📔Crypto Dictionary
Terms and expressions from the crypto universe to facilitate understanding.
All-Time-High (ATH)
The highest value (in price, marketcap, etc.) that a cryptocurrency already had in its history.
API
API It is a type of software that acts as an intermediary or bridge between two different applications. It is what allows applications, data and devices to interact.
Decentralized applications (dApps)
Applications that run on decentralized, peer-to-peer networks such as Ethereum.
Application-Specific Integrated Circuit (ASIC)
Refers to computers that are designed to perform a specific type of task such as troubleshooting the mathematical problems involved in cryptocurrency mining.
Arbitration
A strategy where investors buy a currency in one market and sell it at a higher price in another market with the aim of making a profit.
Attack 51%
A type of attack performed on a blockchain with a group of miners controlling more than 50% of the network hashrate.
Sybil attack
It is a form of attack on a network, in which an entity generates many IDs (identities), unbalancing the distribution of power within the network.
Atomic Swap
Refers to the exchange of cryptocurrencies that operate on different blockchains without intermediaries.
Automated Market Maker (AMM)
Automated market maker. Model used by decentralized exchanges to match buyers and sellers, unlike the model of Order Book, used by centralized exchanges.
Beacon chain
Auxiliary Blockchain of the Ethereum network, which coordinates the shard chains, manages staking and registration of validator nodes in the Proof of Stake mechanism.
Block height
A number that is used to indicate a block's position on the blockchain Private Blockchain.
Blockchain
In the case of bitcoin, it is a decentralized, public ledger that contains all transactional information.
Private Blockchain
A blockchain network in which only one organization has authority over the network.
Block
In the context of blockchain, it refers to data relating to transactions or information that is grouped into a predetermined size.
Capitulation
Process of total sale of assets, when there is no prospect of profits. Miners capitulate, for example, when the mining rewards are no longer enough to offset the energy costs necessary for continued operation.
Custodial Portfolio
Wallet that is in custody of a third party - an exchange like Binance, for example.
Non-custodial portfolio
Wallet that is under the care and responsibility of the owner himself, who is responsible for the security and supervision of his digital assets.
Private key
A piece of code generated via asymmetric cryptography, which paired with a public key decrypts information encrypted with the public key.
Public key
Series of alphanumeric characters associated with a user of a blockchain network, with the function of encrypting information. It is derived from the private key.
Client
Implementation of software that interacts with one type of network - distributed networks for example - by processing data on a local computer. An example of a client can be a wallet, which interacts with different protocols, or even a browser, which interacts with internet addresses.
Coinbase Transaction
Transaction in which coins are created. For example, when Bitcoin miners validate a block, in the transactions of that specific block there will be a coinbase transaction that indicates the reward to the miner for his mining.
Cold wallet
Wallets that are offline and need physical access to a device such as hardware wallets and paper wallets.
Quantum Computing
Computing technology that incorporates quantum mechanical properties to perform computations much more efficiently than current computers allow. Many wonder about the risks that quantum computing brings to current cryptography - but this one could also incorporate elements of quantum computing in order to improve their cryptographic algorithms.
Block confirmation
Refers to the number of times that block was validated. every block that references another block commits it once more.
ConsenSys
Technology company offering development tools and blockchain solutions for other companies.
Crypto asset
Any and all digital assets that retain their value or usefulness through cryptographic technology.
Asymmetric Encryption
Encryption that uses two keys, one public and one private, in order to guarantee more security in the transmission of a message. The asymmetrically encrypted message cannot be decrypted without both keys. Differently, in symmetric cryptography, the information can be decrypted from the unique key.
Elliptic Curve Cryptography
Type of cryptography used to generate a public key from a private key. Used in Bitcoin cryptography.
Cross chain
Technology that allows the interconnection of blockchains of different protocols to communicate, and verify data and values.
Cypherpunk
Participant in a movement that uses cryptography and other privacy technologies in favor of political and social advances.
Delegated Proof of Stake (dPoS)
A consensus mechanism where network members are voted to become delegates and validate transactions and produce blocks on a blockchain.
Decentralized Autonomous Organization (DAO)
Open source systems that do not require centralized operators or controllers.
Decentralized Finance (DeFi)
Refers to the ecosystem of dApps that focus on finance, without a central authority or censorship.
DEX
Decentralized exchanges allow exchanges (swaps) between cryptocurrencies without the need for intermediaries.
DEX Aggregator
Relatively new blockchain technology that presents a cluster of financial tools to the user in a single interface, often with good liquidity and prices in crypto pairs.
Mining Difficulty
Block mining time adjustment mechanism, used in Bitcoin Proof-of-Work. When there are many miners on the network, the mining difficulty increases so that the block is mined in its expected and predetermined time.
Dominance
Refers to the percentage of a token's market capitalization in relation to the total cryptocurrency market capitalization.
ERC-1155
A standardization of the Ethereum network that allows contracts to support multiple token types - fungible or not.
ERC-20
Standardization required for issuing fungible tokens within the Ethereum network. Examples of ERC-20 tokens: LINK, UNI, YFI, etc.
ERC-771
Standardization required for issuing non-fungible tokens (NFTs) within the Ethereum network.
ERC-998
Standardization of the Ethereum network that allows the creation of Composable Tokens - composite tokens.
Ponzi Scheme
Fraudulent investment scheme where return to current investor comes directly and mostly of new participants. Without new entrants, the scheme breaks down, hurting newer investors.
Ethereum Improvement proposal (EIP)
It refers to proposals for improving the Ethereum protocol, it is used to implement updates to the protocol.
Ethereum Virtual Machine (EVM)
Virtual machine on which every node on the Ethereum network runs, performing validations on the network, maintaining general consensus. It's also where Smart Contracts are executed.
Exchange Traded Fund (ETF)
Funds traded on stock exchanges. Funds generally represent a basket of assets, and are purchased and sold as a single asset.
Block explorer
Sites that provide information such as the status of a certain transaction or data contained in a block on a public network
Faucet
Cryptocurrency reward system, in some blockchain protocol or game, given to users for completing some task.
Flash loan
Flash loans are a type of loan offered in certain DeFi protocols, in that no collateral is required, and are completed almost instantly.
Fork
Fork is a modification to a code; there are two types of forks: Hard Forks - a radical upgrade to the protocol makes the upgrade of the blockchain incompatible with the previous version, thus creating two blockchains that coexist. Soft Forks - an update that is backwards compatible and not as radical as a hard fork.
Full node
Nodes that download the entire database from a blockchain network to perform block validation on the network.
Double spend
Double spending happens when a user manages to spend the same digital coins more than once.
Geth (Go Ethereum)
A type of Ethereum client that uses the Go programming language, with which to run nodes and develop smart contracts.
Governance
In crypto, governance refers to the body of users who have decision-making power over a project, power usually acquired through the acquisition of specific tokens.
Gwei
gwei is short for giga(10^6) wei, wei is the smallest part of ether. 1 ether = 10^9 gwei. It is often used when talking about the price of gas
Hardcap
It is the maximum and absolute offer of an asset. Some assets, such as Bitcoin, have a Hard Cap, others do not.
Hash
Hash is the result of a hash function; this mathematical function turns any data input, of variable size, into an output of unique size and identity. Hash functions are known as trap-door functions, which means that it is impossible to discover the used input from the output.
HODL
Slang used to refer to those who make long-term investments in crypto assets. Hodlers generally overlook market fluctuations because they believe in the evolution of their investments over the years.
Impermanent Loss
Temporary loss caused by volatility causing divergences in price between the token pair provided by liquidity providers.
Initial Coin Offering (ICO)
Type of crowdfunding, where cryptocurrency/token is used to raise funds for the operation of a company.
IoT (Internet of Things)
Network of equipment, sensors, and software capable of communicating with each other, establishing the exchange of collected data, in real time, via the Internet.
Know Your Customer (KYC)
“Know your customer” is a customer registration process implemented as a control measure.
Layer 1 Blockchain
Solutions aimed at improving scalability, security or decentralization, in the base protocol of the network.
Layer 2 Blockchain
Scalability solutions that do not involve modifications to the blockchain base protocol, and at the same time do not make the network security unfeasible.
Liquidity Pool
Cryptoassets are accumulated, used to facilitate exchanges between currency pairs; are also known as “LPs”.
Mempool
Abbreviation for Memory Pool. It concerns the set of unconfirmed transactions on a blockchain.
Metamask
Digital wallet, which works both as a browser extension and on mobile. Adapted for Ethereum and ERC-20 tokens.
Metaverse
Virtual world, with ambitions to have the same properties as the real world, such as real-time interactions, and real economy.
Miner Extractable Value (MEV)
Measure of profitability that a miner can have, either including or excluding transactions in the blocks they produce.
Nonce
Answer given as a solution to a hashing problem, with the aim of validating a block, given the difficult conditions - like Bitcoin.
Nodes
It is the most basic unit for a blockchain network. Stores and processes data, updating the network in conjunction with other nodes.
Open source
Open-source development makes it possible for anyone to access, study or modify software or code, allowed by the owner/creator of the code.
Oracle
In the context of cryptocurrencies, it concerns services that verify real-world data and provide it to smart contracts on the blockchain.
Over-The-Counter (OTC)
Transaction made outside exchanges, usually peer-to-peer. Usually made for high values, aiming at lower rates.
Parachain
They are blockchains that run processes in parallel, and are specific parts of the Polkadot network architecture. They are highly customizable blockchains, and allows for interoperability between other non-native blockchains. Parachain locators use the system to develop their own projects, keeping collateral in DOT for this. Parachains are being marketed through auctions.
Parathread
It has essentially the same functionality as a parachain, but with a sporadic transaction processing model, and with compensation to the Polkadot network through fees per mined block.
Cryptocurrency Pairs
Model used by decentralized exchanges to facilitate exchanges between different cryptocurrencies.
Peer to Peer (P2P)
A communication protocol between switches that does not require a central command.
Privacy Coins
Cryptocurrencies that take account of the anonymity of transactions and user privacy in their design.
Problem of the Byzantine Generals
Theoretical experiment that illustrates the difficulties of communication between two parties, through a medium unreliable. Such an experiment was used to develop consensus solutions in blockchain networks, as was done in Bitcoin.
Proof of Authority (PoA)
Consensus mechanism in which validating nodes do not stake tokenized values, but their identities, giving up their anonymity to validate blocks and raise rewards.
Proof of Stake (PoS)
Consensus mechanism in which blocks are validated by validator nodes - and not miners like in PoW. Validator nodes have a “stake”, usually a network token, deposited in the network's own protocol. Stakeholders - who make a stake - receive rewards for keeping the network healthy, and can be penalized for irregularities in the blockchain, having their stakes burned (slashing).
Proof of Work (PoW)
Consensus mechanism first popularized by Bitcoin. Nodes validate blocks, competing with each other to solve an energy-intensive cryptographic problem and resources (specific hardware), hence its name - "proof of work".
Protocol
Set of codified rules that define interactions in a network, involving consensus laws, transaction validation and network participation.
Liquidity Provider
Users of decentralized exchanges provide liquidity by depositing tokens that they own, in a certain liquidity pool, where other users can take advantage of loans.
Pump & Dump
Fraudulent and artificial scheme for asset price inflation, with positive but false news, with the aim of profiting from the spread prices, selling higher.
Block reward
One of the mechanisms used to encourage validators, when a block is validated your validator earns a reward.
ASIC resistant
A term used to describe cryptocurrencies that use the proof-of-work protocol that use several parameters that make mining difficult using ASICs, thus favoring the use of consumer hardware for mining.
Roadmap
Detailed visualization of a project or protocol, which maps the intentions and direction that such project intends to take.
Satoshi Nakamoto
The individual - or group - creator of Bitcoin. To this day, it is not known for sure who he was.
Security & Exchange Commission (SEC)
Independent American agency, responsible for proposing regulations for the securities market.
SHA-256
A cryptographic hash function that generates a 256-bit output, used in Bitcoin's Proof of Work consensus mechanism.
Sharding
Layer 1 scalability solution, in which the state of the blockchain is separated into several parts, aiming at parallel processing.
Short
Trading technique in which an asset is borrowed, a cryptocurrency for example, and sold, in order to to buy it cheaper in the future, given an expected depreciation - and thus return it to the original owner, profiting from the price differential.
Silk Road
Black market that existed on the dark web, where payments could be made with cryptocurrencies. It was shut down by the FBI.
Slippage
Occurs when there is a price movement in an asset, which requires the buyer or trader to accept the difference between the current price and the required price at the time of purchase.
Solidity
Javascript-based programming language developed by Gavin Wood, co-founder of the Ethereum network, used for creating smart-contracts on Ethereum.
Stablecoin Algorithmic
tokens priced at “stable” assets like fiat currencies that use algorithms to maintain their price.
Collateralized Stablecoin
Digital asset that fixes its quotation based on a ballast in real reserves. This type of asset requires confidence in the issuer and its holding of reserves. An example of a collateralized stablecoin is Tether.
Staking
The act of locking up a significant amount of a certain token to participate as a validator in a Proof-of-Stake (PoS) network staking.
Staking Pool
A way of staking, through pools. Barriers to entry become lower, as do the rewards. Different pools offer different possibilities, be it entry price or penalty mechanisms.
State
In computing and blockchain technology, state or state is the ability to a machine for remembering previously performed interactions and computations. With each new operation, a new state.
Tamper proof
Something that cannot be modified or changed - inherent property of a blockchain network.
Composite Tokens
They are basically NFT tokens, which have the property of incorporating other tokens, fungible or not, functioning as a portfolio.
Non-fungible Tokens (NFTs)
They are collectible elements within a blockchain, where each token is unique, i.e. there is no fungibility as in the case of bitcoin where one bitcoin is always equal to another.
Burnt tokens
Tokens sent to addresses whose private key is unknown, effectively taking them out of circulation.
Byzantine Fault Tolerance
Refers to if the ability of a network to reach a consensus among its participants, even in the face of the failure of some components of the network.
Blockchain trilemma
It illustrates the difficulty of achieving three desirable characteristics in a blockchain network: security, scalability and decentralization.
Unspent Transaction Output (UTXO)
Similar to change in an ordinary transaction. Every Bitcoin transaction, for example, generates a UTXO, which tells the system which coins a user has not yet spent efficiently.
web 1.0
The first era of the Internet, created in the mid-1990s. Internet pages were not interactive, so users could only read them.
Web 2.0
The second era of the internet, marked by the vast interaction between users, along with the centralization of data by centralizing entities. For example, billions of people provide their personal information to Facebook in order to use its social platforms.
web 3.0
The new age of the internet. Set of ideas and technologies that aim to put the control of data on the internet in the hands of the user - among them, blockchain.
Whale
A user who has a large amount of cryptocurrencies, which may even cause price fluctuations due to movements of sale or purchase.
Yield Farming
The act of depositing cryptocurrencies over a DeFi protocol in connection with collecting interest and trading fees.
Zero Knowledge Proof
Cryptographic proof for 2 parties to verify a value without revealing what the value is
Zero Knowledge Rollups
Layer 2 scalability solution, where transactions are processed outside the blockchain, and evidence of credibility in transactions is produced in a way that makes processing lighter for the system. The solution is being adopted by the Ethereum network.
Zero Knowledge Succint Non-interactive Argument of Knowledge (Zk-snarks)
Zk-snarks refers to a protocol where someone can prove ownership of a piece of information without revealing it. what that information is and still no interaction between the verifier and whoever has possession of the information.
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