Complete list of crypto related terms

Crypto has a lot of terms and jargon that can be daunting for a newcomer. That is why this list was created, as a one-stop shop for all the jargon you might encounter while on your crypto journey.

AI

Artificial intelligence (AI) is a new technique in which computers are using self reinforcing algorithms in order to learn specific tasks that are usually done by humans. In the context of cryptocurrencies, AI is mainly used to perform data analysis, execute trading strategies but also to index data.

ASIC

ASIC (Application-Specific Integrated Circuit) is a specialized hardware device designed for a specific tasks. Within crypto, ASICs are used for mining crypto. As they provide more computational power and work more efficient than normal PC hardware such as CPU’s and GPU’s. Cryptocurrencies that are mined with ASICs are BTC, PPC and FRC among others.

Atomic swaps

An atomic swap is a transaction between 2 parties from 2 different blockchains. With this transaction, the deal is settled immediately without the need of an intermediary. The purpose of atomic swaps is to make trustless transactions accross blockchain networks possible.

Blockchain

A blockchain is a distributed ledger network that records transaction. It ensures that the transactions are stored safe and can’t be tempered with.

Byzantine fault-tolerant (BFT)

The byzantine fault-tolerance or BFT, is a mechanism in place on blockchain networks. The byzantine fault-tolerance refers to the ability of a blockchain network to continue operating properly even when not all parts are working properly and thus are faulty.

On most blockchain networks, a 50% or two-third consensus must be reached for a new transaction to be approved. With this 50% to a third of the network can work improperly to still ensure proper operations of the network.

Cloud computing

Cloud computing refers to the practice of accessing and utilizing computer resources, such as storage, processing power, and software applications, over the internet rather than locally on a hard drive. This makes it possible for companies and individuals alike to enjoy the computer resources they need, whenever they need it. Without the hassle of purchasing and having physical room for it.

Cold/hot wallet

A cold wallet refers to a cryptocurrency wallet that is offline and of whom the private keys are stored offline. This makes it less vulnerable for online attacks such as hacking. A hot wallet is a cryptocurrency wallet that is connected on the internet. A hot wallet is usually chosen when accessibility is preferred over security.

Consensus mechanics

Consensus mechanisms are protocols and algorithms that agree and validate transactions on a blockchain. This is done automatically by the nodes of a blockchain. Two well-known consensus mechanisms are Proof of Work (PoW) and Proof of Stake (PoS) which are two different consensus mechanisms utilized by nodes to come to an agreement.

Cryptocurrencies

Cryptocurrencies are virtual currencies with cryptographic principles behind it. These cryptographic principles ensure that the cryptocurrency has secure transactions. Furthermore is it possible with these principles to create creation new cryptocurrencies and verify the transfer of the currency. Cryptocurrencies are typically decentralized and transparent in nature and operate independently from banks.

Cybersecurity

Cybersecurity refers to the protection of computer systems and networks from unauthorized access and attacks.

DagSor

DagSor stands for “Directed Acyclic Graph Sorted” It is a specific implementation of a directed acyclic graph (DAG) structure used in the Lachesis Protocol, which is designed to achieve fast and scalable consensus in blockchain networks.

DagSor stands for “Directed Acyclic Graph Sorted” which is an implementation of directed acyclic graph (DAG) structure based consensus protocol. Simply put, it is a structure that enables efficient processing of transactions. Furthermore, it is inherently designed to enhance the performance and the scalability of the blockchain employing it.

Decentralized apps (Dapps)

Dapps or decentralized apps are applications that run on decentralized networks such as a blockchain.

Decentralized content distribution networks

Decentralized content distribution networks (CDNs) are networks that distribute digital content without relying on a single server.Instead of a single server, a peer-to-peer structure is usually used. The content hosted can either be files, photos or videos.

Decentralized finance (DEFI)

Decentralized finance (DeFi) refers to the use of blockchain technology to create financial service you and I use everyday without the need for intermediaries. Financial services that are being created on blockchain includes for example lending and trading.

Directed acyclic graph (DAG)

A directed acyclic graph (DAG) is a data structure that employs nodes. In this each node is dependent on each other. This is usual for blockchain based data structures. However DAG differs from other data structures as it doesn’t allow traversing back to the previous node after information has been sent. Making DAG non repeatable.

DPoS

Delegated Proof of Stake or DPoS is a consensus mechanism used in blockchain networks to achieve validation of transactions. It differs from the traditional Proof of Stake in the sense that with proof of stake every token holder can participate in block validation. With Delegated Proof of Stake this is not the case, as with this system a few trusted individuals are chosen to validate the transactions. These are known as the delegates. These delegates are chosen based on a voting and reputation-based system to ensure the trustfulness of the delegates.

By reducing the number of validators, DPoS achieves faster block confirmation times and higher transaction output compared to other consensus mechanisms like Proof of Work (PoW) or the already talked about Proof of Stake (PoS). It also requires less computational power which in turn makes it more energy efficient.

ERC-20

ERC-20 is the most adopted standard for creating and issuing tokens on the Ethereum blockchain. The protocol provides a set of rules that allows for compatibility and interaction between other tokens. Furthermore ERC-20 protocol allows the use of smart contracts.

Other protocols on the Ethereum blockchain exist. Such as ERC-621and ERC-827.

ERC-223

Is a proposal for a token protocol on the Ethereum blockchain. The main advantage over ERC-20 is that transactions cost less gas compared to ERC-20.

ERC-621

Is an extension on ERC-20 and allows 2 new functions. increaseSupply to increase the total supply and decreaseSupply to decrease the total supply.

ERC-721

The ERC-721 protocol aims to make tokens that have a different value from another. With the ERC-20 protocol each and every token represents a 1:1 value. With the ERC-721 protocol this is not the case and a token of the same type can be worth 10 times more than another token. This is useful for things like real estate, where there are multiple owners of a building with a different stake. Or energy contracts where the source of electricity is different.

ERC-827

Is another extension protocol for ERC-20 that allows for spending of tokens by a third party (if the owner agreed with it).

ERC-1155

ERC-1155 is a standard interface that allows smart contracts to accept multiple types of tokens. This includes normal tokens but also NFTs.

Exchange

An exchange is a platform where cryptocurrencies can be bought, sold, and traded.

Fiat

Fiat currencies are government-issued currencies that are not backed by a physical commodity like the US dollar or euro. They serve the purpose of being a medium of exchange.

GHOSTDAG (Greedy Heaviest Observed Sub-Tree Directed Acyclic Graph) protocol

GHOSTDAG or greedy heaviest observed sub-tree directed acyclic graph is a protocol designed to increase the security and performance of consensus mechanisms on the blockchain. GHOSTDAG aims for two things: security, which is done by utilizing a voting system that determines the most valid and correct blockchain network. And throughput, as the GHOSTDAG uses a system for parallel processing of transactions. With this system transactions don’t have to wait on each other for confirmation but instead can be confirmed simultaneously.

Hard fork

An hard fork is a permanent split from in a blockchain network in which 2 separate versions exist. The original one with its original rules, and a second one with different rules and sometimes protocol.

Impermanent loss

Impermanent loss refers to the temporary loss of value by people that provide dual asset liquidity. This is when someone deposits 2 cryptocurrencies and the price changes significantly. This can make it that, due to exchange rate of the coins, you will encounter a loss comparatively to simply holding the coins.

Interoperability

Interoperability refers to the ability of different blockchain networks to work together.

IoT

Internet of Things refers to connecting things such as washing machines, fridges and heating units to the internet. This to ensure inter-connectivity between the objects.

Lachesis protocol

The lachesis protocol is a consensus protocol designed with speed and scalability in mind. It aims for a fail resistant consensus mechanism that has fast transactional speed.

Layer 1

Layer 1 refers to the base layer of a blockchain, which is typically the blockchain in itself. It is the foundation on which data is stored and transactions are executed.

Layer 2

Layer 2 solutions are protocols built on top of existing blockchains. They generally serve the purpose to either scale up the existing blockchain or make it more efficient.

Ledger

A ledger is a record-keeping system that stores and tracks all the transactions on a blockchain. This to ensure transparency of the blockchain.

Liquidity

Liquidity refers to the ease with which you can buy or sell something in the market without impacting the price. Things with high liquidity can easily be bought or sold without positively or negatively impacting the price. Cryptocurrencies with a low liquidity experience great jumps in price, both upwards and downwards, when large orders are placed.

Masternodes

A masternode is a node that performs additional tasks on a blockchain compared to a normal node, which only provides transaction verification.

Metaverse

The metaverse is a virtual reality space in which users can interact with the world they are in as well as each other.

Mining pool

A mining pool refers to a collaborative group of crypto miners. They work together and combine there computational resources in order to mine cryptocurrency blocks. By working together they increase their chances for a payout which they split amongst the group proportionately.

NFTs

A NFT, which stand for non-fungible token, is a unique digital asset that is like no other. It is comparable to the digital version of art, as it is unique and the price depends entirely on the perception of the piece.

Nodes

Nodes are an integral part within blockchain as they maintain a copy of the blockchain and are capable of validating transactions. Nodes can be two types. full nodes, storing the entire blockchain, or lightweight nodes that rely on full nodes but can verify transactions.

Oracle network

An oracle network is a system that gets and verifies data and posts it on the blockchain. Thus giving things like smart contracts and decentralized apps access to data.

peer-to-peer transactions

A peer-to-peer (P2P) transaction is a transaction from one individual to another.

Play-to-earn

Play-to-earn is a gaming model in which the players earn rewards for actively participating in the game. These rewards are often monetary, consisting of tokens, cryptocurrencies or in some cases even fiat currencies.

Practical Byzantine Fault Tolerance (PBFT)

Practical byzantine fault tolerance or PBFT, is a consensus algorithm that maintains the fault tolerance of a blockchain. The fault tolerance rate refers to how much of the blockchain can work improperly, with the blockchain still operable.

Self-amending

Self-amending within the crypto realm refers to the ability of a blockchain or a protocol to automatically update and modify its own rules and features while requiring no external assistance. This doesn’t mean that it is autonomous however, as most of the decisions are based on the votes from the token holders of the blockchain. As they still govern the system.

Sidechains

Sidechains are essentially seperate blockchains that run on the main blockchain. It is commonly used as an additional layer of protection and adds scalability for transactions on the network. Popular cryptocurrency projects that use a sidechain are Polkadot and the Lightning Network.

Smart contracts

Smart contracts are like normal contracts but then on the blockchain. These contract have predetermined terms and conditions and are automatically executed when those terms and conditions are met. This ensures that intermediaries are not needed for things like regular transactions, which is one of the things that can be done with smart contracts.

Stablecoins

Stablecoins are cryptocurrencies that are designed to have a stable value. They are usually pegged to a fiat currency and are the blockchain versions of those currencies. hey provide stability within the volatile cryptocurrency market, making them perfect for use in transactions.

Staking

Staking is the process of holding and locking up cryptocurrencies in order to earn a reward in the form of interest. Think of it as a savings account at the bank. For the blockchain that is giving out these rewards, the staking is necessary. As those staked tokens power the consensus mechanism and thus provide the security of the network.

Tokenization

Tokenization is the process of representing real-world assets or rights as digital tokens on a blockchain. By tokenizing an asset, the possibility for fractional ownership and increased liquidity of the asset is unlocked. This is particularly helpful for assets that typically command a high price and are quite illiquid such as art, intellectual properties and real estate.

Tokenized asset

Tokenized assets or synthetic asset, are traditional assets such as stocks that have a token representation on the blockchain. This token gives the holder of the token the (fractual) ownership of the asset that is tokenized.

Tokenomics

Tokenomics refers to the economics and incentives behind a token. Tokenomics are the driving force (alongside supply and demand) for value increase within tokens. This due to the fact that the tokenomics dictate factors like token distribution,total supply, utility and use case of the token as well as mechanisms that can lead to value appreciation such as a token burn.

Tokens

Tokens are digital currencies on a specific blockchain. These tokens are commonly used for services or activities on certain blockchain networks. This can range from using tokens for games to using tokens as a way to rent out decentralized storage on the blockchain. Within tokens 2 types exist, either fungible tokens (interchangeable with other tokens of the same type) and non-fungible tokens (unique and not interchangeable) also know as NFT’s.

Virtual real estate

Virtual real estate are digital properties within virtual worlds. These properties can be bought, sold and depending on the virtual world that they are in, also be rented out or in another way generate income from such as taxes (such as with buying a planet in Entropia universe, a game released in 2003). Common cryptoprojects that allow the sale of virtual buildings and land include: Decentraland and the Sandbox.

Volume

Volume is a common term in finance and crypto that refers to the total amount of assets (which can either be stocks, cryptocurrencies or contracts) traded over a specific time period. Volume thus reflects the activity on the markets but also to a degree the interest. As a high volume indicates a significant amount of trading while low volume suggest low trading activity.

VR/AR

Virtual reality is a simulated experience in which an virtual immersive world is build and entered. Comparable to a game world. Where as with augmented reality virtual elements are placed in the physical world. Making the elements immersive. Both technologies have the aim to enable it’s users to experience virtual worlds and interact with digital assets in a more engaging and interactive manner.

WEB3

WEB3 refers to the next generation of internet that is utilizing blockchain technology. The goal is to create a user-centric and decentralized internet that promotes transparency and privacy, While maintaining the users ownership of its own data.

Yield aggregators

Yield aggregators are decentralized finance platforms that seek out opportunities for yield farming. This is done by scouring multiple platforms in order to optimize returns for there staking efforts. Yield aggregators aim to streamline and optimize yield farming. While saving users time and effort (as they don’t need to conduct research anymore) while hopefully increasing staking returns.

Yield farming

Yield farming is a concept in which cryptocurrencies are staked in a liquidity pool to receive rewards. With the reward normally consisting of either additional tokens/cryptocurrencies or a part of the generated fees. In simple terms, it is earning an interest on your crypto assets.

zk-SNARKS

zk-SNARKs, which stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledgeis a cryptographic technology used to enable privacy and confidentiality in blockchain transactions. It allows for someone to demonstrate knowledge of certain information without revealing any details regarding the information. This ensures verifiable proofs while guaranteeing privacy.

Where to buy crypto

Cryptocurrencies and tokens are buyable on Bitvavo (Europe focussed), Bybit (Global focus) and Kucoin (Asian/Global focus).