An address on a blockchain is a string of characters that represents a wallet that can send and receive cryptocurrency. It is akin to a real-life address, email or website. Every address is unique and denotes the location of a wallet on the blockchain. (Source).
Artificial intelligence (AI) is the ability of a computer or a robot to perform tasks that are usually done by humans because they require human intelligence and discernment. Specific AI is designed to complete one task very well e.g. play Go, whereas General AI represents the ability to perform across multiple tasks like a human. General AI has not yet been achieved. (Source)
An airdrop refers to a method of distributing cryptocurrency to the public, via the fact that they own certain other tokens or wallets on a particular blockchain. This is usually done for marketing purposes to incentivize the holding of other tokens or induce them to become a participant in the blockchain network. It is analogous to a rights or bonus issue on a traditional security. (Source)
An air gap is a security measure in which computers, computer systems or networks are not connected in any way to any other devices or networks. This is used in instances requiring airtight security without the risk of compromise or disaster. (Source)
Any cryptocurrency other than the original cryptocurrency, Bitcoin, is known as an alt-coin.
An application programming interface (API) is a connection between computers or between computer programs. It is a type of software interface, offering a service to other pieces of software (Source)
Asset-backed tokens are digital claims on a physical asset and are backed by that asset. Gold, crude oil, real estate, equity, soybeans or just about any other real, physical asset can be tokenized and become an asset-backed token. (Source)
Atomic exchange/ Atomic swap
The transfer of cryptocurrency from one party to another, without the use of an exchange or other intermediary. (Source)
Asynchronous means not simultaneous, or not happening at the same time or speed. In computer science, asynchrony refers to the occurrence of events that are independent of the main program. In an asynchronous system, operations are not coordinated by a global clock signal, but rather events (changes in the system), meaning that they are not reliant on external signals for their reliable operations. (Source)
Decentralised Applications (DApps) are a type of application that runs on a decentralised network, avoiding a single point of failure. (Source)
Baking is a process that is used by Tezos in order to append new blocks of transactions onto its blockchain. This is a delegated-proof-of-stake system, where bakers receive rewards for each block that is baked. (Source)
Any data that is too big for conventional systems or methods to handle. The data could be “big” due to variety (range of data types present e.g. dates, alphanumeric, images), velocity (speed of data transmission or arrival e.g. real-time feeds) or volume (number of data points). (Source)
A cryptocurrency that enables payment in a decentralized peer-to-peer (P2P) network not governed by any central authority or middleman. Bitcoin was the world’s first widely-adopted cryptocurrency. (Source)
Bitcoin Cash is a cryptocurrency created in 2017 from a hard fork of bitcoin. Bitcoin Cash increased the size of blocks, allowing for more transactions to be processed in a single block, improving scalability. (Source)
A file on a blockchain containing information on transactions completed during a given time period.
A blockchain is a type of ‘distributed ledger’ database that allows records of asset ownership to be updated via a network of computers and added as a ‘block’ to the chain, without the involvement of a central party, such as a bank. Blockchains are cryptographically secure, decentralised, append-only (data cannot be changed or removed) and updated by consensus. (Source)
An application enabling a user to view transactions details of blocks on a given blockchain. Block explorers are a key part of cryptocurrency’s mssion of transparency and decentralisation. Example can be found here.
Byzantine Generals Problem
The Byzantine Generals Problem is a theory which describes the difficulty decentralized parties have in arriving at consensus without relying on a trusted central party. In a network where no member can verify the identity of other members, how can members collectively agree on a certain truth? More here. (Source)
Cardano is a third-generation, decentralized proof-of-stake (PoS) blockchain platform designed to be a more efficient alternative to proof-of-work (PoW) networks. Scalability, interoperability, and sustainability on PoW networks like Ethereum are limited by the infrastructure burden of growing costs, energy use, and slow transaction times. (Source)
Centralised decentralised finance (CeDeFi) combines centralised traditional financial services with decentralised applications, merging conventional regulatory policies with modern financial products and infrastructure. (Source)
Central Bank Digital Currencies (CBDC)
Central Bank Digital Currencies (CBDC) are digital fiat currencies, or digital cash. They are similar to cryptocurrencies, however are centralised and backed by the state. (Source)
A software program a user executes on a desktop, laptop or a mobile device to launch an application. (Source)
Cloud computing is a general term for anything that involves delivering hosted services over the internet. Processing is performed on a remote server rather than on the client’s device. Most mobile apps take full advantage of cloud computing technology to process large amounts of data that would be inefficient or impossible on a mobile device, serving results of the processing back to the device. (Source)
A cryptocurrency wallet that is in offline storage (i.e. not connected to the internet), and is thus protected by an air gap. (Source)
In cryptocurrency, collateral tokens are used as a risk mitigation asset when borrowing other types of crypto tokens. (Source)
Common Domain Model (CDM)
The Common Domain Model (CDM) provides a common representation of transaction events, allowing for greater market efficiency and consistency through the use of a common set of fields. More information here.
The time elapsed when a transaction is submitted to the network and the time it is recorded into a confirmed block. Confirmation times can vary even on the same chain. Often paying a larger fee can improve confirmation time as nodes have a larger incentive. (Source)
A consensus mechanism is a fault-tolerant mechanism used in a blockchain to reach an agreement on a single state of the network among distributed nodes. These are protocols that make sure all nodes are synchronized with each other and agree on transactions, which are legitimate and are added to the blockchain. (Source)
A security issued natively on a blockchain. In Germany the eWpG specifically defines a crypto security as being registered on a crypto security register as opposed to a CSD.
A digital currency that relies on cryptography to validate and secure transactions. (Source)
Crypto custody solutions are independent storage and security systems used to hold large quantities of digital assets. A crypto custodian manages the necessary private keys to access and transact with assets held in an address. (Source)
A crypto exchange is an online platform that acts as an intermediary between buyers and sellers of cryptocurrencies and other digital assets. (Source)
A field of study and practice to secure information, preventing third parties from reading information to which they are not privy. (Source)
Crypto lending allows crypto owners to use their crypto holdings as collateral in exchange for stablecoins. (Source)
Decentralised Autonomous Organisation (DAO), is an organisation with no one central point of organisation, usually via a series of smart contracts. (Source)
A distributed denial-of-service (DDoS) attack is a malicious attempt to disrupt the normal traffic of a targeted server, service or network by overwhelming the target or its surrounding infrastructure with a flood of Internet traffic. (Source)
Decentralised finance refers to the property of a system in which nodes work in concert in a distributed fashion to achieve a common goal. Usually this term refers to the growing industry in providing dApps
Diem (formerly known as Libra) was a permissioned blockchain-based stablecoin payment system proposed by the American social media company Meta Platforms (parent of Facebook). The plan also includes a private currency implemented as a cryptocurrency. The project was announced as being wound down in January 2022.
Cryptocurrency difficulty is a measure of how “hard” it is to mine a block in a blockchain for a particular cryptocurrency. A high cryptocurrency difficulty means it takes additional computing power to verify transactions entered on a blockchain—a process called mining. (Source)
A security issued natively on a blockchain. In Germany this term may be used to distinguish an asset registered with a CSD instead of a crypto security, which the eWpG specifically defines a crypto security as being registered on a crypto security register not a CSD.
Digital Regulatory Reporting (DRR)
Distributed Ledger Technology (DLT) – a database that is replicated and shared across numerous computers, allowing individuals or instituons to securely verify and record changes to the shared database without the need for a trusted intermediary. (Source)
Dogecoin is a cryptocurrency created as a joke, making fun of the wild speculation in cryptocurrencies at the time. It is widely considered to be the first ‘meme coin’. (Source)
Domain Specific Language (DSL)
A domain-specific language (DSL) is a computer language specialized to a particular application’s target subject area.
A successful cryptocurrency transaction that is sent to two different recipients simultaneously. It’s essentially as if the same dollar bill could be spent twice. The cryptocurrency’s blockchain protocol should prevent this from happening. (Source)
A type of token standard for Ethereum which ensures the tokens perform in a predictable way. This allows the tokens to be easily exchangeable and able to work immediately with decentralized applications that also use the ERC-20 standard. Most tokens released through ICOs are compliant with the ERC-20 standard. (Source)
A token standard for non-fungible Ethereum tokens. (Source)
The form of payment used in the Ethereum platform.
Ethereum is a decentralized, open-source blockchain with smart contract functionality.
elektronische Wertpapier Gesetz- the German Electronic Securities Act.
Any money declared by a government to be to be valid for meeting a financial obligation, like USD or EUR. Specifically “fiat” denotes the currency is not backed by physical assets like gold reserves. Fiat currencies are generally controlled by central banks of nations. (Source)
The Fintech Open Source Foundation (FINOS) is an independent 501(c)(6) nonprofit organization whose purpose is to accelerate collaboration and innovation in financial services through the adoption of open source software, standards and best practices.
FINOS website: https://www.finos.org/about-us
The creation of an ongoing alternative version of the blockchain, by creating two blocks simultaneously on different parts of the network. This creates two parallel blockchains, where one of the two is the “winning” blockchain. The “winning” blockchain gets determined by its users, by the majority choosing on which blockchain their clients should be operating. Can be thought of as analogous to a corporate action which results in a second asset. (Source)
A term used on the Ethereum platform that refers to the price you are willing to spend on a transaction. See also confirmation time. (Source)
GitHub is a website and cloud-based service that helps developers store and manage their code, as well as track and control changes to their code. (Source)
Governance tokens are tokens that developers create to allow token holders to help shape the future of a protocol. Governance token holders can influence decisions concerning the project such as proposing or deciding on new feature proposals and even changing the governance system itself. This is analogous to preference shares conveying voting rights. (Source)
A radical change to a network’s protocol that makes previously invalid blocks and transactions valid, or vice-versa. A hard fork requires all nodes or users to upgrade to the latest version of the protocol software.
A cryptography tool that turns any input into a string of characters that serves as a virtually unforgeable digital fingerprint of the data, called a hash. (Source)
The speed of a bitcoin transaction.
Hold on for dear life (Hodl)
A type of passive investment strategy where you hold an investment for a long period of time, regardless of market volatility. (Source)
A cryptocurrency wallet that is connected to the internet for storage of cryptocurrency. As opposed to a cold wallet which has an air gap to the network. (Source)
Unable to be changed. Public blockchain protocols impose immutability as a method of preserving trust.
Initial Coin Offering (ICO)
A blockchain-based fund-raising mechanism in which entrepreneurs mint new crypto-tokens and sell them to investors. (Source)
Internet of Things (IoT)
The Internet of Things describes physical objects that are embedded with sensors, processing ability, software, and other technologies that connect and exchange data with other devices and systems over communication networks. A common example of how the IoT will change the world is the concept of a fridge that will detect milk running low and placing an order with the supermarket automatically. (Source)
ISO20022 is an emerging global and open standard for payments messaging, creating a common language and model for payments data across the globe. (Source)
Layer 2 refers to a secondary framework or protocol that is built on top of an existing blockchain system. The main goal of these protocols is to solve the transaction speed and scaling difficulties that are being faced by the major cryptocurrency networks. (Source)
These are ERC-20 tokens that offer leverage to holders. By using these tokens, you automatically gain a leveraged position, unlike traditional trading methods. These tokens offer convenience as they don’t require you to take care of the margins or to have an understanding of liquidation risk. (Source)
Memecoins are essentially cryptocurrencies inspired by internet jokes. These currencies often aren’t suppossed to be taken seriously, but can still gain momentum when members of the retail community invest in the coin and cause it to spike. See also Dogecoin. (Source)
A metaverse is simply an alternate version of reality that exists digitally. Much like the physical reality, people interact in real-time in this metaverse to work, play, do business, and socialize with other people and elements. (Source)
The process through which transactions are verified and added to the blockchain. (Source)
Digital assets that are issued on chain as opposed to representing traditional assets that exist off chain.
A connection point for the transmission of data. (Source)
Non-fungible tokens (NFTs)
Non-fungible tokens (NFTs) differ from traditional cryptocurrencies. Cryptocurrencies like Bitcoin are fungible, in that every one unit of BTC is exactly the same as another unit of BTC and they can be exchanged for one another with no further considerations. Non-fungible tokens are often used as proof-of-ownership for underlying assets, such as digital art or equities. (Source) Also see here for a French version.
If a transaction is processed outside of a blockchain network it is known as Off Chain.
A bridge between traditional assets and currencies and a blockchain.
Transactions that are recorded on the blockchain itself and shared with all participants are On Chain.
Software released under a license that gives anyone the ability and right to use, update and distribute it freely. Development can also be open-source when a community approach is taken to contributions to the code. (Source)
A data feed, usually a third party service, that provides off chain information for use in smart contracts. (Source)
An orphan block is a block that has been solved within the blockchain network but was not accepted by the network.
A private key generally refers to an alphanumeric string that is generated at the creation of a crypto wallet address and serves as its password or the access code. Whoever has access to a private key has absolute control over its corresponding wallet, access to the funds contained within, and can transfer or trade assets and use the account for other purposes. (Source)
Proof of Authority (PoA)
In Proof of Authority (PoA) based networks, blocks and transactions are validated by approved accounts which are also known as validators. Validators run software allowing them to put transactions in blocks. The process is automated and does not require validators to continually monitor their computers.
Proof of Stake
A novel consensus protocol in which, instead of mining, nodes can validate and make changes to the blockchain purely on the basis of their existing economic stake. (Source)
Proof of Work (PoW)
The consensus protocol of choice for Bitcoin and many other cryptocurrencies. To add a new block, miners must calculate a hash for it that meets certain narrow criteria. Doing so requires an enormous number of random guesses, making it a costly process that deters attempts to commit fraud. (Source)
Protocols are a basic set of rules that allow data to be shared between computers. For cryptocurrencies, they establish the structure of the blockchain. (Source)
A public key refers to a series of alphanumeric characters used to encrypt plain text messages into ciphertext. (Source)
A type of computation that harnesses phenomena from quantum mechanics in order to perform much more efficient computations than older, classical computer. Harnessing the collective properties of quantum states a quantum computer can in effect perform many calculations simultaneously rather than linearly. (Source)
The smallest unit of Bitcoin (BTC). Equal to 0.00000001 BTC.
Security Token Offering (STO)
In a security token offering, or STO, security tokens are sold in security token exchanges. STOs are a type of public offering that facilitates the trading of financial assets via tokenized digital securities. A token is categorized as a security token when subjected to rules and regulations under law and deriving its value from external tradable assets or enterprises.
A scaling solution for blockchains. Typically, every node in a blockchain network houses a complete copy of the blockchain. Sharding is a method that allows nodes to have partial copies of the complete blockchain in order to increase overall network performance and consensus speeds. (Source)
A smart contract is a piece of code, or a program, that automatically executes pre-defined actions upon certain conditions being met. (Source)
A protocol upgrade where only previous valid transactions are made invalid, with most soft forks requiring miners to upgrade their mining software. Soft forks are backward compatible. (Source)
Software as a Service
A licensing and delivery model in which software is licensed on a subscription basis from a central host.
Solana is a crypto-computing platform that aims to achieve high transaction speeds without sacrificing decentralization. Solana aims to improve blockchain scalability by using a combination of proof of stake consensus and so-called proof of history.
Learn more: https://www.coinbase.com/
A cryptocurrency with extremely low volatility. Examples include gold-backed or fiat-pegged cryptocurrency. Algorithmic stablecoins also exist. (Source)
Staking is the process of actively participating in transaction validation (similar to mining) on a proof-of-stake (PoS) blockchain. On these blockchains, anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn staking rewards.
Learn more: coinbase.com
Secure Worldwide Interbank Asset Transfer (SWIAT) is a global network of interoperating regulated financial entities based on distributed-ledger technology. (Source)
SWIFT is a messaging system that allows for interbank transfers across the world.
Tether (USDT) is an Ethereum token that is pegged to the value of a U.S. dollar (also known as a stablecoin). Launched in 2014, Tether is a blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner. Tether tokens are backed by reserves, which include traditional currency and cash equivalents. (Source)
Tokens are a type of cryptocurrency that are used as a specific asset or represent a particular use on the blockchain.
The process by which real-world assets are turned into something of digital value called a token, often subsequently able to offer ownership of parts of this asset to different owners. (Source)
USD Coin (USDC) is a type of stablecoin. Each USDC is backed by one dollar or asset with equivalent fair value, which is held in accounts with US regulated financial institutions. (Source)
Tokens that are designed specifically to be able to help people use something. For example, one day, Uber could have its own utility token which people use to pay for rides on the Uber network. Utility tokens are not designed as investment vehicles. (Source)
A place where cryptocurrency users can store, send and receive digital assets.
Web 3.0 is the new generation of internet services that utilise advanced machine-based learning and artificial intelligence to connect web-based applications together and form a more personalised web. (Source)
Wrapped crypto tokens are cryptocurrencies pegged to the value of another original crypto or assets like gold, stocks, shares, and real estate and put to work on the DeFi platforms. The original asset is ‘wrapped’ into a digital vault, and a newly minted token is created to transact on other platforms. (Source)
eXtensible Markup Language (XML) is a mark-up language and file format for storing, transmitting, and reconstructing arbitrary data. Tags are not pre-defined but defined by the implementer.
Learn more: developer.mozilla.org
Yield farming involves earning interest by investing crypto in decentralised finance markets.
Zero Knowledge Proof
In cryptography, a zero-knowledge proof or zero-knowledge protocol is a method by which one party (the prover) can prove to another party (the verifier) that a given statement is true while the prover avoids conveying any additional information apart from the fact that the statement is indeed true. (Source)