Crypto Glossary

# A B C D E F G H I K L M N O P Q R S T U V W Y


Asset-Backed Token

An asset-backed token is a non-fungible blockchain token representing ownership of an asset.

Astroturfing

Posts that seemingly originate from average people that are actually created and/or promoted by companies or corporations to advertise their own brand. (ie., a fake “grassroots” campaign)

Atomic Swap

A decentralized application that facilitates the transfer of one blockchain network token for another blockchain network token without the need a centralized intermediary.

Auction

The process of conducting a sale whereby interested parties are allowed to offer prices (bid) for the product or service. There are many types of auctions including minimum bid auctions, sealed bid auctions, blind auctions, Dutch auctions etc. Each auction type has different rules. Typically, the seller will choose the auction type they feel will fetch the highest price.

Audit

An audit is the process of inspecting information and creating a report, typically by a third party group. A financial audit will review financial documents while a technical audit may review code or schematics.


Breeding

Breeding within the world of cryptocurrency refers to a process seen in many non-fungible tokens (NFTs) based-games out there, such as CryptoKitties or Axie Infinity.

This is a process where you can essentially “breed” your digital assets, or in this case, pets, in order to create a new “offspring” based on that breeding process.

These new offspring will then possess the ability to battle or get sold within a specific marketplace that supports NFT tokens.

The main reason why players will end up breeding their NFTs is to create new ones that potentially have rarer attributes and have higher value or get a competitive advantage within the game they are playing.


Centralized

A centralized organization is one whereby a registered governing body or individual is able make and enforce rules for a system with or without the consent of the participants.


DeFi (Decentralized Finance)

A DeFi service is a smart contract that may be used by parties within a given blockchain network. Interactive functions may include trading tokens, pooling, staking, lending, gambling and lotteries. The executable code resides on a decentralized network giving the system tamper and censorship resistant traits.


ERC-20

ERC-20 refers to a framework for specific type of token within the Ethereum (or Ethereum clone) network(s). ERC-20 tokens may be issued by different groups and organizations but all share functional characteristics which allows better interoperability and exchangeability. (See Ethereum EIP 20).


FOMO

An acronym standing for “Fear of Missing Out.”
“All the noobs are gonna FOMO in when they see the massive gains!”


GameFi

A derivative of “DeFi”, GameFi refers to games utilizing in game blockchain based financial components including interactive elements, gameplay mechanics, items or any mix thereof.


Hot Wallet

A blockchain network private key that is stored online. Inversely, a “Cold Wallet” is stored offline. An example would be a private key that is written on a piece of paper. Hot wallets are generally considered less secure but more convenient.


Inflation

The increase in prices relating to a specific currency with the affect being a lowering of purchasing power of that particular currency.


Keylogger

Software that tracks, stores and/or sends all letters typed into a keyboard or virtual keyboard. This is typically installed via malicious code but can also be added to a system manually.

Know Your Customer (KYC)

Short for Know Your Customer, these are checks that crypto exchanges and trading platforms must complete to verify the identity of their customers.


Leverage

Leveraging is utilizing the value of a currently held asset to create a new investment position (bet). One type of “leveraged position” would be a “10x” or “100x” bet that a given asset will go up or down in price. The upside profit is large because the downside risk is large. Should the the asset price move in the opposite direction of the prediction (bet), even by a small amount, the investor risks having their invested funds liquidated.

Another example of a “leveraged position” would be taking out a loan on a currently held asset and using the funds to buy additional assets. This can be profitable if the yield on the new asset is higher than the interest on the loan.


Market Capitalization (Market Cap or MCAP)

The “Market Cap” of an asset can be determined by multiplying it’s total circulating supply by the current price. This is a crude form of gauging a given assets overall value and stability due to market volatility, manipulation and asset issuance policies. Example; Asset “A” has a total circulating supply of 1 million tokens of which, 500,000 were issued to early investors for $1.00 each with an issuance mechanism that releases just 1,000 tokens a day thereafter. Asset “A” is then listed on a public exchange. Thanks to increased exposure and a possible marketing campaign the price goes up to $5.00 on the first day. So far in this scenario, only 1,000 tokens have been sold for $5.00 however, the “Market Cap” has now risen from $500,000 to $5 Million. Market Cap can give the illusion that there’s more value in a given asset than what truly exists.

Metaverse

The term “metaverse” is used to describe a 3D virtual environment where individuals are able to interact with the environment and other participants in real time. Individuals typically use an avatar to represent their virtual selves and may customize their appearance to suit their mood. Activities within a metaverse may include gaming, socializing, trading, learning and building.

Metaverses may allow inhabitants to buy/sell products and services within the world and are increasingly incorporating blockchain based digital assets (NFT’s) as part of their economies.


Non-Fungible Token (NFT)

A Non-fungible token (NFT) is blockchain platform token that is non-divisible. NFT’s may function like an equity representing ownership stake in a project or company (similar to a stock) or they may contain the hash value of a digital item such as a jpg or mp3. Typically, NFT’s can be purchased, sold or traded directly with other people on the same blockchain network directly, without an intermediary. Currently, the most popular NFT blockchain network is Ethereum. NFT’s may also be created on non-decentralized networks such as the “Binance Smart Chain” or less robust networks such as Wax. Popular NFT marketplaces include OpenSea, SuperRare and Rarible.


On-Chain

“On-Chain” refers to transactions that have been made and recorded a “block” and inserted into a blockchain. This term is synonymous to “L1” or “Layer 1” which is the base layer of a blockchain network.

Off-Chain

“Off-Chain” refers to transactions made and recorded outside of a blockchain. The term “Off-Chain” is synonymous with “L2”, “Layer 2” or “Side-Chain” which are external systems used to record transaction without incurring the cost associated with On-Chain transactions. Many transactions may be recorded and “rolled” into a single transaction and then be inserted into a blockchain which gives the benefit of immutability with a much lower cost.


Paper Wallet

Storing a private key or seed phrase on a physical object such as a piece of paper.

Play-to-Earn

Play-to-Earn is the inclusion of economic functions within a game allowing players to “earn” virtual items or currency with real world value either by chance (loot drops) or by performing certain tasks. Play-to-Earn games may also allow players to trade or build items within the game. Increasingly, virtual items earned correspond to a crypto currency or NFT which the player can trade, exchange or sell on open marketplaces outside of the game itself.


QR Code

A label containing a special pattern of black and white blocks containing encoded information such as a URL. A QR code reader such as a phone camera app may be used to decode the pattern and display the information to the viewer.


ROI

Acronym for “Return on Investment”. The ROI of an investment can be calculated by subtracting the profit from the initial investment cost.


Seed Phrase

A seed phrase is a set of words corresponding to a private key on a blockchain. They allows for more human readable way to save and retrieval a blockchain wallet.

Staking

Staking is the act of depositing tokens into a smart contract and running node software to help validate transactions within a blockchain network. Honest validators are rewarded with staking incentives and typically given shares of the network transaction fees collected for code execution and transactions. Bad actors that attempt to validate or insert false or bad transactions risk losing the tokens they have staked. This processes is often called Proof of State or PoS as opposed to Proof of Work or PoW.

STO (Security Token Offering)

A Security Token Offering or “STO” is the sale of a blockchain token representing ownership interest of an asset or company. Not unlike an IPO, STO’s can be public or private however, due to the decentralized nature of the underlying network these security tokens may be traded on regulated or decentralized exchanges 24 hours a day. These Security Tokens may be borrowed against or leveraged.


Testnet

A testnet is a blockchain network used to test upgrades and features. Testnets may have tokens that are given out to testnet participants via a “faucet”. These tokens typically have little to no value and are used strictly for testing purposes. Testnets run separately from their “Mainnet” counterparts.

Token

A unit of ownership within a blockchain network. Tokens are assigned to addresses within the network and can typically be transferred or “sent” to other addresses. Tokens may divisible (fungible) or non-divisible (non-fungible).

Tokenize

The processes of linking some or all of an assets ownership to a blockchain or crypto token.


Unbanked

Unbanked are individuals that are either unable or unwilling to utilize traditional banking services.

Unconfirmed

This is a state where a blockchain transaction has been executed but not yet propagated throughout the network. Typically, a set number of confirmations by nodes of a blockchain network must be achieved before the transaction is considered “confirmed” and consensus is reached.

Vaporware

The term for a software project that is never actually deployed. The term is often used as a derogatory by skeptics.

Virtual Reality (VR)

Virtual reality (VR) is the use of visual, auditory and/or tactile technology to create a simulated reality for the participant. The immersive effect can give the wearer a sense of “presence” in the simulated environment. The participant may be able to view in all directions and may interact with the simulated environment through the use of gloves, voice or movement.

Volatility

The amount of price increase and decrease over a given amount of time. A High Volatility would be large price swings while Low Volatility would be less deviation from a mean or median price.

Volume

The amount traded within a market over a set period of time.


Wallet

The term “Wallet” often refers to a blockchain public and private address. The public portion of a Wallet can be given out in order for people to send tokens to while the private portion is needed to send funds out of the account and should be kept private. The term “Wallet” is a bit misleading in that tokens you have “in” your wallet are not actually stored in the wallet but instead kept on the blockchain.

Whale

A term describing an investor or group with a large amount of funds. These entities may wield enough value to influence markets.

Whitepaper

A document outlining the details of a technical projects as well as the overall concept and roadmap.


Yield Farming

The act of earning interest on crypto tokens. This may be achieved by lending tokens, providing liquidity to markets, securing a network or other by providing other financial services by leveraging the value of the tokens.