The novel digital world of Cryptocurrency, Blockchain, and Web3 is an international phenomenon that has synthesized its own language, inherited from the multi-cultural foundations that exist at intersection of some of the most informationally dense subject matters known to mankind; computer science, cryptography, finance, economics, statistics, psychology, and sociology.
Navigating this space requires much more than technical prowess, it requires a breadth of knowledge across various sectors that is glued together in very unorthodox manners.
Here, we break down 669 terms native to this paradox of an industry:
4 Terms
1/4/12/24 hr
Denominations for hourly blocks of time. Used by traders and investors, these measurements are typically used to define a specific time frame in which some kind of price action takes place.
1/7/30 D
Denominations for daily blocks of time. Used by traders and investors to measure some kind of activity, usually, price movements or trends, when a number (#) is followed by a D technical analysis of some sort is being discussed.
2FA
Two-Factor Authentication. An added layer of security using an application or a phone number as a method to verify identity. A common practice used for conducting any sensitive online activity such as logging into an account, withdrawing money, and changing passwords. 2FA is considered good digital hygiene and has become a necessary practice in protecting oneself from being hacked.
51% Attack
An attack on a blockchain network by acquiring the majority of hashing power. Applicable to Proof-of-Work chains such as Bitcoin, Litecoin, Dogecoin, and others, a 51% attack is when a malicious entity takes over the network’s mining operations by overpowering all of the other players involved. There are a few different ways that this kind of attack is conducted, buying up a substantial amount of machinery, recruiting existing miners to do exactly what you request by paying them off or renting hashing power from online provide.
41 Terms
ABI
Application Binary Interface; an adaptation of the more common API to the context and suite of crypto and blockchain technology. An ABI is a set of methods that define how developers must interact with smart contracts. The reason these functions receive a separate classification that the traditional API is due to the nature of how smart contracts/programs are deployed; the code of a program is converted from human readable code to machine readable bytecode, which in turn demands that calls/interactions are prompted through the binary logic.
Absolute Return
The total return for any given investment. Just a simple measure of how much a trade/investment has yielded without calculating the transaction costs, taxes, amortizations, or any other factors.
Accelerator
Short-term programs to help early-stage companies obtain their objectives. Accelerator programs are usually short-term, lasting anywhere between three months and a year-long, and consist of providing support in the form of skills (both finding and hiring talent for the team as well as recruiting people from other teams to lend a hand), financing (typically smaller size investments in return for a modest equity stake or helping set up meetings for full-fledged fundraising), product development (helping with the design and concept), and marketing efforts (publications, social campaigns, and incisions into robust networks).
Accredited Investor
An individual that meets certain criteria based on financial regulation laws earns an accredited status. Having this status allows them to participate in private investing/trading of securities/assets that are not formally registered with the SEC. In order to qualify as an Accredited Investor an individual must satisfy one the two: 1) have a net of over $1,000,000 USD (which can be calculated with their partner/spouse and does not include their primary residence) 2) two consecutive years of gross income over $200,000 with the expectation of at least the same level of income for the current year.
Address
An alphanumeric string of letters and numbers that specify the destination of where crypto assets are sent to and from. Addresses identify wallets and are representative of the public key storing its associated digital assets.
Adoption
The process of having a product/technology become widely accepted and used. Adoption is measured by the growth of users and integration into commercial activities. It is a sign of recognition by the masses that a product/technology is a viable, important part of society.
AF – As Fuck
The two letter acronym for “As Fuck”; expressing an extreme degree of confidence or certainty. This is a term originating long before and outside of crypto, but is very commonly found in chat rooms, posts, and social groups within the industry. People use AF to amplify the severity/sincerity of their message.
Examples: I am bullish AF. That technology is advanced AF. His strategy is complicated AF.
AFAIK – As Far As I Know
An acronym encountered outside of crypto, AFAIK stands for “As Far As I Know”. AFAIK is a very informal term typically found in chatrooms, twitter threads, telegram groups, discord communities, and other social platforms.
Aggregator
Software that curates information from other venues. Aggregators pull data from reputable sources and present them all in a convenient interface. Rather than having to use 10 different websites to source information aggregators neatly compact all sources in a single point. Popular aggregator applications are for news sites, asset exchanges, and pricing directories.
Air Gap
To physically isolate computers from exterior devices or information sources. Air gapping is a “closed-circuit” design principle intended to provide two general benefits security and control. By removing an electrical device from internet connectivity, its security is increased due to the mitigation of remote access by hackers. By having full sovereignty/responsibility over a device, users maximize control over data flow.
Airdrop
A method of atomic, mass distribution of cryptocurrency/digital assets. Commonly used as a vehicle for marketing by new/early-stage projects to attract and bootstrap their initial user bases. Typically, airdrops do not require direct asset exchanges, but rather the fulfillment of some arbitrary criteria in order to qualify for receiving it.
Algorithm
Coded instructions or sets of rules that are executed by a computer to solve specific problems. Written in any arbitrary programming language, an algorithm is a logical formula with extremely well-defined functions and operations that a program follows.
Allocation
The specific distribution of tokens/money/assets describing what amount will be assigned for what purpose and how. In the world of Crypto/Web3, allocations pertain to two general areas; how the token supply of a project will be split out among all different market participants and use cases and the use of funding raised by projects for operations.
Alpha
Multiple meanings depending on the context.
Meaning 1: the possession of superior knowledge about a market. Information that is not publicly available or nobody else has been able to realize/access that gives the owner of this information an edge in the marketplace; that edge is called alpha.
Meaning 2: the second stage in a product’s development life-cycle is called the alpha. During the alpha phase, products are for the first time introduced to the public (usually to small, controlled groups of trusted users) for them to test it out and provide feedback.
Meaning 3: typically related to traditional financial instruments but can be applied to crypto, alpha is the return on an investment greater than leading indexes. If the S&P 500 returned 7% this year but your portfolio returned 12%, then your strategy has an alpha of 5%. If BTC clocked in 50% yearly gains, but your altcoin portfolio did 120%, your strategy has an alpha of 70%.
Alphanumeric
A fancy word for letters and numbers. Easily understood when broken down the word into its two constituent parts; Alpha – refers to alphabetic and numeric – refers to numbers. In crypto, alphanumeric is primarily used to describe the randomly generated string of letters and numbers in a wallet address. That sequence is considered alphanumeric.
Example: 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa
Altcoin
The Alt simply stands for Alternative and the coin means currency. Depending on what faction of the crypto community uses the term, Altcoin is an umbrella term used (primarily by single asset maximalists) to define all crypto assets that are not Bitcoin. While there is no concrete threshold that defines when/how a digital asset evolves from alternative to “mainstream”, there has been a life-long trend as new cycles and new calibers of market participants arrive, the term Altcoin gets pushed further down the asset indexes.
AMA – Ask Me Anything
Abbreviation for Ask-Me-Anything, AMA’s are interview sessions (formal and informal) between the general public and a project’s founding/core members.
AML – Anti Money Laundering
Anti-Money-laundering is a set of legislations/regulations around financial activities that were invented to protect market participants from being manipulated by shady practices and disincentivize the obfuscation of money origination.
AMM – Automated Market Making
Automated market making is a model for structuring buy and sell orders through the use of a bonding curve.
Anti-Fragile
A property of an asset that is resilient to failure. Nicholas Nassim Taleb, a world-renowned author, trader, and investor, has defined anti-fragility as being more than just resilient to failure, but actually getting stronger from it. The prime example here would be Bitcoin. Intended as an alternative monetary policy outside of traditional government regimes, anytime there is a global financial meltdown or some fiat currency fiasco, while the price of Bitcoin might go down in the short term, over the long term, such events merely highlight the ultimate selling point of having a non-government monetary system; effectively strengthening its fundamentals in the face of devaluation.
APAC – Asia Pacific
APAC is shorthand for the “Asia-Pacific” region and is the term used to refer to the amalgamation of roughly`40 countries such as China, Singapore, Japan, Australia, India, South Korea, and others that share a similar geographic time horizon.
Ape/Aping
The action of going all-in on a trading/investment strategy. A play on the evolutionary thesis of mankind and the natural behavior of humans being similar to primates; whenever somebody “apes” in you man picture them acting like a gorilla or monkey, slamming their keyboard with no regard to risks. Yes, in the world of crypto it is possible to take a noun of an animal and transform it into a verb.
API – Application Programming Interface
Application Programming Interface. A framework that consists of a piece of software and operational documentation for how to structure commands, that basically tells other software how they should interact with each other.
Arbitrage
The act of “risk-free” profiteering by Taking advantage of price discrepancies of a singular asset across different exchanges. Markets are not perfect, assets trade at different price points, on different platforms, and at different times based on the behavior that their specific audience demonstrates. Arbitrage is identifying these dislocations and stepping in to close them.
Example. On a regulated United States exchange such as Coinbase, users might be buying Bitcoin for $25,500 and Selling it for $25,600. At the same exact time, a non-regulated exchange in the Cayman Islands might have its users buying Bitcoin at $26,500 and selling for $26,600. If a user were to buy Bitcoin on Coinbase from the sellers at $25,600 and sell it on the Cayman Islands exchange for $26,500, that is $900 of free value per Bitcoin that can be supplied. With each incoming trade that gap tightens until both exchanges have counterbalanced each other; Coinbase prices would rise to $26,000 and the Cayman Islands exchange would be drawn down to $26,000.
Arbitrageur
A market actor that engages in the act of arbitrage. Arbitrageurs are usually only considered as such if their main source of income in the markets is through arbitrage.
Ashdraked
Losing absolutely everything on a bad trade by making faulty decisions; specifically through shorting Bitcoin. The term came from a pseudonymous Romanian trader named “Lord Ashdrake” that relentlessly shorted BTC and ultimately lost everything.
ASIC – Application-Specific Integrated Circuitry
ASIC or Application-specific integrated circuitry is a type of machine that is purpose-built to serve a single function. Namely used for mining purposes, ASICs are the most effective, powerful modern method of participating in the Bitcoin blockchain. Given their narrow focus, ASIC machines have proven to be best for providing the highest level of security (when measured on a per unit of electricity basis) and are now being built for a wide range of alternative networks.
Ask / Ask Price
The supply side of orderbooks. The Ask is the price that a market participant desires to sell their asset at. The price that an asset owner is asking for their asset.
AstroTurfing
A deceptive marketing practice that disguises the positive feedback or interactions a product, project, or company receives as being real while in reality, it is the project itself creating fake buzz. Considered an illegal activity nearly everywhere in the world, engaging in astroturfing can result in fines of $16,000 per day.
Asynchronous
Not happening in a specific order. The opposite of sequential. Asynchronous/asynchronicity is when multiple things are happening simultaneously without any order or structure. Best understood an example with communication. Whenever 3 people are talking about a topic, but live in different time zones, they ask questions and respond asynchronously. So rather than there being a structured back-and-forth conversation, questions and responses happen in sporadic manners, with delays in time and context.
ATH – All Time High
Abbreviation for All-Time-High. ATH refers to the highest point that the price of an asset ever recorded.
ATL – All Time Low
Abbreviation for All-Time-Low. ATL refers to the lowest point that the price of an asset ever recorded.
ATM
Popularized in the NON-crypto world as an acronym for automated teller machine; the crypto communities refined these three letters with decentralized digital frameworks to mean Analog Traditional Money / All Traditional Money.
Atomic Swap
Treating a transaction or set of actions as a single unit. A trade of cryptocurrencies between different blockchains that happens instantaneously after all predefined conditions are met. In an Atomic swap, users never risk losing their funds because the trades are structured using smart contract programming logic that escrows funds.
If user A has Bitcoin (BTC) and wants to trade with user B for 1,000 Litecoin (LTC) using an atomic swap, then both users will receive deposit addresses on their respective chains where they will have to send funds. The wallet address to which they send funds is not owned by anybody and only act as escrow holding accounts. The Atomic Swap contract will define a set time frame within which both parties must deposit their assets and monitor both wallets. If, and only if, both wallets receive the exact amounts specified in the atomic contract agreement will the funds be released to their according parties. If User A sends his BTC but after an hour User B still does not deposit their LTC, then the contract shall be canceled and User A will just receive their deposited BTC back to the wallet from which they sent.
Atomicity
Singularity. A property stating that multiple individual functions must occur at the exact same time. All at once, or nothing at all. Breaking the term down, atomic means singular, so in the event of a trade taking place, called an “Atomic Swap”, all specified parameters on both sides of the equation must be fulfilled, otherwise, the action cannot be completed. Picture this, you give a clerk cash at the same exact time, they give you your bag, both of you must release at the same time or the transaction does not complete.
Audit
A formal review process used to inspect code and financial balance sheets in order to identify possible security flaws or mismanagement.
Auditability
Auditability simply refers to the ability to audit something. Due to the nature of smart contracts being deployed on-chain, their code by default becomes open-sourced, anything that is open-sourced if auditable.
AUM – Assets Under Management
Assets under management or AUM is a term used to describe how much of an entity’s portfolio it is managing on behalf of other entities. Whenever people give their money to a bank or a hedge fund, the balance sheet of that entity grows; but the type of asset they put on their balance sheet is classified as AUM. AUM assets are not owned by their managing entities, rather they are handled/utilized for some specific purpose.
Austrian Economics
A school of economic theory that uses individualism and behavior psychology as the focal point of all reasoning. Starting in 1871 with Carl Menger’s Principle of economics, Austrian economics supports ideas regarding pricing/valuations being a paradox based on individual demand above all else. It states that market forces such as production costs follow consumption demand and that macroeconomic forces are far more nuanced than just mathematical modeling.
Authentication
Verifying the validity of a statement. The slogan of the Blockchain industry is “Don’t Trust, Verify”. Authentication is exactly that, the process of evaluating the truthfulness of a statement or claim. While this primarily applies to the proving of Identity, authentication can be applied to any historical action such as a transaction of the completion of work.
56 Terms
B2B – Business to Business
A business model is based in transactions between businesses. B2B’s usually involve higher unit transaction sizes (bulk) or enterprise grade equipment that is used to then further enhance operations or service for other B2C models.
B2C – Business to Consumer
A model of conducting business between a formal organization/provider and their end customers. B2C models rely on establishing channels of communication (usually via marketing on social media) and rely on direct sales; this has become the most popular and preferred model since the advent of the internet due to its ability to circumvent the need for re-sellers, in turn increasing profit margins.
BaaS – Blockchain-as-a-Service
BaaS is a playful adaption on the traditional software industry’s “SaaS” (Software-as-a-Service) business model. BaaS businesses simply provide blockchain technology as a solution to problems. While the maximalist sects of the crypto industry might impose the notion that public blockchains are the only kind of infrastructure; in reality, blockchains are just distributed ledger databases that serve a multitude of purposes outside of just cryptocurrency; including supply-chain management
Backdoor
An entrance into software/code that is designed as a failsafe mechanism (or malicious attack vector and privacy violator)
BackLog
A buildup of transactions that occurs whenever a sharp influx of activity floods a blockchain over a short period of time and cannot be processed in a timely manner, causing networks to clog and bloat. Backlogs happen when the utility demand for a network supersedes its throughput capacity.
Backorder
Refers to demand for physical products that exceed production capacity. Whenever consumers place so many orders that companies are unable to fulfill them in a timely manner. Backorder is typically applied to retailers being unable to source products from their suppliers/manufacturers. Backorders can happen for a multitude of reasons ranging from an inability to source the raw materials to supply chain delays to friction between corporation negotiations.
Backward Compatibility
The property of a software/hardware system to be interoperable with different versions of itself without having to go through any adaptations. Backward compatibility can be understood through the example of a gaming device such as Xbox or Playstation; regardless of the generation, the CDs with games can be used for play. In the case with crypto and blockchain systems, backward compatibility applies to software upgrades to a project that does not alter consensus or force nodes to change their behavior; an example would be an on-chain tagging mechanism such as ordinals. They turn individual satoshis into unique objects, but that does not affect the core components of the networks functions; its basically an accounting trick; therefore, existing mining nodes do not have to change anything and can continue operating as they like; they just won’t be able to distinguish between the “types” of bitcoins (which they are all the same); simultaneously an oracle marketplace would be able to run a version of the bitcoin client software that would show some kind of tags associated with each satoshi.
Bag holder
The person that buys the market top and is forced to hold the asset due to an inability to sell for a profit. The term bag holder is typically used to describe inexperienced retail users, however, there are cases with institutions making poor decisions that leave them in this situation.
BailOut
When an entity steps in to intervene in possible failures of publicly traded companies by providing them financial support. Bailouts are only applicable to companies that are deemed “too-big-to-fail” and whose downfall would result in excessive economic turmoil. While it is commonplace for governments to be those entities of last resort, bailouts can be provided by any arbitrary institution with enough international companies
Bandwagon
Jumping on to a trend just because other people are doing it. The marker of an individual that cannot think for themselves, bandwagoners start developing a belief in something based on society’s acceptance of it.
If you are somebody who lived in New York and does not care about sports, if you move to a new state and begin to support their sports team just to fit in and make friends (granted that you still don’t care about sports at all) you are a bandwagoner.
If, during the bear market, you talked badly about Bitcoin and never bought any, but two years later, once the price is skyrocketing again, you begin to talk about how awesome it is and buy it, you are a bandwagoner.
Bandwidth
The data capacity that can be transmitted over a given path. It is a combination of the upload/download speed and the amount of data that a channel can handle. A channel can be any kind of connective module, wired (fiber optic) or wireless (wifi / bluetooth). Generally, bandwidth is used to refer to informational flows through internet-related channels; however, the term itself can be generalized to any abstract concept.
If Bandwidth can be visualized, it would be the neck/opening of a bottle.
Example 1: If a 2-liter soda bottle with a hole of ¼ inch can pour out all the contents in 8 seconds when held upside down; then if that hole was ½ inch, we could pour out the contents in 4 seconds because the surface area of the point from which the soda flows doubles then so does the amount of fluid that fits in that surface area.
Example 2: If a ½ inch thick wired connection can transmute 1,000 electronic particles per time block (1 millisecond) and in order to get your website to load you need 9,000 particles to funnel, then it will take 9 millisecond for your website to load. If you then double the diameter of that worse (and its internal cables) to 1 inch, you will double the transmute rate to 2,000 particles per millisecond and load in half the time, 4.5 milliseconds.
Bank Run
This is what happens when economic turbulence hits the general population causing large amounts of individuals to get scared of holding their money in banks and having them all attempt to withdraw their deposits simultaneously. The resulting of massive outflows which puts the banks/financial institutions at default risk, causing even more people to get nervous and forcing them to also go withdraw. It is a negative reflexive feedback loop of drying up bank liquidity.
Bear Market
A season of market turbulence where asset prices continually depreciate. A bear market is considered official by the technical markers of price declines of more than 20%, stay suppressed for prolonged periods of time, and a pattern of lower highs and lower lows is drawn out. In traditional markets, bear markets last approximately 10 months, meanwhile, in crypto the cyclicism is much harsher due to the industry’s novelty and can last as long as 36 months.
Bear Trap
A technical chart pattern that tricks short sellers into believing that prices will continue to cascade downwards, causing them to enter large positions before sharply reversing and effectively forcing them into losing positions.
Bear(ish)
One of the two spirit animals describes market sentiment, one that expresses expectations of price decline. Bears are market participants that make money by placing bets on negative price action. Being bearish is generally considered having a cynical view of the market.
Benchmark
Benchmarks are points of reference used to gauge other things against. A common example would be and index; Indexes are essentially benchmarks of an economy’s business health. In the world of cryptocurrency, Bitcoin is the benchmark that expresses the industry’s general state. When Bitcoin is rallying for a prolonged period of time, it becomes logical to assume that other digital assets are following in its footsteps. Whenever a portfolio is being measured for its quality, the returns are pegged against a benchmark. So if you hold three cryptocurrencies that returned 150% over a year while bitcoin returned 50% over that same time frame; your portfolio strategy would be considered phenomenal due to its out-performance of the benchmark.
Beta
A greek symbol/letter that has multiple meanings based on the context and group within which it is used. Applicable to both financial and technological scenarios;
Meaning 1: the first version of a product that is considered ready for the general public. Beta version software comes after a successful preliminary alpha testing round and invites a much broader audience to play with/use the technology. Due to a still high potential of issues arising, Beta phase technology does not provide any guarantees and explicitly states that this product might not be the final end product that will be released later on.
Meaning 2: a measure of a portfolio’s volatility in relation to a benchmark. If an asset, such as Bitcoin (BTC), moves 5% per day on average over 365 days then it gets a volatility rating of 1. Assuming some other digital asset, such as Ethereum (ETH) moves 10% per day on average over 365 days, then the volatility rating is higher relative to BTC, maybe 1.5. That spread in volatility of 0.5 is the beta.
BFA – Brute Force Attack
BFA or brute force attack is a method of hacking that involved using massive amounts of computational power to attempt to break encryption algorithms and passwords through recursive trial and error. During a brute force attack, a malicious actor will relentlessly try to guess sensitive information by exhausting every possible combination of letters, numbers, and special characters. Given the simplistic nature of BFA’s most modern-day cybersecurity systems have been developed with enough randomness and layers of robust re-hashing methods to protect against it.
In crypto, BFAs are protected against by the raw cosmic amount of mathematical number crunching required to derive valid key pairs.
Bid / Bid Price
The demand side of order books. The price that market participants are offering to pay for an asset. If Bitcoin is currently trading at $25,000 and the first seller is offering to sell it for $25,100, I can bid/offer them $24,990. Bids are usually not immediately accepted, they stay on the orderbook until the price fluctuates in their direction.
Big Brother
A term borrowed from the timeless classic “1984” by George Orwell, “Big Brother” refers to a government that pretends to be friendly, loving, and protective, while actually just wearing a facade to trick the population and enforce surveillance under the guise of “security”.
Binary
Having only two possible outcomes. In the context of computer science binary refers to 0 or 1 which represent logical gates for false(0) or true(1). The term itself can be generalized to express yes or no on anything.
Examples:
The outcome of the Basketball game is binary, either they win or they don’t.
Bitcoin is either going to survive or its not.
The trade I just made on Solana will either be profitable or it will end up costing me money.
Do you want Italian food for dinner?
Binaries
An informal way to say Binary Options. Binaries are financial instruments that are tools to place very simple all-or-nothing bets on whether an assets price will be below or above a certain price at a certain time in the future. Usually capped within a price range of $0-$100, a binary option allows people to choose in which direction the price of something will likely be later.
Example: If Bitcoin is trading at $30,000, do you think the price will be above or below the current price in 1 week? If above you purchase a call option for $50, if below a put for $50. The options will expire exactly 1 week from the time you purchase them and either be worth nothing if you are wrong or $100 if you are right (even if by just $0.01). *Important note, some platforms/brokerages allow for trading the options intraday, so if there is 2 day remaining and the price is $31,000; your option will be “in-the-money” and priced at $75, so you can opt to just sell it and secure the $25 profit; if it is at $29,000 and you are “out of the money” it will be priced at $25, giving you a chance to just close out early.
BIP – Bitcoin Improvement Proposal
BIP’s are formalized technical documents formatted as proposals that outline ideas for improving the Bitcoin ecosystem. BIPs can be created to address any internal or external matters ranging from social elements such as community management and developer onboarding processes for access to the core code base to the technical aspects of block size, block time, and signature schemes.
Bit
Bit is a combination of the two words, binary and digit. Bit’s are the smallest possible measurements of data in computer science and are expressed as either a 0 or a 1.
BitCoin
Conceptualized in late 2008 (post-GFC) by Satoshi Nakamoto and released in January 2009, Bitcoin is the first digital currency of its kind & ground 0 for the entire crypto world as we know it. Initially created as an attempt to establish a sovereign monetary system of payments that would be detached from the corrupt political nuances that caused the 2008 financial crises, Bitcoin evolved beyond simply a technology and has become a symbol of freedom from government oppression. Bitcoin has laid the foundation that is possible to create trust in the chaotic world of cyberspace through very careful application of blockchain technology, distributed computing, consensus mechanisms, and cryptography.
Black Hat
The caliber of hackers considered to be criminals. Black hats are self-interested, malicious actors that will violate laws and ethics in pursuit of their objectives. Predominately driven by profits, Black Hats are the archetypical badasses (or government-sponsored nerds) that are able to circumvent cybersecurity and steal data, spy on users, or remotely destroy factories by causing mechanism failures.
Black Swan
An unexpected economic event of catastrophic proportions. Black swans are considered to be inescapable anomalies that continually arise in society to the limited capacity of mankind to account for an infinite amount of random variables. Black Swan events have outsized negative impacts on the masses that can happen extremely quickly and take long amounts of time to recover from.
Example: Simulation, the American stock market operates on 1,000 supercomputers and has 2 layers of backup system to prevent any unexpected outages. Solar flare slams into the North American continent and disrupts all electromagnetic frequencies, rendering the entire stock market system nonfunctional. Considering how interconnected the American market is with the rest of the world, all economies experience a shock due to an inability to trade in/out of their positions. Liquidity freezes, buyers disappear and prices cannot be executed. Wipe out. Even if telecommunications stablize within a week, the amount of chaos created would still have direct tangible consequences on market participants and take time to resolve; some situations would be beyond repair (suicide of traders that lost their life savings).
Bloating
Whenever a network is so overloaded with transactions that the mempool is backed up, causing transaction costs to go up, and throughput to go down. Bloating is considered neither good nor bad, as it sends a mixed signal; while it may show some form of technical lack, it does simultaneously show enormous real-world demand.
Block
A structure of data that contains packages of individual transaction information. Blocks in a blockchain are the colloquial measure of chronological sequencing. Blocks are immutable digital contains of information that have a timestamp, a nonce, a Merkle Tree hash pointing at a previous and future block, digital signatures, and transactions.
Whenever a transaction is sent into network, it must be processed. Processing 10,000 asynchronous transactions of random values while having to broadcast each transaction between all network nodes would result in inconsistencies and prohibitive communicative costs in computations and time delays. However, if transactions are pre-packaged into bundles, and then bundles are disseminated throughout the network at a predetermined rate, processing the incoming information becomes orderly.
Block Height
The specific number of a block. Given that blockchains are immutable structures of data, once a block is appended to a chain, it is permanently given a number based on its order/position in the chain. Block height is simply the terminology that is used to express the location of a block in relation to the total order of a chain.
Block Producer
Block producers are exactly what their titles sound like, nodes on a network that participate in/contribute to the consensus by producing blocks. This is a role that exists primarily in Proof-of-stake networks. Block producers are a subset of consensus nodes that arose due to demands for higher levels of trust. The creation of a block is actually composed of four separate steps, the block/container must be created, it must be packaged with information, its contents must be verified, then it must be appended. By splitting these functions amongst different members a higher degree of trust can theoretically be established (assuming there is no conspiring).
Block Reward
The cryptocurrency that is given to consensus nodes for successfully contributing to the creation of a block. Block rewards exist in two forms, transaction fees and the emission of new tokens. Whenever a network subsidizes nodes with the creation of new token, the results in inflationary supply pressure. Whenever a network is able to retain its consensus nodes with just transaction fees, then that network attains perpetual stability (assuming it can maintain that transactional flow).
Block Size
Essentially it is the amount of data that can fit into a single block; the maximal capacity of a block. Big blocks mean more transactions can be processed, and small blocks mean less. Block size alone is not a determinant of a network’s quality, it is simply the parameters within which users must operate. While intuitively larger blocks may seem better, they introduce more centralization risks, meanwhile smaller blocks have more valuable real estate within them.
Block Time
The amount of time it takes for a block to be processed, produced, published, or appended to a network. The temporal distance between the current block and the incoming block. Block times can vary widely according to their design principles. Generally, the shorter the block time, the higher the network’s throughput, the less secure the block and the easier it is to manipulate the chain. The slower the block time the more secure the activity of its network, the lower its throughput, and the more expensive the transaction should be.
Blockchain
An immutable, append-only data structure that is composed of blocks/batches of data that are organized and linked in a sequential manner. Typically used for maintaining a cloud database, a blockchain is a ledger that records all of the transaction activity happening on a network.
Blockchain Trilemma
A principle within blockchain technology that defines the framework of tradeoffs in operational efficiency based on design choices. At the highest level, there are three core elements to consider in any blockchain, the security, the decentralization, and the scalability. By laws of computational physics, the blockchain trilemma allows for the presence of only 2-of-3 elements. So if a blockchain is secure and decentralized, it will be slow. If a blockchain is secure and scalable, then it will be more centralized. If a blockchain is scalable and decentralized, it will be unsecure.
Bonding Curve
The relationship between a token’s price and its available supply expressed as a mathematically plotted line chart. Bonding curves as established whenever a pool of tokens are created and defines the how the price of the token responds to the fluctuations in supply.
Examples:
Token ABYZ has a supply of 1,000,000
Somebody goes the Uniswap and creates a pool between token ABYZ and USDC
They deposit 10% of the supply, 100,000 tokens, and 100,000 USDC.
The price is registered as 1 ABYZ=1 USDC ($1 each).
Whenever somebody buys ABYZ tokens, their price per token will depends on the balance at each supply point.
If somebody wants to buy 10,000 USDC worth of ABYZ, they will receive less than 10,000 ABYZ; because After a 10,000 token trade, the balance of the pool will become 90,000 ABYZ to 110,000 USDC. 1 ABYZ = 1.22 USDC. If we over simplify the trade logic, the person will on average pay 1.11 USDC per token. Resulting in them getting 9009 tokens.
Boolean Value
A binary outcome of 0 or 1. Boolean values are any type of data that has a true/false result.
Bounty
A reward created by companies that is used to incentivize independents/individuals to find flaws in their products/systems. Bounty programs are typically structured in tiers ranging based on the severity of a vulnerability; low to critical, with critical being the highest. Bounty programs have become popular methods of “crowdsourcing” security experts and making implicit public statements about how serious a company is about the quality of its code.
Bridge
A piece of software that makes it possible to transfer tokens of different data structures between blockchains by acting as a neutral escrow against that collects tokens on one chain and mints the equivalent of them on another.
BSA – Bank Secrecy Act
The Bank Secrecy Act is a U.S. law implemented to detect and prevent money laundering. Effectively the law requires that financial institutions abide under a ridging framework of recordkeeping that can be used to assist the government. BSA is also called the “Currency and Foreign Reporting Act”.
BFT – Byzantine Fault Tolerance
Byzantine Fault Tolerance is a design principle in the consensus mechanisms of distributed computing systems that solves for attempts to subvert the communications. BFT basically guarantees that a system will remain operational and its data remain true, even in the event of network failures.
BTFD (Buy The Fucking Dip)
Acronym for Buy the Fucikng Dip. However silly it may sound on the surface, BTFD is a psychological investment strategy that uses price drops as triggers to signal timings for purchasing assets. By following the BTFD methodology, investors and traders are able to avoid falling victim to frenzied hypes and buying tops, while dollar cost averaging into a position.
BTM (Bitcoin ATM)
Bitcoin teller machines are simply automated teller machines with the added function/ or specific purpose of providing a point of trade between physical cash and cryptocurrencies.
Bubble
An inflated, unsustainable state of an asset market that results in an inevitable “pop” causing massive economic destabilization.
BUIDL
In the light-hearted nature of crypto, Buidl is a playful intentional misspelling of the word build that arose to mimic the famously misspelled term HODL. Buidl is considered to be a “call-to-action” for projects and industry supporters to continue developing products and communities regardless of market circumstances.
Bull Market
A season of positive market sentiment where asset prices continually rise. Bull markets are identified by an appreciation of leading indexes by 20% and a prolonged period of technical price pattern structure with higher lows and higher highs. In traditional markets, bull seasons last for 5 years on average, however, in the crypto economy, its spontaneous and volatile nature has thus far resulted in 12 to 24 month cycles.
Bull Run
Bull run is a semantic variation of the term “Bull Market” and means the exact same thing; A prolonged period of time where asset prices continue to rise. Regardless of which term you choose to use, they carry identical implications.
Bull Trap
A technical chart pattern that tricks traders that bet on price increases into believing that prices will continue to rise, causing them to enter large positions before sharply reversing and effectively forcing them into losing positions.
Bull(ish)
One of the two spirit animals describing market sentiment, one that expresses expectations of price increase. Bulls are market participants that are optimistic about prices going up. Being bullish is generally considered having a positive view of the market.
Burn
To remove tokens from supply. Burning is a novel economic primitive made popular by cryptocurrencies that excerpts deflationary pressure on an asset by contracting circulating supply.
Buy Wall
The amount of open bids on an exchanges orderbook. The buy wall is a visual representation of the amount of money that is currently available to absorb sell pressure and the price points at which it can do so.
BVI – bitcoin volatility index
The Bitcoin Volatility Index is a measure of how much the price of Bitcoin fluctuates on a daily basis and gives a picture of how its volatility has changed throughout its existence. Theoretically, the higher the volatility index, the less stable the price, the more opportunities for trading. If over time the volatility contracts, or tightens in proportion to how it was historically, that is a sign of Bitcoin’s maturation as an asset.
Byte
A piece of computer memory that is 8 bits in size. Bytes are the second smallest unit of measuring data size; if a Bit is a letter, then a Byte would be a word. In computer science a Bit is just a single binary output (00 | 01 | 10 | 11); a byte is a stringed batch of 8 binary outputs such as 0111010011011000.
Byte code
Machine-readable instructions that are created from compiling/decompiling human-readable code. This is the actual logical circuit, in binary form that gets deployed to a blockchain network (Ethereum) whenever a smart contract is published. Whenever any smart contract program is created in a programming language such as solidity; it is transformed into bytecode and that bytecode is what gets sent to storage on network nodes.
Byzantine Generals Problem
A game theory scenario that describes the difficulty in reaching consensus among distributed parties due to the uncertainties revolving about communications and truth and the difficulties in coordination.
The problem itself is described through the lens of having 3 armies surrounding a castle in attempt to take it over. In order for their attack to be successful they must all strike at once, if not, those that attack will perish. Trying to coordinate with each other, the generals send messages between each army; this is where the issue arises and the problem itself is born.
How do we know the messenger will not get intercepted by the enemy? How do we know the messenger will not swap out the message and spread misinformation? How do we know that the general will agree to inform the other general? How do we know that the general will actually act as he stated? The questions are endless and are all amplified by the added parameter of the time which it takes for these messages to be sent between one another.
54 Terms
Call
A Call is a type of option that allows its owner the right to purchase an asset at a future point in time at an agreed-upon price. The nuance of this financial instrument is that it is merely the right, there is no obligation, so if the purchase at a future point would be unprofitable, the owner of a call option does not have to execute their option.
Example: Stock ABYZ is trading at $100. The options to purchase it at $100 are trading for $1. I can buy the stock it today and just own the stock, being exposed to its fluctuations in price. Or, on the other hand, I can buy an option on Stock XYZ at $100 for $1 and hold the option indefinitely. So if a year later, ABYZ goes to $200, I will be able to purchase it for $100 (so long as I hold that option). If the price goes to $90, it would make no sense for me to exercise the buy and I can just hold the option. Be advised that holding an option incurs monthly charges called funding rates, buy they are usually negligible below 0.1% on average.
Cache
The word itself means to be stored or hidden from plain sight. As it relates to computer science, caching is the process of offloading the storage of replicable information (such as banner images of a website) into specific hardware components. Whenever you load a website for the first time it will take 20 seconds because all of the data must be sent over the internet and your device has never had that data before. So in order to save you time on your next visit to the site, your computer will store the website’s layout and compress the render time to 5 seconds by having a local, temporary, memory representation of that website saved to your hardware device (typically the CPU).
CAGR – Compound Annual Growth Rate
CAGR is the acronym for Compound Annual Growth Rate. It is the annualized (yearly) average of growth averaged out over the course of a given time frame that is based on the projections of anticipated returns on investment.
Example: Imaginary stock BTC is trading at $1,000. The year before it was trading at $800 and before that at $600 and $400 before that. So the year-on-year growth is 50% (400 to 600), plus 33% (from 600 to 800) plus 25% (800 to 1,000), 50+33+25 = 108 / 3 (the number of years) results in 36% CAGR projects moving forward. Then we would model the next year’s estimate price at $1,360, the following year at $1,849, and so on in increments of 36%.
Candlestick
The visual expression of price movement within certain time frames on a chart. They are represented as vertical rectangles with lines that sometimes extend from the top or the bottom (called wicks). Whenever you open a trading chart and select a time frame such as 4hr, that means each candle represents four hours of trading activity. When a candle is green, that means the price began at the lower end of the candle’s body and travels up. When red, it means the price began higher and ended lower.
A candle is composed of a Body, an upper wick, and a lower wick. The body is the thick portion that shows where price began at the start of the timer and where is closed at the end. Wicks do not always have to be present, but they represent the extremities of where the price might have traveled in that time frame but did not stay there at the time of closing.
Disclaimer: Colors do not really matter because you can customize them to your own liking, the green/red distinction made here is just for ease of understanding. Candlesticks are just one of many visual modules that are used to express price action; there is a large swath of others that cater to different user preferences.
CAP Theorem
A trilemma in the field of distributed storage and computation that states a system can only have two of the three properties present at any given time; Consistency, Availability, or Partition Tolerance. Thus there are only 3 archetypes of systems that can possibly exist; CA, CP, and AP. CA (Consistency, Availability) systems are only possible in theory, in practice, a distributed system cannot exist at all without partition tolerance and the CA property would translate to during a network partition, you can either have availability or consistency. CP (Consistency, Partition Tolerance) systems express the ability of a system to always provide the most recent version of the data. AP (Availability, Partition Tolerance) systems are able to always provide a response without guarantee of its accuracy. So a consistent system maintains recency; while an available system is just always accessible.
CAPEX – Capital Expenditures
CAPEX or capital expenditures relates to company costs that are required in order to set up fundamental fixed, one-time infrastructure such as an office, land, licenses, servers, etc. Anything that would be a necessary purchase to allow the company to function.
Capitulate
To capitulate means to sell out of fear. Capitulation happens when prices continue to go against a traders/investor’s intentions and the investors can no longer handle the negativity, in turn just forcing themselves to accept the losses just to leave their positions.
Captcha
Captcha’s are a type of tool that is used to protect websites from spam and differentiate real users from automated software bots CAPTCHA is actually an acronym for Completely Automated Public Turing test to tell Computers and Humans Apart. There are a multitude of different captcha variants including the all-to-familiar checkbox that asks you to “prove that you are human”, the puzzle piece slider, and the random letter/number scratch boxes that are hard to see.
CBDC – Central Bank Digital Currency
The antithesis to decentralization and the evil twin sister of cryptocurrency. Sovereign maximalists and cypherpunks, the crypto freedom fighters, understand that CBDCs are crypto-like assets issued by financial government bodies that directly, subtly, violate personal privacy by intruding on the financial lives of its users. CBDCs are digital tokens that are extremely easy to trace (by their issuers) and are monetary tools that arbitrage out basically all intermediary financial corporations between the Central bank and the end users.
CBOE – Chicago Board Options Exchange
The largest options exchange in the United States. Servicing derivatives across nearly every asset class including Indexes, ETFs and Forex, the CBOE is generally associated with markets relating to energy, metals, and interest rates. CBOE is one of the earliest major exchange platforms that listed Bitcoin and Ethereum futures in the United States.
CDs – Certificates of Deposit
CD’s are financial saving instruments offered by institutions such as banks and credit unions that provide a “guaranteed” yield based on locking up money for a set amount of time. CD’s are basically lock-boxes for money where they cannot be redeemed until they expire. Given that these instruments are direct claims on money in the future (at a higher rate) CD’s are classified as a tier one product in terms of liquidity. The return generated by a CD will depend on the terms negotiated by the buyer and issuer at the time of purchase (the APY and the time to maturity) and will generally be subject to macroeconomic forces.
CDN – Content Delivery Network
CDN’s are geographically distributed groups of servers that cache content for end users. CDNs are augmentations of cloud computing architectural principles of “edge” nodes that handle processing and storage for information that is too “heavy” for end users to process on their own. Movies, games, and other memory/processor-intensive applications rely on Content Delivery Networks to service their end users.
CDO – Collateralized Debt Obligation
CDO is a three-letter acronym that carries different meanings to different groups within the industry, based on context.
Meaning 1: Collateralized Debt Obligation is a financial product that is derived from a pool of assets underlying it. Made famous through the 2008 financial crisis, CDO’s have been demonized. While this is not entirely unfounded, when adequately structured and absent of manipulative centralized authorities, CDOs expand the financial capacity of otherwise stale capital. Within the realm of crypto, CDOs were popularized by the DAI stablecoin issuer MakerDAO. In their system users deposit ETH as collateral and are given the right to mint DAI. Effectively making DAI stablecoins debt instruments that are backed by Ethereum.
Meaning 2: Chief Data Officer. CDOs are corporate positions formed in newer generation companies (or within “woke” tech giants) that are tasked with overseeing a broad range of operations relating to Data within a company. Managing Data flows, quality assurance process in cleaning data, defining where and how to source data; basically any function that relates to data in any way shape or form.
Censorship
The act of suppressing speech, denying the right to full expressiveness, a direct violation of fundamental human communicative rights. Before this gets too political, censorship does have a valid and important role in society of protecting unknowing and underaged people from being exposed to potentially harmful or negatively impacting information. Censoring pornography from an eight-year-old is important to their psychological development. However, censorship has become abused by regulatory authorities and transformed into an alibi for covering up hidden agendas through the guise of protection.
Censorship Resistant
Unable to be censored. Capable of denying any attempts at being restricted. As it pertains to crypto, censorship resistance is the ability to transact without the counterparty risks of being muted or worries of having assets confiscated. Defying authoritative controls at being submissive or silenced.
Centralized
Owned or controlled by a singular entity that has full governing power over something. Within the context of Crypto, centralization is the antithesis of fair, open monetary policy; it is the very concept that birthed the entire philosophical war against legacy financial systems.
CEX – Centralized Exchange
CEX is a shorthand version of saying centralized exchange. A CEX is an exchange that is operated by a single entity. Whenever a CEX is used for trading crypto assets, the venue on which the trading happens holds all of the assets and enables infinitely scalable trading operations due to all activity happening off-chain. Essentially trading on a CEX means trading with paper notes. While centralized exchanges provide high-frequency operations, simplified interfaces, and lower costs, using a CEX still involves handing over ownership of the cryptocurrency to the operator; in turn, running a risk of default or shady operations of inadequate fund appropriation.
CFMM – Constant Function Market Maker
A faction of Automated Market Making that explicitly defines continuity in the ability to price and provide a trading venue. The key here is “constant function”, which specifies that theoretically, a liquidity pool will always enable trades by balancing the token supply to the infinite upper/lower bound.
CFTC – Commodity Futures Trading Commission
Aptly named the Commodity Future Trading Commission, the CFTC is an independent government organization that deals with the regulations around derivative products such as futures, swaps, and other variations of options. Established in 1974, the CFTC’s purpose is to provide oversight of markets to protect investors from manipulation or fraud while simultaneously encouraging fair market structures (open, competitive, and financially sound).
Chad
A “Chad” is a psychological archetype of a crypto trader. Associated as being intellectually simple, muscular, and non-sophisticated, yet somehow still being magically successful with their trading ventures. A Chad does not delve into the fundamentals nor do they get overwhelmed by the technicals, they simply make decisions based on arbitrary feelings of being empowered.
Cipher text
Text that is transformed into seemingly random strings of letters, numbers, or a combination of both through an encryption algorithm. Information that is obfuscated from understanding by non-authorized parties.
Circuit Breaker
Circuit breakers are mechanisms to halt trading in events of extreme, negative price activity. Whenever large market indexes, such as the S&P 500 begin to spiral down in price, emotions begin to boil and panic selling creates an out-of-control flywheel of downward pressure. As a measure to curb excessive, short-term, selling, Circut Breakers are implemented by exchanges. Circuit breakers are activated automatically whenever certain patterns of price movement are triggered. In the world of legacy finance, there exist three levels of circuit breakers. Level 1 is activated at a 7% draw down and lasts for 15 minutes. Level 2 is activated at a 13% draw down and also lasts for 15 minutes. Level 3 exists at a 20% level and cuts off trading for the remainder of that day.
The concept of circuit breakers can be generalized to apply to any kind of asset, with any kind of trigger circumstances. This mechanism does exist within crypto, however, it is never implemented as it technically defies the free market forces of a censorship-resistant economy, but it is feasible.
Client
In the context of crypto, blockchain, and Web3, a client is a piece of software installed onto hardware that establishes a connection between a device and a network; transforming those machines into network nodes. Clients can range from anything as high-level as a wallet to something as low-level as consensus participants. Typically, whenever conversations about crypto software clients are brought up, it pertains to the latter, the miners and consensus nodes that contribute to the core functionality of a network. Clients can differ in their implementations but generally provide an execution environment for processing transactions, storage of transactional data, P2P networking tools, and APIs for interfacing with the network directly.
CLOB – Central Limit Order Book
Central limit order books are the most widespread model of matching bid/ask orders on exchanges in a transparent way. Central means that different exchanges/trading venues can reference the order book to organize their pricing. Limit means the type of order that market participants are placing. Order Book is simply the visual expression of what price points users are placing their buy/sell orders at.
Every exchange has its own orderbook that reflects the dynamic demands of its user base. Given that these audience behaviors can skew prices on exchanges creating arbitrage opportunities that don’t help the markets, CLOBs are used as an industry reference point in order to maximize market efficiency.
CME – Chicago Mercantile Exchange
Providers of the first financial derivative markets in the United States, the Chicago Mercantile Exchange is a derivatives platform known best for its futures and options products for foreign exchange and agricultural (commodities). The CME was the first major US institution to provide a Bitcoin futures ETF that marked the top of the 2018 crypto market cycle.
Cloud Mining
Renting hardware, electricity, and computation from remote service providers in order to participate in the accumulation of rewards from mining. The mining process for crypto is technically complex, spatially consuming, and requires diligent monitoring; something that the vast majority of individual users are not capable of or do not want to do, but still desire to have mining as a form of exposure to the industry.
Coin
An archetype of a digital asset that generally refers to commodities. Coins are the cryptocurrencies that are natively baked into the base functionality of networks and are required as forms of payment in order to utilize those networks.
Cold Storage
A form factor of a wallet for storing cryptocurrency that is disconnected from any internet functionality. Cold storage wallet generates and keeps the private keys offline at all times; in turn, increasing the security for its user. By using cold storage solutions, users are able to protect themselves from any remote hacking attempts and simultaneously maximize their anonymity.
Collateral
Assets that are deposited into escrow and used as a security guarantee in order to take out a loan or partake in some kind of financial functionality that requires excessive, hard monetary backing. Collateral be any form of a valuable asset, including real estate, cryptocurrency, fine art, intellectual property, fiat currency, and so on. As it pertains to the provision of credit, collateral can be derived in the form of something abstract and less tangible such as an entity’s reputation.
Compile
Compiling is the process of aggregating and assembling information in a specific manner. Within the context of computer science, compiling is the process of transforming code written in a high-level language into a different low-level language.
Example: A piece of code written in javascript would operate only in a browser/in an execution environment that can understand javascript; however trying to use javascript in order to communicate with hardware is not possible because physical machines are designed with logic gates that only comprehend low-level language. This is why compilers exist, programmers are able to create code in any arbitrary language they are comfortable with and then compile it in order to use for different use cases.
Composability
Stemming from the word “compose” meaning to create, composability is a primitive of decentralization, permissionlessness, and interoperability that defines the possibility to build things by combining separate architectures seamlessly.
Concentrated Liquidity
Liquidity that is condensed within a specific range. As it relates to the creation of decentralized markets, whenever a token is listed on a decentralized exchange by opening up a pool (see. AMM) the liquidity is spread out throughout an infinite range bound in both price directions. Concentrating liquidity means providing it only within a given diameter of price. It is a very creative module that adapts principles from Order Books into an AMM model.
Example: There is $1,000,000 of liquidity in token pool ABYZ. The token is trading at $1. Lets say that I believe it is worth trading between $0.80 and $0.95, then I can specify to add liquidity to only the trading that will happen within that price range. Trades outside of that boundary will not utilize my assets.
Confirmation
Validation by consensus nodes that a transaction has taken place. Whenever a transaction is sent on a blockchain in order for the transaction to be registered as true, it must be processed by network nodes. Confirmations essentially define the amount of time necessary for a transaction to complete. Each blockchain network will have its own parameters of confirmation in order for a transaction to be considered finalized.
Example: a BTC transaction requires 6 confirmations. If one confirmation is added per block and a block is 10 minutes, then we know for a BTC transaction to be considered “final” we must wait 60 minutes (1 hour).
Consensus
The process of reaching an agreement between independent participants. In the digital economy, consensus applies to the state of network nodes arriving upon a singular version of the truth. Designed and implemented as hard-coded protocols, consensus is the foundation upon which trust is built in cyberspace. It is the module of software that determines how network nodes must operate and what criteria are necessary in order to arrive at valid transactions.
Consolidation
A prolonged period of price activity that is stuck within a range and is difficult to trade. Consolidation happens either after a period of very strong price falling/rising that new needs the markets to cool off. During times of consolidation, advanced participants either offload their positions or load up into new ones.
Contango
A situation in the markets where the prices of futures/options diverge positively from the spot asset prices. Contango is considered to generally be a bullish marker because if the price of futures are ahead of the current prices then it can be extrapolated as the market is anticipating positive growth and demand is starting to get ahead of the base valuations that re currently being reflected.
Cope
Commonly used in a demeaning way, cope in crypto means exactly what it does in every other facet of life, to deal with something difficult. The most popular way cope is used within the crypto communities is directed towards non-believers that missed opportunities and start spreading negative rumors in an attempt to conjure up some form of validation to their initially wrong reasoning. On the other hand, cope is also used by people that have suffered sever losses due to mismanagement (greed) and try to rectify themselves.
Correction
Adjustments in the prices of assets that happen immediately after strong rallies. Corrections take place when the prices of assets get too overheated, too quickly, and the price/value/willing buyers diverge causing the price to retract closer to “fair” value. A correction is characterized by a price reversal of 10% to 20% from the recent peak and can last anywhere between a few weeks to a few months.
CPI – Consumer Price Index
The measure of price change that consumers pay for their core goods and services. It is an ancillary gauge of inflation that expresses how an economy is dealing with its monetary policy in relation to the quality of life that is afforded to its population. The higher the CPI, the more expensive it is to sustain an average standard of living, the lower the CPI, the more adorable a standard quality of life is.
CPU – Central Processing Unit
CPUs are the most important component of a hardware device that deals with all general execution and interpretation functions. Everything from organizing the storage to processing, and directing data flow, CPUs are integral in order for any device to work properly. It is a micro sized piece of integrated circuitry that makes every other piece of circuitry understand how to operate.
Creative Commons License
A form of copyrighting that makes the material publicly accessible. The Creative Commons License simply attributes creation to the original author but essentially allows people to use the material for any purpose, commercial or personal. Anything from software code to artistic design to poetic verses can be copyrighted under a creative common license to make it “open-sourced”. Whenever a Creative Commons license is being created the originator can specify the frameworks around what kinds of use cases are allowed.
Cross Margin
A very flexible, very high-risk method of controlling a portfolio’s margin positions by allowing the excesses to taper off into other portfolios. Whenever a Margin account is created, it is typically isolated from the rest of the portfolio for risk management. If a user chooses to enter a position under the premise of cross-margin then in the event that their margin position enters liquidation level territory the portfolio will tap into the other accounts to avoid being liquidated.
Cross-chain
Terminology that is used to describe any operations that involve using multiple different networks or blockchains in order to be executed. Typically found in the same context as bridges, cross-chain operations define that a single form of data will be shared between different databases.
Example: Sending a token from Ethereum to Binance Smart Chain is considered a cross-chain operation.
Crowdfunding
A form of fundraising that attracts capital from the general public. Inverted logically relative to private funding models where small groups of wealthy investors contribute large sums of money, Crowdfunding is a model that raises relatively small amounts of money from a very large group of people.
CRUD – Create Read Update Delete
A model for how data is operated on. Relating to the facet of storage in computer science, CRUD is a framework that expresses the four types of operations that users are able to engage in with a digital environment. Element one is create (write/upload information), element two is read (so request/observe information), element three is update (make changes to information), and the fourth delete (remove information). The CRUD scheme is what defines Web 2; as it pertains to crypto and blockchain, CRUD is no longer valid due to the permanence/immutability property and has become CRU (Create, Read, Update).
Crypto Jacking
The act of hijacking hardware devices to mine cryptocurrencies without the user’s awareness. Crypto jacking is considered to be a cybercrime as it expands resources of unknowing people in order to extrapolate money from a crypto network; effectively costing the thieves nothing by arbitrating out the electrical and hardware costs onto the shoulders of the people.
Crypto Winter
A prolonged period of low prices, devastating stories of individual losses, political issues, constantly bad news, and negative social sentiment about the crypto markets.
Cryptocurrency
A compilation of two words, crypto relating to cryptography, and currency relating to money, the term cryptocurrency is a general way to refer to all digital assets. At its core, cryptocurrency is actually an archetype of digital asset that meets the criteria of existing on a decentralized digital ledger and used primarily as a form of value exchange and payment vehicle of network fees.
Cryptography
A field of computer science, mathematics, and human behavior that deals with the practice of obfuscating information in order to preserve privacy and protect against adversarial behaviors. Synonymous with the processes of encrypting and decrypting information, cryptography can be generalized beyond technology and utilized to refer to all forms of communication.
Cryptography is actually a tool that has existed for a large portion of human history. Egyptian Hieroglyphics quality as a form of communication that is encrypted in visual imagery rather than alphanumeric characters. The earliest know form of cryptography dates back to the roman empire and was used by Juilius Ceaser, where he would send letters to his armies that on the surface looked like nonsense to any enemies that might have intercepted the messengers but was able to be read by the armies that were thought how to read the letters. Named the “Ceaser Cipher” in his honor, the module was simply shifting the alphabet over 3 letters.
CT – Crypto Twitter
CT is the sphere of twitter users that exclusively pertain to the crypto industry. There is no singular, universal hashtag or group that envelops the entire community, but rather is an amalgamation of everything from the hashtags of Bitcoin, Solana, Ethereum, Crypto and countless others, with the uses of the dollar sigh for their currencies ($BTC, $SOL, $ETH, etc.)
Using Crypto Twitter has proven to be a double edged sword in terms of a reliable source of information. Plagued with bots and scams as far as the Nigerian Prince can send his emails, there is a plethora of memes and erratic conversations creating noise that makes it hard to detect real signals. However, any and nearly every, professional user has some degree of reliance on CT for finding alpha before it appears in mainstream media platforms.
CTF – Counter-Terrorism Financing
A movement by financial institutions, money service businesses, and governments to suppress any attempts at funding terrorist activity. CTF is found in conversations involving Anti-money-laundering policies and is generally considered a safeguard against mal intentioned capital flows.
Custodian
Custodians are entities that hold assets on their balance sheets in order to provide use of their platforms to users. The entities are service providers that explicitly/implicitly promise to safeguard your assets for the duration of your using their financial services.
These guys have a bad rap in the crypto world. In order to custody crypto assets, that means you must hand over the private key controls to them, which effectively removes your physical ownership of the underlying asset and forces you to trust that the custodian will not break their promises. While there have been few well-intentioned, high-quality platforms such as Coinbase, Binance, Kraken, Gemini, and select others, the vast majority of platforms that have custodied crypto assets have resulted in scams or outright fraud that led to total collapses. As soon as you hear “custody” immediately associate it with centralization or counterparty holding risks.
CVC – Convertible Virutal Currency
Digital assets that are recognized by the governing authorities as valid alternative forms of money. CVCs are a broad term that still lack a concrete definition and classifications, but in the general sense, it is an asset can be a substitute for “real currency”. In order to fall into this category the asset must exhibit some degree of aptitude to facilitate commercial activity and have an exchange directly into legal tender (fiat money). This term will not be found among regular conversations, only in documentation that uses legalise (language that is rigid and usually presented for government use), such as regulatory guidance.
Cypherpunk
A person that is extremely well equipped with knowledge and technical abilities to effectively maneuver in cyberspace while maximally protecting their identities, preserving privacy, and understanding how to avoid being spied on. These people are usually very outspoken on the subject implementing privacy-enhancing software/tooling as a driving force of society. Usually anti-government in the sense that they do not like wide-spread, invasive, monitoring of individuals digital activities.
46 Terms
D.ID.
D.ID refers to a form of decentralized identity management, storage, and authentication without the presence of a central ruling authority. Considered to be one of the most difficult and important pillars of technology to implement for a truely decentralized digital global economy, D.ID. as a subject matter has been an area of research for decades.
DAE – Digital Asset Exchange
Whether an AMM like Uniswap to trade fungible tokens or a NFT marketplace like Opensea, a DAE or Digital Asset Exchange is a venue that provides trading capabilities exclusively focused around digital objects.
DAG – Directed Acyclic Graph
A model of stateless transitions that expresses itself without ever looping or reversing. DAG’s are a mathematical and computer science principle that has been applied to distributed systems such as payments for structuring data in an alternative fashion than a blockchain.
DAO – Decentralized Autonomous Organization
Digital organizations that are established by aggregating their behaviors and operating under hard-coded rules baked into smart contracts that dictate how distributed groups of individuals interact with systems.
DAPP – Decentralized Application
Applications that exist in decentralized environments and cannot (should not) be shut down. DAPPs are software systems implemented as smart contracts that inherit the principles of immutability, transparency, audibility, and whatever else, of the network they are deployed to.
DCA – Dollar Cost Averaging
An investment strategy used to enter a portfolio position that includes making consistent equally sized purchases on a consistent basis. The benefits of DCA’ing is its ability to dampen the risks while giving potential opportunities to accumulate more assets. It is a sought-after and popular strategy among the crypto communities due to its risk-balancing properties.
Example: Imagine you have an extra $10,000 and want to buy Solana. $SOL is currently at $20. You can buy 500 on the spot and spend the $10,000 immediately, forcing you to ride the ups and downs of price fully while simultaneously having no more free cash to invest with. On the other hand, you can create a plan by which every week you invest $2,500 for the next month. So, if you buy $2,500 worth of $SOL at $20 the first week, you will get 125 $SOL. Next week the price goes to $15. Your portfolio draws down -25% to $1,750, but you now again buy $2,500 and this time you get 166 $SOL, making your portfolio 291 $SOL worth $4,250. The following week $SOL price stays at $15, keeping your portfolio value in terms of dollars flat, and giving you another chance to buy 166 $SOL for the $2,500. Now you are at 457 $SOL valued at $6,750. On the last week, $SOL returns to $20. You purchase 125 $SOL for the last batch of $2,500 and bring your portfolio to 582 $SOL; at $20 each your portfolio is worth $11,640.
Dead Cat Bounce
A technical pattern that is drawn during a downtrend/bear market when prices pop up but do not seem to have any support to carry that momentum forward, tricking investors into entering based on false pretense. A dead cat bounce looks like a rounded upside-down belly, prices rebound up, hover modestly around the same peak price, and start to taper off. Dead Cats are typically characterized by very short spans of time, usually lasting a few days and in some rare cases week(s). During these times prices are driven by speculations, assumptions, or rumors, never by underlying fundamentals.
Death Cross
A bearish chart pattern that signals strong confirmations of cyclical/seasonal market shifts. A Death cross happens whenever the shorter-term moving averages fall below the long-term moving averages. So in the case of a 50 day and 200 day EMA/SMA measures, if the 50 day line dives under the 200 day line, that is considered a Death Cross. There is no concrete guidelines as to how long the impacts of a death cross may last, however, it is important to keep in mind that it is a trailing indicator, meaning that other factors have already conspired to create this environment and should not be ignored.
Death Spiral
A very traumatic, negative circumstance that happens whenever prices start falling down and the fact that they are falling forces others to sell more, in turn creating a self-feeding negative feedback loop of recursive price drops.
Debase
To reduce the value of money through the creation of more of it. Diluting the buying power of a monetary asset by expanding its supply. It is a form of subtle taxation without representation. Whenever prices are established, they are predominately done so through the concept of supply and demand. If demand stays consistent but the amount of monetary units increases then each individual unit is subsequently worth less. Debasement can be applied to any arbitrary asset of value. If new tomato farms arrive into the agricultural industry, then effectively those new farmers debase the tomato supply of others.
Example: If there are $1,000,000,000 (B) USD dollars in an economy. There are 1,000 people there all with $1,000,000. With those 1m USD they technically have the equivalent of 1/1,000 power/ownership of that economy. If the Government then prints another $1,000,000,000 that are not given out to those original 1,000 people, and instead are handed out to another group of 10,000 at $100,000 each; then the power of each individual dollar unit goes down because there are more of them.
Debt
This should already be very intuitive, but debt is a form of money that is owed. Whenever money is borrowed, an entity that gives the money “credits” another, and the borrower then in must return what was credited to the lender. Think, negative equity. It is an obligation to return something to someone. Whenever a person is in debt, they are unable to afford something and therefore must tap into resources that do not belong to them in order to acquire that something.
Decentralization
The ability to resist being controlled by a single authority. Decentralization is an extremely abstract principle, at its simplest decentralization involves the distribution of power or control over something among a multitude of independent parties; diffusing ownership rights throughout groups rather than having it concentrated in a single point. Tricky to implement, true decentralization is an environment of absolute equality, meaning that participation is based on a desire to contribute and the provision of genuine value; rather than selective exclusion/inclusion.
Decoupling
Removing attachment. Decoupling happens whenever the patterns of price action between two assets diverge and their valuations no longer move in tandem.
Example: All cryptocurrencies, the entire market, is essentially pegged to the movement of Bitcoin. When Bitcoin rallies, other digital assets now have more room to rally. Decoupling in the sense of crypto would mean that digital assets do not rely on each other to dictate their market actions. So If Ethereum decouples from Bitcoin that would mean their prices would no longer move equivocally.
Decrypt
To transform information into coherent data. To decipher or decode seemingly arbitrary into intelligible, actionable form factors. It is a process of converting information that was originally encrypted/obfuscated from its native state into something that cannot be understood without having pre-existing context. Decryption happens only after some information has first been encrypted.
Deep/Dark Web
Generally synonymous with criminal activity, from the trafficking of illicit substances such as drugs to wild services that are better left unnamed; the dark web is a part of the internet that is not accessible through traditional measures. It is the portion of cyberspace is outside of the reach of regular users and gets ignored by consumer indexing services (such as Google). Besides the negative press that is always talking bad about it, the Dark Web also happens to the birthplace of BTC’s first true market application; or rather the stomping grounds of the first real-world markets that gave Bitcoin monetary prominence. Think no-mans land, owned by nobody, ruled by nobody. Pirates galore. Chaos. Anarchy. Freedom.
DEFI – Decentralized Finance
DEFI or Decentralized Finance is an umbrella term used to describe a new system of finance that is built on the distributed ledger technologies underpinning cryptocurrency. Inheriting properties of openness, borderlessness, permissionlessness, immutability, auditability, transparency, composability, and interoperability, DEFI is the evolution of finance through the vector of decentralization. DEFI levels the playing field by making it possible for a new grade of products to be built by a new grade of entrepreneurs.
Deflation
A decline in prices of goods or services. Deflation is a state of economic transformation where a nation’s currency strengthens, and the unit value goes up, offsetting debasement. Generally considered a good time for consumers because they become able to afford more of their needs at a better rate. While good for consumers, times of deflation can cause liquidity issues and create challenging environments for early-stage businesses to find funding. The opposite of inflation.
Degen
A derogatory term, shorthand for degenerate. Degens are generally one of two personas within the crypto sphere. They are either individuals that are not too bright and express their intellectual limitations by always having to follow somebody or they are wealthy entities that conduct very bold financial actions that elicit confusion due to some measure of rationality (or a lack of it).
Delegate
To defer responsibility or give authoritative control to other people. As it pertains to crypto, delegation involves appointing trusted parties into roles of power by showing support through voting with assets. Commonly found at the consensus/network operator level, delegates are nodes that possess some degree of involvement in the maintenance and operations of a network. Popularized as a variation of staking, delegating essentially means signaling to allocate your power within a network to another actor in hopes that they will behave in a manner that aligns with your philosophy (honestly).
Delist
Removing an asset from a venue such as a directory or an exchange. Assets that are delisted will no longer be made available for trade/inspection on a platform. Generally speaking, delisting is a negative occurrence that signals something is not healthy. However, in extreme cases, if an asset is delisted, it might be done on the level of personal vindication or government intervention; therefore delistings are not always a bad thing.
Demurrage
Demurrage is the implicit “cost of carrying money”. While holding money may prove an excellent vehicle to protect yourself during times of market downturn, being overly attached to the money and refusing to spend/invest/use it results in the missing of opportunities and being subjected to inflation devaluing the currency itself.
Depth
The amount of liquidity in a given direction. If liquidity is shallow, that means there is very little of it and it is spread out among different price points; also called “thin”. If liquidity is deep, that means there is a lot of traders and the market can absorb large amounts of trade activity without having to impact the price.
DeSoc
Shorthand for “decentralized social” media. Referring to social media platforms constructed on decentralized networks. DeSoc has been an area of interest and research for many years; especially as the surveillance by large corporations and government organizations increases dramatically over the last few years, drastically overstepping their boundaries of personal privacy laws; decentralized social media has become a promised land for startups to build social environments that are free from the grasps of big-brother.
Derivative
A financial product that derives its value/price from some underlying concept/asset. Derivatives are exotic instruments that can be used to represent abstract, non-tangible products or markets that have no physical form factors. Derivatives are inherently more risky than other instruments due to the fact that they are not actually backed by anything. Futures and Binary options are very common examples of derivates.
DEX – Decentralized Exchange
DEX or decentralized exchanges are venues to conduct trading activity that does not custody customer assets, is not controlled by a single entity, does (should not) have a single point of failure, and is able to circumvent any legalities of geography by being deployed to/ having its core business logic deployed on a permissionless, public network.
Diamond Hands
Market participants that are emotionally numb to the pains of negative market conditions and the joys of positive ones; the term is used to refer to a very exclusive grade of ultra-evolved holders of assets that do not sell under any circumstances. As the title itself implies, Diamond Hands is meant to express the fortitude of investors that hold on to their investments inspired by anything based on their convictions.
Difficulty
Difficulty refers to an increase in complexity in the solutions necessary to mine a consequent block in a proof-of-work blockchain. It is a mechanism to stabilize the rate of block product on the network in relation to the global hash rate. Whenever difficulty increases, it signals that now it will take more time and more resources in order to arrive at the correct answer to the mathematical hash puzzle in the consensus mechanism. Whenever there are a lot of machines connected, the amount of hash rate is high, in turn allowing miners to find the next block in time spans shorter than the objective target of 10 minutes; once this happens the difficulty is needed in order to push the time back towards 10 minutes. The inverse truth applies as well, if miners suddenly drop off and the network begins o produce blocks in longer time spans, the difficulty will adjust to become easier. In the case with Bitcoin’s network, difficulty is automatically adjusted every 2,016 blocks (approximately two weeks).
Disincentives
Mechanisms to deter malicious behavior. Whenever an economic system is designed many principles must be taken into account in order to balance out how the rewards are extrapolated/distributed and to protect the system from being abused by bad actors. Disincentives can be explicit in things such as directly punishing nodes by removing their staked tokens or banning their IPs; and they can be implicit, such as other network nodes will know that a bad actor is among them and will choose not to cooperate with them, denying their blocks automatically.
Disrupt
To break the status quo or cause a radical change in structure. Disruption forces new models that are in some way superior to old existing models which in turn diverts attention away from the legacy systems/companies and steals the userbase. Be it for reasons of speed, efficiency, or whatever else; Disruption can happen for a variety of reasons, but the most intuitive one expressed by the crypto industry (namely Bitcoin). Arbitrating out traditional financial institutions due to their shady behavior and manipulative controls over money (not to mention the subtle ties with governments); whereas Bitcoin is an open, auditable, transparent, borderless, and maximally inclusive system. Bitcoin disrupts banks.
Distribution
Dispersing or sharing goods among a wide group of participants. Distribution, as it pertains specifically to crypto, has two general conversational applications; first, distribution refers to how the nodes on a network are geographically positioned around the world; the more nodes in more different jurisdictions, the more decentralized a network is. The second use of distribution is around the allocation of token supply. Here the distribution would express how the tokens are to be proportionately handed out to different participants.
DLT – Distributed Ledger Technology
DLT or distributed ledger technology is a system for replicating information digitally among groups of participants. DLT’s are platforms that implement a single version of a database that is shared between all members; it allows for users to track activity by recording it in a log available for inspection by any of the nodes within its network.
Dolphin
A grade of investor that has a very modest-sized crypto portfolio. Typically categorized by a portfolio value of somewhere in the range between 10k-100k, dolphins are basically the normal middle class. Within the hierarchy of crypto holders, there exists a distinguishment based on the size of underwater creatures.
Dominance
Dominance is a metric that measures the level of influence over the crypto industry as it relates to a ratio of market capitalization. Typically used in the context of Bitcoin versus other crypto assets; dominance shows how much of the market is taken up by a digital asset in terms of the total market cap.
DON – Decentralized Oracle Network
DON or Decentralized Oracle Network is a system of independent nodes that feed data to and from a blockchain. They are used to create hybrid software environments by merging on-chain and off-chain information. The key element in a DON versus an individual oracle, is that the network aspect of decentralization as it provides higher levels of guarantee in terms of data quality and resilience against any singular points of failure.
DOS
Denial-of-Service is a cyber attack that renders a system unable to provide its services by spamming it with requests. DOS attacks overload the capacity of a system by abusing it with fake, low quality demands that disrupt regular uses from legitimately accessing its services. Once a server has been reched its operational limit, the service becomes unusable. DOS attacks are shady tactics that are meant to dissuade consumers from using a service.
DDOS
Distributed Denial of Serice is an augmented version of a DOS attack that is executed by utilizing a network of machines to conduct the attack rather than just a single point.
DOX / DOXX
Revealing private or sensitive information, usually the identity of somebody that is involved with a project or important event. Doxxing is actually a linguistic derivative of “dropping docs (documents)” that was originally used by hackers to extort people. Crypto managed to pull in this term for its own uses and refers to the teams working on projects revealing themselves. Doxxing became a more common theme after the relentless scamming taking place of anonymous teams promising revolutionary technology only that did not go so well.
Double Spending
An attempt to make two different payments utilizing the same asset. Double spending has been one of the core problems in the development of digital monetary protocols due to the immense amount of nuance at it pertains to the ability in establishing the true singular transaction without inflicting unintended harm with the second instance.
Example: I have 1 Bitcoin. If I send that 1 Bitcoin to two different wallets at the exact same time; one in exchange for a Honda Car the other for a Toyota. Both of the Dealers give me the cars; but only one gets paid; how does the network process the transaction (which one will it actually allow adn which one will get denied) and regardless of the outcome, one of the dealers will suffer. How do we mitigate this?
dPOS (delegated Proof of Stake)
Delegated Proof-of-Stake is a model of consensus for distributed systems. In dPOS; users elect the network nodes by allocating their crypto assets to an address. Delegation does not involve giving out the assets, but rather just pointing them towards an entity that they would like to see nominated as trustworthy enough to conduct consensus operations. dPOS is somewhat similar to the traditional system of how current local governments nominate a delegate to represent them to federal systems; individuals vote for an official to get elected and then the official that garners the most support becomes a representative of their locale. Generally speaking, dPOS is more efficient but more centralized than classic proof-of-stake because it concentrates operations within a set number of nodes which in turn reduces the communicative overheads.
Dry Powder
Slang for cash-on-hand. Usually referring to some kind of reserve of emergy capital that can be used to conducting investments in times of great price opportunities.
DSA (digital signature algo)
DSA stands for digital signature algorithm and it refers to a cryptographic protocol that deals with how public keys are used to conduct authentication and verification processes by providing signatures. There are many different variations of the actual algorithms for producing these signatures such as Schnorr and El Gamal, but at their core they serve the same function for authentication.
DTM
Terminology that arose in the corners of discreet crypto groups online and deciphered to mean Digital Tokens and Money or Decentralized Tokens and Money. It is extremely rare to come across this acronym anymore, but might appear in some select chatrooms and legacy blog posts, so its worth just being prepared for it.
Dump
To suddenly offload a position. Dumping refers to events where traders/investor exit their entire positions as quickly as possible. Whenever a dump happens, prices will almost always reflect themselves by falling down and will be accompanied by technical anomalies such as spikes in volume.
Dust TX
Dust transactions are micro-sized transactions that send out tiny amounts of money throughout a large amount of wallets. Dust Transactions are a common method used by low-tier crypto projects (as well as low-integrity high-tier ones) to increase their on-chain metrics by spoofing accounts with tiny balances and counting them as a “growth in unique wallet addresses”.
Dusting Attack
A Dusting Attack is when malicious protocols send tiny amounts of crypto to wallets and try to force users into interacting with those tokens by giving some smart contract authorization. Also used by Tornado Cash after the US government sanctioned any wallet that interacts with its protocol; Tornado Cash literally went to send Dust transactions to all of the notable on-chain wallets including Gemini, Coinbase, Steve Aoki, Jimmy Fallon, Shaquille O’Neil, Logan Paul, and approximately 100 others. While this move might have had some semblance of trying to outwit the government, ultimately it was just putting all those users are risk.
DYOR – Do Your Own research
The cornerstone of good decision-making and the most important element in committing to any plan of action regarding a purchase/investment; DYOR means Do Your Own Research. In tune with the crypto industry’s famous motto of “Don’t Trust, Verify”; doing your own research is a disclaimer of liability that states people should not just take information for face value and should conduct their own analysis before simply reacting to information.
17 Terms
E2Ee – End-to-End Encryption
A model of secure, direct communication between parties that avoids being intercepted by any intermediaries. E2EE is necessary for ensuring that the content of any communications cannot be interpreted by anybody other than the intended parties. In End-to-End encryption schemes, sender and receiver preserve their privacy by having messages encrypt on the senders end and only decrypt on locally within the receivers environment. E2EE has become a fundamental necessity in designed any kind of modern day messaging platforms; if E2EE is not present then uses can automatically be sure the contents of their communications will not be private.
Eclipse Attack
A cyber attack that takes place on distributed, peer-to-peer network. During an Eclipse Attack, a node is isolated from other honest nodes (having its view of the network eclipsed) and fed false information by a group of shady malicious nodes. By intercepting inbound and outbound activity happening through the real blockchain, the bad actors keep the victim node away from the true state and make it believe/follow a forked version of it. An advanced form of subversion, eclipse attacks happen by the exploitation of neighboring nodes; technically only possible in purely permissionless, open environments because this activity would be easily detected in an enterprise instantiation.
Edge Node
An Edge node is the machine at the outermost tips of network architectures that sense/gathers information. Everything from a sensor that receives weather data or water pressure to a cell phone that receives inputs from its owner qualifies as an edge node. It is the “interfacing” device that feeds information back into the network.
ELI5 – Explain it like I’m 5
ELI5 is an acronym that stands for “Explain it like I’m 5”. It is used whenever extremely complicated technical subjects are discussed in order to break them down into a more comprehensive form factor that can be understood by a larger non-technical audience. ELI5 is also used by intelligent interviewers and podcasters during conversations to weed out slick fake gurus that sometimes get their tongues twisted in their lies.
EMA – exponential moving average
EMA or Exponential Moving Average is a technical indicator that measures price trends over the course of time. EMA’s put emphasis on the data that is more recent; amplifying its fluctuations based on weights that are more current to the existing market environments. Typically an EMA is used to gauge the general state of the market; when prices are above the EMA it is considered to be an uptrend, when they are below, a downtrend. Usually, an EMA is plotted using two timeframes 50-day and 200-day (but can be customized as felt needed by the user) and the weaving of the two timeframes are used as their own type of signals; when 50-day crosses down and goes below the 200-day that signals a “Death Cross”; when it crosses upwards it is called a “Golder Cross”.
Encryption
The process of transforming information into some kind of code that cannot be interpreted without pre-existing knowledge. As it pertains to cryptography and computer science, encryption is the core premise on which digital communication is built upon. It is the conversion of plaintext, data that can be read and comprehended by a human eye, into ciphertext, scrambled seemingly random strings of letters and numbers. Encryption is made possible through complex mathematical algorithms that obfuscate their patterns and make it impossible to reverse their actions or figure out how to deduce the original input data based on output data.
Emission
The supply side strategy of a system for creating and adding more tokens into circulating supply. Emission is basically the rate at which new tokens will be minted within the context of a cryptocurrencies economic policy.
Example: There are 18,500,000 BTC in circulation; for the next year a total of 500,000 more will be added into the supply; therefore the Bitcoin Networks Emission rate is deduced on how many coins will be added over a set period of time.
Endowment
A grade of investment management vehicles that is perpetually outside of personal gains and which generate profits exclusively for charitable purposes. An endowment has very unique treatments in terms of taxation; they don’t have any. Essentially whenever an endowment is created, money is “gifted” to the entity and that entity must utilize that money with the highest level of fiduciary responsibility. Given the nature of the asset transfer being a “gift”, it is a non-taxable event; furthermore, the intentions behind what these assets are used for and the allocation of their profits circumvent tax obligations.
EOA (Externally Owned Account)
EOA stands for Externally Owned Account. It is a technically complicated formulation that simply means an account/wallet address that is created by generating a public-private key pair and is owned by something “external” relative to the blockchain, such as a human being.
EOY – End Of Year
EOY is the acronym for “end of year”. As the term implies, EOY is just meant to be a general expression of the time horizon closer to the final months of the year. Usually, EOY is used for the months of November and December but can extend to the entire fourth quarter (which includes October as well).
Epoch
A measurement of network activity/consistency based on the elapsing of time. Epochs can be any arbitrary amount of blocks (based on the network being measured) that is used to periodically assess the quality of its operations. Some networks might also use epochs as methods to establish transaction finality.
Equity
Shares that express an interest stake in a company, project, or other financial asset such as real estate. Equity is the total value of a financial instrument, minus any debts and liabilities. It is basically the amount of money an owner would be able to retain in the event they chose to sell their asset for.
Example: If a company has $0 debts and $10,000,000 worth of liabilities, produces $10,000,000 per year in profits and has 1,000,000 shares outstanding the way a shares price would be determined is (in the event that it is sold) {income x industry multiple – liabilities} as as simple example $10,000,000 x 7 – $10,000,000 = $60,000,000; translating to a share price of $60. That is equity.
Example 2: A property is worth $1,000,000. You put down 20% or $200,000. Your equity in that piece of real estate is 20%; meaning if the price doubled to $2,000,000 and you wanted to sell it; you would keep $400,000 of it (minus all fees and taxes).
ERC – Ethereum Request for Comments
ERC or Ethereum Request for Comments is a framework for introducing new protocols for the creation of tokens or other digital asset standards on the Ethereum Blockchain. It is a format for establishing logical rules and determining the actions that take place whenever certain functions are enabled. The most common version of an ERC is the ERC-20 token standard, which basically defines the parameters and operational logic of the code in a smart contract that can create simple fungible tokens on-chain.
Escrow
A neutral third party that is typically tasked with holding funds on behalf of other entities until specific conditions that have been previously agreed upon are satisfied by the involved counterparties. Escrows are used as a vehicle to arbitrate out the counterparty risks by reducing the need to trust them.
Example: I want you to create a glorious enterprise website. You charge $20,000. I like your work but am still nervous about having to send you fund without you first completing the work. Likewise, you are nervous that you will have to complete all that work and run the risks of me not paying you. So, we hire an escrow agent that i will give the money to, and they will hold until you deliver the final website. Once I receive the website and am satisfied that you were able to deliver what your promised, the escrow agent will see that and release the fund to you.
Et al.
Et al is an abbreviation stemming from the Latin term “et alia” which means “and others”. Et al is commonly found in whitepapers and other intellectually dense documentation in the references sections (or sometimes intra-content) to express that there are many co-authors of another resource.
ETF – Exchange Traded Fund
ETF or Exchange Traded Fund is a financial instrument that functions like a micro-portfolio; It is a basket of securities that tracks the aggregate average price of its constituent assets. Just like when you diversify your portfolio, its moves get suppressed and exaggerated by how the individual components of it move, an ETF is a fund that trades like a stock.
EVM – Ethereum Virtual Machine
The engine that computes Ethereum’s smart contract activity; the EVM is a trusted runtime environment and state machine where smart contracts are able to be executed and processed. The Ethereum Virtual Machine is what actually transforms the Ethereum network into a world computer; it is the architectural element that gives Ethereum its “Turing completeness”. The EVM is isolated from other critical elements of the system in order to mitigate security flaws.
39 Terms
FA (Fundamental Analysis)
Rarely seen by the acronym FA, Fundamental Analysis is the use of non-technical markers to conduct research. Fundamental Analysis takes into account more abstract parameters that are rooted in qualitative measures. Things such as news (where are the information published, its quality, and how often), social sentiment (what do people think and talk about regarding an asset), the value of something vs. the price it’s trading at (is there a discrepancy in the price it’s trading for vs. the degree of solution it provides/how broad is its solutions, how many people does it impact and how), what is the market pricing the individual asset when compared to how it values other similar products (does the industry trade at a 10x multiple on cashflow while this one only a 3x; is there a reason, is there opportunity if not), the core business model and how it supersedes of doesn’t other solutions, the list is endless.
Using Fundamental Analysis is less effective for gauging short-time price action; the core concept of fundamental analysis is to find value discrepancies that will be corrected over time, which is more suited to investing than trading.
Fannie & Freddy
Fannie Mae and Freddy Mac are the two largest home mortgage companies that are backed by the US government. These guys don’t have anything to do with crypto directly; however, it is in part due to their massive failures/impacts/involvement on the 2008 GFC that indirectly contributed to the creation of Bitcoin. It is worthwhile knowing their names for acuity in any conversation revolving around economic circumstances and the history of America’s finance.
Farming
The action of leveraging crypto assets for collecting passive income in the form of yield. There are different degrees of farming that range from simple, single-platform token lock-ups (staking) to more advanced leverage of multiple platforms to compound the return potentials (higher risk). Reusing assets across multiple platforms creates exponentially more risky strategies due to the potential of a single failure cascading across multiple venues; even possibly contaminating those platforms for other users.
FATF – Financial Action Task Force
An intergovernmental organization that deals with the enforcement types of criminal activities including AML and Terrorism financing on a global scale.
Faucet
An application that provides tiny bits of free cryptocurrency on a revolving time frame for users that complete some kind of a simple social task such as watching an ad or filling in a captcha. Historically, faucets provided nearly all kinds of cryptocurrencies (Doge, BTC, ETH, and the such) however, as the industry evolved, micro-transactions fees became prohibitive and asset prices went up, the vast majority of faucets turned off or switched to providing test-net assets.
FBA – Federated Byzantine Agreement
An augmented version of traditional Byzantine tolerance consensus mechanisms that provides a higher level of capabilities in terms of flexibility and throughput than predecessor versions. Pioneered by Ripple, FBA uniquely balances desirable properties of decentralized systems (permissionless allowance for nodes to join) while still being able to guarantee strong security and quality of data. The flexibility of the system is based on “quorum slices” which allow nodes to arrive at their own version of the ledger truth, based on what their quorum neighbors claim. If visually depicted, the first part of the FBA, the “federated” helps draw a mental model; where the system can support infinite sub-systems/trusted quorum slices, ultimately all having to relay their internal state to one another for global ledger consistency.
FCFS – First Come First Serve
FCFC or First Come First Serve, is a scheduling mechanism that establishes validity based on the time order sequence of events taking place.
FDIC – Federal Deposit Insurance Corporation
An American (United States) government organization that is tasked with the provision of insurance for depositors in commercial and savings banks. The FDIC has no direct connection to the crypto space, however, they do exert some degree of influence relating to whether or not a bank/financial institution can provide their services to crypto companies, which then indirectly translates to the operational fluidity around the onboarding/ease of entry for the crypto market participants.
FDV – Fully diluted Value
FDV or Fully Diluted Value is the measurement of a cryptocurrency’s market capitalization based on it having its supply fully in circulation. The way a digital asset has its market cap measured is based on the simple formula of {Unit price x Circulating supply}. However, crypto’s do not always have all of their supply in circulation, so if an asset is worth $100 and there are 1,000,000 tokens in circulation then its Market Cap is $100,000,000; however, if those 1,000,000 tokens only represent half of the total/final supply then the FDV would be $200,000,000. FDV is a projection not a perfect measure; as new tokens enter circulation, they can cause price depreciation and ultimately just result in a reduction of price in 50% while maintaining a stable market cap of $100,000,000 {2,000,000 x $50}
FED
The FED, also known as the Federal Reserve, is the central bank of the United States. It is without a doubt the most powerful financial institution in America and holds the reigns to control the setting of interest rates, managing the supply of money, and regulating the financial markets. It is the single authority responsible for all of the core economic activities revolving around money, they can print money, they can siphon it out with higher interest rates, and they can overturn any fiscal policy.
Federated Network
A federation is a structural design that distributes authoritative controls within a network according to a hierarchical principle. It is a network of networks; where worker nodes relay their information to the elected leaders of each independent network; only those leaders have the power to share information with other networks. It is an amalgamation of smaller networks that resembles how the individual states within the US are all combined to create the (North) American economy and sit under the umbrella of a federal government. Each state has authority around being able to implement its own unique rules and laws but ultimately still need to have some degree of alignment with the laws set forth by the federal government.
FFS – For Fucks Sake
Very informal term usually found in conversations that are emotionally charged, FFS is the three letters representing the feelings of somebody who is fed up. For Fucks Sake can be used towards arrogant people that continue to ignore reason and aggravate others; it can be used to express emotional exhaustion around the uncertainty or deliberate laziness of regulators; for fucks sake it can be used for anything!
Fiat
Currency that is issued by governments and does not have any material underlying claims. It is a debt instrument upheld by society as legal tender because it has the support of the government. The term itself “Fiat” comes from the Latin vocabulary and translates to “Let it be done”.
Fibonacci
Fibonacci was an Italian mathematician that discovered what is known as the “golden ratio” and fathered the modern-day decimal and numeral systems. Whenever used in the context of crypto, the term “Fibonacci” is used to refer to a technical indicator that has become a reliable method for gauging levels of potential support and resistance.
Example of Fibonacci Sequence: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, and so on.
FIFO – First in, First out
FIFO is shorthand for First in First out. A sequencing method that systemically operates as the name states; information that is entered/input earlier will be queued for exiting/out earlier. Applicable to both, computer systems in certain functions relating to data management, as well as, finance for creating portfolio management strategies. When thinking FIFO just picture a traditional environment, such as a line for buying groceries, and you will full comprehend the implications.
Finality
A property of blockchains that provides guarantees around transactions reaching a state which cannot be reversed. Finality is a nuanced concept with a few different models to its logic; generally speaking, there are two types of finality within crypto finance, probabilistic and deterministic. Probabilistic Finality is what we experience with open, public networks like Bitcoin; the transactions never actually reach 100% certainty in their finality, in the event that there is a rollback the transactions is no longer valid. Therefore, the added vertex of “economic” finality is applied here which states after a certain depth (new blocks on top of the one with your transaction), the cost of rolling back the network is no longer financially beneficial or too heavily outweighing its implementation. Deterministic finality (also known as absolute) occurs in more centralized environments where network nodes can set anchor points in a blockchain that becomes irreversible; this type is usually near instant and proves as the ideal alternative for commercial activity.
FinCEN
FinCEN or the Financial Crimes Enforcement Network is a sub-division of the US Treasury Department dealing with the collection and analysis of financial data to provide protection and deter malicious activity. While the agency is obviously domestic to the USA, it does have ap powerful presence on the world stage and works to combat international economic criminality such as AML, terrorism financing, and the such.
FINMA
The Swiss Financial Market Supervisory Authority is a regulatory agency that deals with oversees the financial industry in Switzerland. Something similar to the SEC, FTC, and FINRA in the United States, FINMA handles matters that pertain to the protection of consumers within the banking, insurance, investments, and trading sectors. The reason that FINMA is an important entity as it pertains to crypto is because of two reasons; first of all, Switzerland is known to be a “safe haven” for big money due to its airtight laws around privacy. Second, considering the prominence of the Swiss in finance, it is intriguing that they embraced crypto very early on, so much so that they have something called “crypto valley” (the equivalent of Silicon Valley in the US). Therefore, the rulings of FINMA around crypto play an important role for other countries.
FINRA – Financial Industry Regulatory Authority
A private, American, nonprofit company that is government authorized to oversee US-based broker-dealers. Tightly related to the SEC, FINRA handles market intelligence operations that deal with their mission to protect investors, uphold maximal market integrity, and help manage economic risks by stewarding compliance. By the nature of the role they play, FINRA is a responsive organization in the sense that it does not prevent bad things from happening; it attempts to fix them after the fact.
Fiscal Policy
Fiscal policy refers to how government finances are used to influence an economy. Elements such as the revenue collected from taxation and how it is spent are incorporated into the fiscal policy (applicable to the federal government). Fiscal policy is the main lever that the federal government uses to regulate economic conditions.
Fish
A grade of investor that has a small crypto portfolio. Typically categorized within the 1-10k size, fish constitute the vast majority of market participants and classify and average. Within the hierarchy of crypto holders, there exists a distinguishment based on the size of underwater creatures.
FIU – Financial Intelligence Unit
FIU or Financial Intelligence Units are private organizations that deal with monitoring financial activity for compliance purposes. FIU’s are independent entities that fill a function between financial institutions and law enforcement agencies.
Flappening
The takeover of prominence in the crypto space, where Litecoin supersedes Bitcoin Cash. This was a term that arose after the controversial launch of BitcoinCash which immediately gave it a position in the top 5 cryptocurrencies by market cap. The Litecoin community felt offended and decided to create a playful term to describe what happens when Liteceoin overtakes Bitcoin Cash. The last time “Flappening was used in conversation was in 2019.
Flash Crash
A sudden sharp drop in prices. Usually happening within a timeframe of seconds to minutes and lasting for less than a day, flash crashes are market anomalies that happen randomly with extreme force and recover just as quickly. While there is no single, universal reason as to why Flash Crashes happen, there are some known instances of slips in the logic of algorithmic high-frequency traders and blackouts of servers that have caused them before.
Flash Loan
Flash loans are an innovation that only exists within the confines of decentralized finance and are non-collateralized loans that last for the duration of a single network block. Flash loans are atomic transactions that allow users to borrow assets and pay them back over the course of the transaction initiation. The application of a flash loan to provide large pools of capital for extremely short durations of time in order to conduct efficiency-enhancing operations such as arbitrating out price discrepancies.
Flippening
The Flippening is a market event where Ethereum overtakes Bitcoin by Market Capitalization. This has not happened, at least as of yet, however, in the event that it does, it would signal a new era of digital economic policy reigning supreme. There are sects of the crypto economy that think this is an inevitability while other maximalists think this will never happen.
FOMC – Federal Open Markets Committee
FOMC or the Federal Open Markets Committee is a special division within the Federal Reserve that oversees the decisions relating to the entire economy’s market operations. This specific division also happens to make the key decisions around the supply of money and the state of interest rates.
FOMO – fear of missing out
FOMO is the fear of missing out. FOMO is used to describe an overwhelming feeling of anxiety that investors or traders deal with whenever they see prices rise and feel as though they do not have enough exposure to properly capture the movement.
Fork
Just like when traveling down a pathway and arriving at a point where the road splits into two different directions, forks are a divergence in the network’s logic that create a temporary state of uncertainty as to which path is the valid path that the blockchain will continue down. Forks can happen for two main reasons, the community passed a vote and the code was updated faster than all of the network nodes were able to upgrade their software clients, and (in a leaderless system) two nodes published a new block at the exact same time. There are also different types of forks known as either “hard” or “soft” and those relating to updates being backward compatible; upgrades that either demand or do not demand updating the code in order to still be able to interoperate.
FPGA – Field Programmable Gate Array
FPGA or Field Programmable Gate Arrays are circuits in hardware that are configured after manufacturing for dedicated uses. After crypto mining began to permeate society, FPGA’s become the first version of hardware specifically optimized for the function of mining. Simply put an FPGA is a customizable circuit board; in order to take advantage of what they have to offer a user must have some technical inclination to electrical/computer engineering. FPGA are less effective than ASIC machines for mining purposes; they are more for hobbyists. (People do not build mining farms with FPGAs).
Free Floating – assets not held in treasuries
Free-floating means not tied to or belonging to a specified use; assets that are unlocked can be used for any reason. Free-floating is a term borrowed from legacy finance that refers to assets (such as stocks) that do not have any clause or ramifications around their applications. When considering this in the context of crypto, free-floating applies to the supplies of tokens that are available to trade. Circulating supply minus staking, token lockers, vesting, liquidity pools, lent, or otherwise collateralized.
Frictionless
Having no resistance to the fluidity of functionality. As it pertains to finance, whenever a trade is conducted friction exists at the points where there are excessive fees or prolonged processing times that hinder a seamless flow of operations. Frictionless is a desirable design principle that exists across many of the most widely adopted commercial applications.
Example: having to download specific software, then create an account, then fund your account, then wait for the transfer are all points of friction; whereas being able to conduct a transaction simply by handing over cash makes the transaction fluid and easy.
Example 2: Amazon allows you to connect a credit card and conduct purchases without having to re-enter the card information every single time; that is a prime example of a frictionless transaction.
Frontrunning
An illegal practice where entities exploit proprietary information and extort other users around it. A byproduct of informational asymmetry. In crypto, frontrunning is a practice that has been abused by network nodes that get to see sensitive/valuable data (such as the prices two different parties are willing to transact at) and then squeezing themselves in between those two orders to fill the gap. Attributed to MEV, whenever a node sees that a user places a sell order on a DEX for $1,000 and another user places a buy order for $1,100; the node would buy the $1,000 order and directly re-sell it to the $1,100 order; whereas in a fair environment, the user that placed the $1,100 order should get his $100 back, instead the low-quality, low-moral node keeps it.
FTC – Federal Trade Commission
The FTC or Federal trade commission, is an independent government organization tasked with overseeing and enforcing fair, competitive, free market operations and consumer protection. This agency does not have a good reputation within the communities of crypto enthusiasts due to their blatant inability to distinguish quality companies from scams and incessantly being incorrect in their judgments.
FUD – Fear Uncertainty & Doubt
FUD is the acronym for Fear, Uncertainty, and Doubt. It pertains to the floods of negative press that bombard consumers and the state of social sentiment toward the crypto industry. It is an emotional state that turns off the masses from industry and is sometimes used by mass media to create an illusion, deterring regular investors and giving insiders an opportunity to accumulate without retail intervention. (FUD can be applied to any industry, market, company, or asset beyond just crypto).
Full Node
A Full node is a machine on a crypto network that handles the full spectrum of core operations for maintaining the function of the blockchain. Storing the entire history of the network’s ledger, verifying transactions, acting as an access point for new incoming nodes to use as a neighbor and validate the state, an access point as a data provider, and participating in mining. Although full nodes are not obligated to mine, it is up to them if they wish to only partake in upholding the network’s history or if they would also like to contribute to the hashing rates.
Funding Rate
Payments that must be made to counterparties in order to keep their positions open and available. Applicable to futures/options, funding rates are small systematic fees that are paid by position holders to the market makers for allowing the instruments to trade. The rates can exist in either direction (short or long) but the premium depends on the divergence in an asset’s spot price, the level of interest in an instrument, and the option’s nature.
Fungible
Easily interchangeable. Fungibility is a property of an asset that makes it indistinguishable from another one of its kind. So a paper dollar is worth any other paper dollar. An unused 16.9 oz bottle of Springwater is equal to any other unused 16.9 oz bottle of Springwater. Assuming that all other things are equal, a 10-ounce brick of gold is worth any other 10-ounce brick of gold.
Futures
A type of financial instrument (derivative) that allows market participants to speculate on the future price of an asset. It gives its owner the right to (option) purchase an asset at a future point in time at a previously agreed upon price point (the owner can, but does not have to exercise this right).
Example: Imagine Bitcoin is trading at $30,000. You think that next month it will trade at $40,000, but are not certain enough to risk buying it outright. Options to purchase 1 BTC for $30,000 are priced at $1,000. So you can either buy 1 full Bitcoin right now at $30,000 and if next month it goes down to $25,000, you are down $5,000 and have to just sit it out or you can buy the option for $1,000 and just let it expire. On the other hand, if the price goes up to $40,000 as you predicted, you can exercise the future option and buy 1 Bitcoin at $30,000 (effectively paying $31,000). So the future contract is an exotic way to hedge your risk.
FX – Forex
Shorthand for foreign exchange market. Forex is the venue where money is traded against other money; by measure of volume, interest, and activity it is the single largest market in the world. Forex is the marketplace that dictates the sport price of currencies internationally.
16 Terms
Gains/z
An informal term that is used interchangeably with profit to express a positive, or potentially positive outcome of a trade/investment.
Game Theory
A mathematically formalized study of strategic interactions. Used in computer science, sports, war, and economics alike, Game theory expresses behavioral outcomes and logical patterns that arise in thinking whenever attempting to solve problems. Something as simple as simulating possible results of an event (such as moves in a chess game) and something as complex as developing an autonomous defense mechanism against heat-seeking missiles qualify as game theory.
GameFI
A synthesis of two massive digitally native industries, gaming and decentralized finance, GameFI stands for Game Finance and refers to the financialization of the gaming industry utilizing blockchain, crypto, and Web3 technologies. Implemented through play-to-earn or play-to-own modules, gameFi effectively seeks to draw attention and retain its audience on the premise that they will be able to derive monetary value from their efforts.
Gas
The measurement of computational effort that must be expanded in order to compute/process a transaction on-chain. Gas is basically the fee that must be paid in order to use a decentralized network. Since blockchain networks (should be) public goods, there need to exist mechanisms to incentivize participation, Gas, acts as a vehicle for accounting the costs incurred for the nodes to provide their services and then imposes it as a fee to the end user.
Gas limit
The maximum amount of Gas/fees that a user is willing to pay in order to have their transaction executed. Gas limits are necessary to design principles that help avoid discriminatory behavior from nodes and diffuse the potential that wealthy users will deny other users participation by simply constantly outbidding them.
Gas Price
The amount of cryptocurrency that must be paid as a fee in order to cover the costs of gas. So if everybody has a maximal limit of 21,000 Gas units they can pay for, the price of it would be denominated in that network’s native asset; in the case of Ethereum, once the gas limit is reached, the only way to continue submitting transactions would be by increasing the price per Gas unit. Even though the base Gas costs for a node might stay stable, if the demand for the network increases, then the price for each gas unit will increase.
Example: Ethereum is $1,000. A basic swap costs $2 and consumes 20,000 gas; translating to $0.0002 per gas unit. The Network is handling 10 transactions per second. Suddenly an influx of users arrive all trying to trade; the gas limit for a swap remains at 20,000 but the users are now outbidding each other at $0.0004 per gas unit, doubling the price per gas unit, driving the same exact operational swap cost to $4.
GDP – Gross Domestic Product
GDP or Gross Domestic Product is the total value of goods and services produced by a country; it is effectively a measure of a nation’s economic output. GPD is measured on a year-on-year basis and its calculations do not involve production costs, amortizations, losses, or any other forms of depreciation; it is simply a measure of the absolute maximum output.
Gems
Slang for extremely valuable crypto assets. Gems can be used to refer to any cryptocurrency, however, it is more common for projects that are less known and with much smaller market capitalizations to be called gems (adapting the principle from a diamond in the rough).
Genesis Block
The first block of a blockchain. The Genesis block is the anchor point that dictates a network’s initial parameters including the supply capacity, reward mechanism, emission rate, and other core economic primitives relating to consensus.
GFC – global financial crises
The Global Financial Crises, also known by the acronym GFC, was the economic whirlwind of chaos that took place in the 2007-2008 period. The level of turmoil in terms of cascading prices was the worst since the Great Depression of 1929. A faulty system of fraudulent real-estate mortgages (called sub-primes) collapsed the American housing market with such force that its effects rippled throughout every other major economy around the world.
GL – Good Luck
The two-letter acronym GL stands for Good Luck. Most commonly found in the chat logs of multiplayer online games, GL is used as a form of signaling support for others in their ventures, as well as, a disregard for divergent opinions.
GMI – Gonna Make It
GMI stands for going to make it. GMI is a form of crypto-cultural slang to refer to intelligent long term investors, people that ignore FUD, and those that avoid scams.
Golden Cross
A signal confirming a market reversal created by a triggering of certain technical indicators. The Golden Cross is considered a very strong signal that takes place whenever the 50-day moving average crosses the 200-day moving average by breaking upwards. As is the case with other technical indicators, this is a lagging sign, so whenever a Golden Cross happens, prices would have typically already shown some strong action in recent times.
GPU – Graphic Processing Unit
GPU or Graphic processing unit is a type of hardware that has its circuitry set up, especially to provide functions relating to the creation of visual outputs such as videos, images, and so on. However, at its core GPU’s serve the same general function of processing logical bits of data; therefore, they can be applied to most other forms of processing and even provide supplementary parallel processing for other components of devices. Moreover, GPUs have found applications within the cryptocurrency mining industry (mostly for bootstrapping early networks or running smaller-sized family operations) as well as the field of AI for supplementing the demands of neural networks.
Group Mining
Group mining is having multiple individual, independent entities pooling their computational resources together to mine a cryptocurrency and split the rewards proportionately.
Gwei
Micro denomination of the Ethereum cryptocurrency. A single GWEI is equivalent to one-billionth of an ETH (0.000000001). GWEI is a measurement necessary for accounting the costs associated with Gas.
25 Terms
Halving
The Halving is an event where the emission rate of new tokens being released into circulating supply as rewards for miners drops in half. This is an economic supply policy that is programmed into proof-of-work networks like Bitcoin and Litecoin and set on a hard schedule. Halving in Bitcoin are set to take place every 210,000 BTC blocks, which translates to approximately every four years. (It is ok to call this even the halvening as well).
Hard Cap
There are two general meanings for hard cap, but the essence of its idea can be extended to cover other similar concepts.
Meaning 1: The maximum limitation around how much money can be raised for a new project that is launching. Denominated in crypto or dollars, it is meant to act as a backstop at which point a project will no longer be able to accept more funding.
Meaning 2: The hard-coded limitations as to how many tokens/coins there will ever exist on a network; basically the total maximum supply that will ever exist.
Hard fork
A split in a blockchain that is caused by a software upgrade that results in a divergence of the fundamental consensus logic of a network that is not backward compatible. Whenever the consensus logic (things relating to the economic policy or operational processes) changes in a way that is drastically different from its preceding version, a new chain splits off and suddenly two versions are being built simultaneously. Issues with hard forks taking place revolve around the creation of new digital assets and discrepancies between the node operators that ultimately weakens all parties.
Hard Peg
An exchange rate that is hard set to equal value and does not fluctuate. This is a financial principle that is applicable to stablecoins and wrapped assets where one token is (must) always be redeemable for one unit of the underlying asset.
Example: Bitcoin (BTC) and Wrapped Bitcoin (WBTC). The wrapped version is always valued exactly as much as a regular Bitcoin. Whenever you redeem a WBTC, you Burn the wrapped token on one chain and claim the exact amount burned on the original chain. The same logic applied to USDT/USDC. If you have $10,000 USDT in your wallet, you must be able to go to Tether are request exactly $10,000 USD transfer to your bank account in return.
Hash
A hexadecimal string of letters and/or numbers that is produced by complex one-way mathematical formulas called a hashing function. It is basically a form of encryption that cannot be reversed and even if the formula is public, it will not provide any semblance of the original data. A Hash can be likened to a digital fingerprint; there is always one identifier for an individual and it cannot be replicated. Hashes are used to provide unique identifications for records on a blockchain. Every Block in a chain has its own hash, every transaction has its own has, every wallet has its own hash, and on. Because a Hash cannot be reversed (meaning that if you take a Hash and run it through the hashing algorithm it does not decrypt the data back to its original input, instead it will just take that hash and hash it, creating yet another random-looking output that will not resemble the original input.
Hash Rate
The measure of computational power that is being used to secure a network through mining. The Higher the hash rate of a network, the higher its security, the more competitive it becomes to mine, the lower the average reward.
Hashcash
An algorithm to conduct proof-of-work hashing that has a set computational demand but a very light proving mechanism. This is usually applied to applications such as e-mail in order to combat sybil/mass spam attacks.
HDD
Hard Disk Drives are storage devices found in computers that provide memory. HDDs are mechanical systems that have been the standard for nearly a decade. While these have slowly being displaced by SSD’s, the fact that these are mechanical offers a novelty in the sense of recovers; if HDDs get damaged the information inside them has a high probability of being recovered.
HDwallet
Hierarchial Deterministic or HD wallets are wallets that generate new key pairs for every single transaction that take place. Legacy wallets have a single address that receives transactions, you can send 1,000 transactions and the address will remain the same; but in an HD wallet, every single time a transaction is received the wallet will change its address. This was implemented as a mechanism to increase privacy/security.
Heartbeat
As it relates to computer science and distributed systems, a heartbeat is a rate of pinging between nodes. Heartbeats are simple messaging/signaling systems used to validate if a node is online or not. Commonly found in consensus models with a leader-follower structure, heartbeats contribute to making sure that a network is always lively (never accidentally offline).
Hedge
To protect an investment by offsetting the risks. While hedging does incur some extra costs to implement and might bring down the total maximum potential returns, it does provide a security net that will minimize the chances for losses and dampen a portfolio’s overall volatility.
Hexadecimal
An augmented form of alphabetic or numeric notation that uses a modulo of 16 rather than 10. Whenever opening a number system using letters we associate their numeric value with their position in the alphabet, A=1, B=2, C=3, and so on. However, when in a logical environment of a computer, once we reach the number 9=I, the next number becomes 10 (a figure with 2 variables 1 + 0) in order to save space, the hexadecimal system replaces the numbers 10-16 with upper/lowercase variants of a=10, b=11, c =12, and so on. This concept can be applied and customized in accordance with the design preferences of the system utilizing hexadecimal principles.
HFT – high-frequency trading
HFT or High-Frequency Trading is a method of trading that involves the use of technological advancements (advanced algorithms and cutting-edge hardware/machines) to conduct financial activities at an extremely fast rate; we’re talking about conducting hundred/thousands of trades in under a second. HFT is typically used by large financial institutions and well-funded organizations due to the high costs of building out the systems themselves, technical expertise in computer science and mathematics, and generally large pools of capital needed in order to make these strategies worthwhile to implement. HFT is best equipped for making a lot of low-value wins; it is a model based on volume/quantity rather than quality.
HFSP – Have Fun Staying Poor
A derogatory acronym that deciphers to “Have Fun Staying Poor”; an attack on somebodies mental acuity or (lack of) intelligence. HFSP is used as a negative way to communicate a disagreement with others. Whenever people make choices that are considered to be unwise (or downright stupid), most commonly being against crypto, people will tell them to Have Fun Staying Poor.
Hierarchy
An organizational structure based on supremacy. Hierarchies exist in all walks of life, from predator-prey relationships of humans and other animals to social structures based on finances. Applicable to any field from intelligence to authority, the top of a hierarchies is smaller, more concentrated, and hosts the elites within a certain domain. The Bottom of a hierarchy includes the least “valuable/informed” portion of the relational system.
Higher High
Higher Highs are technical chart patterns that mark the peaks of price rallies against their last most recent similar price action. If an asset is trading at $1 and next week goes to $1.50. The following week it drops to $1.25 and end the week at $1.75. For a month the price is stable. Then again every week the price increased by $0.25. Every time the price sets a new record compared to its recent action, it is a higher high.
Higher Low
Higher lows are technical chart patterns that are used to market price retracements during bull markets that measure consistently higher levels of bottoms. An asset that started at $1 and went to $1.50 before going to $1.25 then going to $2.00 and down again to $1.50, then going to $3.00 and down again to $2.00 is setting a pattern of higher lows; each following price pullback remains higher than the last.
HODL
A playful, purposeful misspelling of the word Hold. At first, HODL became a term whenever a user accidentally misspelled Hold, but it caught on within the community and became the defacto word to express the action of not selling. Since then some people have unofficially also transformed it into an acronym for “Hold On for Dear Life”.
Honeypot
Honeypots are cybersecurity exploits that leverage faulty smart contract logic to trick people into sending their money in with no way of ever getting it out. Honeypots existed before Bitcoin with systems that would just hijack other digital valuables such as documents and sensitive personal information. Seemingly simple in their concept, honeypots have become extremely sophisticated tools that are used not just by hackers to steal money from unsuspecting users but likewise to trick other hackers into believing they found a loophole to hurt others and end up getting stuck/caught. In Crypto specifically, honeypots are most commonly found as either smart contracts that tell users to send funds in return for some token or as fake phishing software disguised as web3 dapps.
Hosted Wallet
Hosted wallets are wallets that are provided by companies/organizations that retain control of the wallets private keys. These are the types most commonly found in basic consumer applications; their greatest benefit is they abstract away the complexity of key management. However, they introduce the vector of counterparty risk. Not your Keys, Not your coins.
Hot Wallet
A crypto wallet that is connected to the internet at all times. Hot wallets are necessary for conducting all the basic activities relating to crypto, storing, sending, and receiving; the “Hot” portion of it means that it is always available for easy access. The ease of access and speed of operations that Hot Wallets provide come at the cost of security; they are easier to access therefore making them desirable targets for hackers and scammers.
Howey Test
A framework employed by the US government to discern whether an asset qualifies as a security or investment contract. The Test is conducted through an evaluation of four elements:
1) is there an investment of money?
2) is the investment in a common enterprise?
3) is there an expectation of profit?
4) are the expectations linked/derived from the efforts of others?
Only in the event that all four of these criteria are a yes, would an asset qualify as security or investment contract. It is important to point out that while framework has served a purpose historically, it is incredibly outdated and no longer provides a sufficient depth of analysis for newer age digital assets.
HTLC (Hash-TimeLock-Contract)
Hash-TimeLock-Contracts are a type of smart contract that removes potential counterparty risks by introducing the parameter of time. HTLC are sophisticated escrow contracts that have become the foundation of layer 2 scaling applications such as the Bitcoin Lightning Network.
Hyakeian economics
A school of thought that branches from Austrian Economics that basically supports the concept of modern-day free-market capitalism. Hyakeian economics opposes many of the Keynesian beliefs and puts emphasis on individuality, creativity, and the freedom of competition or allowing markets to dictate prices and qualitative standards rather than have centralized organizations do so.
Hyperinflation
The state of runaway inflation becomes impossible to control. Once an asset enters the hyperinflation cycle, the rate of new money entering circulation continues to increase, and attempts at deterring it prove futile. This is one of the worst scenarios for any monetary asset; if something is going through hyperinflation, then odds are it is merely a short matter of time before its value dilutes so much that it becomes essentially worthless.
24 Terms
IBC – Inter Blockchain Communications
IBC or Inter-Blockchain-Communication is a protocol developed by the project Cosmos and is intended to facilitate and authenticate the transfer of data between separate blockchain / distributed ledger environments. IBC was the first of its kind to handle consistency in the data regardless of the environments or differences in states.
ICO – Initial Coin Offering
An ICO or Initial Coin Offering is a model for fundraising/crowdfunding from the general public. No longer utilized en mass due to the legal issues caused by it, ICOs gained enormous momentum in the 2017 era of crypto and helped bootstrap many of the projects that are live today. However, due to the open nature of the technology, it was soon abused by scammers and fraudsters as a tool to conduct their malicious activities.
ICYMI – In Case You Missed It
ICYMI is a very popular term beyond just crypto, blockchain, and Web3 that stands for “In Case You Missed It”. ICYMI is most commonly found in shortform content whenever trying to provide some kind of news or updates. Projects can use ICYMI in their weekly/monthly recaps, news agencies can use it for their social posts, basically anything and everything that relates to catching other up to date on something they might not have noticed otherwise.
IDE – Integrated Development Environment
An IDE or Integrated Development Environment is a piece of software that aggregates all of the core applications, functions, tools, libraries, and debuggers into a single ecosystem for comfortable working. It is like a customizable operating system for programming that developers can use to test their software without having to worry about how it might affect others; all of the activity stays within the IDE.
IDO – Initial DEX Offering
An IDO or Initial DEX Offering is a model for crowd fundraising that is an evolved, more sophisticated version of its predecessor ICOs. And IDO leverages a decentralized exchange, or some other platform, to act as a neutral escrow agent on behalf of the projects and investors that holds funds until certain criteria are satisfied by the projects. Widely adopted today, the IDO model is currently the standard for conducting decentralized token offerings for burgeoning crypto/blockchain projects.
IEO – Initial Exchange Offering
An Initial Exchange Offering or IEO for short, is a form of fundraising from the public that leverages a centralized exchange as an intermediary to conduct KYC/AML compliance identity checking and acting as an escrow agent for the funds.
Immutable
Synonymous with permanence, immutability is a property that states once something is created it cannot be changed. To be immutable to be unable to change or be changed. This is one of the core tenets upon which blockchain technology is built and the principle that brings the element of trust into a digital environment.
Impermanent Loss
Impermanent loss is the losses incurred from providing liquidity on a decentralized exchange through the form of an AMM when asset pairing values become skewed. The term itself is counterintuitive because, for the most part, assets will never remain at an equal exchange rate. What it implies is that (imagine ETH is $1,000) if you provided 1 ETH and $1,000 worth of USDC to a pool, (you have claims on at least the $2,000 worth that you are providing) however if the price of ETH double to $2,000 then you are technically at a loss in terms of how much ETH you will pull out. When ETH is at $2,000 you will have to pull out 0.5 ETH and $1,000 worth of USD (the same $2,000 worth that you provided + some fees).
Incentives
A tool for motivating specific action. Incentives are rewards that are given out for behaving in a desirable way or a payment that is distributed for satisfying some kind of criteria. In crypto incentives are mechanism for recruiting users by providing them with some kind of monetary reward.
Incubator
A program that takes very early-stage projects, usually those that don’t have a working product yet, to provide guidance, mentorship, and networking opportunities to help them get off the ground. Incubators have been around for almost as long as consumer technology itself, but has taken on an interesting new experience in the age of cryptocurrency. Distributed teams of people that have never shaken hands are able to tap into the professional resources of other people on basically nothing more than a concept. Some incubators take a percentage ownership stake and set up some kind of agreement (such as a SAFT or a Right of Refusal) to give them a chance to capitalize on their efforts down the line.
Inflation
An economic monetary state when goods and service rise in price and the value of money falls. Inflation can be triggered by a slew of different events taking place, such as war, but the primary driving cause of it is the increase in monetary supply. By having more units of a currency added to circulation, the individual value of each unit dilutes the others and simultaneously causes the price of everything to go up (prices rise because those goods/services remain most stable in their availability to the economy while the growth in money out-paces them).
Inputs
The data, prompt, or information that must be provided in order to set off/trigger action.
Insider Trading
The illegal action of partaking in the trading of securities based on some kind of superior information that is not available equally to all market participants. Insider trading is a paradigm that only really applies to publicly traded companies. If somebody that works at a company has superior information (such as knowing that there is a buyout deal/merger going on, or, they know that the company will post massive earnings that will cause the price of the stock to rise) uses that information to profit, they are wrong for doing so.
Interoperability
Interoperability is the property of a software system being compatible with sharing data and being able to conduct operations between distinct environments. Being able to execute functions agnostic of their originating sources.
IOT – Internet of things
IOT or Internet Of Things is a network of physical objects that are imbued with “smart” functionality to communicate with one another. Essentially any physical product qualifies as a node on an IOT network that has the capacity to either sense data or process some kind of computation. A refrigerator that can track your supply of protein, sends that information to your cell phone, that then communicates with your shopping application, and ultimately auto schedules it on an electronic calendar is an example of an IOT system.
IOU – I Owe You
IOU is an informal short way to write I Owe You. IOU’s are basically promises to repay debts. Within the context of crypto, IOU’s are a type of financial instrument that obligates parties to provide some form of reimbursement in the future. A popular example of this is tokens that are so demanded by the community that some exchanges begin to trade them before the tokens even launch; those exchanges are trading paper IOUs that cannot be redeemed but denote an obligation of that exchange to immediately distribute the proportionate amount of tokens to their users as soon as they receive them from the projects.
IP – Internet Protocol / Intellectual Property
IP has two main definitions as it pertains to crypto:
Meaning 1: Internet Protocol. Found whenever discussing communication in the world wide web and usually in conjunction with TCP/IP. Specifically the IP portion relates to how data is routed and transmitted between different nodes on the internet, as well as, how they are identified. Every machine on the internet has something called an IP address, which is basically a unique identification system for distinguishing computers and where signals are sent from.
Meaning 2: Intellectual Property. IP is most commonly associated with Intellectual Property or a form of intangible designs or concepts that have been registered with authorities and are copyrighted, trademarked, or patented. IP is basically a legal defense mechanism to protect ideas from being stolen.
IPFS – Interplanetary File Storage
IPFS or Interplanetary File Storage is a system of storing and sharing files in a decentralized way. Similar to other decentralized systems IPFS combats censorship by being operated on a geographically distributed and capable of resisting legal enforcement. Many of the world’s leading software service providers have turned to IPFS as a means to protect their users from authorities unfairly shutting down their operations.
IPO – Initial Public Offering
IPOs or Initial Public Offerings are sales of company stocks to the public. Whenever a business has achieved a certain level of scale and needs to raise capital in order to expand their operations they go through a process of transforming from a private company into a public one. After rigorous compliance measures are met and underwriters are found, companies issue stock that will now be owned by the general public.
Isolated margin
Leveraged trading potions that have all of the risk concentrated into singular factions. Isolation of margin preserves a portfolio by avoiding risking excess capital; however as is the case with any type of margin, isolated margin positions always run the potential risk of total position loss.
ISP (Internet service provider)
ISP or Internet Service providers are entities/companies/organizations that provide connectivity solutions to the web. An ISP can be either a for-profit company that charges for access (such as mobile phone operators), non-profits that are looking to provide internet to underserviced portions of the world and connect them with online communities, or they can be a community-run organization that operates as it finds necessary.
ISO – International Organization for Standardization
The ISO is a non-government organization that is tasked with the oversight of global trade by providing frameworks that are applicable equally around the world for quality assurance of product manufacturing and business processes; that comply with their standards and the regulatory climate.
ITO – Initial Token Offering
ITO or Initial Token Offerings are an umbrella term used to describe any kind of public crowdfunding mechanism to raise money for the launch of a token. ITO’s are not as common as the other variations of ICO/IDO and are typically also used to describe funding events that will specifically contribute to the generation of tokens in proportion to the amounts of funds that are raised.
IV – Intrinsic Value
Intrinsic Value is the “fair’ worth of an asset directly associated with its inherent properties. Sometimes also called “true value”, intrinsic value measure how much an object is worth at its most raw state.
Ex: An ounce of pure gold costs $2,000. If a necklace was made from that ounce that has been intricately designed to look like an interwoven thorn, the jeweler/designer spent 100 hours creating it and they bill $100 per hour. Now the necklace must be resold for more than $12,000 in order to be profitable. However, regardless of how much it sells for, the owner of it at any given moment will only ever be able to emergency liquidate it for the cost of its material, the 1 ounce of gold.
IYKYK – If You Know, You Know
Another acronym that is not crypto native, IYKYK stands for If You Know You Know, and it is basically an abrasive form of communication that seeks to engender those with certain knowledge and exclude (or interest) those without it. Sometimes a random post might come out with massive amounts of engagement from more season market participants with the IYKYK tag and have absolutely no meaning to those that are uniformed.
2 Terms
JIT – Just In Time
Just in time is a paradigm where decentralized applications execute certain hidden functions that are not publicly visible when inspected empirically. The most popular JIT’s refer to the provision of liquidity. As the name might have hinted out, Just-in-time Liquidity applies to the provision of tokens only in under the circumstance of it “being just in time”. Whenever decentralized exchanges host liquidity pools there are hard, clear parameters that define how much buy/sell pressure a certain pair has. As DEFI protocols became more complex, they became able to layer their functions with external contracts that are triggered in the event of something happening.
Imagine if token pair XYZ/USDT has $100,000 of liquidity in the pool (50k/50k) and the price is $0.1 per XYZ token. Somebody can look at the pool and understand that if they purchase $50,000 worth of tokens, they will drive the price immensely. However, there can be an external contract that is monitoring the state of the pool and has a trigger that, if XYZ goes to $0.2 then supplies 4x as many tokens into the pool immediately.
JOMO – Joy Of Missing Out
The feeling of avoiding getting sucked into a bad situation. JOMO is the emotional pleasantry that arises whenever a trader or investor was able to (accidentally or purposefully) circumvent a poor decision. Usually, JOMO takes place when a user wanted to take out a position or participate in an investment but ultimately did not, which in turn resulted in them saving money. Not all that glitters is gold, when emotions run high and logic is nowhere to be found poor financial decisions are made; just because it looks or sounds good, doesn’t always mean that it is good. JOMO is the inverse play on words to the related term FOMO. Sometimes the only way to attain JOMO is by ignoring the FOMO.
7 Terms
Keynesian Economics
A school of thought that builds theories around how important the demand side of the economy is to establishing the dynamism of an economy. Here we find the logic that supply cannot always maintain growth alongside demand. It is a cornerstone building block of modern macroeconomic models and expresses that demand is the key driver for the activity and well-being of an economy. It is concepts borrowed from Keynesian Economics that influence government to focus their efforts on growing demand to stabilize factors of supply and inflation.
Keylogger
A software virus that monitors and records the activity of how users input keys into different environments. As the name implies, keyloggers log the action of using the keys on a keyboard. They are basically a form of spyware that steals users’ passwords.
Keys
Strings of data that are used to define ownership in the encryption/decryption processes relating to data. Keys come in two different types, public and private. Public keys are those used to encrypt and receive information (such as cryptocurrency) while private keys are used to decrypt and send information.
Kimchi Premium
The gap in prices for cryptocurrency that occurs between the South Korean markets and the rest of the world. Kimchi Premium derives its name from the nation’s most popular form of food and describes the situations where demand outstrips local supply; in turn, causing higher prices on crypto assets. Basically, it is how much more people the exchanges in South Korea are charging for crypto assets due to a disbalance in supply/demand.
KOLs
Key Opinion Leaders. KOLs are influential figures within the industry that have garnered followings/audiences of people that listen to them and trust their opinions. Due to the pseudonymous nature of crypto, many KOLs are unfortunately hard to distinguish as being authentic, nevertheless, they play an important role in marketing and promoting early-stage projects.
KYC – Know Your Customer
KYC of Know Your Customer is a framework for recording identities that is compliant with international anti-money laundering and counter-terrorism financing policies. KYC is a method of user verification that requires the provision of government-issued identity information. KYC is necessary for registration on exchanges and other financial platforms as a way to mitigate fraud.
KYT – Know Your Transaction
KYT or Know Your Transaction is an adaption of the KYC framework that applies similar principles of establishing the validity of a transaction using pattern recognition and other detection modules to combat fraud based on the flow of funds. It is a method to monitor activity that might raise concerns about criminality based on a criteria that can be triggered by suspicious patterns.
27 Terms
L0 – layer 0
Layer zero is the foundation upon which communication is built, its the traditional networking infrastructure composed of hardware machines and universal logical principles. L0 protocols are used to make different blockchains interoperable by allowing them to send messages between one another. In order for a blockchain to operate there must be equipment that hosts software to interact with circuit boards that are fed binary code in order to configure their transmission, connectivity, and other base functionality. Just like phones require radio frequency waves to actually capture signals and connect to one another, Blockchains need some kind of medium through which they send their messages. For older-generation networks such as Bitcoin, the traditional internet protocol TCP/IP catalyzes this. This has been necessary but sub-optimal as there is a dependency on centralized ISPs (Internet Service Providers). Moreover, blockchains (up until recently) have not been compatible. They have been siloed systems that do not have a standard for communicating with each other. Recent innovations such as IBC (Inter-Blockchain-Communication) provided by the Cosmos network, have begun to slowly disintermediate ISPs by allowing blockchains to send messages between themselves.
L1 – layer 1
Synonymous with architecture, security, decentralization, and ownership; Layer 1 refers to the core tenets of how a distributed ledger is implemented; The base layer of a blockchain that’s primary purpose is found in three functions; data storage, data availability, and consensus. They are the chains upon which applications and other networks build, leveraging the higher security guarantee and sophisticated mathematical primitives of the origination L1. Layer One blockchains include the likes of Bitcoin, Ethereum, Ripple, Cardano, Solana, Cardano, and the such. These are the chains that require the use of cryptocurrency as a method of payment for computation; the reserve assets which translate to the pricing of other assets on top of it. Layer 1s can be thought of as independent digital nations.
L2 – layer 2
An extension of a blockchain that enhances scalability via transaction throughput and lowered costs by trading off some degree of decentralization for operational efficiency. Layer 2’s can be built in a variety of ways including sidechains, rollups, and state channels. The primary purpose of an L2 is to conduct higher frequency transactions within its environment, package them up into blocks, and anchor that activity back down its originating Layer 1.
Large Cap
Large Cap refers to a grade of cryptocurrencies that have surpassed a certain level of marketcap. Typically once a crypto asset is inducted into the Large Cap classification, it becomes considered a relatively safe bet; it inherits the assumption that it is here to stay. The exact measurement as to what a Large Cap can be qualified by will generally depend on opinions; but as a rule of thumb assets above a $1,000,000,000 (1 billion USD) market cap become considered Large Cap. Large Caps have better risk profiles in terms of their ability to protect their prices from spiraling down out of control, but they also have lower return potentials than other grades.
Latency
The amount of time it takes for information to transmit between point A and point B. The delay between when a request is received to when a response is sent back. Something that is high latency is slow because it takes a long amount of time between an input and output, something that is low latency is fast because of how quickly information is transmitted.
LaunchPad
A platform for cryptocurrency startups to present themselves to the public in a formal, structured method. Launchpads include services ranging from the establishment of tokenomics, to incubation, to IDO/crowdfunding and marketing. Launchpads have been a popular vehicle for early-stage projects that are looking for venues that already have audiences with investment interests.
Launder
To conceal the origins of money. Laundering is a form of fraud in the eyes of government organizations and financial authorities because of the impact it has on Taxes. Whenever the origins of funds cannot be established, they cannot be traced, and in turn, the party involved with that origination cannot be taxed. Moreover, laundering is commonly associated with criminal activities such as drug/human traffic, illegal gambling, and so on. The assumption here is that if money is earned fairly, there is no need to obfuscate where it was sourced.
Laundry
Also known as “mixing services”, within the context of crypto Laundry means to use a protocol or platform to clear out the monetary trail currently associated with funds. This is basically the action of laundering money and it can be done through a series of sophisticated cryptographic tools in combination with careful transaction dispersion.
Ledger
A record of activity. In cryptocurrency ledgers are the immutable, public, auditable, transparent logs of transactions that happen on a network. Historically, ledgers were just books used by accountants and businesses to track their financial activity; today these have transformed into digital versions where a database substitutes a physical book.
Leverage
A tool for the amplification of financial gains through the use of debt. To increase the amount/impact of money by utilizing a mixture of credit and collateral. When you leverage something, you are willing to risk total loss in return for an opportunity to enjoy greater returns. Leverage can be a blessing when used with caution and professional knowledge and it can also be an absolute curse that causes ruin. Even the most intelligent and capable experts have been destroyed through inadequate utilization of leverage or unexpected circumstances/freak accidents in value/price fluctuations that occur in markets randomly.
LFG – Lets Fucking Go
Intended as a positive, envigorating war cry, the acronym LFG (Lets Fucking Go) actually stems from a long history before the arrival of cryptocurrency. Lores about its origination vary from college parties to early online chat rooms. There is a pg-13 alternative for strangers on social media platforms which deciphers to Looking for Group. Whenever applying LFG to the crypto-verse, it is almost exclusively within the context of the more radical alternative, Let’s Fucking Go.
Liability
An asset that binds a person to a dept obligation. Liabilities are objects that devalue over time or cause financial burden in the form of contant expenses. They are the opposite of an investment. Anything from a bad loan, expensive clothing, or luxury car leases are liabilities. If an object is always taking money out of your pocket without contributing to the betterment of your life or causes unnecessary difficulty, it is a liability.
Light Node
Network participants that use lightweight client software, making it easier to maintain in terms of memory storage and do not demand excessive expenditures to upkeep. A Light node only stores information that is relevant to its specific purpose and does not participate in the consensus processes. A light node can be an application such as a wallet that tags onto full nodes to access on-chain information.
Lighting Network
A second-layer scaling solution that uses state-channel technology to increase the operational efficiencies of layer-one blockchains. The Lightning network is considered to be the solution to Bitcoin that lowers costs, allows micro-payments, and speeds up transaction time.
Limit Order
A type of market order that determines the exact price point at which a transaction should execute. Limits can be set on two parameters, when to trigger a listing and when to trigger a trade; acting as tools to automate strategies. Applicable to both, buy and sell side activities, limit orders specify what price a user wants to participate at. Limit orders are used to make markets, and do not always get filled. If the price of an asset is currently $1,000 but want to pay $995, I can set a limit buy order at $995. However, if the price then goes to $1,500, my order becomes useless. The same applies to selling. If I own an asset that is trading at $1,000, but I want to sell mine for $1,050, I can set that price as the trigger to sell at $1,049 and auto list at $1,050.
Liquidation
The event when a debt goes unpaid for too long or becomes too burdensome for the lender to continue providing and the agreement enters a termination process of asset appropriation and the selling off of collateral in order to repay the originating creditors. During a liquidation, users have their assets used to back the loans taken from them, sold off into the open market/private bidders in order to recoup liquidity/cash to make lenders whole, and any credit/debt obligations are voided.
Liquidity
Capital that is readily available, cash on hand, money that can be used at any given moment without resistance. Liquidity is the lifeblood of financial markets that allows assets to be sold/traded without friction. Liquidity is measured by the amount of available cash to absorb any trading, the amount of time required in order to conduct a trade, and the spread/amount of slippage incurred during a trade. When something is liquid, it is easy to sell; if something is illiquid, it is difficult to sell. Cash is liquid, it can be used instantaneously for any purpose; Real Estate is Illiquid, it takes a longer period of time to find buyers/sellers and go through the processes of title transfers and inspections. Usually (but not always) lower value objects are more liquid, whereas higher value objects are illiquid {this logic does not pertain to Bitcoin, BTC is an extremely liquid instrument of high value}.
Liquidity Pool
An aggregated amount of liquid financial instruments that is readily available. Liquidity Pools are exactly what their names imply, buckets of cash that are created by pooling together capital from different parties. If there are 10 people, 5 have $10,000 and 5 have $2,000; then if we put our money together, we would have a pool of liquidity work $60,000 {5 x $10,000 + 5 x $2,000}.
Liveness
A property of a network that is used to establish its uptime and availability of nodes. Networks that have good liveness will always be able to conduct communications/send messages between one another; whereas a network with bad liveness properties will constantly experience delays or downtime. Liveness is a requirement for any blockchain system that intends to provide DEFI services or be considered in any way shape or form reliable. It is impossible to build any trust without liveness.
Long
A trade/investment that bets on the direction of price going up. Long is terminology that is borrowed from the traditional financial system and expresses investor expectations that prices will rise. Being long implies having high hopes of asset appreciation. The opposite of short.
Low Cap
Low Cap refers to cryptocurrencies that are valued below a certain market threshold. Low Cap cryptocurrencies are usually high-risk assets that carry the largest potentiality for high return, as well as, being overly saturated by scams. Low Caps can be thought of as “pink-sheet” stocks, assets that are so cheap that it is hard to distinguish qualitative parameters. While there is not universal measure for what qualifies as “low-cap” (it is all relative”) however, as a general rule of thumb, assets that trade below the $10,000,000 mark is what people will refer to.
Lower High
A technical chart pattern that dictates a weakness is price action. Lower highs are visually exhibited by a series of declines in price that continually attempt to rally above prior levels without any success. Movements such as $1 to $0.90, rebound to $0.95 then down again to $0.80, rebound to $0.85 then down again to $0.70; and so on. Here the lower highs would be the cadence of $1.00, $0.95, $0.85.
Lower Low
A technical chart pattern that dictates a weakness is price action. Lower lows are visually exhibited by a series of declines in price that continually break the previous level even after rebounds. Movements such as $1 to $0.90, rebound to $0.95 then down again to $0.80, rebound to $0.85 then down again to $0.70; and so on. Here the lower lows would be the cadence of $0.90, $0.80, $0.70.
LPs – Liquidity Providers
Liquidity Providers are key players in the creation of functional markets; they serve the purpose of providing assets for people to conduct trade through. LPs are closely related to market makers in the sense that without them, there would by no way to facilitate efficient trading between asset buyers and sellers. In crypto, an LP is somebody (individual or organization) that provides funding to both sides (buy and sell) of a marketplace by locking up collateral in equally supplied pairs.
LSD – Liquid Stakng Derivatives
LSDs or Liquid Staking Derivatives are promissory notes used to express claims on ownership of underlying assets that are currently allocated to staking. Whenever a proof-of-stake crypto is put to staking, it effectively becomes nonusable for economic activity anymore. LSD are protocols that track ownership of which assets, in what amounts are staked by which addresses, and in turn mint those addresses tradeable tokens that accrue value in proportion to the yield they are generating. If an LSD is traded, then the new owner inherits the staked position. LSDs expand the usability of staked assets that would otherwise be stale. They allow for creating more exotic forms of exposure by having yield-generating assets be used in other environments. The owner of an LSD token has full claim rights to the underlying asset.
Example: If I stake 10 ETH, I will receive an LSD (such as lstETH {Lido Staked ETH} that would generate 0.01 ETH per day. Then I can go lend that lstETH for an added 0.1% daily return, effectively compounding my returns.
LTDA – Legal Tender Digital Assets
Terminology that is usually only encountered in circles of government organizations, criminal enforcement agencies, and financial firms; LTDA or Legal Tender Digital Assets refers to any kind of digital asset that is recognized by authorities as having the status of legal tender (being acceptable to be used a form of money to exchange value, settle debt, and support commercial activity.
LTV – Loan to Value
LTV is a ratio that measures the balance between a loan and the value of the assets used to collateralize it. Whenever a large loan is taken, the creditor will typically ask the borrower to secure their loan with another object of value that will be seized in the event that the borrower commits fraud or becomes unable to repay the loan. LTV is essentially the health of a loan based on the discrepancy between the money provided and its collateral. If you want to borrow $250,000 from a bank, but have no credit history, they will ask you to provide them with something such as your house, jewelry, or anything that is worth at least the same amount as the loan that you will receive. People do this in order to leverage illiquid assets that they do not wish to sell but have an urgent need (or good plan) for cash.
53 Terms
M1
The measure of all highly-liquid financial instruments within a country’s economy. Specifically talking about the cash or cash equivalents that are circulating; M1 includes currency, demand deposits, balances of checking accounts, and traveler’s checks. Basically, anything that can be used as a medium of exchange for the purpose of conducting payments, instantly, qualifies as an M1 Asset. The M1 data set is published by the Federal Reserve (every Thursday at 4:30 PM EST).
M2
M2 is a measure of a country’s money supply that includes all the highly liquid cash equivalent instruments in the M1 measure, plus short-term savings assets such as savings accounts, mutual funds, money market funds, and similar certificates of deposits. The M2 is published by the Federal Reserve (every Thursday at 4:30 PM EST) and is used as a reliable indicator to gauge the well-being of an economy in terms of the state of its monetary inflation.
M3
A now defunct measure of monetary supply for a country. Disregarded after 2006, not long before the Great Financial Crises, M3 used to be the broadest measure of the state of an economy’s liquidity that included corporate financial agreements, repo agreements, and other larger assets by size that had maturity dates with less than two years. As is the case with other measures of the money supply, M3 used to be published by the Federal Reserve.
M&A – Mergers and Acquisitions
M and A, or Mergers and Acquisitions are exactly what they sound like; agreements to combine companies/projects from two separate entities under a single umbrella. Mergers refer to when two companies come together to form entirely new legal business entities by aggregating the intellectual properties, workforces, and business models. Acquisitions refer to when one company obtains ownership over another, ingesting all of its IP, workforce, and assets.
MA – Moving Average
A technical indicator that takes into account historic data on a rolling basis and smooths out short-term fluctuations to establish a clear linear representation of price movement. Moving averages are one of the most popular indicators that are plotted right on the price charts and are used to signal trend strengths and inflection points. There are multiple different variations of moving averages including simple, exponential, and cumulative; but they all serve the same purpose, and their variance might only express any relevance in shorter time frames. Important to keep in mind that moving averages are intended/better suited for longer-term time frames.
MACD – Moving Average Convergence Divergence
A technical indicator that measures the fluctuations of moving averages between long-term and short-term time frames. As the name implies, the moving averages that measure price trends converge and diverge to express how trends are holding up against themselves. Most commonly found in the form of a 50-day and 200-day measurement, whenever a 50-day moving average dives below the 200-day moving average, that is called a “death cross” and is considered to be a high-fidelity signal of negative macro trend changes where prices will now fall. Whenever the inverse happens, where the 50-day moving average pops above the 200-day moving average, that is called a “golden cross” and is considered to be a high-fidelity positive signal that the state of an asset’s trend is now entering a period of growth.
Mainnet
The phase of a software or distributed system that enter full-fledged operations; the evolution of a project’s phase from testing to real-world production. Entering mainnet phase is a nerve-wracking time for companies because there is no going back; this is taking off the training wheels and staking their product’s reputation live. In crypto specifically, a mainnet is a reference to the primary infrastructure that will host services.
Malware
A general term used to describe computer viruses that infect a hardware device to conduct virtually anything a hacker desires. From stealing sensitive information to locking people out of their devices and extorting them for money if they want their device back. Malware can arise in any shape or form and is usually implanted by malicious actors through scam websites whenever a user attempts to download something. If you see a webpage with a lot of clickable ads, be extremely careful!
Margin Call
A signaling system that warns traders/investors that collateral levels in their portfolios are approaching dangerous levels. The term “margin call” is also used interchangeably with liquidations, so it has the dual meaning of getting liquidated. Whenever a user trades using leverage or margin (credit) they typically collateralize their obligations, if the maneuvers they are participating in begin to threaten the loan originators/creditors, they will get a margin call.
Market-Making
Providing liquidity to both sides of a market’s orderbook simultaneously to create an environment that allows for trading to take place. Market making is a strategy used to attract traders to an instrument by giving them prices to participate at. People who engage in this service are called market makers; they are effectively the entities that create capital efficiencies. Without Market Making free market forces would rule the marketplace and make it difficult (if not impossible) to stabilize prices, which in turn would drive away potential investors.
Master Node
A role that exists within certain crypto consensus models given to the leaders of networks that do not deal with the creation of blocks or verification of transactions; but rather play a more subtle role in the governance process of validating the truth of the network’s state.
MAU – Monthly active users
Simply a measure of how many users engage with a project/product/platform on a monthly rolling basis. MAU is a key indicator to gauge the health of a product’s progression and validate its role in the marketplace. Whenever this metric drops, it means that interest drops and is beginning to slow down or reverse; during time when this metric grows, it indicates that the product has found an inflection point that is attracting more users and proving its value/position in the marketplace. MAU is a fundamentally important element for any software startups that are interested in raising money.
Maxis
Die-hard supporters of a project. Very tribal in nature, maxis express their beliefs that only their chosen project is the correct choice and spew derogatory claims against everything else. Maxi is just a derivative of the term “maximalist”.
MB
The two letter acronym for megabyte, a very common unit for accounting digital memory. Megabytes the storage sizes applicable to nearly any retail use case and is denomoinated as one million bytes or 1,000,000.
mBTC
Milli-Bitcoin, a fractional measurement of a Bitcoin that equals 0.001 BTC or 100,000 satoshis.
MCAP Marketcap
MCap or MarketCap is shorthand for Market Capitalization. Market Capitalization is a measurement of a cryptocurrency’s (or any assets) total economic presence by taking all of the supply units in circulation and multiplying them by the individual price. Market Cap does not provide any information on the fundamental state of a project; it just simply expresses the global financial valuation of an asset based on what price people are willing to buy/sell at. MCAP is typically the leading marker for ranking/organizing assets against each other.
MCR – Minimum Collateralization Ratio
The lowest percentage requirement of asset balance that must be maintained in a portfolio to keep a healthy debt/margin position. MCR’s are actually a regulatory requirement for operating any kind of exchange/brokerage that ultimately protects the stability of the markets and removes the potential of bad loans.
Meme
An idea/concept/belief that is found amusing, entertaining, or otherwise valuable and becomes ingrained as part of digital culture. It is something adopted by communities to express emotions and behaviors through images, videos, comedic rhetorics, and other mediums of content online.
Mempool
Short for memory pool, the mempool is where transactions that have been submitted but have not been processed by nodes yet get queued. All unconfirmed activity gets stored here until network nodes are able to validate them. Mempools exist at the individual level, where every independent node has its own.
MENA – Middle East/North Africa
MENA is the geographic region representing the Middle East and North Africa. Composed of 19 countries, including Egypt, Iran, Israel, Morocco, Qatar, and the such. MENA has historically been very strict with their political and religious regimes that would deny any alternative monetary systems; however, in the case of crypto, these countries have actually been more lax and inviting for its development.
Metcalfe’s Law
A core principle of network theory that states a value of a network is proportionate to the square of the number of users. Metcalfe’s law observes that the quadratic/exponential nature of how networks operate and bases it’s inherent value on the number of connections made possible through its participants.
Example: If there are 5 people with a cell phone, they “value” of the network is 25 given that the 5 participants can call each other in any way (user 1 calls user 2, user 2 calls user 5, user 3 calls user 1, and so on until there are 25 variants of how many different calls can be made).
Merged Mining
A mining technique that allows for multiple cryptocurrencies to be mined at the same time. Merged mining is only possible in scenarios where the networks being mined share the same consensus mechanism. During merged mining, network security and performance remains unaffected even though a single devices share its resources across different demand vectors.
Merkle Tree
Also known as a “hash-tree”, Merkle Trees are data structures that track the identities of transactions, wallets, and any other applications of hashes through a forking/leaf diagram. Fundamentally important to blockchains, Merkle trees are applied to individual blocks, by unraveling all of the transactions within it and compressed the storage requirements of each block. Rather than having every transaction fully stored in a block, only a hash of it that is hashed once again into the Merkle root is required.
Meta
Transcending, self-referential evolution. Meta can be applied to describe new standards of thinking or being as it pertains to a previous state of itself.
Example: Last year everybody in fashion was wearing black leather coats and straw hats with blue ribbons. The “Meta” this year is blue denim jackets with black leather hats and sporty gray sneakers.
Example 2: In a video game, people have been using a fire sword with an ice shield and a lightning ring to fight a boss. After the last patch which changed some parameters, players started to use three different swords instead; making attack damage the new meta.
Metaverse
This is nearly impossible to define properly as different groups of people has their own definitions of it; however, generally speaking, metaverse is a term used to apply to social settings that are mixtures between physical and virtual realities.
MEV – Maximum Extractible Value
MEV is a controversial practice by network nodes to extrapolate and prioritize transactions that provide the greatest financial benefits while disregarding or delaying all others. Nodes will leverage a mixture of morally challenged actions including, sandwiching (slipping in their transactions between other ones), frontrunning (pushing their activity to the top, ahead of others), and re-org attacks (switching out transactions to their liking), among others. Another way to view MEV is a form of subtle, on-chain extortion; whereby users are forced to always overpay what is “fair” just to avoid exclusion.
MFer
Another one of the infamous derogatory terms commonly encountered in the cryptoverse; MFers directly translates to Mother Fuckers. There is not much to try and intellectually dissect here; its used exclusively for name calling. Although, some very tightly knit communities that are playful, emotionally resilient, and take nothing personally us it to refer to each other in a friendly way.
MH/s – megahashes per second
MH/s or Mega Hashes per second is a measurement of a computer/miner’s capabilities to conduct mathematical functions on the order of a million. So 10 mega-hashes per second simply means that a device is doing 10,000,000 hashes every second.
Micro Cap
The category of cryptocurrencies that possess a minuscule market capitalization. Assets in this category are basically glorified gambles. Projects that fall into the Micro-Cap category are typically those that do not have any valid economic purpose or have already failed. If a project is micro-cap from launch then there is a potential discussion to be had as to it being capable of creating massive returns. Micro-caps usually extends to projects that are below the $1,000,000 level.
Micro Transactions
Low-value transactions that usually take happen at high frequencies. Micro-transactions are generally classified in one of two ways; either being so small that it costs more in fees than the value of the sum being transferred (sending $1 for a cost of $10) or being below the $0.01 point, effectively being impossible to track with traditional two-decimal point system interfaces.
Mid Cap
A grade of cryptocurrencies that fall into a specific range of market capitalization that classifies them as being middle-tier (in an economic sense). Mid-Cap cryptos present themselves as the most balanced caliber of assets in terms of return potential and risk management. There is no universal measurement for what qualifies as a mid-cap, but generally speaking, people group assets anywhere between $30/100 million up to $900/$1 billion.
Miner
Nodes on proof-of-work networks that expend computational resources and electrical energy to secure the blockchain and earn block rewards. Historically, miners could be any user with a computer capable of average functionality (CPUs and GPUs); however, the space has evolved tremendously and modern-day miners are sophisticated, purpose-built machines that have ASIC capabilities.
Mining
A computationally intensive process of solving complex mathematical problems (using hardware machinery) to confirm network activity and increase security while competing for the rewards that a blockchain issues. Applicable to POW (proof-of-work) systems, the maths are cryptographic hash puzzles that can theoretically be completed by hand, but would require, literally thousands of hours just to compute a single one; whereas a machine can compute thousands in a matter of minutes.
Mining Pool
A grouping of cryptocurrency miners that aggregated their resources. The main purpose of mining pools is to give smaller participants a chance to compete against industrial-sized mining operations and earn rewards for their contributions. These pools split rewards proportionately to the contributions of each individual miner. A nuance of the mining industry that is worth noting, in a scenario where 5 operators own 99.9% mining power and a 6th operator has 0.1% would mean that individual should technically earn every 1,000th block reward; that not exactly how it works; the raw amount of power between the top 5 operators creates enormous asymmetry because of how exactly blocks are found.
Mining Rig
An organized frame specifically set up to house mining machinery. Mining rigs are just a collection of many GPUs, CPUs, ASICs, or FPGAs that are neatly grouped into a container.
Minnow – same a fish
The exact same thing as a “Fish”; a grade of investor that has a small crypto portfolio. Typically categorized within the 1-10k size, fish constitute the vast majority of market participants and classify and average. Within the hierarchy of crypto holders, there exists a distinguishment based on the size of underwater creatures. Minnow specifically is slightly more uncommon, most people will just say fish, but for some odd reason both have gained some traction in the space.
Minting
The process of creating new tokens. Minting happens whenever a new project is releasing its initial supply, projects will typically bring these tokens into existence on-chain through a process called minting (from the technical side of things, it just deploying a contract). However, not all minting is the same, minting the whole supply upfront at once is usually done by fungible crypto token projects. Minting can also take place in the form of a TGE, when tokens are generated based on the amount of assets sent into a contract. Finally and basically used by all NFT project, is the minting that takes place after a contract has been deployed, and users acquire their tokens through some auction/sale (basically a modified generation event.
MITM (Man-in-the-middle Attack)
A form of cyberattack where a malicious actor injects themselves in the communication chain between a user and an honest server, becoming a silent relayer that passes all traffic through them. When a MITM attack happens, criminals can interject private messages, read them, and even replace them with their own material, creating a vector for phishing scams and social engineering. Usually, a Man-In-The-Middle attack happens whenever people connect their devices to unsecured, public wifi-networks.
MLM – Multi-level marketing
Multi-Level-Marketing is a hierarchical referral-based business model where the profit is generated primarily through network effects of infinite recruitment. Highly contentious due to the egregious amount of scams that utilize this model and the pyramid-like structure of it MLM is generally considered a toxic concept.
MMT – modern monetary theory
Modern Monetary Theory is a school of economic thought rooted in the belief that currency is a public good and that governments can/should print as much money as they so find fit. The logic underpinning MMT is that governments cannot go broke unless they themselves decide to.
Mnemonic
A model of private key/secret seed that is used to secure/backup a crypto wallet in case of password or device loss by using random 12 and 24-word combinations.
Monetary Trilemma
In order to create what is considered to be the “perfect” form or “sound” money, an asset must possess three intrinsic qualities, it must be a unit of account, a medium of exchange, and a store of value. So far in human history, there is yet to have been any form of money that has satisfied these three properties. Every form of money has had some trade off, paper bills do not store value well (inflation is constantly decreasing their buying power), gold does not serve as an ideal medium of exchange (it is heavy, valuable, and hard to fractionalize as needed), and Bitcoin has its own nuances that may have the presence of all three but they are not to the full capacity (long transaction times make it bad for commerce).
Money Markets
Financial instruments that are utilized in short-term credit/debt liquid transfer situations. Money markets are made up of a multitude of individual high-liquidity, low-risk obligations including, bank-to-bank loans, certificates of deposit, interest-bearing bank accounts, and the such.
Mooning
Prices rising extremely fast. Another derivate of astronauts and space travel within the crypto communities used to trigger visceral, visual, and emotional associations with asset prices going up.
MoU – Memorandum of Understanding
An agreement created between two or more parties that formally elaborates an alignment of intentions/expectations between everybody. MOU’s are typically not legally binding agreements, they are used primarily to signal intentions around a desire to collaborate/work together. MOUs are just documents that preempt any definitive negotiations and help structure proposals. Companies can use MOUs during times of Mergers and acquisitions, governments can use MOUs to establish peace treaties, and individuals can use MOUs to build trust with each other.
MPC – Multi-Party computation
Known by both MPC (Multi-Party-Computation) and SMPC (Secure-Multi-Part-Computation), is a cryptographic protocol that splits up the process of computing on a single data point between multiple different parties without revealing what the other party’s information points are. If we need to calculate how much you can earn working for company ABC, then we can split up the formula into 3 different portions and have them independently, individually operated on; ultimately aggregating the solutions only in front of you so that no sensitive information can be extrapolated from it.
MSB – money service business
From Check Cashing, to FX (foreign exchange), to International transfers, to teller machine operators and everything in between; an MSB is a class of business that deals specifically with the transmission and conversion of money. Operating an MSB requires special licensing and receives thorough scrutiny from financial authorities around compliance.
MT. Gox
An important pillar in the history of Bitcoin and the crypto industry; MT. Gox was one of the earliest leading Bitcoin exchanges (2014) that ended up abruptly shutting down, stealing at that time nearly (70%) of all retail users’ Bitcoins. Allegedly misappropriating funds and not being able to honor all of the withdrawal requests that it received, Mt. Gox was the first exchange to brutally tarnish the image of crypto and expressed the problem with trusting centralized intermediaries.
Multi-sig
Shorthand for Multi-signature, multi-sig is a method of securing funds by distributing wallet ownership throughout multiple trusted parties. In a multi-sig, transactions must be authorized by a majority share of key owners, and no single entity can conduct any action without approval.
Mutable
Not permanent; prone to be changed; capable of being silenced, censored, or edited. A property of data that is diametrically opposite of crypto; the antithesis of a decentralized, trusted network.
MV – monetary value
MV is a multi-purposed acronym for a few very tightly connected principles:
Acronym 1: Money Velocity/Velocity of Money; the property that explains the frequency of how many times a single unit (the same bill/token) is utilized for commercial purposes within a given time frame. At a very high level, if I spend $100 at the store; that store will then use $60 to buy more supplies, that supplier will then use $30 to purchase gas for their vehicle; the gas station owner will then use $15 for tipping a waiter; who then goes back to the store I bought from to buy a drink.
Acronym 2: informally used on special threads and nerdy bulletin boards for Monetary value. Basically another way to specify a different type of value that is uniquely attributable to the function or purpose of money. So even though a $1 bill is printed on a piece of paper that has no intrinsic value, it still carries economic buying power because of its Monetary value.
MVP – Minimum Viable Product
MVP or Minimum viable product is the first stage of a product that expresses the absolute least necessary properties to show the potential of what will be possible in the future; basically a glorified prototype. MVPs are unsecured and cannot guarantee consistency or proper function; the main purpose of an MVP is to raise funding on the back of a workable concept.
MVRV ratio
Market Value to Realized Value; a measure of whether an asset is trading a price point that is reasonable based on the percentage relationship between the two different types of value. Market Value is simply the current market capitalization of the asset, and realized value is an estimation of the current state of profitable and unprofitable positions.
17 Terms
Nakamoto Coefficient
A measurement of decentralization. The Nakamoto Coefficient expresses the minimum number of nodes of a network that are required in order to disrupt proper network functionality. The higher the number, the more nodes are needed, the more resilient the system is; the lower the number, the more centralized the system, the easier it is for collusion from small groups to impact the network. The mathematical formula itself is an adaptation of the Gini Index and the Lorenz Curve, which are both used to measure income inequality in traditional economic environments. The calculation is extremely complex, but at a high level, it uses a mixture of six key variables and plots them against the Lorenz Curve; Mining state, Client variance, Developer count, Exchange presence, Node amount, and asset Ownership distribution.
Nakamoto Consensus
An adaptation of Byzantine Fault Tolerant systems used to implement a model for open distributed consensus. Utilized primarily by legacy chains, is a combination of multiple key primitives, including Mining/hashing (POW) and Longest-chain logic.
NASDAQ
One of the most recognized brands on the global stage as a marketplace for trading a wide range of assets and the world’s first electronic exchange. Based in New York, the NASDAQ is among the most popular venues and facilitates the most activity (in terms of volume) of all American exchanges. The name itself is actually an acronym for the “National Association of Securities Dealers Automated Quotations”. Securities, debt, commodities, indexes, forex options, and a multitide of other instruments are listed on the NASDAQ.
NFA – Not Financial Advice
NFA is the acronym for “Not Financial Advice” and a disclaimer that must be used to avoid being scrutinized by government organizations for publicly voicing opinions around subjects that might be interpreted with potentially variable financial implications. NFA has become somewhat of a meme whereby prominent anonymous accounts will use NFA as a countersignal to imply their opinions strongly.
NFC – Near Field Communication
A grade of wireless technology that enables devices to transfer information at close proximity. Through magnetic field induction, electronic devices equipped with NFC technology (special circuitry and magnets) become capable of communicating with each other when closer than 4cm apart. This is basically the type of technology used whenever you are paying with apple pay and have to bring your phone close to the reading device or the way credit cards can tap-to-pay.
NGL – Not Gonna Lie
Not Gonna Lie; NGL is a term that exists far beyond the crypto sphere but is commonly found in conversations online.
NGMI – Not Gonna Make It
The acronym for Not Gonna Make It; NMGI means exactly what it deciphers to. A term/phrase that is used both playfully and seriously to describe situations in which somebody has made terrible decisions that will lead to sure demise. This is a highly cynical phrase that can get misinterpreted and, for the most part, is used too much in extreme situations that are not necessarily true; many psyops botnets will try to emotionally trigger people and make them collapse into investing or trading some worthless asset.
Example: Selling Bitcoin during a bear market is a signal that you are NGMI. Using Bitcoins for gambling online rather than just saving is a tell that somebody is NGMI.
NGU – Number Go Up
NGU stands for Number Go Up. Originating as a meme within the crypto community to describe bullish/positive investor sentiment about the price of an asset going up. However, many intellectuals in the field have extended this into semi-philosophical realms attempting to explain why the price will continue to rise and why even when price does not rise, the NGU; because there are always new blocks being added, new transactions happening, and global awareness is growing.
Nifty
Nifty is a playful, informal way to refer to NFTs. Phonetic crypto slang for NFT; whenever reading the three-letter word and pronouncing it in a lazy/quick way. Also the name of a popular NFT platform owned by the Winklevoss brothers.
NIST – National Institute for Standards and Technology
The NIST is a government agency related to the Department of Commerce that handles the oversight of innovation and industrial competitiveness. They develop the legal frameworks for standardizing operations within industries that (they claim) make it a more equal/fair environment for other participants. Additionally, a faction of the NIST provides a cybersecurity framework to help companies manage and understand their data/network risks.
NFT – Non-Fungible Token
NFTs or Non-fungible Tokens are a class of digital assets that have the special property of uniqueness. Here the most important element to understand is the first two portions of the term, non-fungible means non-interchangeable; so NFTs are generally considered to be assets that are all different from one another and therefore can exist from the same deployment but have no uniform measurement of their values.
Example: The most intuitive explanation of an NFT that can be understood by just some deeper thinking is two houses. Two houses can have the same exact layouts, be built from the same materials, and even exist on the same block; however, due to how it is maintained, or the skill of the salespeople, they can sell for totally different prices; even in the case of something as small as the grass being trimmed and windows being polish.
No-coiner
Exactly what the name implies, a no-coiner is a person that has no cryptoassets. Usually used in a slightly derogatory manner to polarize positions of people on the outside of the industry.
Node
A device that is involved in the functions of a network. Nodes can represent any machine or point of contact where data is processed, collected, or stored. As it pertains to crypto, Nodes can be any kind of hardware, from a mobile phone with a wallet application to a computer that actually contributes to the network’s consensus process. Nodes have different roles within networks based upon arbitrary, agreed-upon parameters giving them different degrees of influence; some nodes can delegate very specific functions such as ordering transactions and packaging blocks, while other nodes on the network would handle verification processes, and yet another would then act as a final gatekeeper validating the activities of the other node types.
Nonce
A term that means “Number Only Used Once”. Nonces play a key role in blockchain networks by providing a non-reputable unique authenticator/identifier for each independent block.
NSA – National Security Agency
The National Security Agency is a unit/branch of Intelligence for the US department of defense. Similar to the CIA and the FBI, the NSA is considered to be the highest ranking unit of intelligence operations due to its massive budget (which is often hidden from the public under the guise of being “classified”) and broad range of capabilities; the NSA provides policymakers and regulators with attestations on the state of foreign affaires. Additionally they are deeply involved in monitoring online activity with their “Advanced” cyber-security products. Many crypto maxis have a negative outlook on the NSA’s involvement in tracking activity because it is a violation of privacy.
NVM Ratio
A measurement of the percentage relationship between a Network’s Value and Metcalf’s Law. The purpose of the NVM ratio is to act as a model that attempt to establish the “Fair Value” of an asset based on its total marketcap when compared against the squared value of the number of users.
Example: Bitcoin is worth $500 Billion USD ($500,000,000,000) there are 1 Million (1,000,000) holders/users of BTC. NVM would = 500,000,000,000 / (1,000,000 x 1,000,000) would transform to 5/10 = 0.5.
NVT ratio
Network Value to transactions; a model of evaluating a cryptocurrency based on its network’s total market capitalization against the 24-hour transaction volume. Similar to a company’s P/E (price to earnings) ratio, the NVT helps determine the state of the asset in terms of being over or under-valued. More suited to larger time frames, a single NVT reading cannot be considered actionable, but using an aggregated reading on a rolling time frame can provide valuable insight. There is no objective measure as to what kind of ratio is considered to be healthy or not, this is an indicator that is heavily based on the context of other economic circumstances.
19 Terms
OCC – Office of the Comptroller of the Currency
A branch of the United States Treasury department that operates independently from the government in regulating major financial entities including national banks, federal savings associations, other federal branches, and even foreign banks. Their objective is to provide oversight and ensure compliance, as well as, authorize the instantiations of new banks; essentially the OCC is the agency that sets the rules around the banking industry.
OCO (once-cancels-the-other)
A type of order used by traders and investors that utilizes a form of logic which specifies if a certain event is triggered, such as a buy order executes, then the sell order would be canceled. OCOs are usually implemented through a combination of limit order and stop orders applied to both sides of a market (buy/sell).
OFAC – Office of Foreign Asset Control
A division of the United States Treasury Department that deals with intelligence and enforcement efforts around trade agreements relating to international affairs. OFAC is the entity that issues sanctions against countries for reasons of terrorism or other human/commercial violations in pursuit of upholding the standards of National Security.
Off-Chain
A reference to data that is not stored, processed, or observed by a blockchain. At a very high level, crypto transactions can take place in one of two place, either directly on the network or through some ancillary solution outside of it. Off-chain activity can mean transactions that are conducted in person-to-person settings in exchange for cash (in which case the blockchain would only register a single send), through an intermediary such as a centralized exchange, or even another network.
OHLC
Deciphering to Open High Low Close, OHLC is a type of charting method similar to candles, but slightly more generic. Better suited for basic/macro picture evaluations, OHLC charts do not provide the granularity or distinct pattern expressiveness that candlesticks do.
On-Chain
Reference to transactions that happen with the recordable ecosystem of a blockchain; directly on the network itself. On-Chain activity is considered to be the highest form of trust-minimized decentralization in terms of crypto because of the audibility and immutability of the tech itself.
Open
The technical market used for trading and chart analysis that specifies the price point at which a given time frame begins. Open’s are generally a neutral data point that is simply effective in providing a reference point for the direction of price action within its time frame.
Example: Every day the market starts recording that day’s activity at 8:00 am UTC; that means the daily/24-hour candle will start to be measured at 8:00am and complete at 8:00am the following day, which will automatically market the start of the next day. This concept is granulated into any time frame; if in a day there will be six (6) four-hour candles, then the second candle that starts at 12:00pm UTC will measure the actions until the start of the next candle at 4:00pm UTC, and so on.
Open Interest
The total outstanding amount of dollars that are currently circulating in a derivate market. Open interest measures the total aggregate amount of money, on both sides (long and short), that is circulating around a market to gauge the general financial sentiment around it.
Open Source
Open Source refers to a code license (or lack of it) that allows the general public to utilize software at their discretion. If code is provided open-source, everybody has equal access to it, it can be inspected at any time, and people have full personal and commercial rights to it. Considered to be the holy grail of technology due to the massive potential of a flywheel effect in adoption, Open source has become a highly regarded standard for crypto projects that claim to be decentralized.
Option
Options are a class of financial instruments that have different use cases depending on their application. Typically a derivate of another product, there are many different variations of options such as calls, covered calls, binary options and perhaps the most popular which are know as futures and those give its owner the right (but not obligation) to purchase an asset at an agree upon price at a later point in time. The important factor about options is that they do not give direct exposure to the asset and have become the tool of choice for many active traders.
Oracle
A trusted, source neutral provider of data feeds and connectivity between different systems. Specifically in the context of blockchains, an oracle is a node on a network that exists outside of interoperability bottlenecks and can seamlessly transfer information without conflicts of interest. Oracles are proving to be one of the most important and valuable components for the construction of a full digital economy due to their unique positioning and important functions.
Order Book
A list of buy and sell orders currently on the market for a given asset. Orderbooks are where traders submit their desired trades and help visualize the state of demand for an asset from both sides of market participants. An orderbook will provide the prices at which people want to trade as well as the sizes of their orders; important to know that an orderbook only shows limit order types. Generally, orderbooks are not a very reliable indicator due to the fact that they are constantly fluctuating and are filled with market-maker order that cannot be distinguished from regular order, skewing the true perceptions of a markets demands.
Orphaned Block
Sometimes when a blockchain network is producing blocks through a proof-of-work process, multiple miners can find the next block at the same time; but due to the fact that the consensus mechanism is hard coded to only accept one of the block and depending on factors of communication between nodes and the arrival of the next block, the extra blocks are considered valid, but they are discarded from the chain itself; floating in cyberspace for eternity.
OS – operating system
Software that communicates directly with hardware and applications; sometimes closely related to middleware or firmware, an operating system manages resources and provides the layout of an interface. The term OS itself has been abstracted out to refer to many similar tools such as aggregators and web3 wallets that effective act as an operating system between software systems.
OTC – over the counter
OTC or Over the Counter has two general meaning depending on the context:
Meaning 1: is a type of dealmaking that involves naked large-sized trades off of venues that record the activity. OTC deals are conducted in order to avoid having the public scrutinize the activity and helps preserve privacy. In order for an OTC deal to take place, there must be orders that are too large to be absorbed by markets and might cause extreme price collapses resulting in the person selling not being able to capture enough of the asset’s present value.
Meaning 2: OTC securities refers to a grade of assets that are not qualified to be listed on public exchanges and usually trade on smaller or private venues (such as brokerages).
Output
The response that is produced based on some kind of demand. Output is a very broad general term that applies equally to computer science, agriculture, mathematics, and even human behavior. Outputs are the results created in relationship to their inputs.
Example 1: A mathematic formula is [X+3-1=?] the result is entirely based on what X is; so if we use 5 as the input for this formula it will give us the output of [5+3-1=7].
Example 2: Two people are speaking; an interviewer and a celebrity. To have the conversation flow, the interviewer provides questions as inputs to prompt an output from the celebrity. If the interviewer asks what is your favorite color and why; the output is Emerald green because of the way it illuminates in the sun reminds me of a glowing supernatural force.
Over Collateralization
A model for extending credit based on the borrower providing assets of greater value than the loan. Over Collateralization is utilized in scenarios where there is a high chance of default, low levels of trust, or uncertainty around the type of collateral that is used. Very common in the crypto industry for cases such as minting stablecoins and taking out loans in DEFI environments, over Collateralization provides and emergency cushion. However, this model carries some sub-optimal externalities by turning large pools of value into stale, escrowed assets that are not productive.
Overbought
The state of a market or asset that has experience extreme levels of overly positive price action for a prolonged period of time and is due for a pull-back or correction. This condition is usually derived from a reading on the RSI (relative strength index) when it was setting lower levels, usually below the “30” mark on longer/larger time frames.
Oversold
The market condition when an asset has been experiencing excessive amount of selling for a prolonged period of time and is due for a bounce or correction. The oversold reading is established though the use of the RSI (relative strength index) when it has been setting higher levels above the “80: mark on longer/larger time frames.
34 Terms
PB – Petabyte
A unit for the measurement of memory storage used to express 1,000,000,000,000,000 bytes. The number represents an enterprise, government or industrial-sized use case that is numerically referred to as “quadrillion” with 15 zeros following the placement. Other ways to present this number are either 1,000 trillion or 1,000,000 million.
PNL – Profit and Loss
PNL (or P&L) stands for Profit and Loss. It is a statement that records the net outcome of trading activity over a set time frame. Profit and loss is very general and can be applied to any kind of market transactions; from trading activity to regular business operations; PNL is simply the gross profits (or losses) that are generated.
P2E – play to earn
P2E or Play-to-earn is a model of gamification used to attract users on the premise that they are able to earn and extrapolate value from the time/effort they spend playing a game. P2E was first conceptualized in 2012 by legacy companies trying to monetize their experiences and rose to popularity with the arrival of Cryptokitties and Axie Infinity.
P2P – person to person
A model of transactions that happens directly between two people without the involvement of third parties. P2P models are the foundation of open, fair transactions and are considered to be the pinnacle of privacy-preserving activity.
Pair
A set of assets that have a market created to facilitate trade between them. In the context of crypto, if there is no pair between assets, then there is no marketplace to gauge a fair value of an asset from; it is the presence of a pair that provides pricing and volume parameters. Pairs are the foundation of establishing markets and can theoretically be created from any combination of assets; such as BTC/USD, BTC/ETH, ETH/USD and so on.
Paper Trading
Testing out trading/investing formulas, algorithms, or strategies by utilizing dummy accounts that do not have real value. Paper trading is useful for beginner that wish to play around and get a feel for the process and have proven effective for learning how to understand the quality of a through process without having to risk real money.
Paper Wallet
A cheap, affordable alternative to having a crypto wallet that has all of the information printed on it for ease of use and access. Paper wallets have a genuine application for any reason but are primarily utilizes for novelty, branding, and distribution purposes. Due to the fact that Paper Wallets are disconnected from the internet, they classify as a form of cold wallet with potentially stronger security guarantees than the vastor majority of regular wallets.
Parabolic
Rising or falling in prices at an exponentially fast rate within an extremely short time frame. Parabolic price action usually happens after a prolonged period of divergence between price and value, when price has been suppressed below an assets true/real value and results in an effect sometimes know as the underwater volleyball. Generally assets that make parabolic movements categorize as pump and dump scams or those of extreme value; making this marker very difficult to interpret and serves as a poor indicator for driving the decision making process.
Partition
A split in a network due to a logical/technical failure. Whenever a partition happens, the majority of the network continues to operate without ceasing under the assumption that those nodes which can no longer be detected/reached have gone offline. Partitions can be contentious a difficult to resolve in events where the majority gets confused, and a blockchain then creates a fork where two chains start to grow; whenever the partition is fixed, and the network reunites, one of the chains must now be truncated (removed/cut away).
Peg/Pegging
Pegging is the creation of value-links between assets; to create a bond that represents symmetry in identity, that must reflect itself in value. Whenever a stablecoin is created, its value is pegged to the underlying currency that it is representing. Whenever a Bitcoin is locked into a wrapping protocol to be used on another network, the value of that wrapped token is pegged to the value of Bitcoin.
Pension Fund
A fund that is designed to accrue value over long time frames to provide pension payments for workers after their retire. Systems that pool assets from investment profits, employer contributions, and other avenues to help secure a person’s financial livelihood after they leave the workforce.
Permissioned
Requiring authorization. A Permissioned system is one that is closed and controlled by some central party/parties that invites friction for participation and doesn’t not allow for fluid/easy access. The antithesis to fair, decentralized maximalist crypto.
Permissionless
Not requiring any special authorization in order to be utilized or engaged. Permissionlessness is a defining attribute of any network that constitutes whether or not it is truly fair, open, or decentralized. The opposite of Permissioned.
Phishing
A form of cyber attack where hackers create mirror replicas of distinguished, reputable websites and boobytrap them with password-stealing software. Usually, a phishing attack involves some kind of social engineering that lures users with fake links to their dummy websites to attempt and log in (at which point they steal the info). In crypto, phishing attacks use the same concept, only they hijack the Web3 wallets to steal all of the digital assets within them by having users click on misleading “confirm/sign” transactions.
Pinging
Sending out signals between nodes in order to verify their liveliness. Whenever a ping is sent it checks what other nodes are online, if a signal is sent out and no answer is received back then that node is considered offline.
Plaintext
Simple, unencrypted text. The sentences and letters you read on your screen and the information you send to your friends in a text; just basic words.
Pleb
Shorthand for “plebian” which means regular, average, or common person. The term is generally neutral, however, in crypto circles it carries a slightly demeaning connotation. Calling somebody else a pleb is a rather harsh, indirect way to say that there is nothing special about them.
PND – pump & dump
A scheme used to trick users into believing an asset is becoming valuable by manipulating the price with massive short term appreciation and immediately reverting back to or below the price from where it started, once people have bought some. Pump and dumps are an illegal method of stealing money by subverting user perception through technical/financial chicanery. A pump and dump can be easily detected on a chart (after it has happened) by the visual representation of a sharp, thin mountain that was never able to garner any significant attention or activity outside of that single event.
PoA – proof of authority
A model for achieving consensus in distributed systems that utilizes reputation as a defining factor for operators. PoA is a permissioned, censorable, centralized model that is utilized in private or consortium blockchains due to its extremely high level of operational efficiency and lack of accountability to the public.
PoB – Proof of burn
A pseudo-economic consensus model that utilizes supply policy measure of deflation to establish agreement and define a node hierarchy. Created as an attempt to combat the energy demands of POW networks, the POB system works by having accounts send tokens to a void address (burn them) in order to gain prominence within that ecosystem. The most an account burns, the higher their chance of participating in the creation of the next block. This model is not common and does not exist in any top-tier projects; many have discarded or created modified versions of it.
PoH – proof of history
A relatively new model for consensus that is used for organizing and processing blocks/transactions based on a variable involving a clock (sequencing them in time order). Doing so allows for possibly one of the highest level of throughputs for a blockchain due to the ability to submit activity and not have to wait for it to finalize; allowing a pseudo-optimistic assumption that even if a transaction is not processed right now, it will be no matter what with a certain time frame.
Ponzi
A scheme where fraud is committed by collecting money from new investors in order to pay off old investors. The owner of a Ponzi collects a percentage fee for providing some service that promises returns meanwhile simply just having assets lay there to return to early investors. Imagine layers of investors where the money from any newcomer is given out to earlier participants. Somewhat similar to a MLM, Ponzies are unsustainable pyramids that ultimately result in financial ruin.
PoR – proof of reserves
PoR or Proof of Reserves is a model to audit the treasuries of a company or project. Mostly attributable to issuers of stablecoins, centralized exchanged, and other entities that must hold assets on their balance sheets off-chain in order to issue them on-chain. Used to manage risk and authenticate that the public statements and circulating supplies of projects are aligned with their holdings.
PoS – proof of stake
A model of decentralized consensus that involves network nodes having to stake valuable digital assets in order to become operators. Proof-of-Stake is the most popular mechanism when it comes to the designs of new generation blockchain due to its energy efficiency; rather than having to expand network resources such as electrical energy through wasteful competition, nodes act more cooperatively with one another awaiting their selection to produce blocks by a random function for leader inclusion or something similar. Staking, outside of crypto, means to put to risk, applying this principle to crypto, users must put something of value at risk. Although incentive mechanisms have changed radically and now do not have punishments, most of the reputable networks (such as Ethereum) utilize penalties to align the behavior of staking nodes.
PoW – proof of work
A mechanism for achieving consensus in decentralized, open, permissionless blockchain environments that uses a competitive model of transforming computational resources and electrical energy into solutions for mathematical problem of astronomical complexity; computers that arrive at a solution the fastest become the leaders that create the next block. Popularized through its application in the Bitcoin Network, the concept underpinning POW actually stems back to the evolution of email; to combat spam a function called hashing was required. Hashing is an intensive process that carries a non-zero cost; that cost is then transferred to the sender and helps deter sybil attacks. Proof-of-Work is by and far considered to be the most natural realization of a human-like fair form of decentralization.
Preimage Attack
A hack or subversion of a hashing algorithm by being able to derive the input. A preimage attack is only effective in outdated systems and are conducted by having a computed brute force every possible input and map them to outputs; it only affects the hashing mechanism; which in the context of blockchains is everything, they can derive the private/public key pairs, the transaction routes, and front-run every miner.
Pre-mine
To create and distribute a portion of tokens before the official release of the project. Pre-mines are used to bootstrap the circulating supplies or allocate the assets to early investors and team members. Generally this practice is looked down upon as it signals some form of internal accounting schemes; however prominent projects have used this historically and are still dominant forces today (example here being Ripple {XRP}).
Pre-sale
A presale is a very early stage of fundraising where tokens are offered to investors at an extreme discount, before being listed on exchanges. Pre-sales typically have pro-longed vesting schedules and carry the highest risk given that during pre-sales the vast majority of projects do not have any tangible products to showcase.
Price feed
The stream of data that established correct prices/valuations for assets. Price feeds are taken for granted by users but underneath the hood are extremely sensitive and complex systems that are usually abstracted through an API. Price feeds are a common vector of manipulation, the software the transmits the data can be tricked into utilizing false sources, the data itself can be manipulated for a very short time just to skew parameters, and these are intuitive, easy to understand examples; sophisticated market actors have attempted to pull of wild scheme of distortion around price feeds for the sake of profit.
Private Key
A secret string of alphanumeric character that must be kept protected at all costs. Private keys are the colloquial passwords for digital wallet addresses. These are the digital objects that are referred to the popular saying “Not Your Keys, Not Your Coins”; he who holds the private keys actually owns the digital assets which they are attributed to. Paired with Public Keys.
Pseudonymous
Unknown, false, hidden identity. A pseudonym is an alter-ego that is used to preserve privacy. When on twitter or other social media platforms, you might notice that there are many accounts that carry ridiculous names but act “intelligently”; these belong to individuals who do not wish to reveal themselves but allow them to express their thoughts without being publicly shamed.
Public Key
Almost like a house address where you can receive your physical mail to, a public key is the string of letters and numbers that can be made publicly and shared with others in order to receive crypto. These are like identifiers for wallets that can be inspected on-chain to track activity but do not have control over the assets which they hold.
Pump
An informal way to express an increase in price. Usually, Pump is used to refer to abnormal movements that are faster or larger than prior movements. While generally considered a positive thing, pumps must be carefully navigated because they are typically short lived and followed by dumps or price corrections.
Put Option
A financial instrument that allows (but does not obligate) its owner the right to sell an asset (or bet on the direction of its pricing falling) at a future date. Put options are used by sophisticated portfolio managers to offset risks by using put options as a form of insurance in case the spot assets they hold move in an unfavorable direction. Used by people who are bearish or negatively positioned towards an asset, put options increase in value as the price of an asset falls.
7 Terms
QE – Quantitative Easing
Quantitative Easing is a controversial monetary policy whereby the central bank prints money in order to buy government and business obligations (debt and stocks) in order to inject capital into the economy and stimulate activity. Many economists look down upon this practice because of the artificial impact and the indirect side-effect of the bank now becoming a part owner of public companies. QE is among the newer generation of policies that arose out of the 2008 global financial crises; thus its long-term impact has yet to be properly studied.
QoQ – Quarter on Quarter
A way to conduct performance measurements by segmenting them according to a three month time block. Given that a year consists of 12 months, and a quarter is ¼ of something; that translates to three months. So, whenever an analysis is conducted on a QoQ basis it simply means that the model is using ~90 day sequences.
QR Code
An acronym for quick-response code, QR’s are barcodes created by using a 2-dimensional matrix of pixels that are designed to be easily read by scanners such as phone cameras. They are basically methods of tagging things for machine readability purposes.
Quant
Short for quantitative. A Quant is a person that is considered to be extremely intelligent in the realm of mathematics, finance, and technology. Quants are tasked with creating sophisticated trading strategies using statistical data and conducting acute analysis of markets. Considered to be one of the most coveted jobs within the investment industry for its high salary, Quants are a valuable asset to any organization that deals with investing/trading.
Quantum Computing
An advancement in computation that supersedes current binary computing by orders of magnitude. The essence of quantum computing is based on the use of subatomic particles to store state and process information; theoretically the performance capabilities of these computers should be able to solve the greatest computational problem that mankind currently comprehends to be the simulation of nature. As the case with other technological breakthroughs, fearmongers have been prying on the imaginations of the crypto communities and scaring them with speeches about the destruction of current cryptographic systems which would render bitcoin and effectively all other digital assets vulnerable to being broken.
Quantum Resistance
The ability of a system to resist being broken by quantum computing. Applicable to a school of design principles within cryptography specifically dedicated to creating algorithms capable of circumventing being broken by quantum technologies.
Quorum
The minimal threshold of participants required in order to validate/authenticate the state of something. Within blockchain systems quorums refer to the amount of nodes needed in order to verify the next block of transactions. Also, quorum is equally applicable to DAO governance rule making and voting; in the event that a proposal is present to a community, there will usually be a threshold of vote in favor/against it, in order for the proposal to pass/be rejected.
30 Terms
Rage Quit
To get overly emotional and give up on something due to excessive anger and an inability to deal with it. Rage quitting is a term usually applied to gamers in first person shooter, but has been extended to the crypto industry towards events such as debate when people cannot handle the conversation and abruptly leave chatrooms.
RAM – Random Access Memory
RAM or random access memory is a pary of a computer hardware system that is dedicated to using information that is only needed for short term applications. The data stored in RAM is never saved, it is only temporarily stored while the device is turned on. As soon a computer restarts or turns off, the RAM clears itself for the next session.
Ransomware
A computer virus that locks users of out their devices and demands payment (usually in the form of a cryptocurrency) for the owners to regain access. Hackers that use this kind of malware infect the physical machines with code that denies access and threatens to expose sensitive information or destroy all of it unless money is given to them. A passively violent form of digital extortion.
Re-org
Short for re-organize, a reorg is whenever the sequence of blocks in a blockchain are changed because of conflicts between validators. Reorgs happen in one of two events, either a single version of a chain has been growing and suddenly something is detected in the history of it or a chain splits temporarily without the nodes all being aware of it, two versions extend out and then once they meet again those two chains must be synthesizes; resulting in some blocks being removed and others merged.
Rebalancing
Adjusting the proportions of assets in a portfolio to achieve a specific objective that is desired by the owner/user. Rebalancing is common practice for index funds that attribute certain weights to assets based on a combination of risk tolerance, adherence to regulatory demands (such as ESG) and other arbitrary factors.
Example: You have a portfolio worth $10,000 that is built with 50% BTC, 25% SOL, 10% ETH, and 15% AVAX. If SOL doubles in price, but all others stay the same, then your portfolio would be worth $12,500 and have a distribution of 40% BTC, 40%SOL, 8% ETH, and 12% AVAX. If you choose to rebalance it, you would take the $2,500 profits of SOL and convert them proportionately into the other crypto’s to return back to your original 50/25/10/15 portfolio.
Rebase
To adjust the supply side of an asset to balance out the demand of it. Rebasing is an elastic economic model used to try to find price stability through an alternative means. Effectively if a system such as a stablecoin, has an objective asset price of $1 and a circulating supply of 1,000,000 tokens then the network is worth $1,000,000. Suddenly an influx of demand drives the token price to $2; after the network observes this, it will mint 1,000,000 new tokens to dilute that value of each unit and arrive back at the $1; only now the network is worth $2,000,000. The same applies for the inverse; now if the demand leaves and price falls to $0.50; once the network observes this, it will contract the supply be removing 1,000,000 tokens from circulation; once again stabilizing the asset’s value at $1 and the network back at $1,000,000.
Recursion
Repetition through self-referencing. A logical look with a feedback mechanism that addresses its own logic. A very high level of recursion can be understood when looking at the concept of demand and network effects. The more something is demanded, the more people want to demand it. So when a crypto has 600 holders and it worth $0.01, the demand is low; as the holder count doubles and the price goes up to $0.02, more people begin to want it. If it took 1 year to double that holder count and price, the next double will come in half the time, 2,400 holders at a price of $0.04; this creates a flywheel with the next double taking place in only 3 months. The increased cadence of demand and the speed with which it amplifies accelerates as its adoption goes up; meanwhile, fundamentally, nothing is changing.
Redundancy
In the context of computer science, redundancy is a network property that establishes multiple channels of communication to increase the guarantee of messages being delivered. When a system has low-redundancy that means in the case of a disruption or failure that system will be unable to deliver its message; when a system is high in redundancy that means it is more resilient and capable of operating even in the event of breakdowns.
Reentrancy attack
Whenever a smart contract has a vulnerability in the structure of code that allows certain functions to be called by unauthorized external parties that are able to execute code repetitively without allowing the code to complete its processes due to an internal “fallback” mechanism. So if a malicious address starts to query a withdrawal, the contract will see that the address has some balance registered with it and send the address its requested money; however, as that money is send, the internal logic of it never updates, because the attacker redirect funds and the internal contract balance is still registering something for the attackers address
ReFI – Regenerative Finance
A new generation of decentralized finances that is built on the premise of good ecological good as much as it does financial. REFI targets audiences that are conscientious of sustainability of nature. Effectively, REFI concepts draw their valuations from the impacts/benefits/contributions of their systems on the external natural environment.
RegTech – regulatory technology
Shorthand for regulatory technology and also known by its alternative name “supervisory technology”, RegTech refers to the type of applications that deal with compliance and monitoring. Usually embedded directly into the core logic of products that deal with highly regulated industries including healthcare, finance, energy and the such. Ultimately the presence of RegTech totally negates any possible privacy.
Rehypothecation
As it pertains to finance, rehypothecation is the practice of re-attributing value from the same assets for alternative purposes; effectively the reuse of assets for multiple, unspecified, applications that take place ad hoc. Seen in the accounting charades that banks and other financial institutions do, whenever customers deposit money into a bank, the bank must technically keep those assets in house in order give people the option to withdraw them at any given moment and exist on their balance sheet as “customer deposits/custodied assets”. However, through having customers sign agreements that allow for rehypotheciation, banks will take customer deposits and repurpose them for lending. This is legal, so long as customers agree to it; and many agree for benefits such as lower borrowing costs or higher saving yields.
REKT
Slang that plays on the phonetics (sound) of the word “wrecked” and is used to refer to whenever somebody makes a bad financial decision that results in large losses. Originating as far back as 2013, REKT first become use in the crypto industry after Bitcoins first sizeable collapse.
Remittance
Payments that are made across borders. Technically, the term can be used to refer to any form of payment ranging from invoice to a transfer; however, it has evolved to be primarily associated with the sending of money from foreign workers back to their origin countries to support their families.
Replay Attack
A replay attack is what happens whenever a hacker intercepts information and just saves it for re-use later on without modifying it. The attack itself gets its name from the nature of what takes place; data is replayed in order to instantiate a certain output. The best example of a replay attack is when a malicious actor captures some kind of data that was transmitted encrypted and cannot decrypt the data, so he would just store it and be able to use it to gain access to a website later without having to know the sensitive information itself (basically he would be able to sign into your account without knowing your login details).
Reserve Asset/Currency
A reserve assets are the backbone for settlements in global economic activity. A reserve asset is typically one in which other good/services are priced and is necessary for conducting inter-governmental trade. To qualify as a reserve asset something but be globally accepted (by businesses and individuals), have a regulatory acknowledgement, and (ideally) be easily transferable. This is the archetype asset that Bitcoin is hoped/anticipated to become.
Resistance – level of high interest/difficulty for the price of asset
A price level with a large amount of interest around it that marks the zone at which an asset will face difficulty in breaking above. Used primarily as a technical indicator to understand potential fluctuations in price based on historical markers where price has previously gone multiple times. Whenever an asset price falls areas of resistance are identified those to be with the most intersections of the price or where the largest accumulations of sell walls exist.
REST API
An application programming interface that operates under the (REST) representational state transfer architecture. The REST design principle offloads computation to the sever and keeps all functions minimally intensive for the clients. These designs are cacheable (meaning that they can be stored in sort term memory for ease of use) and stateless (meaning that no sensitive information is available and no information is permanent, each request must be updated the most recent possible version and specify its request exactly).
Retargeting – algo for difficulty adjustment
Algorithm for adjusting the mining difficulty. Applicable to proof of work networks such as Bitcoin, retargeting is a measure to balance out the rate at which mining nodes are able to solve blocks; whenever the hashrate grows too large that the block-time falls below the target 10 minutes, the retargeting algorithm will increase difficulty. Whenever hashrate falls too much that the block time target is longer than 10 minutes, retargeting will reduce difficulty.
Reverse Indicator
Market signals that indicate the opposite of what they claim; inverse logic. A Reverse indicator is typically something that is counter-intuitive and goes against mass/herd mentality sources; most commonly attributed to people who are notorious for making incorrect predictions that are usually found in mainstream media. A prime example being Jim Cramer. Everytime this man has said that it is time to sell something because it is bad and dangerous, prices go up; whenever he says something is awesome and worth buying, prices go down. Although, a reverse indicator could be any arbitrary data point that can be extrapolated to abstract truths, that is best to be defined by each individual on their own.
RFID – Radio Frequency Identification
Usually found in the context of a “chip” RFID technologies are a type of wireless communication that uses electromagnetic signals to decrypt machine readable data. Things that require higher distance ranges of approximately 30 feet such as magnetic house keys, toll booths, and even animal collars with tracking capabilities.
Ring Signature
A mechanism to enhance privacy by attributing random groups of identities to a transaction signature rather than a single one. In a Ring Signature Scheme ever transaction, when inspected, will be associated with a group of people (randomly chosen with no identifies or links between them) increasing the difficulty in identifying a true source of transaction origination many times.
RNG – Random Number Generator
Random Number Generators are systems that use some form of entropy to create digital randomness. Since randomness is a mathematical phenomenon that, by the logical nature of its own definition, cannot be forced, RNGs use some combination of hardware and software elements to attempt and re-create true randomness in cyberspace. These mechanisms play an important role in many different cryptocurrency applications ranging from the creation of wallets/addresses, online casinos, and other things that require gamification elements.
ROI – Return on Investment
ROI, or Return on Investment, is a simple measure of how an investment or any general financial decision performed. The difference between the input of money and the result it produces. If you want to get fancy with it, it is a hard mathematical measurement of the degree of reward stemming from an investment/financial decision.
Rollback
Similar to a reorg, a rollback is whenever a blockchain must have its activity reversed. Rollbacks can only happen whenever the vast majority of node operators on a network agree that something of extremely high value has happened that needs to be unwound. Most commonly this applies to some kind of a hack in a case where the hacker still has not been able to trade in the crypto they have stolen.
Rollup
A type of scaling solution for instantiating layer 2’s that essentially is built on top of a base/layer one blockchain and uses it as an anchor for Data Availability. Effectively a rollup is just an extension of a layer one that conducts all activity off-chain but uses the base chain it is attached to as the ultimate drop-back and source of truth.
RPC – Remote Procedure Call
RPC or a Remote Procedure Call is whenever a computer program activates another system while being geographically distant. Essentially it is just the ability for one system to interact with another system without having to be physically present/close to one another. Prevalent in all modern distributed systems RPC’s apply to crypto networks in the form of a proxy; where a node would interact with a server than has the ability to call a function from any of the smart contracts deployed to a blockchain.
RSI – Relative Strength Index
A technical indicator that is used to measure the strength of a trends price action with a gauge between 0 (oversold) and 100 (overbought). The RSI is used to help signal potential market discrepancies by expressing the relationship between how prices have been moving recently compared to how they move historically. There is no singular perfect model for evaluating RSI across every asset class, however as a general rule of thumb when RSI is above level “80” that is considered to be overbought; when below “20” that is oversold.
Rug/Rugpull
An alternative phrase for scam. The term gets its name from the phrase “its like having the rug pulled from under you” and expresses what happens when people think they are in a legitimate investment but unfortunately fall flat on their face whenever the owners of the fraudulent project just yank all of the invested funds and disappear.
RWA – Real World Assets
RWA or Real World Assets is modernized terminology used to refer to anything of value that exists in the world of traditional finance and is not natively digital. RWA includes everything from Real Estate to Automobiles to industrial machines and even regular commercial retail products (such as furniture).
66 Terms
S&P 500
Standard and Poor’s 500 is the most commonly followed index of equities that tracks the performance of the 500 largest companies in the United States. Basically a barometer of America’s economic wellbeing.
SaaS – software as a service
SaaS stands for software-as-a-service, and it is a business model where technology companies license out their software to other companies. A corporate subscription service for software in a business-to-business setting. SaaS companies provide operational infrastructure for other companies to build on.
SAFT – simple agreement for future token
An investment contract that is used by early-stage Web3, crypto, and blockchain companies to raise money without having to issue a token or define the specifications until a later date. The purpose of a SAFT is primarily to lock in a legal obligation for the startup to provide a portion of the tokens to whoever is providing them funding whenever they do lunch a token at a later date. Necessary for whenever companies are at their earliest stages and need money to help them make it to the point at which the token will become their next vehicle for raising the next round of funding. A crypto modification to the traditional SAFE (Safe Agreement for Future Equity).
Satoshi
The first name of the anonymous entity that created Bitcoin and the smallest measure of a Bitcoin. A satoshi representing a single atomic unit or 0.00000001 of a Bitcoin.
Satoshi Nakamoto
The anonymous creator of Bitcoin. First arriving into niche online community threads in 2008 and writing the famous Bitcoin Whitepaper, Satoshi Nakamoto is one of the most mysterious stories of the new generations. It is unknown whether it/he/she/they was a group or and individual, but many less than morally qualified people have tried to contend for the title of its creator; nobody knows who it is, possibly deceased Hal Finney makes for the most real case but secret government organizations cannot be ruled out.
Scalability
The property of a system that defines its capable to increase operational capacity alongside demand. Scalability as it pertains to crypto, refers to the blockchain platform’s/network’s themselves ability to handle increased activity. A scalable system is able to provide the performance at the same level of quality regardless of how many processes are demanded.
Script
A type of program that is used to automate tasks by using another program. Scripting is not intended to create applications; it is only used to activate/interact with them. Scripts most commonly applications to the crypto industry include operating botnets on social media (having accounts respond to posts with random, generic phrases to prop up engagement), automating trading strategies, market making, and spinning up new accounts on blockchain to trick people into thinking there are real users while it is simply just a vanity metric.
SDK – Software Development Kit
Also known as “devkits”, a software development kit is a package of request tools that are organized into a single download to help developers speed up the process of setting up their environments. SDKs are deployed independently for their use cases, crypto projects will usually have their own stacks of dependencies that must be installed, and rather than having developers scurry around the internet hoping they find the right programs, the internal teams of crypto projects will neatly organize it all for them. SDKs are usually something that is only applicable to either open sourced projects or infrastructure-grade projects that are looking for startups to build on top of them.
SEC – Securities and Exchange Commission
An independent agency of the United Stated Government that is intended to protect investors and regulate financial markets. The SEC is the entity that specifically deal with the classification of assets as securities, they are the organization that is in constant was with crypto in argumentations over how to classify digital assets. The are tasked with the oversight of securities, exchanges, brokers, investment advisors, and mutual funds; making sure that they are compliant and the integrity of the capital markets are in tact.
Seed
This has two definition that depends on ther context and crowd;
Meaning 1: the first stage/round of fundraising that provide equity (or convertible notes) in return for capital. Seed rounds are still relative small amounts of capital usually needed to just pay for operational expenses and get the company to the next round of funding (Series A).
Meaning 2: the piece of data that is used to create a sequence of information. A seed is used in conjunction with randomness functions that must remain unknown to the outside world in order to protect the hashing mechanisms that control privacy. Whenever a new system is bootstrapped, a seed is used to start it, it is the element which preserves the integrity of privacy; if a seed is found than it can be used to unwind all of the information within that system by re-creating it and looping through it.
Segwit
Shorthand for Segregated Witness, is a protocol upgrade that took place on the Bitcoin blockchain back in 2017 which transformed the method of attaching signatures to transactions in order to save space whenever packaging them into blocks. Signatures are very large in terms of their relative weight; given than a block on Bitcoin has a maximum capacity of 4MB per block, every scrape of data is extremely valuable. Implemented as a fork, Segwit effectively splits transaction data into the actual transaction and the signature (witness) that is happened. This resulted in lower fees per transaction, more space to include transactions into blocks, and community uproar.
Series A/B/C/D/E
Rounds of fundraising that take place once a project reaches a certain level of maturity/capability. Typically the “series” rounds take place after an angle and/or seed rounds once there is some kind of working product that users are already paying or some kind of revenue stream is active on which a financial model can be built. Depending on the letter than follows “series” will determine the stage of a project as well as how much money they can theoretically attempt to raise. Series A ranges from $2m-$20m; Series B ranges from $15m-30m; series C ranges from $10m-$100m; Series D ranges from $50 million up. The vast majority of companies will only raise up until a series C, sometime a D. However, there are exclusive cases where before a company goes to its IPO a round E is held and that raise is entirely dependent on the circumstance of the company’s state.
SHA256
Acryonym for Secure Hashing Algrothim of 256 bit size, SHA256 is a military/enterprise grade cryptographic hashing function that was created through a joint effort between the United States National Security Agency(NSA) and the National Institute of Standards and Technology(NIST). Considered to be the most advanced algorithm of its kind, SHA256 has never been broken, nor has it ever experienced a collision (where a single hash is produced by different inputs). The numbers 256 represents that the output will always be the same size regardless of the input. SHA256 is used in many of the leading crypto networks including Bitcoin.
Shard
A fragment of a network. Shards are portions of a greater network that handle certain functions. When a single network exists, all nodes must communicate all information equally and wait for one another to process it; by become shards, certain roles can be split up and the communication of received information must only be propagated throughout the nodes within a shard.
Sharding
Fragmenting a network into multiple smaller portions to distribute the computational load and increase communication speed. Sharding is a solution that simultaneously improves energy efficiency and scalability. Initially considered a potential method to optimize Ethereum but later turned down because of the security vulnerabilities that arise through its use. By splitting up a network, the security cannot be shared and must in turn be proportionately distributed through the shards.
Sharpe ratio
A formula that measures the relationship between an investment return potential and the risk it incurs. Gauging the quality of an investment is infinitely difficult; by using the Sharpe Ratio, we can determine if the risks associated with it are worth the profits it can generate. What would you consider to be a better investment; option A: where a $100 investment can result in a profit of $80 but might lose $20, or option B: where the $100 investment can return $160 but lose $80. Of course, everything will boil down to personal risk tolerance, however from the standpoint of pure, cold logic, if all you have is $100 and lose $20; then you will need to make a trade of 25% to recoup your losses; if on the other hand you lose $80 and only have $20 left, then you must make a trade of 400% just to recoup that loss. Even though the $80 gain is only 50% of the other one potential $160; the impacts of a negative outcome are much more severe than the positive outcome.
Shill
To promote a crypto without any shame or attempt at obfuscating the sale/marketing intentions.
Shitcoin
An informal term used to refer to cryptocurrencies that are of low value or quality. Depending on the nature of a project and the ideology of a user, Shitcoin is sometimes inappropriately used to generalize all projects that do not meet some confined, maximalist frame. Generally, Shitcoins are classified by their lack of technological sophistication or market capitalization. Extremist Bitcoiners refer to basically everything that is not Bitcoin as a Shitcoin.
Short
A bet on the deprecation of an assets price. Shorting is a complex mechanism of borrowing an asset and then immediately selling it to the market, effectively owing the lender the value of what was borrowed from them. If my theory is that Bitcoin will fall, I can borrow it from somebody and promise to return it at a later date; assuming I borrowed it at $60,000 and sold it; I now have $60,000 (minus fees) in cash. If a month later the price is $45,000 I can buy it back at the price, return your Bitcoin (plus small fee) and pocket the $15,000 (minus fees).
Side Chain
An independent blockchain with its own consensus mechanism and network of nodes that runs parallel to another chain. Side Chains are connected to main chains through two-way pegs or bridges so that data can be transferred between them. Sidechains were one of the earliest solutions to solving the scalability issues in public blockchain networks. Effectively, the greatest difference between a sidechain and a main chain is the decentralization. Main chains are generally classified as being public goods, transparent, auditable, and secure; Sidechains are a more centralized, privatized alternative. The security relationship has one degree of directionality; if a sidechain is compromised, nothing will happen to the main chain; however, if a main chain is compromised, then the sidechain is also.
Signature
A signature is a digital fingerprint, a method to cryptographically prove that a transaction has indeed been initiated by the proper owner. Whenever digital identities are created, they are issued a private key and a public key; the public key receives information and the private key sends information. However, the private key must always be kept secret; therefore, signatures are mathematic hashes created by using information from a private key. When I send a Bitcoin to another party, my public key transfers something to their public key; on the blockchain, this is registered as valid only if the public key that is sending has a signature of authorization from its associated private key; instead of publishing/verifying the private key, it verifies that the private key was involved in the signing process.
Silk Road
From narcotic substances and firearms to stolen credit cards and chemical compounds; the Silk Road was the legendary underground online marketplace on the dark web that facilitated the trade of illicit black market goods and services. It was on this platform that Bitcoin found its first real-world adoption by being able to provide trade while retaining end-user anonymity. Operating for a short two odd years from 2011 to October 2013, the site conducted approximately 9.5 million $BTC is volume.
Sim-Swap
A form of social engineering fraud where scammers/hackers contact mobile service providers and pretend to be somebody else in order to manipulate the agents working at those companies; tricking them to activate new sim-cards and gaining control over another persons phone number. By getting access to a valuable person’s phone number the scammers can bypass the two-factor authentication systems to gain access to their social media and bank accounts.
Slashing
Punishing nodes on a staking network for misbehavior by confiscated their staked assets. Slashing is a key part of incentive designs that takes into account a module for dis-incentivizing malicious behavior. Slashing systems can very from network to network, but can be any arbitrary amount from 10% to 100% based on the degree of violation then cause.
Slippage
A loss in price during a sale because of available liquidity constraints; the difference in face value and real price. Whenever trading assets on an open market place, there are orderbook that dictate how much of an asset can be purchased at which price; if something is trading at $100 and the next buy order is $99 for 1,000 units then there is $99,00 of liquidity at that point, $98 for 500 units after that, and so on. In the event that a large sale hits the market then the seller would have to accept the available liquidity at the moment of the sale.
Example: Person is selling $1,000,000 worth of BTC and BTC is worth $50,000. That means they have 20 BTC to dump on the market. If they are selling it all through a single exchange, there might only orders for 5 BTC every $1,000. That means of the 20 BTC sold, 5 will go for $50,000 each ($250,000), 5 will go for $49,000 ($245,000), 5 for $48,000 ($240,000) and the last 5 BTC for $47,000 ($235,000); While the face value of their position was $1,000,000, when we add up the actual sale, the person will only get $970,000. That $30,000 difference is the slippage.
Smart Contract
A program/piece of code that exists on a blockchain. The name “smart contract” actually has absolutely nothing to do with intelligence (moreso a branding technique by the pioneers of the industry). Smart contracts actually attempt to articulate that the code is autonomous and trustworthy because of the inherent properties of the blockchain(s) where it is deployed to. Smart Contracts are building blocks of applications and can be anything as simple as an order to transfer assets whenever certain conditions are met to something more complicated as engaging a liquidation mechanism, halting a platforms operations in the event of flash loan detection and so on. Many industry newcomers from absolute beginners to ultra talented, capable developers that are overqualified are sometimes struck with some confusion at the name of “smart contracts”; keep it simple, just code that lives on a network.
SMPC – Secure Multi-Party Computation
Known by both MPC (Multi-Party-Computation) and SMPC (Secure-Multi-Part-Computation), is a cryptographic protocol that splits up the process of computing on a single data point between multiple different parties without revealing what the other party’s information points are. If we need to calculate how much you can earn working for company ABC, then we can split up the formula into 3 different portions and have them independently, individually operated on; ultimately aggregating the solutions only in front of you so that no sensitive information can be extrapolated from it.
Snapshot
Recording of a blockchain’s global state at a given block height. Useful for assisting projects in assessing/verifying the activity of accounts that have (or have not) qualified for airdrops and marking network forks. For ease of understanding, just imagine taking a photo of the blockchain and using whatever is in the photo as a way to prove whether something is or isn’t true.
SNARKS
A SNARK or Succinct Non-interactive Argument of Knowledge, is a tool of cryptographic privacy preservation and data validation. Belonging to the family of zero-knowledge technology, SNARKs are a design conceptualization for realizing precisely what its name implies. If we break down the acronym, we can see that, Succinct means small/concise (not taking up too much space). Non-interactive refers to removing the need for a prover and verifier to communicate (saving computational overhang). Arguments of Knowledge are just a fancy way of saying proofs.
SneakerNet
An alternative slang that means moving around digital information by foot; literally, sneaker refers to physical running. Becoming less prominent as humans digitize all the more, SneakerNets were the logistic systems that moved around information by carrying CDs, floppy discs, and other cold (not connected to an internet) information devices.
Soft Cap
The absolutely minimum requirement of money that must be acquired during a round of fundraising for a project to be able to achieve its operational requirements. SoftCaps mark the level at which a startup/project can continue to pursue their objectives; if a softcap is never reached, it is usually a sign that the product is of no use to the market, the marketing was bad, or the economy is going through a difficult time.
Soft Fork
A split in the software logic of a blockchain that is backward compatible; an update to the system that is not required in order to continue operations. Soft forks are opt-in alternatives that usually provide some kind of adaption such as alternative methods of verifying signatures. These upgrades do not impact the core logical elements of security or consensus; therefore do not alter the operations of the blockchain.
Soft Peg
An exchange rate that is established through ideation rather than equal redeemability. Soft pegs are used by government to tie the value of their currencies to other assets without having those assets in their treasuries. These mechanisms are used to create ranges within which an asset is allowed to have its value deviate.
Solidity
The original and most popular (widely adopted) programming language for smart contracts. The language is based in the object-oriented paradigm (meaning everything in the development environment is an asset, even algorithms that constantly change and update, can be objectified; which in turn make it easier to interact with {simplified programming that does not communicate directly with machines}). Designed initially for Ethereum, the solidity language has become the standard for developing on-chain programs and now exists on every EVM compatible network.
Solvency
The ability to meet financial obligations, measured by the ratio of an entities liquid value, illiquid value and their liabilities over the course of time. The ease with which and entity is able to resolve their debts. Solvency is a direct expression of financial health, being solvent demonstrates higher levels of trustworthiness (on the assumption of being able to recuperate value) and in turn provides more credit opportunity; on the other hand, being insolvent is equivalent to being bankrupt without actually claiming you are bankrupt.
Sound Money
There are a few variations of what sound money means depending on the affiliations/groups of people that are using it. At its core, sound money refers to assets of value that are recognized as valuable globally, can be exchanged with relative ease (accepted as a form of payment), is able to preserve its buying power over time, and is able to withstand political coercion. While there has yet to be found any form of truly sound money through all of history, assets such as Gold have shown the highest degree of stability and resilience against absurdly sharp volatility.
Soundness
A qualitative measure of a system. Applicable to technology, finance, business, and even personal relationships; soundness is a property that reflects the degree of wholesome logic and strength against moments of volatility. Crypto native will harp on their systems or assets being more sound than others and malicious scammers consistently attempt to use this as a buzzword to validate their trash projects.
SOV – Store of Value
An archetype of asset that is designed to retain its buying power over the course of time and mitigate any potential depreciations in value. This type of asset is best for an audience that is more averse to risk and prefers to protect their money more than they worry about having it increase sharply. Within the world of crypto, this is a highly abused term with projects attempting to present themselves as valuable; so far there has only been one asset that even remotely represents an SOV and that has been Bitcoin.
Spike
A sharp increase in asset price over a short period of time. Sudden algorithmic alignment between different trading desks might accidentally funnel their funds into a common asset at the same time, scammers will temporarily pump up their assets to create an illusion of incoming value, large institutions might enter projects through a single, large buy and just sit on them, Spikes occur for a multitude of reason and cannot be predicted (without insider information).
Spoof
Faking or creating a false identity; pretending to be an authority or imitating one in order to bypass any suspicions and execute a scam or some kind of fraud. Spoofing is the most common technique of online scammers attempting to socially engineer or steer unknown users to malicious websites/links.
Spot
Also called cash markets, are trading venues where users are able to trade their money directly for assets. This is basically the most simple permutation of an exchange that has not fancy or complex alternative instruments. On a Spot Market it is possible to actually purchase and own an instrument; rather than speculate.
Spread
The distance between the first available buy order and the first available sell order on an exchange. When trading an asset with an orderbook matching model, there are quotes available on both sides of the market, the price somebody is willing to purchase the asset and the price somebody is willing to sell an asset. Tight/close spreads are signs of an efficient, liquid market. The larger the spread is, the less liquidity there is, the more volatile the asset’s price is, and the less mature the market for it.
SPV – Simplified Payment Verification
Also called a light client, and SPV or Simplified Payment Verification refers to a type of node client that depends on other (full) nodes in order to obtain the most recent information from a blockchain. SPV’s do not participate in validation or mining, their singular purpose is to only access information that is relevant to their specific applications. Common example of SPV nodes are wallet providers, where they have no need to expand resources to contribute to consensus but they require updates on the most recent network state to allow their users to properly interact with the chain. SPVs do not require massive, expensive hardware but are very useful for helping facilitate transactions at the highest level. On the technical side, these clients use slivers of the merkle trees that are applicable to their desired addresses.
Spyware
A malicious software that spies on the activity a user does and sends that observation information back to the entity which deployed it. A virus that tracks all of your activity, gathers it, and shares it with unauthorized parties. Implemented as a silent, subtle security breach, spyware is usually deployed under different names in an attempt to hid it from detection by anti-virus software.
Squeeze
A sharp move in the price of an asset for a very short period of time that results in overleveraged traders being wiped out of their positions and risk-averse offloading their positions. Intended as a manipulative method to break conviction, a squeeze happens suddenly and usually in the direction wherever there is more open interest. If there are $100,000 in leveraged longs and $2,000,000 in leverage shorts, it is almost a guarantee that the shorts will be squeezed out of their position.
SSD – Solid State Drive
An SSD or Solid State Drive is a type of hardware used to store memory. Belonging to a newer generation of technology that other storage devices, SSD’s are faster at saving and retrieving information while being smaller and lighter than its predecessors. More expensive than alternatives, SSDs have become the standard equipment for most new computers.
SSO – Single Sign On
A method of logging into an account by using another one. SSO is a protocol/authentication model for online identity by weaving together separate, trusted applications. The purpose of SSO is to streamline the ease of a user experience by removing the need to constantly enter usernames and passwords. The most common form of an SSO is Gmail; where by being logged into a browser that is always signed into the email account, people can click a single button and validate that it is them trying to access an application. While this model is certainly attractive, it is also a potential vector for massive hacks; by having multiple different usernames and passwords, a hacker would need to acquire them all independently to gain access; by having just the SSO if that account is compromised, then every other application to which it has been connected is as well. In crypto, your metamask wallet is basically the equivalent of an SSO; where through one application you are able to access all the other different applications with the same wallet address.
Stablecoin
A digital asset that is hard pegged to another, tracking its exact price at all times and always being redeemable for the asset which it is representing. In crypto there are three general categories of stablecoins; fiat, commodity, and crypto backed. Fiat stablecoins are those that represent traditional government currencies, issuers of this type of stablecoin are typically holding physical reserves equivalent to the outstanding circulating supplies of their tokens. Commodity-backed refers to digital assets that are underpinned by a proportionate amount of hard metals such as gold, silver, or platinum; redemption here is more complicated as it requires transfers of physical objects and incurs higher transaction costs. Crypto stablecoins are basically just wrappers around other cryptos that are required be used on other networks; prime example here would be WBTC (wrapped Bitcoin) where Bitcoin is sent to a wallet on the Bitcoin network, and then minted on Ethereum to another wallet specified by the depositor.
Stagflation
A negative economic cycle when the two elements of high currency inflation and unemployment are present at the same time. Sometimes also called “recession-inflation”, stagflations represent stagnant circumstances, meaning no progress is being made and productivity is not recovering. This depicts weakness in the fiscal and monetary status of a country/economy and creates difficulties around forcing new policies. In these environments it is more difficult to find work, cash is hard to come by, and credit crunches result in consumers losing their possessions.
Stale Block
A block that has been mined, but is not included in the blockchain. Stale blocks happen whenever more than one block is mined at the same time and only one of them can be chosen to append the next one to. When two blocks arrive at the same exact time, there is a temporary fork in the network, as the next incoming block is mined it is appended to one of them and the other gets disregarded and ignored by the network.
Standard Deviation
A measure of volatility that uses historic price action as an indicator. Applied as a technical indicator to guide in decision-making, whenever standard deviation is high, there is no stability in price and it is expected that activity will be calming down in the near term. When standard deviation is high, that is an expression that an asset has found a zone in which it can move predictably and a large spike in volatility can be expected soon. Denoted as stdDEV; this metric is commonly applied to other indicators such as Bollinger Bands and shows the expected range for an asset to trade in.
STARKS
STARKS or Scalable Transparent Arguments of Knowledge, are cryptographic tools for privacy preservation and data validation. Belonging to the family of zero-knowledge technologies, STARKs are a design conceptualization for realizing an effective model of proving information while being able to maintain absolute privacy and a high degree of trust. STARKS are considered to be a breakthrough development because they do not require trusted setups and instead rely on very sophisticated cryptography instead; meaning creating a STARK system would be independent of the creator. One of the tradeoffs/difficulties in implementing STARKs as a solution is the weight/size of the proofs they generate. When compared to its closest alternative (SNARK), a STARK is easily one or even two orders of magnitude more intensive (10x-100x as much data is created for these)
State
The reality of a system at a given moment. State is a very abstract word that applies equally to a person’s emotions as it does to the being of a technology. The aggregation of experiences whenever being measured. State, as it applies to blockchain, is the recording of transactions, balances, nodes operating, the transition from its historical moments, and all other metrics at a specific time.
State Channel
A model for scalability that involves creating direct paths of data transmission between selected parties that happens off-chain. State Channels are one of the most battle-tested solutions for creating secure second-layer networks that can utilize assets on a base chain and never have to rely entirely on the trustworthiness of the operators on the second layer. Opened by having assets pooled into a single address and then having that addresses act as a communication point off-chain and process all other entities that have done the same.
State machine
A model for how a system behaves that depends on information having static, concrete moments that can be used to gauge transitions from the last to the next. State machines are finite systems that have recordings or checkpoints in memory. Blockchain is the perfect example of a state machine, the chain depends on its progression from one block to the next, the activity that takes place between blocks is not considered true until it is added to the chain.
Stateful
An architectural design principle where the exact conditions of a system are recorded and stored as separate instances. As the name might have hinted out, something that is stateful has a multitude of different states and requires there being historical moments that can be referenced.
Stateless
An architectural design principle where the exact conditions of a system are not recorded or stored. Stateless systems are models of fluid operations that have no sense of memory and do not depend on any history. They process the incoming stream of information without any discretion or point of reference. Examples of stateless systems include the internet; there is just the transfer of information taking place, data being sent back and forth with nothing being stored inside of itself (the storage of internat archives are done by separate systems of databases that are appended by other actors).
STO – Security Token Offering
A fundraising model for cryptocurrency projects that explicitly implies the asset being sold in return for the capital qualifies as a security under the regulations of the US SEC (Securities and Exchange Commission). STOs are an adaptation of the ICO/ITO model that merges the open, borderless crowd-souring of crypto and the legacy legal financial system compliance measures.
Stop-loss
A type of order used by traders to specify a price point at which they will exit their position. Stop losses are used to define the lowest bound at which a trader no longer wants to have exposure and caps their downside. A tool to manage risk, if an asset experience sudden movements in the opposite direction of a trader’s expectation, they minimize their potential losses.
Strong Synchrony
A property of distributed systems that dictates a high degree of certainty in the delivery, receival, or processing of information with a definitive time frame. Stong synchrony, as a concept, is necessary for predicting the likelihood of an outcome taking place; it assumes that the system will operate and as intended no matter what. Strong synchrony is a requirement in validating the truth of a system. However, it can only exist under healthy network conditions; whenever a network experiences some kind of disruption, the property of synchrony weakens. If a system has been designed only to function during moments of strong synchrony then it will totally halt and be unable to operate. On the other hand, weak synchrony expresses the ability to operate even during extreme disruptions.
Substrate
Getting its name from nature meaning an underlying system; Substrate is the leading framework for building blockchains from the ground up. A compilation of program libraries and datasets that are necessary (and proven) in developing efficient distributed blockchain networks. So many projects are built using Substrate that it has become a standard element for conversations with developers and startups.
Supply Chain
A logistical system involved in the operational processes of a business. Supply chains express the trail of touchpoints that something goes through from inception to the end customer, the whole life cycle of a product’s creation. Applicable to both tangible and intangible business solutions. In physical products, where there is raw material extracted by some provider that is transferred to a factory, which is then sent to a quality inspector, which is then sent to a packaging facility, then to a shipping center, to a border control inspection, to the store (or customer) that ordered it. In non-physical or information products, there is a request for a blueprint or software product sent to a manager, who then breaks down the order to different workers, where designers are creating the visuals, developers create the code, writers provide text, then all getting amalgamated back at the project manager who puts it together and sends it back to the customer for inspection.
Support
A technical market that depicts a price level where the asset will have strong defenses against falling below. Support levels denote areas of high interest from market participants or large batches of capital that can absorb selling pressure, as well as, being the level at which sellers will most likely no longer want to offload their positions.
Sybil
A type of cyber attack where a hacker makes/takes control over a large amount of accounts to overtake a network/system/decision. Sybil attacks are very commonly seen on low quality projects that create bots to fake social engagement with their own projects or to attempt and destroy the reputation of competitor projects. This kind of mechanism has been applied to the farming of airdrops as well as the farming on social giveaways.
Synchronous
A property of a system that describes multiple things happening at the same time. Cohesiveness between action and reaction. Synchronicity is a natural phenomenon that humans experience when watching two independent systems (such as other human beings) conduct duplicate processes in parallel; so whenever two people jump up at the same time and/or as soon as they land, two more jump up, and so on. As it pertains to blockchain and crypto, synchrony refers to the processing of information in the natural sequence of its occurring. When a transaction is sent, and it is picked up by the network as is anticipated, and the network then mines a block as intended, that is synchrony.
Synthetic Asset
An asset with no form of hard value underlying it. Synthetic assets (within the context of crypto) can be thought of as extremely exotic tokenized instruments that can be used to represent anything but cannot be claimed for whatever it is that it is representing. A derivative in the digital economy that only has value based on social consensus and for the sole purpose of speculation. Also called “Synths” for short, these objects can range from anything as basic as a dollar equivalent or a stock to things that have never even been seen before (such as representations of the ratio between buy and sell orders).
31 Terms
T-Bills
Treasury Bills are short-term debt obligations issued by the US Government. Ranging anywhere from a few days to a year, T-Bills are used to finance government operations by attracting investors with discount prices. These are considered to be among the most secure investment vehicles due to their payouts being tied to the US Government; which carries an extremely high level of guarantee.
TA – Technical Analysis
A type of analysis that involves the use of mathematics; objective, observable, measurable metrics that are provided in the form of charts, historic price patterns, indicators, volume, and anything else that has a concrete quantitative element. Technical analysis is most commonly used by traders or short-term market participants because the information that TA provides will almost always diverge from the fundamental value proposition; skewed by market forces over qualitative truths.
Taint
To mark something so it becomes easier to track. Whenever funds become associated with criminal activity, they get tagged on-chain and become focal points for tracking the flows of that illicit money. Tainted assets are also usually denied or confiscated if they come into contact with authorized, informed agents.
Take-Profit
A type of order used by traders to specify target price points at which to exit their positions. Used to define a level at which the profit of a trade meets satisfactory criteria and secure the gains/profits. A necessary tool for managing risk and executing trading strategies according to concrete plans.
Tamper-Proof
Being able to resist manipulation; resilient against change. Relating closely to immutability, tamper-proof is a core property of a blockchain system that claims to be genuinely decentralized and honest.
TCP/IP
Transmission Control Protocol / Internet Protocol is a suite of logical technologies that provide a standardized framework for communications in cyberspace. TCP/IP is the backbone of the world wide web and the method by which online activity is generally secured against benign intercepted by malicious entities and encrypting information to avoid being read even if captured.
TEE – Trusted Execution Environment
Trusted Execution Environments are secure, isolated enclaves where data can be processed without revealing any information to other portions of a system. A block box that requires authorization for interaction and only has the input that is provided to it and the output made available; the internal operations are kept hidden from unauthorized entities to maximize the privacy and integrity of information. TEEs are usually specialized hardware devices that are built by ultra-reputable companies with the intention of being maximally neutral.
TestNet
A software environment where the activity taking place has no impact on the external product. Testnets are used, as the name implies, for conducting experiments without having to deal with the potential risks of something going wrong and negatively (unexpectedly) causing issues in the real world. As it pertains to crypto, testnets are where developers deploy their applications/smart contracts to see how they actually operate before bringing it to the public. Testnets do not have tokens of value and do not provide perfect expressions of user/application behavior but are valuable for gathering early information.
TGE – Token Generation Event
TGE’s or Token Generation Events are the moments when a project deploys/mints/issues their own digital asset. While the real meaning of a TGE came from the concept of sending ETH or some other valuable assets to contract and then having that contract generate tokens proportionately to the contribution; many new age projects have skewed the pure definition and just use it to mark the moment in time when they will distribute tokens.
TH/s – Terra Hashes per second
TH/s or Terra Hashes per second is a measurement of computational power that denominates one trillion (1,000,000,000,000) hashes. TH/s expresses the strength of a miner and his ability to compute the complex mathematical equations of a POW system.
ThroughPut
The operational capacity of a system to handle processes. Throughput, as it pertains to blockchain, defines what the maximum limitations around how many transactions a network can process within a given time frame. High-throughput is considered to be a good property for systems that require very high levels of frequent activity; low through-put is less effective for speed but generally considered more secure (there is a tradeoff in the amount of secure operations that can take place over the course of 1 second when compared to 10 minutes).
Ticker
The symbol/code for a token/stock/asset. Tickers are unique combinations of letters (and sometimes numbers) that are used to identify a company/project on a trading venue. While historically these have been very short combinations of up to three characters, in crypto, tickers have become as long as six characters. BTC is the ticker for Bitcoin, ETH is the ticker for Ethereum.
Timestamp
To verify something by using time as the reference point. To provide validation through recording events based on technological elements. Timestamping is one of the earliest applications of blockchain and was applied by anchoring activity with the hash of the Bitcoin blockchain at which something happened. Suppose somebody wants to authenticate their document and prove that it was indeed created at a specific time in history (which helps create a permanent mark of distinguishment). In that case, they can have the number of current Bitcoin block heights instead of or in conjunction with the regular time.
Token
A digital unit of account and medium of exchange. Tokens can represent absolutely any arbitrary object that its issuer intends it for, so long as the marketplace accepts and uses it as such. Tokens specifically in the context of crypto are also a reference to an archetype of digital assets that are different than coins. Tokens are usually second layer applications that are deployed as smart contact; whereas coins are digital assets that are baked directly into the blockchain’s functionality.
Tokenization
The process of transforming physical asset into their digital equivalents. Creating or issuing tokens to represent units of value, access, or exchange. Tokenization is considered to be the frontier of evolution for finance. Interestingly enough, the concept of tokenization itself has been around long before cryptocurrency and it was basically a model for substituting data from valuable or sensitive things (such as passwords) to abstract digital tools for use cases such as access.
Tokenomics
The economic systems or business models of blockchain-based projects. Tokenomics are the logical designs that accompany a digital asset to define what role it plays, where it attracts/captures value in the concepts supply chain, how it is used, and how it will be distributed, among other things; ultimately, the tokenomics dictate whether a digital asset has been created in a way that is accurate to its purpose and whether or not it will be valuable over the course of it. This is a qualitative metric that can be used to determine how well-intentioned a project is and trace a likely outcome of events for its market price action.
TOR – The Onion Router
The Onion Router is a privacy-preserving protocol for surfing the internet without revealing information about your device or location to pesky monitoring systems. TOR was one of the earliest and most popular implementations of a mechanism for obfuscating information by using an “onion-layering” approach. When TOR is used, your device joins a network of other devices that route requests through other computers but not revealing to those computers the information by having your input coated in a cryptographic layer that can only be decrypted by you. Today, TOR is no longer effective because white-hat hackers and government agencies have built intelligent methods called packet sniffing for deriving identity based on when a computer disappears and reappears and mapping it to flows of information in cyberspace.
Total Supply
The current aggregated supply of a token that has been brought into existence. Total supply measures all of the circulating tokens (those available to market participants) plus all those that have been burned (no longer accessible) and those that have been created but cannot be accessed due to lockups or vesting schedules. This is not a very reliable metric as it is not used to gauge any other valuable data points, such as market capitalization; however, it is useful for tracking the emission schedules of projects and modeling the impact of network fees on supply over the course of time.
TPS – Transactions Per Second
TPS is a metric for evaluating the performance of a blockchain and establishing its capabilities to handle network demand. Transactions per second is exactly what it sounds like, how many actions can take place within a time frame of one second. TPS is actually a very useful indicator of a blockchains design premise, high TPS is more performant, while being more centralized and being less secure. High rates are good for low-value use cases such as video games and micropayments. On the other hand, low TPS expresses higher security and decentralization. Bitcoin being the premier example of this, where even at only seven transactions per second, the amount of value of each transaction is secured by a monstrous amount of computation.
Transaction Fee
The costs incurred in order to utilize a network. Transaction fees are the core business models in open public blockchain networks and are utilized to offset the operational expenses incurred by network nodes. Transaction fees also play the dual role of being a mechanism against Sybil attacks and spam, if there are material costs attached to any kind of activity, that low-value malicious activity (such as to try and clog a network by overloading with empty activity) will cost the attacker money and still ultimately compensate the nodes.
Treasury
A reserve of assets that belongs to a project, company, or DAO and is not accessible to the open markets; capital that is privately held. The purpose of a treasury is to act as a pool of capital for use by as project as it finds fit. Treasuries are a fundamental component of any economic design and expresses the level of maturity in a project’s systematic developments. Large treasuries can be a blessing which provides protection to a project or can end up being a curse that makes it a target for incessant scamming and internal conflicts of interest.
Tribalism
Borderline religious belief in the superiority of a certain project over every other; exclusive commitment to a single theory. Applicable to and used interchangeably with maximalism, tribalism refers to the behavioral aspect of community members that are primitively and wholly committed to their convictions, constantly denying the possibility of there being other, better solutions on the marketplace. Tribalism is a root cause of conflict/rivalry between cryptocurrencies.
Trilemma
A difficult situation that arises in the presence of three confluent and conflicting ideologies during the decision-making process. In a trilemma scenario, there is a tradeoff that takes place, the selection of any one or two will come at the cost of giving up the other(s). In cryptocurrency, there are three trilemmas; the blockchain trilemma which involves the properties of a system including decentralization, scalability, and security. There is a monetary trilemma for designing any digital asset including unit of account, medium of exchange, and store of value. Third but not least, there is the CAP theorem which applies again to the blockchain system side where three properties must be juggled including consistency, availability, and partition tolerance.
Trojan
Two meanings depending on context and community, both definitions stem from the same underlying principle present in stories of ancient Greece war with the trojan horse;
Meaning 1: A method of propagating viruses by disguising it as healthy software. Hiding malicious code in software that appears legitimate, hackers use this method to infect devices.
Meaning 2: Using digital assets (such as bitcoin) to take down government fiat systems by first making the crypto appear as simply a toy that ultimately transforms into the world reserve currency because of natural realizations by people that it is superior.
Trustless
A system that does not require having to trust a counterparty. Trustlessness is a property that is highly desirable in finance because of constant conflict that arises through misunderstandings and mal intentions. Whenever commercial activity is conducted, one party (buyer) has to trust that whenever they hand over the money, their counterparty (seller) will deliver to them the product they promised. By injecting a neutral, objective, automated solution between these parties, having the buyer deposit money into a lockbox that cannot be unlocked unless the seller delivers as promised or the delivery is never made, in which case the buyer would get their money back. Cryptocurrency is considered to be a trustless system in the manner that it does not require bank or government authorization for transferring funds, everything is solely reliant on the judgment of the users.
Turing Complete
The property of a machine/system that states given enough time and resources, it will be able to compute/solve any abstract problem. Named after one of the founding minds of cryptography, Alan Turing, Turing Completeness is a necessary property for a programming language or device that must conduct general-purpose actions. If a system is not Turing complete, that means it is designed to specifically only handle narrow purposes. Bitcoin’s scripting language is turing incomplete and considered superior due to its ability to simplify the network’s application, keeping it solely aligned with value storage and transfer. Ethereum, on the other hand, carries the colloquial name of “the world computer” because it is intended to host any type of application.
TVL – Total Value Locked
The aggregated measure of the value of all assets within a DEFI protocol; simply take the total amount of cryptocurrencies, multiple them by their current price, and add them up. TVL has become one of the most important metrics in gauging the quality of a project; the higher the TVL the more assets are housed there and more people believe that a protocol can be considered trustworthy.
TWAMM – Time-Weighted Automated Market Maker
TWAMM or Time Weighted Automated Market Makers are order matching engines that are designed to spread out large orders into batches that are executed over the course of time. These modules help reduce slippage, maximize the accuracy of token swaps, contain excessive price deviations, and balance liquidity.
TWAP – Time-Weighted Average Price
TWAP or Time Weighted Average Price, is a system for pricing assets on decentralized exchanges with AMM models based on how price moves over time. TWAP pricing is an effective way to simplify establishing fair market rates and mitigating flash loan attacks. TWP can also be used to refer to a model of executing large trades by breaking them down into smaller batches to minimize slippage and avoid sending out signals to the market.
TX – transaction
TX is shorthand for transaction. Absolutely every kind of interaction with a digital asset on a blockchain, from sending and receiving to depositing and trading, is classified as a transaction.
TXID – transaction ID
TXID stands for transaction identification, and it is a unique hash that is used to organize and refer to transactions. Implemented at a 64-character long string of letters and numbers, TXIDs are the method of identifying and tracking blockchain-based activity.
9 Terms
UASF
A User Activated Soft Fork is a split in the software of a blockchain network that is initiated by a set of nodes (large minority) without asking for consensus from all network participants. USAF consist of changes that are backward compatible but still require miners/fullnodes to signal their support of the update.
UBI
Universal Basic Income, or UBI is a theoretic welfare system where all people would receive a guaranteed monetary government subsidy to pay for their fundamental living expenses. A heated topic of debate amongst economists and politicians with a lot of controversial argumentations in both directions, UBI would effectively provide all adult citizens with a consistent stream of cash to reduce their monetary burdon. Those in favor tend to be arguing that it would improve the baseline quality of life for regular people; those against claim it is a danger to society as it would ultimately lead to a individuals becoming extremely dependant and lazy.
Uncle block
Similar to an orphaned block, an uncle block is an extra block that is mined simultaneously and still provides a reward for the miners even though it becomes obsolete and ignore by the future blocks. Arising in the Ethereum ecosystem while it was a Proof-of-Work network; after the transition to a Proof-of-Stake uncle blocks are no longer an occurrence.
Unconfirmed Transaction
A transaction that has been detected by the network and queued into the mempool, but has not been processed by the nodes yet. While a transaction is in the unconfirmed state, the address sending it will have its balance deduced by the amount, but the receiver will not get it until it has been added into a block.
Unrealized P&L
Unrealized Profit and Loss refers to the current state of a trade or investment in a portfolio that has not been finalized yet. Whenever a user enters a position on an exchange, they have a floating value of how that position is doing, so long as they are in the position the gains/losses they have incurred will not be considered permanent.
Unregulated
Not subject to a legal framework; lacking oversight from authority. Unregulated refers to assets or markets that have either been ignored or too difficult to qualitatively quantify and are able to operate without being held accountable. While a market/asset is unregulated, there cannot be punishments issued to those involved due to there not being a guideline or framework by which they must abide; however, there have been cases where after a market transitions from an unregulated one to a regulated one, retroactive punishments have been pursued.
Unspendable Address
Also called a burn address or a void address, an unspendable address is one where the private keys associated with it have been permanently lost. The element of being unspendable simply means that assets which enter that address will have no chance of being sent back out. Most major networks automatically use their genesis block’s as theses addresses so that other users of the network can leverage it for supply compression (via burns) without having to worry about any internal conflicts of interest.
Utility
Refers to either a digital asset or an application and means having a use case. Utility is an archetype of asset that technically falls outside the scope of the HOWEY test and therefore becomes a convenient buzzword for all projects to create tokens under the guise of being a “utility.” Being extremely abstract and broad in its implications, a utility can realistically be anything the creators position it to be; however, at the highest purity/honesty level, a utility must represent some kind of function that cannot otherwise take place without the role of the token.
UTXO
UTXO or Unspent Transaction Output, is a novel model for conducting transactions and tracking account balances. The model is very unique in the sense that uses the entire balance of an address to send funds and creates a new address after every transaction occurs. If an account (1A1) with 1 BTC balance is sending another account (1B1) 0.1 BTC, the network would register the transactions as (1A1) sends out 1 entire BTC with 0.1 of it specifically directed to (1B1); then the network would route the 0.1 to its destination and re-route the remaining 0.9 to another address, which will be owned by (1A1). Now the balances would be (1A1) having 0.9 BTC UTXO and (1B1) having a 0.1 BTC UTXO.
15 Terms
Vanity Address
Customized/unique wallet addresses that can be easier to identify. Vanity addresses use human-readable text to make the entire process of using cryptocurrency more user-friendly by making it easier to distinguish who is sending what and where. Instead of having extremely long strings of spaghetti letters and numbers, a vanity address could be something as simple as “iLike2Build.eth” or “MakeitRain.btc”. While this improves the experience by simplifying things for users it also introduces a much higher level of risk in terms of hackers being able to track and attempt to identify real-world identities of people.
Vaporware
Products, usually some kind of technology (software or hardware) that is advertised/marketed as being capable of doing something, while in reality it either can’t or never will. The term is used most commonly to refer to startups that abuse the lack of understand from basic consumers by making promises, usually with a lot of buzzwords, hot air, and no concrete strategies, which does not make it to production.
VC
Venture Capital refers to a form of private fundraising through prominent investors that have a track record of success. VC is used interchangeably to refer to the institutions, the individuals, and the type of capital itself. Within the traditional world of technology (Silicon Valley), VCs are heralded as heroes and are highly sought out by startups; within the world of crypto, these guys are usually demonized by decentralization maxis and “puritans” for polluting the ecosystem with their money. Given that the entire purpose of a VC is to generate money, many crypto projects that are involved with VCs run the risk of being bashed online for their actions. It is up to the discretion of the user to do with this information as they please, just like with any other decisions for a startup; getting involved with VCs is a tradeoff; there are enormous benefits and potential pitfalls.
VCS
Version Control Systems are a tool for tracking the changes in the development lifecycle of a software. VCSs store the historical states of a product and help manage updates by providing a backlog of previous versions. Sometimes whenever a software product is being created issues/bugs arise that are difficult to identify; by retracing their steps through the different state of the code, development teams can coordinate themselves to resolve these issues.
VDF
VDF or Verifiable Delay Function, is a cryptographic primitive that introduces the parameter of time as a module to make something more difficult to compute but easy to verify. Regardless of the type or amount of computational resources available, a VDF utilizes a scheme of sequenced, non-parallelized operations to force the expenditure of time as the base requirement of a process. The purpose of VDFs is to provide an alternative model for solving problems in distributed systems including sourcing randomness, validating data replication, and electing leaders with a consensus system.
ve Token
Whenever any token has the two letters “ve” in front of its ticker symbol that means that the original asset has been locked up into a protocol’s voting escrow smart contract. The purpose of ve tokens is to amplify the governance processes by committing tokens to lockups for predetermined durations of time, the long the lockup of a token, the stronger the weight of their influence in voting over governance decisions.
Velocity
An indicator of an asset’s desirability/market application that is dictated by the degree of user demand to either spend or save an asset; a gauge for monetary flow. Essentially, velocity measures the rate at which an asset trades hands within a certain timeframe. Assets with high velocity indicate that there is consistent demand for acquiring the asset, as well as, a high proclivity to get rid of it; this translate to a property of a liquid instrument like cash. Assets with low velocity indicate some sort of a barrier in the demand to accrue it or the lack of desire to part with it. Velocity is not a binary measure however, the correct way to evaluate it is based on the direction and momentum taking place, so if an asset that is closer to 0 (low velocity) begins trending up towards 1 (high velocity), there might be indication of a new market forming. Whereas the inverse of a downtrending might hint at either slowing macro economic factors or a general displacement of an asset.
Vesting
Locking away portions of a token’s supply until a specified point in the future. Vesting is a method of managing a project’s economic policy by allocating it to storage and having no ability to access them without the completion of a predefined criteria (such as enough time passing). Applicable to startups, vesting is an expression of commitment from the team to work without putting token holders at risk of internal conflicts, a strategic long-term method to validate their focus on product above all else.
Virgin Bitcoin
Fresh, new Bitcoins that have been earned by miners as block rewards and never used. A Virgin Bitcoin has no transaction history and considered to be “pristine” in the sense that there is no risks of getting them confiscated or blacklisted.
Void Address
The same thing as a burn address or an unspendable address, a Void address is a wallet that is owned by nobody and the associated private keys have been destroyed or lost forever. Referred to as a ‘Void” because if anything gets sent in to it, it will never be sent back out. Every major network will have a dedicated void address for all of the ecosystem participants to use as a single trusted source for conducting their token burns; usually this address is tied to the genesis block of a chain.
Volatility
Fluctuations in price. Volatility is a measurement of the degree and severity of how an assets price moves within a predefined block of time. Something that is volatile has low/no stability and is considered a good asset for risk loving traders; usually assets that are volatile tend to be those that are newer because markets have not had a chance to price them yet. Something that is not volatile is considered to be safe/more mature in sense that its price movement will be minimal and in turn, more predictable. Volatility is both objective and subjective depending on who and how it is being used. It is an objective metric that is able to provide unique insight into the relationship been an asset and the marketplace. It is subjective in the sense of what it is being measured against; so volatility is relative to the counter-asset.
Volume
A measure of how much trading activity happens with an asset in a certain timeframe. Volume is one of the foundational data points for conducting a technical analysis; it is the most direct metric for gauging the level of interest on the market for a given crypto. High volume indicates high levels of interest and low volume indicates a lack of it. Given how generally important volume is regarded by market participants, the crypto industry has unfortunately abused this parameter worse than any other. The vast majority of volume on cryptocurrency exchanges (especially centralized ones) is not real; market makers generate fake activity by selling the same asset back and forth to create the illusion of interest).
VPN
Virtual Private Networks or VPNs, are encryption services that obfuscate the origination of a device’s IP address to allow circumventing firewalls and preserve privacy. VPNs work by connecting devices to remote servers and having those server act as the “middleman” that make it seem online as though the server is what is making the requests. Services that are geo-locked (restricted from being accessible by residents of certain countries) become available through the use of a VPN.
VRF
An acronym that has two different definitions based on the context of its application;
Meaning 1: Verifiable Random Function; a random number generating mechanism that uses cryptography for the verification of its randomness. Slightly untrue because effectively the output it generates is only pseudorandom by the fact that it is deterministic (based on a set input); a VRF is created by taking public/private key pairs, combining them with a seed, and then running that result through an algorithm. Verifiable random functions are present in so many key applications beyond (and including blockchain) ranging from zero-knowledge proofs and internet security to escrow schemes and even lottery systems.
Meaning 2: Virtual Routing and Forwarding is a fundamental component of traditional IP (internet protocol) that deals with routing data (sending it across specific pathways, in a specific manner). VRFs, in this sense, allow for a single hardware router to establish multiple different instances; creating a robust fallback model that optimizes the transference of information based on the current environment.
VWAP
VWAP or Volume Weighted Average Price, is the most commonly used system for pricing assets in nearly all crypto/decentralized exchanges that determines valuations based on how the assets perform over a set time frame as it relates to the volume. VWAP is a proven effective method for combating manipulation of asset prices by aggregating the actual volume across the entire industry, which smooths out the volatility on less liquid exchanges. Another application of VWAP is as a technical indicator for traders to use in their strategies; rather than using base prices, they might opt for a VWAP alternative because it is know to provide accurate pricing that is less reactive than traditional models.
23 Terms
WAGMI
We’re All Gonna make It. WAGMI is one of the most popular positive messages that is used to support community members during difficult market conditions, signal joyous associations to technological breakthroughs, and invigorate investors during times of roaring prices. WAGMI is usually used by members of the same crypto asset/nft communities when talking to each other. While this is a breath of fresh air for the generally negative industry, it can cause people to loose sight of fundamental reality and forgo securing profits over the short term. Over the long term, all of us in crypto that do not get swept up into emotional frenzies and scams, should know that WAGMI.
Wallet
Wallets in the general digital sense, are exactly what they are in the physical world, storage containers for our monetary objects and payment methods. In the more technical crypto world, wallets are the software applications that store user public/private keys that ultimately own digital assets. There are many different versions of wallets including the hot types of web-based, browser extensions, and downloadable apps; and the cold types including hardware devices and paper wallets.
Wannacry Ransomware
One of the most famous cyber attacks that took place in 2017, where a malicious group of hackers used a cryptoworm (nothing to do with digital assets, these are a parasitic infection/virus models) to burrow into exposed computers running Microsoft Windows and locked users out of their computers, demanding payments in Bitcoin to release them.
Wash Trading
The illegal practice of manipulating market prices and generating fake volume by rapidly selling and buying assets from yourself. Extremely common practice in crypto, wash trading is a no-risk, low-cost method of creating the illusion that a market is actively traded. By setting an order and automatically filling it to oneself (within the spread range) actors can create synthetic demand and trick traders into reading these indicators incorrectly. Wash trading can sometimes extend beyond the involvement of single actor and be conducted through the coordination of a group of sophisticated entities.
WBTC
Ticker symbol of Wrapped Bitcoin; basically Bitcoin that has been locked into a multi-sig escrow account on its native blockchain and had a tokenized version that is compatible with the EVM deployed. The purpose of this is to tap into Bitcoin’s relative reliability/stability in price for use in DEFI strategies. While this book is staying as neutral as possible by minimizing and avoiding the definitions of different cryptocurrencies; WBTC has become a foundational asset within the ever-growing multi-chain digital economy and is being used in so many different DEFI protocols that it is uncommon to not bump into this four letter symbol in chat rooms and community groups.
Weak hands
Market participants with low emotional tolerance to the radical price fluctuations of crypto; people that fumble the bag every time the price goes down. The term itself is intended to call out the traders/investors that are shaky in their levels of commitment, those that enter and exit positions based on emotional reaction, take losses and do not HODL. The opposite of diamond hands.
Weak Synchrony
A property of distributed systems that provides operational guarantees of a network regardless of finality. If a network is operating under the control of a malicious entity, it is expected to be subjected to this for an undefined but generally non-permanent amount of time; in events whenever a network loses its integrity to such event, it will still be able to operate and return to its real/true state whenever control is regained. Works in tandem with strong synchrony properties to secure communications over time.
WEF – World Economic Forum
WEF or the World Economic Forum is considered to be the most powerful/influential non-government organization for lobbying on behalf of multinational companies. Commonly looked down upon by the crypto folks for their sinister, shady, behind-closed-doors, elitist attitudes and involvements with individuals that are borderline “evil”; the WEF has a glorious mystery and boatloads of conspiracy theories floating around it. Nevertheless, WEF is an economic powerhouse headquartered in Geneva that conducts its annual meetings in Davos. To put things into perspective, it is this organization that releases statements such as “you will own nothing and be happy”.
Web 1
The earliest version of the internet. Web 1 is defined as the first iteration of a global network of connectivity that was rooted in a “Read Only” model. Users here had extremely limited functionality and could only consume information. During this era, the state of the internet was considered to be “decentralzied” in the sense that due the lack of corporate infrastructure interoperability was a core tenet of all protocols; meaning that all applications were able to interact with each other because they shared foundational protocols.
Web 2
The era of social media and user interactivity; the corporate internet that the developed world has begun to accept as being the only version of online communication. Web 2 was the evolution from Web1 that expanded user side experience from just reading to reading and writing. This phase of the internet was the consolidation of users within social applications owned by commercial entities; Facebook, Instagram, Reddit are all examples of Web 2 applications; the most centralized version, where all power and profit was captured by companies.
Web 3
The decentralized version of the internet that is built by using technologies such as blockchain. In this state, the principles of data ownership and privacy are retained by the end users through having identity obfuscated by pseudo-random wallet addresses. Here, tokens become the base units of account and foundational objects for value transfer. Web3 imbues the concept of money into communication and disintermediates companies from protocols, transforming connective technology into publicly owned goods.
WETH
Ticker symbol for Ticker symbol of Wrapped Ethereum; basically Ethereum that has been locked into a multi-sig escrow smart contract and had an ERC-20 tokenized version minted. The purpose of this is to leverage the EVM compatibility and allow ETH to be used on other networks. Additionally, by being tokenizes, a new surface area of increased flexibility for application in DEFI. While this book is staying as neutral as possible by minimizing and avoiding the definitions of different cryptocurrencies; WETH has become a foundational asset within the ever-growing multi-chain digital economy and is being used in so many different DEFI protocols that it is uncommon to not bump into this four letter symbol in chat rooms and community groups.
Whale
Within the hierarchy of crypto, exists the distinguishment of positioning/notoriety based on the size of an underwater creator. Whales, the largest known aquatic animals is used as the identifier for a grade of investors that have huge portfolios. Being in a caliber of their own, defining a whale is an imperfect art, but there are two general ways to do so; first applies to the community whale. This can be any single actor with more that 0.1% of a specific token’s supply. Considering that 0.1% would translate to one party owning 1/1,000 of the entire project that is a sizeable degree of control when measured against a world stage of ~8 billion people. The second type of whale refers to just generally monster sized investors that have portfolios worth north of $1,000,000,000 (1 Billion USD).
White Hat
A type of hacker that exists in accordance to the highest grade of moral/ethical purpose. White Hats exploit systems in order to patch vulnerabilities and help the creators of the systems mitigate any damage. This caliber of hackers are usually employed by the worlds leading cybersecurity agencies, are participating in bug bounty programs, and joining hackathons on teh regular. Think of white hat as the “angels” of software, hardware, and networks that do everything in their power to secure and protect.
White Label
To provide a software, product, or system while allowing companies to brand it with their own logos. White labeling is basically a business-to-business model of providing something created by one business (which owns the patent) to another and giving them the right to present it as their own. In crypto, whitelabeling is very common for the creation of applications such as centralized exchanges and wallets. Elements such as the layout of how a platform looks and how its functionality works does not have to be rebuilt; instead companies can just apply any changes they desire (such as the color palette or the logo) to align it with their brand image or customer demands.
White List
A method of authorizing inclusion/participation based on approvals for wallet addresses. Whitelists are for a wide range of purpose including accessing applications at early stages, qualifying for airdrops, granting NFT minting rights, joining DAOs, and so on. Whitelists are like VIP lists for entering a club, only those whose address is on a whitelist can enter with no alternative.
White Swan
White Swans are economic events that have two different meaning depending on the context and nature of conversations.
Meaning 1: Events that are foreseeable and anticipated that can be prevented if acted on and prepared for adequately. Due to the ability to predict it happening, a White Swan is a data-rich assumption that can have its impact/significance measured. White swans include a wide range of things such as recessions (which are expressed through increasing unemployment and monetary inflation alongside a declining GDP).
Meaning 2: Events that happen unexpectedly and bring positive things. This is an informal definition that is used by non-scholarly circles of people that just inverse the meaning of black swan events. Inverse of a black swan, White Swans could be something such as a business suddenly striking a deal that would lessen its obligation and give it enough time to settle its debts without resorting to default.
Whitepaper
A formal document written in an academic or technical tone that describes concepts in depth. Originally, Whitepapers were used to communicate complex, informationally dense subject matters for organizations to demonstrate their thought leadership in an industry. Over time, these documents started to generalize more began to be used as pamphlets for products. Within crypto, Whitepapers started out as the former, highly intelligent documentations that were a pre-requisite for any project attempting to come to market; unfortunately as the industry developed Whitepapers have become seemingly random form of documentation that are just utilized as a marketing instrument. Nevertheless, at its very core, a whitepaper exists for the purpose of educating as wide an audience as possible; they should address technical concepts without excluding non-technical people (to the best of their ability).
Wick
The thin line that extends off of candles on technical charts. Wicks indicate where price traveled within a certain timeframe but did not stay there. Also called shadows, tails, and whiskers, wicks are important for assessing an assets degree of volatility. Whenever a wick extended upwards, that shows price attempted to break upwards but was met with resistance and could not sustain the movement. Whenever extending downwards, wicks show that prices attempted to fall but were denied and support systems brought price back up.
Wind Down
The process of deleveraging a DEFI position by retracing all protocols and unwrapping tokens. Wind Down’s happen for three major reasons, either there has been a macro market shift and users are now losing interest in the industry, the yield opportunities that initially attracted the users is no longer appealing, or a liquidity crunch when an overleveraged position collapses at one of the protocols resulting in a chain reaction.
Wind Up
The process of entering a DEFI position by wrapping tokens through various projects for farming yield or gaining multi-variant leverage on a single form of collateral. Positions that are wound up go through a multitude of different protocols in an attempt to utilize the same asset through different venues. A prime example of a Wind Up is with Ethereum. Users take their ETH, deposit it into a liquid staking protocol, receives a token in return that expresses a claim on the underlying ETH and generate some percentage for doing so; then they take that claim and lend it out for another few percentage points; effectively stacking the avenues from which they earn a return on their ETH. A Wind Up can be as simple as one or two degrees of depth (as the example with liquid staked ETH) and can be as arbitrarily complex as the ecosystem allows for it to be.
Wrapping
The process of converting assets from different networks into tokens that are used to replicate their economic properties in alternative environments. There are two general methods of wrapping; one in which assets (such as ETH) are deposited into smart contract that act as neutral escrow agents and mints WETH in exact proportion to the deposit amount. The second in which assets (such as BTC) are deposited into a multi-sig account that is linked to another network; whenever Bitcoins are deposited into that multi-sid, the depositor specified their address on the destination chain and has a protocol/smart contract mint it to them there. As it exists today, all wrapping mechanisms are centralized because the entities that deploy the wrapping protocols will always retain the private/dev keys and technically present a counterparty risk to the users.
WSB
Acronym for the famous stock trading community of WallStreetBets. WSB came from a fly-on-the-wall Reddit page into a mainstream phenomenon by becoming the first known retail-driven community organization to wreak hedge funds/notorious financial institutions through their involvement with the Gamestop and AMC in 2021.
1 Terms
XBT
The ticker symbol for Bitcoin that is compliant with the ISO framework for assets. XBT arrived as an alternative to the original BTC symbol as a sign of it gaining legitimacy on the world stage amongst legacy financial institutions. The International Organization for Standardization specified that if an asset does not belong to any jurisdiction, then it must begin with the letter “X” as can be seen with the example of gold that is listed on worldwide platforms under the ticker “XAU” (X plus its chemical compound AU). Odds are that the vast majority of platforms will continue to list Bitcoin as BTC, traditional and those appeasing to regulators might have it under the XBT code.
4 Terms
Yellow paper
A document containing experimental concepts that have not been verified by the broader community. Yellow papers are precursors to formal documentation and are used to draft theories/high-level concepts of technically dense information. After they receive a formal authentication (called a peer review process, by an accredited entity) these documents are inducted into academic journals.
Yield
Profit/income generated by an investment in a passive form. Yield is basically money that is earned for putting assets to work for you; one of the most intuitive models of generating yield is through lending/borrowing. If you have $10,000 and you let them sit in your wallet, then in one years time it will still be $10,000. If you put it into a savings account at 5% apy, then in one years time it will be $10,500. If you lend it to a business to help them finance short term operations and they can guarantee you 12% apy, then in one years time you will collect $11,200. The profit generated from using the assets is $1,200. In the world of crypto, there are limitless models of generating yield; you can provide liquidity to a DEX and collect the transaction fees as yield, you can lend your crypto, you can provide liquidity to a DEX then wind up your position by further locking up the Liquidity position in a new project that will pay you service fees in their tokens.
Yield Curve
The plotting of potential yield return on a chart. The Yield Curve is just a visual expression of what the expected outcome of a strategy might be. If a curve is “normal” then it will have the shape of a belly; with a maximum opportunity located at the top of it before the degree of the curve begins to slow down in proportion to larger sums/longer time frames. If a curve is “flat” (which defeats the entire concept of a curve), then the return on an investment will not change regardless of increases in size or duration. If a curve is “inverted” then the asset is considered a liability because it shows that owning it is actually costing you money instead of making it for you.
YTD – Year to Date
A measurement of activity that happens in the time frame of the year’s start, up until the current date. YTD is helpful in expressing how an asset/market has performed specifically within the context of the current year; however, it can be broadened to represent any arbitrary thing that must be measured, such as interest paid, revenue earned, losses/profits incurred, and so on.
2 Terms
ZKP – Zero-Knowledge proofs
A cryptographic protocol used for preserving the privacy of sensitive information by using a model of proving the validity of something instead of directly exposing the information itself. ZKPs can the thought of a class of technology used as an alternative method of authentication. By breaking down the term itself we can arrive at the underlying concept of it; Zero Knowledge Proofs. The first portion of Zero-Knowledge means that nothing is known, the second portion, proofs is the ability to verify the validity of something; via a reverse engineering we can see that ZKP are designed to verify the truth of a statement without having any knowledge of the subject shown.
Example: Sally loses her iPhone at the Cafe. A barista finds it on the ground and puts it behind the counter with a sign that says “IPhone Found”. Sally runs back and sees the sign; relieved, she asks the barista to return her phone. But the barista is not just going to be duped by a random stranger, so he asks Sally to prove that it is her phone. Sally says she can unlock it because she knows the code; through association, knowing the unlock code proves it belongs to her. Instead of just telling the barista the code, Sally asks to put it in herself. If she manages to unlock it, she keeps it. By tapping in the code and unlocking the phone, Sally proves it is her phone because she knows the code without having to reveal the code to the barista.
zkRollup
A layer two scaling solution with the properties of zero-knowledge technologies. By taking the privacy preservation and proving capabilities ok ZKP’s and combining them into the scaling powers of a rollup, a sophisticated new grade of technologies that is superior to any of its predecessor solutions arrives. The technical implementations are complex and varied, but all that matters is how the tech itself can be applied (and of course whether or not it is properly built).
