A 51% attack on a blockchain refers to an event where a group of miners attempts to take over more than 50% of a network’s mining power. If successful, they can manipulate the transactions made on-chain. They can either prevent the entry of new transactions or confirm inaccurate ones for their own gains.
Air-gapped is a term used in computer networking to imply a non-internet-connected computer. In the cryptocurrency world, air-gapped computing devices increase the security of digital currency wallets.
An airdrop, in the cryptocurrency space, is a form of marketing that involves sending small amounts of coins or tokens to wallet addresses as a reward for a completed action by the recipient. The marketing method is usually employed by start-ups in order to raise awareness and increase ownership of the new cryptocurrency to help bootstrap a new project.
Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT) is a joint global initiative that aims to fight terrorism and money laundering, which involves a set of decrees for businesses and organizations to comply in order to prevent serious economic consequences and violence against civilians globally. The AML/CFT initiative is supported by a large number of countries, as well as government organizations and agencies, including the UN, EU, FATF, IMF, etc.
Annual Percentage Ratio (APR) and Annual Percentage Yield (APY) are often confused to mean the same thing. While the economics behind these concepts are related, they are not the same. The annual percentage yield (APR) is used to calculate interest in a deposit account. It is the interest given to a lender accrued over a year. It works on the principles of compound interests.
Arbitrage refers to trading similar assets in different markets intending to gain from the slight difference in prices in both markets. Traders who partake in arbitrage are known as arbitrageurs. An arbitrageur simply buys an asset in a market and sells it simultaneously to benefit from a higher sale price in another market. Common arbitrage became popular in the stock market and has also become common in cryptocurrencies.
An automated market maker (AMM) is a system used by decentralized exchanges (DEXs) to encourage people to become liquidity providers so as to facilitate automated trading. In traditional markets, buyers and sellers rely on order books to fill their orders. However, in decentralized finance (DeFi), AMMs are the tools that keep ecosystems liquid.
Avalanche is an open-source layer 1 smart contract platform for developing and deploying decentralized apps (dApps) and enterprise blockchain solutions. AVAX, the native currency of the Avalanche ecosystem, is a medium of exchange used for incentives, settling transaction fees, staking, and more.
BEP20 is a token standard for the Binance Smart Chain (BSC). A token standard is a blueprint that entails the fundamental dynamics of tokens on a blockchain. It ranges from how it's held, how it's spent, who can spend it, etc. BEP20 is the token standard that applies to the Binance Smart Chain, which has been made compatible with the ERC 20, Ethereum's token standard.
Binance Smart Chain (BSC) runs in parallel to the Binance Chain (BC). Unlike BC, BSC has smart contract functionality and is Ethereum Virtual Machine (EVM) compatible. BSC’s dual-chain architecture allows its users to build Decentralized Apps (DApps) and digital assets on one blockchain and exchange it on another using the blockchain’s high-speed trading. Its transaction time is roughly 3 seconds.
Bitcoin was the first cryptocurrency invented, and has maintained its position as the leading and most popular virtual asset since its inception. It was originally designed to be used as peer-to-peer electronic cash that would enable anyone to conduct online money transfers no matter where they are in the world at any given time. It was created back in 2009 by an unknown developer/s under the pseudonym Satoshi Nakamoto.
In a blind signature, some portion of the contents of the sender’s message are hidden, leaving the receiver to sign the transaction based on trust. It’s called blind signing because the recipient has to sign at least partly concealed information. Blind signing introduces risk in the verification of transactions, but people do it most of the time without noticing.
A blockchain is a decentralized immutable ledger composed of a series of blocks that store a set of data on transactions made in a particular network of computers, which are called nodes. Each node holds a copy of the blockchain and confirms the validity of the transactions made in it in a process called mining, or in other cases, staking.
Blockchain cybersecurity refers to the security function of a network powered by a distributed group of computers, also called “nodes,” that store information in blocks, which is also known as “distributed ledger technology.”
Blockchain fees refer to the transaction fees that users pay whenever they perform cryptocurrency transactions. These fees are essential for blockchain networks to maintain operation since they incentivize miners/stakers to do their jobs in validating transactions and securing the network.
A blockchain is a decentralized public ledger that records transactions on blocks that cannot be changed (immutable). Blockchain as a public ledger means it is not run by a centralized body but a copy of the ledger is stored on decentralized nodes within the network.
A blockchain network refers to the whole system that supports a distributed ledger and its series of smart contracts. It is analogous to a bank’s ledger, only that it ensures its integrity by encryption, decentralized validation, and permanent record instead of simply being based on trust.
A blockchain node refers to a computer or a server that stores data in a blockchain network, and is interconnected with other nodes. Each time a new version of a blockchain is confirmed, each node updates its copy with the latest version. Some nodes only store a portion of the blockchain in their storage, but there are also full nodes that keep the whole blockchain history.
The Bored Ape Yacht Club (BAYC), known colloquially as Bored Ape, is a collection of 10,000 unique non-fungible tokens (NFTs) minted on the Ethereum blockchain, whose owners are granted membership to an exclusive club that features perks. The collection consists of profile pictures generated using an algorithm.
Business wallets are like regular digital wallets, only more scalable. These wallets are designed to handle high-volume cryptocurrency transactions on specific blockchain networks.
A Central Bank Digital Currency or CBDC refers to a type of centralized digital asset issued by governments, specifically central banks, and is considered a hybrid of crypto and fiat since some CBDCs use blockchain technology to create a digitized form of national currencies.
Centralized Finance is a structured financial service that allows people to apply for loans or earn interest on their cryptocurrency by lending or borrowing it through a centralized exchange.
Cold storage refers to a way of storing and interacting with cryptocurrency keys offline. Cold storage is used by cryptocurrency exchanges and individual holders to prevent hackers from being able to access their digital assets.
The US Commodity Futures Trading Commission (CFTC) is responsible for regulating the derivatives market.
Crypto custody is the act of storing cryptocurrencies on behalf of another party for a fee. It removes the technical bit of digital currency storage from a user and transfers that responsibility to a third-party custodian.
A cryptocurrency exchange is a virtual asset service provider (VASP) that functions as a platform for the trading of digital assets. Through these platforms, users can also purchase and withdraw their digital currencies.
CryptoPunks is a collection of 10,000 unique NFTs developed by Larva Labs on the Ethereum blockchain. CryptoPunks were minted in 2017, making it one of the earliest NFT projects to be released.
Decentralized Autonomous Organizations are entities without a central authority as decisions on issues relating to the network are reached by the community through a bottom-up system. DAOs can exist in many areas like cryptocurrencies, a DeFi protocol, a charity organization, etc.
A decentralized exchange (DEX) is a crypto and digital asset exchange model that allows for trading directly between users. In this model, users trade assets through the peer-to-peer model without a central authority. Crypto exchanges started as centralized, with decentralization exchanges coming up much later. In a decentralized exchange, their backend exists on a blockchain, unlike in a centralized exchange where it is moved to another entity.
Decentralized finance (DeFi) refers both to the blockchain movement aimed at making traditional financial products and services accessible to everyone globally, as well as the innovative blockchain-powered financial applications designed to make financial intermediaries obsolete.
DeFi lending is depositing crypto assets on a DeFi lending platform to be borrowed to other users while receiving interests. DeFi lending works as banks in traditional finance. As people deposit their money in banks, banks loan these funds to people who pay back with higher interests.
Digital asset custody refers to the safekeeping of a platform user’s digital assets. To ensure the security of an owner’s assets, digital asset custodians implement safe key management solutions. This means that they implement security measures that maintain the confidentiality of a client’s private keys and ensure that it cannot be accessed by unauthorized parties.
Digital asset security refers to cryptocurrency protection systems that keep malicious actors from stealing or taking control of someone’s digital assets. Through hardware security modules (HSM), digital asset security solutions can ensure that no unauthorized access to one’s wallet can happen.
EIP-1559 is a proposal to make Ethereum transactions more efficient and reduce high transaction gas fees. The upgrade to the Ethereum blockchain, which is scheduled for July 2021, is set to alter the way miners are incentivized and is intended to make Ether (ETH) deflationary.
Enterprise-grade vaults are cryptocurrency storage services that offer high-quality and reliable end-to-end security features in both its hardware and software layers. These kinds of vaults are designed to facilitate real-time transactions without compromising its function of keeping the private keys of its users safe.
An ERC20 token is a digital asset that is created and hosted on the Ethereum network and follows a set of ERC20 standards, or Ethereum’s standard for Fungible Tokens. ERC20 tokens make it easier for anyone to create their own tokens, which can be transferred or stored on-chain. They are also much faster to create because developers only need to follow the blueprint prepared in the ERC20 standard, which is open source.
Ethereum is a blockchain platform designed to support the execution of smart contracts that run various kinds of decentralized applications (dapps) like personal identity systems, supply chain trackers, voting mechanisms, cryptocurrency exchanges, and many more. But like Bitcoin, it can also be used as a peer-to-peer medium of exchange.
Ethereum 2.0 is an upgrade of the Ethereum network, ushering their move to a purer proof of stake (PoS) consensus model, which is more decentralized. Through the Beacon Chain, Ethereum 2.0’s PoS chain launched in December 2020, the network will be able to establish a new system that will address its problems of scalability, gas fees, and transaction speed.
The Ethereum Ice Age is a mechanism to force Ethereum transition from PoW to PoS consensus mechanism, by increasing block time to slow the network, consequently removing incentives that maintain PoW.
The Ethereum blockchain consists of the mainnet and the Beacon Chain. The mainnet is secured by the energy-intensive proof-of-Work (PoW) consensus algorithm while the parallel Beacon chain, launched on December 1, 2020, uses proof-of-stake (PoS). The Ethereum Merge will take place when the two systems come together, and PoW will be eliminated from the mainnet.
The Ethereum Virtual Machine, EVM, is an engine for the execution of millions of projects on the blockchain. The main aim of the EVM is for the deployment of smart contracts and their execution.
The Financial Action Task Force (FATF) adopted a new data-sharing requirement for virtual asset service providers (VASPs) in June 2019. The Recommendation 16 update, referred to as the FATF Travel Rule in recognition of its close resemblance to the U.S.’ BSA Travel Rule, covers cross-border and domestic wire transfers, with the objective of addressing the emerging use of cryptocurrencies in money laundering and terrorism financing. Through the travel rule, law enforcement agencies can more effectively monitor those who facilitate illicit activities through digital assets.
The Financial Authority Conduct (FCA) is a regulatory agency in the UK that’s purpose is to ensure financial integrity in the UK and boost the credibility of its markets. The FCA works closely with other regulatory agencies in the UK to set regulations for both retail and wholesale financial service providers.
The Financial Crimes Enforcement Network (FinCEN) is a federal bureau of the United States Department of the Treasury tasked with AML/CFT monitoring. FinCEN’s goal is to prevent and punish criminal networks that participate in financial crimes such as money laundering and terrorist financing.
Flash loan attacks refer to a smart contract exploit where an attacker takes out a flash loan from a DeFi protocol, uses the capital that they’ve borrowed, and pays it back in the same transaction. In a flash loan attack, hackers arbitrage the money that they have borrowed from a DeFi pool, then return the capital quickly right after they have made a profit from the money, which will be left to them as soon as they repay their flash loans.
GameFi is a new crypto sector arising from the marriage of gaming and DeFi. It uses the concepts of blockchain technology, cryptocurrencies, NFTs, and game mechanics to create environments conducive to monetizing gameplay. It utilizes a P2E model to reward players financially for competing and advancing within the games they participate in.
A hard fork is a phenomenon where a blockchain network undergoes a radical change in its protocols that triggers a split, birthing two separate chains, the original network, and the “fork” network. A hard fork may be intentional or come off as an accident. Oftentimes, forks happen whenever developers encounter differences in the way they want a project to move forward or when its community feels that the protocol should follow a different direction.
Hardware Security Modules (HSM) are security solutions powered by either a hardware or cloud storage platform that is designed to keep digital keys for future transaction verification. Typically, HSMs function through external storage devices that can be plugged into a computer or network servers.
Impermanent loss is the loss liquidity providers suffer when they deposit their money in trading pools and one of the staked assets in a pair changes in price. In a liquidity pool, if the price of cryptocurrency in a stablecoin-cryptocurrency pair fluctuates, arbitrageurs will take advantage and purchase it at the lower price, impacting the ratio of the staked pair. Withdrawing at a particular moment could cause the liquidity provider to receive less funds.
An institutional vault is a crypto cold storage system employed by institutions offering cryptocurrency custody services or exchanges securing customer funds. It can support single or multiple virtual currencies depending on the target market.
Insured vaults are special offline vaults where users can keep their private keys and are also secured by insurance coverages. The insurance policy on such vaults covers situations that could cause the loss of someone’s digital assets stored in the vault, such as theft, hacking, etc.
Know Your Transaction, popularly known as KYT, is a regulatory requirement that allows banks and other financial institutions to monitor transactions and check for possible fraudulent activities.
Know-Your-Customer (KYC) is a regulatory guideline and procedure that obligates financial institutions as part of their customer due diligence (CDD) process to screen and verify the identities of all their customers periodically in order to ensure that they are true and accurate. Banks, centralized exchanges, and other financial service providers implement KYC procedures in order to prevent cases of identity theft, money laundering, terrorism financing, and other illicit transfer of funds.
Layer 1 is simply the main blockchain architecture. Bitcoin and Ethereum are layer 1 architecture, while layer 2 is anything built on layer 1 to make it more efficient.
A layer 2 solution is designed to help scale applications by handling transactions off the blockchain mainnet (layer 1), while taking advantage of its high security.
A layer-1 network is the base network of a blockchain and the architecture it uses to achieve decentralization, scalability, and security. As the blockchain’s use cases expand, there is a need to scale blockchain throughput, or ‘transactions per second’. Layer-1 solutions are then implemented to improve scalability, often in the form of sharding, increasing block sizes, and changing consensus mechanisms.
Liquidity mining, a form of yield farming, is the provision of liquidity to exchanges or other platforms in order to earn governance token rewards during a specified period.
Liquidity is a collection of cryptocurrencies or digital assets made available by users called liquidity providers to enhance the trade between assets on a DEX.
A liquidity provider is a person or entity who loans assets to a platform to enhance trading and decentralization in crypto markets. Liquidity providers are often called market makers in most financial markets.
Malware is an umbrella term for most computer viruses including ransomware, scareware, spyware, trojans, worms, and other variations of malicious software created to exploit any device and harvest personal information, steal money, blackmail, or damage other people’s files.
A man-in-the-middle (MITM) attack is a cybersecurity breach in which a perpetrator illegally joins a conversation between two users or a user and an application with the purpose of eavesdropping, data theft, or impersonating one of the parties involved in the communication. The attack usually targets the users of financial applications and websites or services where login credentials are required.
The metaverse is a combination of various technologies such as virtual reality (VR) and augmented reality (AR) that allow users, known as avatars, to exist, interact, game, and socialize in a virtual world. The term metaverse was first coined by Neal Stephenson in his novel Snow Crash published in 1992.
Multi-factor authentication (MFA) is a security function that utilizes two blockchain networks to prevent attackers from easily gaining control over a user’s digital assets. MFA systems provide authentication to someone’s website or program by way of granting two independent log-in credentials.
Markets in Crypto-assets (MiCA) is a proposal made to the European Commission in 2020 (as part of a much broader Digital Finance package) that is aimed at streamlining the development of distributed ledger technology (DLT) and virtual asset regulation in the European Union (EU). It also covers the aim of the Commission to protect cryptocurrency users and investors.
The Monetary Authority Singapore (MAS) is the central bank and financial regulatory agency of Singapore. The MAS is in charge of currency, banking and insurance, and financial service regulation.
Multiparty computation (MPC) is a cryptography technique that allows multiple parties to conduct a transaction without compromising privacy. Basically, it looks like this: an individual in a group adds his data to the computation without revealing it to the other group members.
Multisignature refers to a digital signature that can be formed only through the fusion of several other unique digital signatures. Cryptocurrency wallets utilize multisignature to provide a complex layer of security that requires two or more signatures before any transaction is authenticated.
Non-custodial solutions are crypto wallet solutions that offer you full control over your private keys and, therefore, full control over your crypto assets. It is the opposite of a custodial wallet, whereby users forfeit control of their funds to a centralized party like exchanges to protect their assets.
Non-fungible tokens, NFTs, are digital collectibles stored on the blockchain. To fully grasp the concept of NFTs, we have to take it in steps. A fungible asset is an asset that can be replaced for another one and have the same value. For example, one Bitcoin can be swapped for another bitcoin. On the contrary, a non-fungible asset is unique as one cannot be replaced with another. NFTs can be art, music, videos, games, etc.
Phishing refers to a criminal activity where malicious actors use suspicious emails, phone calls, or fake websites to steal user information such as banking details, passwords, and other personal data. These swindlers tend to impersonate accounts or websites to lure their victims to give out their information and increase their likelihood of pulling off a scam.
Polygon, formerly called Matic, is an Indian blockchain scalability platform that aims to solve the problems Ethereum is currently facing, such as scalability, high gas fees, and low transactions per second (TPS). The solution platform is used as a framework for connecting Ethereum-compatible blockchain networks. Its native token is MATIC, which ranks as one of the top 15 cryptocurrencies globally.
A Ponzi scheme is a fraudulent investment pattern built to pay older investors with the funds of recent investors. Organizers of Ponzi schemes often advertise a legitimate system where investors' funds grow either through the purchasing and sale of assets, where a percentage of the sale goes to investors who have been in the system longer.
A private key, or a secret key, refers to a series of alphanumeric data that is assigned to a crypto wallet as soon as it is activated. A private key is inviolably necessary to access a wallet’s digital assets, and hence, should not be lost or exposed to other parties. Doing so may result in the loss of all funds attached to that wallet address. If a user happens to lose access to his private key, he or she cannot recover their assets anymore.
A public address is a cryptographic code that allows users to receive assets in a cryptocurrency wallet.
Ransomware is malware programmed to compromise a person’s device in order to allow an attacker to perform various intimidating tactics on their victims and demand ransom. A ransomware attack can be done by either locking out users from their computers or putting passwords on a user’s files.
A re-entrancy attack occurs as a result of making an external call to an unsecured network and a fraudulent person exploiting the call function. Re-entrancy attacks are very dangerous to a network and can lead to a potential breakdown of the platform.
A recovery seed, also known as a seed phrase, refers to a randomized list of words prompted to users during the initial setup of a cryptocurrency wallet. A recovery seed is provided to make sure that in the event that users lose access to their wallets, they can still be able to recover their crypto assets.
A replay attack is a security threat where an attacker intercepts the communication between a network sender and receiver, then either delays the message or re-transmits it. A replay attack is a technique used by hackers to deceive a receiver into doing what they want.
Sanction Screening is a tool in financial regulation to restrict a business relationship with someone or a company flagged for breaking a serious financial law. As more cryptocurrency regulation mounts, crypto firms are taking sanction screening to new highs.
The United States’ Securities and Exchange Commission (SEC) is an independent federal government agency that was founded in the aftermath of the 1929 Wall Street Crash. The SEC is responsible for protecting investors, preventing market manipulation, and facilitating capital formation.
A smart contract is a self-executing agreement that contains defined parameters involving the transaction of its participants and carry out specific functions on its own as soon as the agreed-upon standards or terms of a contract between interested parties are fulfilled. This ensures that transactions can happen without the need for an executor or third-party to facilitate them.
Solana is a third-generation blockchain developed to improve on the mechanisms of Bitcoin and Ethereum. Solana's blockchain is scalable, decentralized and secure with its novel proof-of-history consensus mechanism.
A stablecoin is a novel category of cryptocurrencies whose value is equal to an asset it seeks to emulate or peg to, which is typically the US dollar. A stablecoin is backed by a reserve asset and is designed to remain relatively stable, enabling cryptocurrency holders to perform daily transactions in the extremely volatile crypto market without the high risk of massive price swings.
Staking refers to the act of locking one’s cryptocurrencies on smart contracts in order to maintain the validation process of a proof of stake blockchain to receive compensation paid in transaction fees and block rewards. Staking is an alternative consensus mechanism to mining, where miners earn cryptocurrency rewards by solving a mathematical puzzle.
A security token offering (STO) is a public fund-raising event that involves the sale of tokenized digital securities or security tokens. An STO allows startups to tokenize real-world assets and issue them in order to sell to investors. A security token can be backed by the asset that it is designed to represent digitally, such as a company, a physical asset, or any other form of investment.
A supply-chain attack, also known as a value chain or third-party attack, occurs when cybercriminals gain unauthorized access to software, services, networks, or hardware from the suppliers in a supply chain. By attacking a supplier at the source, the criminals effectively plant a trojan horse for the customers that use the services or networks of a compromised supplier.
A threshold signature system (TSS) is a unique public-key cryptography scheme that aims to take away the need for single private keys securing a user’s assets all by itself. It functions by distributing secret keys to multiple users, called their ‘secret share.’
A token in general parlance is a voucher that is used to purchase goods and services within an environment. Tokens are often bought with fiat currencies or given as a reward for an offer.
Token approval is the permission granted to smart contracts to spend tokens when users interact with decentralized apps (DApps). The majority of decentralized finance (DeFi) apps use what is known as “infinite approval” as the default setting. This makes future transactions easier to manage.
Tokenomics is a portmanteau coined by combining token and economics. It simply refers to the economics that determines the supply and demand of a token. Tokenomics is important because it describes the math and incentives that govern a token. It details how a cryptocurrency works and whether investors will find it appealing over the long term.
Total value locked (TVL) is the total of all crypto assets held in (DeFi) protocols. It includes all the tokens deposited in DeFi protocols offering services that include staking, lending, and liquidity pools. A protocol’s TVL changes when investors or users deposit or withdraw in the DeFi pools.
A transaction signature refers to the digital information used in cryptocurrency transactions to verify the identity of its participants. Through advanced cryptography, transaction signatures are formed from a combination of public and private keys. Every transaction is assigned a unique transaction signature to ensure that once a signature is already used to verify a particular transaction, there won’t be any duplicates.
A turnkey solution refers to a series of functionalities that can be readily implemented on any business operations conveniently without causing disruption. This removes the need for enterprise owners to perform expensive in-house oriented solutions to adapt to customer demands.
Typosquatting is a form of cyberattack in which bad actors capitalize on mistyped URLs to trick unsuspecting users by directing them to malicious websites that look like their legitimate counterparts. Users then provide sensitive information such as login details to the fake websites.
A blockchain validator is a person responsible for confirming and verifying transactions on the blockchain. A blockchain is a decentralized public ledger for the record of transactions.
Virtual Asset Service Providers (VASP) refer to platforms or entities that facilitate financial activities involving transactions made in digital assets. These include money transfers, the exchange of assets from virtual assets to fiat currencies, and the storage and sale of these assets.
Vesting refers to a process in which tokens of a new project are locked up and periodically released to the market. Most crypto projects handle vesting differently, but the end goal is usually to protect the token from crashing.
The acronym WAGMI stands for “We Are All Gonna Make It.” It is a rallying cry used within the crypto community to signal high conviction and optimism for a better crypto future, which is not indicated with any specificity through the use of the phrase.
A cryptocurrency wallet management system is a program designed to facilitate the management of multiple virtual currency wallets from a single interface. Institutional or retail crypto investors can use it.
Warm wallets are digital asset storage systems that function like “hot wallets.” Their main difference is that they are usually software that is downloadable, unlike the hot wallets offered by most exchanges.
The term whitelist can have many meanings in the crypto sector. In general, a whitelist refers to a list of individuals, wallet addresses, or entities deemed to be trustworthy.
A wrapped token is a token pegged to the value of a cryptocurrency from a different blockchain and that always carries the same value as the underlying asset. Wrapped tokens allow crypto assets to be used on non-native blockchains, and are used as a solution to blockchain interoperability challenges.
Yield farming, also referred to as liquidity mining, is a Decentralized Finance (DeFi) rewards scheme that incentivizes crypto holders to become liquidity providers for a project. Yield farming involves lending your cryptocurrency to others using a smart contract, and, in return lenders earn more cryptocurrency.
YubiKey authentication refers to the hardware-based access authorization tool for devices and networks. This works through the YubiKeys, which are like flash drives that can be plugged into USB-A or USB-C ports. The device is manufactured by a company called YubiCo.
Zero-trust security refers to a security model backed by rigorous identity authentication tools. It aims to limit access to applications and data to only a certain group of authenticated and authorized users. This can also provide high-level security to users and applications from malicious actors online.