double spent, it cannot function properly as money as it loses its scarcity and counterparties cannot trust that they alone have received payment. Solving the double-spend problem without the use of a central intermediary had never been accomplished until Bitcoin. Satoshi Nakamoto prominently featured the fact that Bitcoin solved this problem in the Bitcoin White Paper. The third sentence of the Bitcoin White Paper reads “we propose a solution to the double-spending problem using a peer-to-peer network.”

A digital signature is a cryptographic value created by a hash function. Digital signatures are used to authenticate and maintain the integrity of messages, transactions, documents, and pieces of digital data. 

Digital data is more vulnerable to attacks and security violations than physical data. The outputted, hashed values used as digital signatures are difficult to forge and prove an item hasn’t been created fraudulently or tampered with. Some digital signatures are legally binding.

Asymmetric cryptography (also called public-key cryptography), which uses a pair of keys, underlies digital signatures on blockchains. Traders use a secret private key to sign and decrypt transactions securely and a public key to receive and encrypt transactions.

DYOR is a term, which you often see in disclaimers and chat groups regarding the cryptocurrency market. It stands for ‘Do your own research’. It is a quick way of saying that no financial advice is given and you have to do your own research before you invest.

First proposed in 2015, the ERC-20 is a standard for fungible token creation on the Ethereum blockchain. There are hundreds of thousands of ERC-20 compatible tokens. 

On the Ethereum blockchain, many tokens operated differently from one another. ERC-20 solved this problem by creating rules for token functionality and providing a template for token creation using an API and smart contract technology. The ERC-20 standard simplified the exchange of tokens across the Ethereum blockchain and impacted the whole cryptocurrency market. 

Alternative standards, such as the ERC-223, have been proposed to solve perceived downfalls in the ERC-20 model. 

A cryptocurrency exchange is a platform that allows its customers to trade cryptocurrencies for other cryptocurrencies, stablecoins, or fiat currency.

Ethereum is one of the world’s most actively used blockchain systems. Initially released in 2015, it is a decentralized ecosystem that uses open-source, distributed, blockchain technology. 

Thousands of computers running Ethereum clients maintain its virtual machine (EVM), allowing the platform to run continuously, uninterrupted, and immutably. Ethereum’s native cryptocurrency is Ether (ETH), which trades alongside many other currencies and tokens on the platform. 

Building upon Bitcoin’s blockchain, Ethereum offers a programmable platform that hosts thousands of decentralized applications. Smart contracts are central to the platform and are primarily written in the coding language Solidity. 

Ethereum currently uses the proof of work algorithm as its blockchain consensus method, but it is being phased out in favor of the less energy-intensive Proof of Stake (PoF) model.

A website or app that provides small amounts of a cryptocurrency to users, often as a reward for completing tasks or as an introduction to the currency.

The term fiat currency refers to any government-issued currency that can be used as legal tender. This type of currency isn’t backed by a commodity and enables centralized financial institutions, such as banks and governments, to control how much money is printed. Because of governmental regulation, fiat currency does not have intrinsic value and can suffer from hyperinflation. Fiat currencies are stores of value, mediums of exchange, and units of account. 

Processing transactions with fiat currencies requires more time than cryptocurrency transactions, and there can be higher charges associated with trading. Most modern-day paper currencies, such as the U.S. Dollar and Euro, are fiat currencies.

A 51% attack occurs then more than half of the mining hash rate or computer power is controlled by an individual or a group of people. A successful 51% attack can be used by an attacker to disrupt the network, either by refusing to mine blocks, mining empty blocks, or by performing a double-spend attack, whereby a coin or coins are spent and then “unspent” on the attacker’s longest chain. This attack is possible due to the nature of Nakamoto Consensus, in which nodes accept the heaviest chain (that is, the chain with the most accumulated computational work) as canonical.

FOMO is the abbreviation for and is used regarding people who are afraid they are missing the boat and therefore take a position in a coin.

A fork is an update to a blockchain’s rules that causes a split in the network.

Cryptocurrency blockchains are usually decentralized, with hundreds or even thousands of nodes on a network. When a developer or community member initiates a blockchain update, some nodes will update their machine, creating a “new” forked-off chain. Updates may relate to modifications to block size, mining rewards, and more. 

There are two categories of forks: hard forks and soft forks. A hard fork occurs as a result of a significant change to a blockchain. All nodes must decide if they want to join the new protocol or remain as part of the old chain. Conversely, a soft fork is a backward-compatible update to a protocol that only requires the majority of nodes to update to avoid a split. 

It is important to note that some forks can be used maliciously to short a cryptocurrency or as scams. What’s more, the price of a blockchain’s native currency may become volatile during a fork. 

Fear, uncertainty, and doubt (FUD) are considered the core underlying emotions that influence traders. Influencing parties use FUD to manipulate behavior in sales, politics, financial markets, and more.

Anybody can take advantage of cognitive biases by exaggerating the benefits, questioning the knowledge, or focusing on negative aspects of specific trade options to create FUD. 

In the crypto domain, people leverage FUD to depreciate specific cryptocurrencies or the whole crypto market. It is crucial for professional traders to distinguish genuine analysis from FUD.

Fungibility is the ability for an asset of an equivalent denomination to be interchangeable. Examples of fungible currencies include most fiat currencies such as the US Dollar and some cryptocurrencies, including Bitcoin. 

Like fiat currencies, fungible cryptocurrency tokens can be divided into smaller parts and easily exchanged. Individual tokens don’t have unique value and should be worth an identical amount. 

The ERC-20 on the Ethereum blockchain set a technical standard for creating fungible tokens to simplify trading.

A genesis block is the first block in a blockchain. It is usually considered “Block 0” on a blockchain because of 0-based indexing in computer science. However, some blockchains refer to the genesis block as “Block 1.”

The genesis block is the only block that does not contain a hash pointer to a previous block. Genesis blocks are often hard-coded. 

Bitcoin’s genesis block doesn’t contain any transaction data. It holds the message, “Chancellor on brink of second bailout for banks.” The mining reward of Bitcoin’s initial block can never be spent. 

Gas refers to the cost of completing operations on the Ethereum blockchain. Gas represents an abstract unit of computation on the network and is paid for in fractions of Etheruem’s native cryptocurrency, Ether, called gwei. 

Like car fuel, gas allows the Ethereum Virtual Machine to continue operating. Every transaction on the Ethereum blockchain uses up computational power, and gas fees fund miners’ computational output. Users can set a “gas limit” on transactions, thus restricting the amount of gas used. 

Gas is decoupled from the value of Ether. However, its price is affected by network activity. Gas fees help maintain network security by reducing the risk of denial of service attacks and infinite loops on smart contracts (among other things).

A hardware wallet is a device meant to store coins securely. It usually looks like a USB flash drive with a small display and a few buttons. The best-known manufacturer of hardware wallets is the Ledger SAS company from France.  The main function of a hardware wallet is that your private key always remains offline. When commissioning the device, 12 or 24 words are shown on the display, which you then have to write down on paper. Keep these safe! If you lose the words, you also lose your crypto assets if the wallet stops working. With these words, you can always recover your crypto assets if the device breaks down. In the case of Ledger and also Trezor, multiple blockchains are supported with the same private key. So you can use the same set of words to secure your Bitcoin, Ethereum (tokens) and other coins. 

Halving is when the portion of Bitcoin’s block reward comprised of newly minted issuance is cut in half, which occurs every 210,000 blocks. This mechanism, and the schedule on which Satoshi enacted it controls the number of new bitcoins in circulation, as well as Bitcoin’s terminal fixed supply.

A hard fork is a significant update to a blockchain’s protocol that is not backward-compatible. Hard forks create blockchain protocols that branch off from original chains. Nodes must “decide” whether or not to join the new protocol.

This process produces two incompatible parallel chains, in which the new chain has a duplicate record of the older chain, including data about all users’ assets.

Miners usually react to hard forks in one of two ways. In one scenario, nodes voluntarily update their software to comply with the new protocol of a planned hard fork. Often, however, community disagreement arises, which causes a split in the blockchain. Nodes that agree with the changes join the new forked-off chain, creating a new version of the currency, while nodes that disagree remain on the original chain. 

Bitcoin hard forks have created alternative Bitcoin currencies such as Bitcoin Private and Bitcoin Cash. The price of a blockchain’s native currency may become volatile during a hard fork. 

A hash function enables the mapping of data of variable size to a new set of data at a fixed size in a way that the reverse computation is impossible. Said differently, a hash function allows the ability to create a unique fingerprint for a set of data, but the fingerprint cannot be used to reveal the content of the underlying data that it represents. Cryptographic hash functions require specific properties to be secure, and different digital assets may use different hash functions.

The hash rate is the sum count of attempted hashes by Proof of Work miners during a given time interval. Individual mining machines, mining operations, or the entire Bitcoin network can be said to have a hash rate. The higher the hash rate is, the more attempts are being made to create a Bitcoin block. As of September 2021, the 90-day average of all bitcoin miners combined hashrate is more than 117 EH/s (117,000,000,000,000,000,000 per second), which is more computations than all the world’s other computers combined.

A hardware security module (HSM) is a physical cryptographic processor that manages, processes, and stores cryptographic keys. A HSM is ordinarily a plug-in card or external device that connects to a computer or a network server.

Hosted wallets are digital cryptocurrency wallets provided by trusted third parties that keep users’ private keys and funds safe. These third parties are usually cryptocurrency exchanges. Coinbase and Binance are two well-known examples.

Hosted wallets share similarities with centralized banking applications because they leverage two-factor authentication and password recovery. They are also custodial, meaning that users don’t retain control of their private keys.

Less experienced traders often choose them as they are easy to set up and use. In addition, traders who regularly operate on centralized exchanges may opt for hosted wallets.

Hot wallets are cryptocurrency wallets that are connected to the internet. Various types are available to cryptocurrency owners. They are accessible via the web and on mobile and desktop applications. 

Hot wallets attract less experienced traders because of their ease of use. In addition, regular traders may opt to utilize hot wallets to make faster transactions. However, they are more vulnerable to cyberattacks than cold storage alternatives. To prevent hacking, safety features such as two-factor authentication are often employed. 

Originally a typo made by a user on the BitcoinTalk.org forum, where Satoshi also posted early in Bitcoin’s history, HODL has been adopted as a shorthand call for investors to hold a digital asset instead of trading or selling it, regardless of market fluctuations.

IBC stands for Inter-Blockchain Communication Protocol, an interoperability network created as part of the Cosmos and Tendermint projects. It is an open-source protocol enabling independent blockchains to communicate with each other.

Equivalent to an initial public offering (IPO) on the stock market, an initial coin offering (ICO) is a process in which companies or individuals raise funds to produce new blockchain applications, cryptocurrencies, or financial services. It is a form of crowdsourcing through which investors can buy tokens issued by a company. These tokens function as representations of a stake in a company or a future product or service.

Typically, IPOs use “white papers,” which detail what is on offer and how the ICO will function. If fund requirements are not met, and the ICO is unsuccessful, investors’ money is returned. However, ICOs are often unregulated, and investors should undertake due diligence before investing.

The term interoperability in crypto refers to blockchain interoperability. In short, this means the ability to share information between different blockchains. Since the launch of Bitcoin, a lot of new blockchains have emerged of which the most well known Ethereum. All these new blockchains are in a way competing with each other to get adoption by developers and users and results in a lot of silos. Since each blockchain usually has it’s own speciality it would make sense for developers to utilise more than one blockchain. In order for this to work there is a need for the interoperability and several projects are working on this.

Keys are the alphanumeric codes that facilitate cryptographic digital asset transactions using asymmetric cryptography. A public key is used to encrypt a message, and a private key decrypts that message. Public keys can be made public, while private keys must be kept secret. Regardless of legal claims of ownership, anyone with access to a private key can effect the transfer of digital assets under its control.

“Know your customer” is a widespread practice that helps financial organizations reduce the occurrence of illicit financial actions, such as money laundering and fraud. 

The “know your customer” process validates customer identities using photo identification, proof of address, and other verification methods. Regulations vary depending on institution types but often include Customer Identification Programs, customer due diligence, and monitoring.

“Know your customer” is one component of a more comprehensive set of anti-money laundering regulations. Most financial institutions across the globe are expected to comply with these standards.

As the industry is not fully regulated, centralized cryptocurrency exchanges apply “know your customer” protocols to varying degrees. Nevertheless, users often have to upload photo identification to begin trading.  

The term “layer-1” refers to the foundational architecture of blockchains, on which other “layer-2” structures can be built. Improving the efficiency of layer-1 technology makes both the base blockchain itself and all the systems it supports more scalable. Ethereum is an example of a layer-1 Blockchain. 

However, executing efficiency-driving changes can be difficult and developers often run into the “scalability trilemma.” The trilemma stipulates that improvements in scalability cause drawbacks for decentralization and security. 

Two examples of layer-1 solutions are consensus mechanisms and sharding. The modification of consensus protocols can improve efficiency and security. Developers use sharding to break up transactions into smaller datasets to distribute them across multiple nodes. 

Layer-2 is a secondary structure built upon a base, layer-1 blockchain. Developers leverage layer-2 solutions to increase throughput by remote-sourcing operations from the layer-1 blockchain. 

Layer-2 solutions are often created by third parties and complete processes independently of the layer-1 blockchain. Because of this separation, developers often refer to layer-2 solutions as “off-chain.” However, layer-2 systems are reliant on the layer-1 blockchain’s security and decentralization.

Layer-2 solutions solve the “scalability trilemma”, which stipulates that increased layer-1 scalability reduces security and decentralization. State channels and nested blockchains are two common layer-2 solutions. 

A ledger tracks the movement of assets. Blockchain technology creates a decentralized, permanent, public, unalterable ledger of all transactions recorded.

The Lightning Network is a protocol for speeding up blockchain transactions. Lightning networks are secondary, off-chain layers built on top of main chains. Bitcoin’s current lightning network was first proposed in 2015.

The Lightning Network layer-2 protocol facilitates faster peer-to-peer payments by opening a system of bidirectional channels on a separate network of nodes that communicates with the main chain. 

Lightning networks maintain funds by creating multi-signature addresses with signed balance sheets that store users’ funds. Two parties place funds in the specified addresses and execute transactions between one another, details of which are stored and signed on the applicable balance sheet. These transactions remain off-chain until the channel is closed, at which point the main chain processes the remaining funds as one transaction. The funds are then released from the address based on the current balance sheet. This process turns multiple small transactions into a single transaction on the blockchain. 

A liquidity pool is a supply of a cryptocurrency that a decentralized exchange leverages to maintain its liquidity and asset prices.

Conventionally, exchanges enact each crypto trade using peer-to-peer transactions. This sequential “order book” system can lead to price slippage. What’s more, a small, decentralized exchange with few users will have low liquidity due to a lack of peers. This renders trading unreliable. 

Decentralized exchanges combat these issues by creating liquidity pools. Currency stores allow exchange users to lock their funds to construct a reliable supply of assets. Traders can then transact with the pool at any time, enhancing liquidity. Liquidity pools are automated using smart contracts.

Users that offer their currency to the liquidity pool are known as liquidity providers. The blockchain rewards them with transaction fees for their service.

A mainnet is a functioning, live blockchain. Mainnet blockchains validate transactions effectively and comprise immutable, distributed ledgers that anyone can view publicly. 

Mainnets are live and trade “real” cryptocurrencies with value, unlike testnets that trade symbolic, valueless coins. Developers deploy their projects and updates on mainnets after test-driving and modifying them on testnets. Ethereum and Bitcoin’s primary blockchains are both examples of mainnets.

Trading financial instruments with borrowed funds, allowing traders to amplify gains or losses.

Market capitalization (or Market Cap) of digital assets is determined by multiplying the current coin supply by the last known trade price of that particular coin.

A server within a decentralized network that performs additional functions beyond simple transaction validation, often requiring a collateral investment.

The maximum coin supply is the total number of coins that can be created for a specific digital asset. For example, Bitcoin’s maximum coin supply is 21 million. Some coins do not have a fixed maximum coin supply.

A Merkle tree is a type of binary tree that represents datasets. Like an upside-down tree, its structure consists of a single Merkle root at the top that connects down to multiple branches, which then link to individual leaves. Merkle trees increase efficiency and data integrity on peer-to-peer networks by reducing the risk of historical data tampering.

The data from multiple transactions are stored within a block and recorded in a Merkle tree structure on a blockchain. Separate transaction data is stored on a non-leaf node at the base of the tree. Each piece of transaction data is put through a cryptographic hash function to create a hash for each leaf node. Subsequently, two leaves’ hash labels are inputted into the hash function to create the connected branches’ hash. This process continues until there is only one hash code in the top row, the root hash, containing all of the block’s data. 

A browser extension that functions as a crypto wallet, allowing users to interact with Ethereum-based DApps directly in the browser.

One-thousandth of a bitcoin, or 0.001 BTC. Also known as a millibitcoin.

Miners are the individuals or entities who operate a computer or group of computers that add new transactions to blocks and submit those blocks to the rest of the network in a Proof-of-Work blockchain. Bitcoin miners earn their revenue by collecting transaction fees included by spenders as well as by generating newly minted BTC. The rate at which BTC is minted reduces by 50% every 210,000 blocks (halvings).

Mining is the process by which new blocks are created in a Proof-of-Work blockchain, and thus new transactions are added to the blockchain. The process involves miners trying to solve a puzzle that requires computational work and, if they are successful, they publish a block of new transactions to the blockchain and collect a reward. While the term “miner” typically refers to an entity that participates in block production on a Proof-of-Work network, “validator” typically refers to an entity that participates in block production on a Proof-of-Stake network.

A mining pool, also known as group mining, is when miners band together and agree to share winnings if one of the miners in the pool solves a block. While individual mining operations are likely to receive rewards proportionate to their hash rate on a long enough time scale, the frequency of successfully finding a block and thus earning a reward is variable, mining pools are useful because they smooth out the frequency of rewards and thus make it easier to operate a sustainable mining business.

Multi-sig is short for “multi-signature” and is a feature of Bitcoin and other digital asset networks that enables the creation of addresses that require some number of multiple private keys to be used to sign a transaction and move funds. Pragmatically speaking, multi-sig setups add additional security, because a user can require that a certain threshold of keys must sign before a transaction is considered valid, making it possible for one or several keys to be lost or compromised without losing access to the underlying digital assets. Digital asset custodians typically use multi-sig setups.

Non-fungible tokens are discrete modules of data, stored on a blockchain, that verify ownership of a digital asset. A non-fungible token essentially acts as a virtual fingerprint or signature, tying a specific digital asset to an owner or set of owners.

NFTs represent digital assets. They are not, as is commonly thought, the digital assets themselves. Instead an NFT can be used to verify the authenticity of the original digital asset, which may be stored on the token’s blockchain, a different blockchain, or a third-party server, and prove ownership. 

“Fungibility” is a property of an item that means it can be interchanged with other items that are exactly the same. Non-fungible tokens are “non fungible” because they are entirely unique. Cryptocurrency coins such as Bitcoins, on the other hand, are all alike and can be interchanged.

Nodes are individual computers that collectively comprise peer-to-peer networks. Unlike a blockchain’s end-users, each node is a separate processor that provides intermediary services, such as transaction verification and blockchain storage, for the decentralized network. 

On public blockchains, participation in the network is open to all. And to maintain security, nodes remain pseudo-anonymous. Blockchains utilize nodes to store a unified and valid chain of records across the network and reward some nodes with native cryptocurrency for mining and validation services. On private blockchains, nodes are known to one another.

“Light nodes” have a significantly reduced capacity and do not store the entire blockchain. These more basic computing devices are used primarily for transactions. 

“Full nodes” are responsible for validating transactions and storing the entirety of a blockchain’s data. The rights for reading and writing data are equal across all “full nodes.” 

“Master nodes” have all the tasks of “full nodes” but can also oversee voting events and complete protocol operations. To be designated a “master node,” the node must own a large quantity of the blockchain’s native cryptocurrency. This collateral-based system deters fraudulent activity. Networks incentivize nodes to become “master nodes” by offering more reliable rewards for their service to the network.

A nonce is an arbitrary number used to vary the input to a hash function and change its output in an unpredictable way.

On-chain and Off-chain refer to transactions that occur on the main public blockchain network vs. outside the public blockchain network. Off-chain transactions may eventually settle on-chain, such as in the case of Bitcoin’s Lightning Network or transactions that occur on Ethereum’s rollup platforms Arbitrum or Optimism. Crucially, the development of a robust off-chain ecosystem that inherits the security properties of the on-chain network is viewed as an important avenue to scale blockchains.

Open-source refers to a software license under which the source code is made freely available and may be redistributed and modified.

Optimistic Rollups are a Layer 2 scaling solutions that execute transactions off from the main chain, where the end results of the transactions are then published in a compressed data format. The transaction data is sent to and batched together by an aggregator called a sequencer. Optimistic rollups assume that submitted transactions are valid by default; only if the submission is disputed will the rollup execute a fraud proof, which re-computes all transactions to determine whether fraud had occurred.

An Oracle is an entity or process that submits data from off-chain to be used by on-chain participants, including smart contracts. Public blockchains cannot be aware of off-chain events without being told about them, a function performed by oracles. These events could include the market price of a digital asset, the weather, political actions, the outcomes of sporting events, or the result of a contract between parties.

A physical document containing a public address and private key for a cryptocurrency, used for offline, secure storage.

A blockchain where access permissions are controlled, and only authorized participants can validate or write data.

Perpetual Futures are a type of futures contract without an expiry date, allowing users to open positions without the need to ever roll exposure. Perpetual futures are anchored to spot via funding rates. For example, if the futures contract is worth less than the spot price, then short positions will pay long positions a rate proportional to the deviation and vice versa.

In asymmetric cryptography, a Private Key is a piece of data held in secret by an individual or entity that is used to compute digital signatures upon other data that can be verified by a third-party cheaply simply by knowing the public key. Private keys can be used to create nearly infinite numbers of associated public keys.

Proof of Stake is a type of consensus mechanism used for blockchains. It selects validators in the network at random using a probability algorithm proportional to the validators’ stakes in the blockchain’s native cryptocurrency. The validating node is rewarded with transaction fees after the computation is completed. 

The Proof of Stake concept was created as an alternative to the Proof of Work mechanism, which lacks scalability due to its energy-intensiveness and the need for miners to have elite hardware to compete to verify blocks. 

Some perceive Proof of Stake as a more secure model because it limits the incentives for miners to attack networks. If a validator verifies false transactions, they lose part of their stake. 

First conceptualized in 1993, the Proof of Work consensus model was designed to reduce the threat of denial-of-service attacks and other malicious computing. 

Used in the cryptocurrency sphere, the Proof of Work mechanism leverages a blockchain’s decentralized nodes to complete complex hash-based computations that are necessary to solve a puzzle for a new block to be verified. This process is known as “mining,” and the prover node is rewarded with some of the blockchain’s native cryptocurrency.

The Proof of Work mechanism provides transactional security without the requirement of a centralized authority. However, it is incredibly energy-intensive. Both Bitcoin and Ethereum currently use the Proof of Work model.

A fraudulent practice where the price of an asset is artificially inflated to attract investors, followed by a coordinated sell-off.

Peer-to-peer is a type of network that consists of multiple nodes that form a distributed architecture. Tasks are divided between peers, all of whom have equal standing on the network. 

Peer-to-peer networks of nodes distribute requirements, such as processing power and storage, thus removing the need for centralized coordination. Unlike more traditional client-server models, peers function as both suppliers and consumers of resources. Peer-to-peer networks can be unstructured, structured, or hybrid. 

A ring signature is a type of digital signature used to increase privacy. A ring signature fuses the input of multiple signers with the original sender’s to protect the identity of the actual signer.

A roadmap is a plan that shows what an organization or team wants to achieve. This usually contains the deliverables for the year, but sometimes it’s even a couple years in the futures. In can be as detailed with specific dates or months, but it can also be broader and based on quarters. In crypto, it’s a common practice that the team shares this roadmap publicly to give insight into the coming features and when those will be realised.

ROI is an abbreviation for ‘Return on Investment’. This is an indicator to show the ratio between your initial investment and the return on it. The formula is ((current value – investment) / investment) x 100. Example: if 1 Ether deposit in an ICO total has become worth 1.6 Ether, then the ROI is 60%.

A rug pull is a scam variant in crypto where the team behind the coin intensively promotes the project and tries to drive up the price only to dump all their coins at once on the order book or by removing all liquidity in case of a DEX. Just like a literal rug pull where a rug is pulled out from under your feet, and you fall, the price of the coins also collapses. This is then clearly visible on the chart with a large red candle.

SAFU is a term in the cryptocurrency world that means safe. It is used by, for example, exchange CEO’s when a hack has happened and then can say ‘All user funds are SAFU!’. It became popular when this Youtube video by Bizonacci was released.

Satoshi (or “sat”) is the name of the smallest denomination of a bitcoin today. One bitcoin can be split into one hundred million units, and each unit is called a satoshi, or a “sat” for short. Thus, one satoshi = 0.00000001 BTC.

Satoshi Nakamoto is the creator or creators of Bitcoin. Satoshi Nakamoto presented the concept of Bitcoin in a publicly released white paper, Bitcoin: Peer-to-Peer Electronic Cash System, released to the Cypherpunk Mailing List on October 31, 2008. Nakamoto registered Bitcoin.org and communicated regularly with developers via email and on BitcoinTalk.org under this pseudonym. Despite the claims of many, no person has ever presented valid proof they are Satoshi Nakamoto, and Nakamoto’s true identity remains unknown to this day.

A scam is a fraudulent scheme that is performed by a dishonest individual, group or company. The goal is to get money or something else of interest like personal information or in the case of cryptocurrency the ‘private key’.

Refers to a blockchain’s ability to grow and manage an increasing number of transactions without slowing down the network.

A security token is a representation of a digital contract for a portion of a tradable asset. Security tokens symbolize partial ownership of financial assets like stocks and bonds and constitute a promise of profit. 

Security tokens are traded on blockchains and issued through security token offerings (STOs). STOs are comparatively more regulated than initial coin offerings, thus reducing the risk of scams. Fundraisers that tokenize financial assets can also reach a broad audience on open markets with STOs. 

Securities traded as tokens benefit from transparency due to the public nature of blockchains. Security tokens also enable the divisibility of illiquid assets.

Security tokens are subject to governmental regulations and penalties can be incurred if rules are broken. However, tokens often take advantage of exemptions to get around laws. The Howey Test governs securities in the USA. The test requires that securities be an investment of capital into a common enterprise with the expectation of profit due to third-party initiatives.

A series of words that gives access to a cryptocurrency wallet, allowing for recovery if necessary.

Segregated Witness was a soft-fork upgrade to the Bitcoin network that activated in August 2017 and allowed for the movement of certain transaction data (signatures and scripts) outside of the main part of a block as a way to fix a transaction malleability problem. In fixing transaction malleability, SegWit also enabled for the creation of Bitcoin’s Lightning Network. Additionally, the SegWit upgrade offers an important scaling improvement by allowing the Bitcoin network to change the way the “weight” of adhering transactions is calculated, offering a significant reduction and therefore increasing the number of transactions that can fit inside a block.

The practice of individuals securely holding the private keys to their cryptocurrency assets, as opposed to using a custodial service.

Sharding involves partitioning a blockchain into multiple pieces known as “shards” and storing them separately. By dividing up the data and the processing of transactions into shards, the computational requirements can be reduced, allowing the network to process larger transaction volumes.

A sidechain is a secondary blockchain that connects to a main chain. Two-way pegs connect the blockchains and allow bidirectional coin and token transfers. Any coins or tokens sent to the sidechain are locked on the connected parent chain. The sidechain then unlocks the same amount of the asset.

Developers utilize sidechains to implement scaling solutions and add functionality to layer-1 blockchains. Sidechains sit somewhere between a layer-1 and layer-2 solution. Despite being an additional protocol to a main chain like layer-2 solutions, sidechains often have separate security protocols. 

Moreover, sidechains can also implement distinct consensus mechanisms, which may differ from those of the main chain. 

Conceptualized in 1997, a smart contract is a program stored on a distributed ledger. It contains the terms of an agreement between a buyer and seller along with a balance.

Smart digital contracts are written in code and self-execute based on prior stipulations, functioning as an automated, non-human intermediary between users. Due to their functionality, smart contracts were described by their creator, Nick Szabo, as “digital vending machines.”

Smart contracts are stored on blockchains and are often immutable once deployed. They are faster to execute, more cost-effective, and reusable when compared to traditional contracts. These contracts are often utilized as the building blocks of decentralized applications.

A minimum amount that a project aims to raise during an ICO or fundraising event. It’s often set lower than the hard cap, which is the maximum limit.

A soft fork is an update to a blockchain’s protocol that allows non-updated nodes to remain functioning on the network. These backward-compatible updates maintain communication between non-updated and updated nodes. 

As long as the majority of nodes update to the new protocol, the blockchain will not split. If a non-updated node attempts an action that is no longer valid in the amended protocol, updated nodes will reject the action. This rejection process renders non-updated nodes less efficient than updated ones, encouraging uptake of the new fork.

Staking is the act of participating in a blockchain that uses a stake-based consensus mechanism. Stakers lock a portion of their balance of a specific cryptocurrency to prove their investment in a blockchain. Stakers must meet the balance requirement of the blockchain and this has the effect of deterring malicious actors. A high enough stake will permit users to verify blocks or vote on the network.

Within the Proof of Stake consensus model, stakers compete to forge blocks. The blockchain apportions transactions to stakers based on their stake and other factors such as randomization and the length of time they have been staking. Thus, the greater the stake, the more likely a staker will be picked to validate blocks and the higher value transactions they can authorize.

Blockchains reward stakers with transaction fees for their service to the network. However, stackers can lose some of their locked currency if they attempt any malicious activity.

Stablecoin is a type of cryptocurrency that is resistant to extreme value fluctuations. It shares elements of both a fiat currency and traditional cryptocurrency.

To maintain value stability, stablecoins can be either fiat-collateralized, crypto-collateralized, or non-collateralized.

Fiat-collateralized stablecoins utilize fiat currency or assets like gold and silver as collateral. An example of a fiat-collateralized stablecoin is Tether (USDT) which is tied to the US Dollar as its reserve asset.

Non-collateralized stablecoins use an algorithm to control their price. Crypto-collateralized stablecoins are linked to other cryptocurrencies and are often “over-collateralized” to prevent price fluctuation.

Refers to the flow of goods and services, including all processes of production, shipping, and delivery. Blockchain can be used to enhance transparency in the supply chain.

A Sybil Attack is the act of using many fake identities simultaneously to overwhelm or manipulate a peer-to-peer network. Public blockchains must be designed to mitigate the threat of sybil attacks and often do so through the imposition of fees, computation requirements, or penalties for bad behavior.

A method used to evaluate and predict future price movements of a financial asset based on historical price data and trading volume.

A testnet is a type of blockchain that is similar to a genuine blockchain but is utilized solely for testing. It is a sandbox where developers can run experiments without the risk of causing disruptions or spending authentic cryptocurrency.

Developers usually test blockchain programs, such as dApps, before releases and updates. Unlike real-value coins and tokens on a mainnet, testnet currency doesn’t have value, and users cannot trade coins between networks. 

Testnets have some important differences from their mainnet counterparts. For example, Bitcoin’s testnet is smaller than the mainnet and uses a different genesis block.

A ‘Ticker’ is an abbreviation of, among other things, shares on the stock exchange. It consists of a few letters. In the crypto world, this system is also used. In the case of shares, a unique ID has also been developed, the so-called ISIN code. Such a system does not yet exist for crypto. It happens a ticker exists several times for different coins. Therefore it is extra important to check the name before placing a buy or sell order.

The total number of coins that a given digital asset has in circulation.

A token is any digital asset built using blockchain technology, including cryptocurrencies, stablecoins, security tokens, and NFTs.

Tokenization is a process that transforms both tangible and intangible tradable assets (or “abilities”) into digital tokens. 

Unlike cryptocurrency coins, tokens are utilized for more than simple buy/sell transactions and storage.

A few examples of these utilities are investment, value storage, purchasing, and crowdfunding. Tokenization opens up a broader market of potential investors, speeds up trade times, and increases liquidity compared to more traditional financial and trading methods.

Tokenomics is a portmanteau of “token” and “economics” and refers to the study of digital assets, particularly cryptocurrencies, and their value. 

Tokenomics is a large field. It includes the study of creators of tokens, allocation and distribution methods, market capitalization, business models, legality, and the ways in which tokens function in the broader economic ecosystem.

Tokenomics forms part of the due diligence process completed by investors and traders before buying crypto tokens or participating in initial coin offerings.

A transaction fee is a payment made by a user for using the blockchain for their transaction. Transaction fees are often paid to the miner or validator who successfully adds to the blockchain the block containing the transaction, although different networks implement transaction fees differently. Transaction fees are an important tool for preventing spam—by imposing a cost to transact, attackers are disincentivized from broadcasting large amounts of junk transactions to the network.

TVL is the abbreviation for total value locked. This refers to DeFi platforms, where users lock their crypto assets for yield or put them to work as liquidity providers. All assets combined are the TVL, and it is an important metric to see how popular a DeFi platform is. The TVL is often shown as a current figure but also with a historical chart, so you can clearly see how it is trending. An example of this is Uniswap. The TVL is useful for end users to use when looking for yield. A new platform with a low TVL can be significantly riskier than one with a much higher TVL. Regardless of size, there is always a risk associated with any platform. 

One millionth of a bitcoin, or 0.000001 BTC. Also known as a microbitcoin.

A utility token is a contract for a portion of a tradable asset. They are created through initial coin offerings (ICOs) on blockchains. 

Utility tokens often act as gateways to products or services. For example, utility tokens can give holders entry to a network, allow prepayment for a product, or provide democratic powers on a network. Unlike security tokens, utility tokens don’t pass the Howey Test and are unregulated, increasing the risk of scams and attacks. However, some utility tokens can face regulations if they are essentially security tokens.

Utility tokens tend to have availability caps, which causes value fluctuations as the quantity available diminishes. Funfair and the Basic Attention Token are examples of utility tokens. 

An Unspent Transaction Output is the amount of unspent digital currency received by a trader after fees have been deducted. The balance an individual has in their crypto wallet is the combined value of their UTXOs. 

On blockchains that utilize the UTXO method, traders must send whole UTXOs to make new payments. Any change the initial trader receives back from a transaction is a new UTXO. The combined amount of UTXOs in a particular currency is the total supply of that currency in circulation.

The UTXO model helps blockchains maintain transaction validity by confirming that the total inputs of each transaction equal the outputs. This method helps prevent double-spending attacks and ensures balance and security. What’s more, knowledge of UTXOS can help traders avoid unnecessary transaction fees. Bitcoin uses the UTXO model. 

In a Proof-of-Stake blockchain, a validator is a node that locks up a number of coins as stake and is responsible for validating and proposing new blocks.

Virtual Currency is another is another term that may be used interchangeably to refer to cryptocurrencies or digital assets.

A programmer and writer, best known as one of the co-founders of Ethereum, the largest decentralized smart contract platform.

The statistical measure of the dispersion of returns for a given asset or market index. In crypto, it refers to the degree of variation of a trading price.

Refers to the total amount of a specific cryptocurrency traded within a certain period, often used to gauge the asset’s popularity or trend.

A Wallet is a tool that stores public and private keys and enables the user to use those keys to interact with a blockchain network. Wallets can be software, hardware, or physical (paper, metal, etc.).

A ‘whale’ is someone with a very large position in a coin.

A list of pre-approved participants who are given access to a specific service or offering, such as an ICO.

In business, a white paper – or whitepaper – is a report designed to inform and influence potential customers, partners, and investors. 

Most professional cryptocurrency startups present white papers alongside initial coin offerings (ICOs) to explain the features of new projects. 

This long-form document presents the token or coin’s concept, technical details, tokenomics, values, strategies, and more. 

White papers are considered a valuable part of an ICO. However, there is no certainty that the information provided on a white paper is valid or reliable. 

A litepaper is a shorter, summarized version of a white paper.

Dit is over het adres dat op gegeven moet worden om een cryptocurrency op te ontvangen bij een terugstorting (withdrawal). Deze term wordt over het algemeen door exchanges gebruikt. Meestal geef je hier je persoonlijke wallet address op, maar het kan ook het ‘deposit address’ zijn van een andere exchange.

WBTC stands for “Wrapped Bitcoin” and is an Ethereum-based tokenized version of a bitcoin. The bitcoin itself is held in escrow by a custodian using the Bitcoin blockchain, and WBTC is an Ethereum-based synthetic representation of that locked bitcoin.

WETH stands for “Wrapped Ether” and is an Ethereum-based tokenized version of an ETH. A user can deposit ETH into an escrow smart contract and receive an ERC-20 version of it (WETH) in a 1:1 ratio. Because WETH is ERC-20 compliant, it can be used in Ethereum-based dApps that adhere to the ERC-20 standard.

Yield farming is the process of generating the most returns possible on your crypto assets by putting them to work. Within the crypto space, DeFi has taken on a big role and services inside this space are making yield farming possible. There are nowadays ways to move your crypto assets to pools to gain interest on those assets giving it an annual percentage yield (APY). Just buying crypto-assets and holding them in your wallet, won’t generate any yield, but lending them out with DeFi services like, Compound, for example, does make this possible. A term closely related to yield farming is liquidity mining.

A ‘yellow paper’ is a research document. It describes a more in-depth and technical analysis. The purpose of this document is to inform those involved and interested.

A Zero-Knowledge Proof (ZKP) allows a party to cryptographically prove an action, such as evidence of a transaction or event, without revealing details of the transaction or event. An observer can verify the authenticity of the claim without evaluating the underlying details used to create it.

Zero-Knowledge Rollups (ZKR) are a Layer 2 scaling solution that execute transactions off from the main chain, where the end results of the transactions are then published in a compressed data format. The transaction data is sent to and batched together by an aggregator often called a relayer, which is also responsible for generating an easily verifiable cryptographic proof that demonstrates the validity of off-chain transactions.