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The phrase “ad hoc” is a phrase of Latin origin that is used in modern English to mean “for this purpose” or “specifically for this.” The direct translation of the Latin phrase is given by most dictionaries as “for this.”
1: An accredited investor is a person or organization that is qualified to participate in financial opportunities that are not legally offered to regular investors.
2: Accredited investors are individuals with high incomes who, according to the SEC, are given permission to invest in unregistered securities, like cryptocurrency. We can clearly discern from the report that they’re investing a lot, with the majority investing over $1 million into highly diversified portfolios that include the expected blue chip stocks, bonds, small cap, 401(k)s, and cryptocurrency.
In fact, the report reveals that 70% of those surveyed have already invested in Bitcoin, and are well-aware of what cryptocurrency is. This shows that crypto isn’t a new investment opportunity, but rather that crypto has proved its worth and benefits, and that investors are already all-in.
Not only have they already invested in Bitcoin and other crypto, but they’re looking forward to investing more in the future. Three-quarters of those in the report say they wanted to invest in Bitcoin, and were willing to stake $500,000 or more in the next year. Additionally, they want future investments to not only include Bitcoin but DeFi products as well.
Their outlook on crypto assets doesn’t stop at direct investments. They were also interested in building their own crypto mining farm, or even investing in a crypto startup, crypto-focused fund, or a public crypto-based company. Investors aren’t just singularly focused, but are interested in casting a wide net in the industry.
1: An aNFT (autonomous non-fungible token) is a self-operating digital asset that can function independently without human intervention. It uses incentivized networks, like the Autonomy Network, to trigger actions based on pre-defined conditions.
2: aNFTs have the capability to spark conversations with Web3 users and network protocols autonomously, without needing any external stimulus. Consequently, these systems provide users with a nearly limitless range of complex and diverse activities that can be tailored to many different Web3 applications.
An aNFT (autonomous non-fungible token) is a self-operating digital asset that can function independently without human intervention. It uses incentivized networks, like the Autonomy Network, to trigger actions based on pre-defined conditions.
These aNFTs can perform a variety of actions such as transferring assets, functioning as NPCs in crypto games, trading, lending and borrowing, voting, sending messages, playing games, performing off-chain actions and upgrading their own logic.
Non-Fungible Tokens (NFTs) make game play more captivating, since they can be utilized to create Non-Player Characters that you can engage with. These NPCs may fill the role of friendly merchants or pose as adversaries in a competitive setting – providing plenty of enjoyment and challenge.
When engaging an NPC, you are in essence clashing with a smart contract directly. PvE, or Player vs Environment gaming is the standard term used when fighting NPCs in traditional games. Web3 has revolutionized this concept however by shifting it to be more focused on player vs blockchain (PvB) due to the blockchain becoming part of the environment itself.
Specialized hardware designed for mining cryptocurrencies, providing higher efficiency and performance compared to general-purpose CPUs or GPUs.
The price at which sellers are willing to sell an asset or security.
1: Algo trading (Algorithmic Trading) is an automated trading system where buy and sell orders are placed according to the rules of a computer program or algorithm.
2: Cryptocurrency Algorithmic Trading is a way of automating crypto trading strategies. This term has many synonyms: API trading, Algo Trading, High-Frequency Trading (HFT) or Crypto Bot Trading. However, all these terms mean basically the same, using a computer program to trade crypto instead of doing it manually.
3: What is Crypto Algo Trading?
Algo Trading is the practice of using computers programmes to carry out a defined set of instructions for placing a trade to generate profits at a speed and frequency that is impracticable for a human trader. The most significant advantage of automated trading is that users can execute a particular crypto trading transaction on multiple indicators, inclusive of a targeted price at lightning speed. Algorithmic trading includes high-frequency trading. It has a high turnover rate, is co-located, and has high order-to-order ratios as its primary qualities.
Why do we need Algo Trading in crypto?
The volatility of cryptocurrencies as an asset class, as well as the crucial fact that they have a 24-hour trading window, make them perfect for automated trading. It’s nearly impossible for a human being to be available for trading all the time and hence the algo is needed. The user has to simply select the strategy and then wait for the algo to do its magic. The pre-programmed algorithmic trading instructions are used to trade on established parameters like the market price, time, and volume.
Is Algo crypto trading profitable and safe?
Automated trading has been popular among equity traders. It is now slowly becoming a preferred choice among crypto traders globally too. It empowers strategy creators by allowing them to automate their strategies and make them available to investors and traders worldwide. Users/traders need not have to write a code and yet can create an algorithm to trade automatically.
By splitting orders and random patterns, one can trade undetected, when liquidity allows for it with minimal market impact. Thus a well-calibrated algorithm aids in optimizing the trading strategy by fostering pertinent market trends and maximizing potential gains, thus saving both time and money for the investor.
In the case of crypto trading, one of the most significant advantages of automated trading is that users can execute a particular crypto trading transaction on multiple indicators, inclusive of a targeted price at lightning speed. It allows strategy creators to create trading algorithms using a web-based strategy builder. Once the users create the algorithm, it can be listed on the exchanges where investors can subscribe to them and take those trades in their existing brokerage accounts.
By virtue of algotrading, traders don't have to keep an eye on the market for triggers and regular price movements. Additionally, it helps insulate trade from emotional influences such as fear or greed by preventing buying and selling at incorrect prices. However, algo trading should be adopted by traders and investors who have a proper understanding of the systems, markets, and trading strategies.
Why should one go for Algo trading?
Bitcoin algorithmic trading is a well-known approach adopted by most financial market traders across the globe. The investment in terms of time and effort to learn algorithmic trading is once but the results go a long way. The other prime benefits of using algo trading include:
Informed and emotionless trading: Since the human intervention is minimized, it reduces the chances of making a mistake. Most of the algorithms are double-checked, triple-checked, and backtested by historical data. It also facilitates automatic withdrawals and deposits, i.e. automatic re-balancing of cryptocurrencies across exchanges, making the investment process seamless.
Timing the market: Timing the market right, to trade based on expected price fluctuations is crucial to fostering efficient gains. While market timing is not easily achievable, it is what makes all the difference to spot apt entry and exit points. Since computers are much faster than any person to recognize a change in the market and therefore algo trading can help leverage market timing optimally.
Diversification of trading: Since algorithms and AI are used in trading, the process of executing several trades and strategies simultaneously becomes very simple.
The Bottom Line
While algo trading has been one of the most popular and go-to models for most crypto traders, it is always advisable to have adequate knowledge and be aware of technicalities before testing the waters. Using a trading bot, starting with smaller amounts and learning from an expert can help mitigate risks while enjoying more predictable and stable results.
1: Algorithmic stablecoins are coins pegged to the US dollar. It’s done through software that has conditions. For example, when the price rises, the algorithm may issue more coins, & when the price falls, it purchases them off the market.
Source: Investopedia
2: Understanding Algorithmic Stablecoins
The first step in learning about the best algorithmic stablecoins right now would refer to an understanding of their definition. What are algorithmic stablecoins, and how do they work? It is important to note that algorithmic stablecoins do not have any associations with collateral. Therefore, the algorithmic stablecoins are also known as ‘non-collateralized’ stablecoins. Algorithmic stablecoins are decentralized and focus on improving market price stability through pre-programmed supply for matching asset demand. Algorithmic stablecoins employ predefined stabilization measures encoded in the different smart contracts on Ethereum.
The algorithm behind the top algorithmic stablecoins features the necessary programming for increasing the supply of a cryptocurrency in deflationary positions. On the other hand, it also works to decrease the supply of stablecoin in situations involving a substantial reduction in purchasing power. As a result, algorithmic stablecoins could respond to different market events with automated stabilization measures.
The design of algorithmic stablecoins shows them as a decentralized, smart, and responsive cryptocurrencies. Algorithmic stablecoins can maintain transparency over the network by offering visibility into their internal logic. They can also provide details of the collateral used in maintaining token value.
The outline of popular algorithmic stablecoins should always be associated with an overview of the types of algorithmic stablecoins. You can discover different algorithmic stablecoins with unique traits or features. Here is an outline of the distinct types of algorithmic stablecoins you should look out for.
The rebasing algorithmic stablecoins basically involve the supply taking over regulation of value. In this case, the algorithm reduces the coin supply in event of a price drop and ensures issuing additional coins in the opposite situation.
Over collateralized Algorithmic Stablecoins
The over-collateralized algorithmic stablecoins depend on a large reserve of cryptocurrencies for issuing lesser stablecoins. Such types of algorithmic stablecoins serve as an effective choice for a buffer for price fluctuations.
Fractional Algorithmic Stablecoins
Fractional algorithmic stablecoins are one of the important additions to an algorithmic stablecoins list, and they are partially collateralized. The assets feature backing of cryptograghic algorithms as well as asset collateralization.
The Seigniorage algorithmic stablecoin model opts for an alternative to the rebasing mechanism. It features two distinct tokens such as a supply-elastic currency and the investment shares of the network. The owners of the investment shares can receive inflationary rewards and bear the burden of debt when the currency falls.
A person not identified by name; of an unknown name such as Satoshi Nakamoto.
A type of decentralized exchange that uses algorithms to set asset prices and facilitate trading without the need for traditional order books.
Airdrop
1: An airdrop in crypto is a marketing ploy to promote awareness by a crypto startup or an existing company looking to create buzz around a new coin. Airdrops are also used to reward early supporters of the company, project or chain developers.
3: Crypto airdrops are distribution and marketing methods specific to the crypto industry. Though there are several different types of airdrops, most of them involve some registration event for users to receive their free digital assets at the appropriate wallet addresses.
Some airdrop models may require users to perform certain tasks to receive their airdropped assets, but the result will be the same: users’ wallet addresses are recorded before the cutoff date and time. Here are a few examples in which projects might conduct their airdrops:
Users complete one or more online tasks to qualify for receiving the airdrop at a later date.
Assets are automatically distributed to token-holders of a given asset, provided the wallet has a minimum balance on the relevant blockchain on which the airdrop takes place.
Taking a snapshot of the blockchain’s state from a prior moment in time, with users claiming their airdropped assets through a smart contract request.
AIRDROP KEY POINTS:
Crypto airdrops are just one of the many ways Web3 projects have introduced novelties to the tokenomics models of startup projects. In fact, it has become commonplace now for firms to allocate specific amounts of tokens in the total supply for airdrops from the time of a project’s inception.
Though airdrops can be lucrative, some of them require significant opportunity cost in terms of your time and assets invested, so please proceed with caution. Seeking out airdrops simply for the free tokens is a precarious strategy that is likely to lead to bad actors looking to exploit unsuspecting airdrop-seekers.
As with all things crypto, it is prudent to look for true value and utility in a token first, and simply let airdrops serve as bonuses rather than determining factors when evaluating a project or token.
1: Getting Alpha information about an NFT project means you are getting exclusive information before anyone else. Alpha includes valuable info about giveaways, whitelist opportunities, etc. This gives you a head start and helps you make better buying decisions.
2: ALPHA is an ERC-20 token, which means that the Alpha Finance protocol is backed by the protocol on the Ethereum network. Ethereum currently relies on Proof of Work where miners play an integral role in securing the network and validating transactions.
The Alpha Finance ecosystem was built to mitigate and reduce risks involved in decentralized finance and cryptocurrency trading and management, all while increasing opportunities to generate major returns. The protocol manages to achieve this goal through interoperability that is facilitated through the use of cross-chain structures, so the protocol could connect users to other networks like Ethereum or Binance Smart Chain and enable seamless interaction between multiple ecosystems and Alpha Finance protocol.
The highest price ever reached by a cryptocurrency in its trading history.
1: Arbitrage is basically the simultaneou purchase and sell of an asset in different market and to make profit due to difference in price in the two markets.
For eg. The price of $BTC is $40000 on exchange A and $40100 on exchange B, then suppose a person buys 1 $BTC from exchangeA and sells that on exchange B in doing so the person will surely make $100 profit per $BTC sold.
2: Crypto arbitrage is a trading strategy that aims to capitalize on price differences in cryptocurrencies. To begin, consider arbitrage in its classic definition. Arbitrage is a trading method in which a trader buys and sells the same item in several marketplaces to profit from price discrepancies.
KEY POINTS:
1: Crypto arbitrage takes advantage of the fact that cryptocurrencies can be priced differently on different exchanges.
2: Arbitrageurs can trade between exchanges or perform triangular arbitrage on a single exchange.
3: Risks associated with arbitrage trading include slippage, price movement and transfer fees.
To understand how crypto arbitrage trading works, firstly, you need to know that crypto exchanges can have slightly different prices for specific assets, as well as different methods of determining those prices. Since crypto prices tend to fluctuate and the market is active 24/7, there will be countless minute discrepancies in crypto asset prices across the market, and arbitrage traders seek to take advantage of them.
To understand the complexities of crypto arbitrage trading, firstly it’s important to understand how different exchanges determine prices of cryptocurrencies. Not all exchanges calculate cryptocurrency prices using the same method, which creates opportunities (pricing discrepancies) across different platforms. Let’s dive deeper into this now.
Crypto arbitrage strategies take a number of different forms, each one taking advantage of price discrepancies across different parts of the market. Let’s check out a couple now.
Triangular Arbitrage is a trading strategy that seeks to exploit pricing inefficiencies between three different currencies when their exchange rates do not match up exactly. This could be across different exchanges, or within the same platform.
Triangular arbitrage opportunities can be difficult to spot without trading equipment. Nonetheless, they can be very popular strategies for crypto arbitrage traders.
For example, say a crypto trader has noticed a discrepancy in the exchange prices for Bitcoin (BTC), Ether (ETH) and Tez (XTZ). Using triangular arbitrage strategies, they may exchange an amount of BTC to ETH at one rate, then convert the ETH to XTZ for another rate, then finally, exchange the XTZ back to BTC. As a result, the trader would cash in on the small difference and make a profit as a result
Price differences don’t just occur between centralized exchanges and AMMs. There are also often price differences between different decentralized exchanges (DEXs). Trading focused on AMMs is known as decentralized arbitrage.
Decentralized arbitrage traders seek out pricing discrepancies between DEXs. This has the advantage of incurring less fees than using a centralized exchange, as well as enabling the trader to retain full control of their private keys for the entirety of the process. This is because Decentralize exchanches do not support custodial crypto wallets.
1: A 51% attack is an attack on a cryptocurrency blockchain by a group of miners who control more than 50% of the network’s mining hash rate. Owning 51% of the nodes on the network theoretically gives the controlling parties the power to alter the blockchain.
The first check for any blockchain would be to ensure that no single entity, group of miners or even a mining pool controls more than 50% of the network’s mining hashrate or the total number of staked tokens.
This requires blockchains to keep a constant check on the entities involved in the mining or staking process and take remedial action in case of a breach. Unfortunately, the Bitcoin Gold (BTG) blockchain couldn’t anticipate or prevent this from happening in May 2018, with a similar attack repeating in January 2020 that lead to nearly $70,000 worth of BTG being double-spent by an unknown actor.
In all these instances, the 51% attack was made possible by a single network attacker gaining control over more than 50% of the hashing power and then proceeding to conduct deep reorganizations of the original blockchain that reversed completed transactions.
The repeated attacks on Bitcoin Gold do point out the importance of relying on ASIC miners instead of cheaper GPU-based mining. Since Bitcoin Gold uses the Zhash algorithm that makes mining possible even on consumer graphics cards, attackers can afford to launch a 51% attack on its network without needing to invest heavily in the more expensive ASIC miners.
This 51% attack example does highlight the superior security controls offered by ASIC miners as they need a higher quantum of investment to procure them and are built specifically for a particular blockchain, making them useless for mining or attacking other blockchains.
However, in the event that miners of cryptocurrencies like BTC shift to smaller altcoins, even a small number of them could potentially control more than 50% of the altcoin’s smaller network hashrate.
Moreover, with service providers such as NiceHash allowing people to rent hashing power for speculative crypto mining, the costs of launching a 51% attack can be drastically reduced. This has drawn attention to the need for real-time monitoring of chain reorganizations on blockchains to highlight an ongoing 51% attack.
MIT Media Lab’s Digital Currency Initiative (DCI) is one such initiative that has built a system to actively monitor a number of PoW blockchains and their cryptocurrencies, reporting any suspicious transactions that may have double-spent the native token during a 51% attack.
Cryptocurrencies such as Hanacoin (HANA), Vertcoin (VTC), Verge (XVG), Expanse (EXP), and Litecoin Cash are just a few examples of blockchain platforms that faced a 51% attack as reported by the DCI initiative.
Of them, the Litecoin Cash attack in July 2019 is a classic example of a 51% attack on a proof-of-stake blockchain, even though the attackers did not mine any new blocks and double-spent Litecoin Cash (LCC) tokens that were worth less than $5,000 at the time of the attack.
This does highlight the lower risk of 51% attacks on PoS blockchains, deeming them less attractive to network attackers, and is one of the many reasons for an increasing number of networks switching over to the PoS consensus mechanism.
B
means the decentralized, Peer-to-Peer digital currency in which a record of transactions is maintained on the Bitcoin Blockchain and new units of currency are generated by the computational solution of mathematical problems and that operates independently of a central bank.
Block Explorer is a website/app that displays the status of all transactions on the public blockchain network of individual cryptos. It grants access to the data of a blockchain & allows users to know the status of a transaction without running a node themselves.
Cryptocurrency projects burn their tokens for several reasons. However, the main aim behind such an activity is to add value to tokens still in circulation by having more personal control of the overall supply of tokens demanded.
Markets function through demand and supply, and crypto projects use burning to reduce supply, increase demand and potentially add value to their crypto.
Below are some reasons why projects burn crypto:
Burning tokens Increase Value:
Demand and supply are economic factors that can influence the value of commodities, and those commodities can also be tokens.
Cryptocurrency projects believe that the total available supply of token coins in circulation can alter the value of new coins added to the circulation supply.
Such projects partake in cryptocurrency burning at large amounts that help increase the value of their tokens.
Reducing the supply of token coins in the crypto market is a great way to generate value when implementing the laws of demand and supply. The value of the token coin will continue to increase as users keep requesting them even when they are few in the circulating supply.
Token burning makes coins scarce. A cryptocurrency project can use scarcity to create an urgency for their community members to buy more coins, increasing value and demand over time.
Burning crypto is a process that can and has been executed by many individuals and developers in the coin market for several years. Some token developers like Binance have been partaking in a periodic burning of their tokens and have executed this in quarterly burns since 2020.
Binance has burned around half of its total coin supply since it began partaking in cryptocurrency-burning procedures.
Over 860 BNB is burned daily on the Binance platform, and a portion of the BNB burned coins are gas fees spent through the Binance BSc platform. Binance has destroyed around 2,065,152 BNB coins to partake in burns.
Private keys are the only secure way of accessing coins stored in a wallet address. Therefore no one can access a wallet address with no private key.
A cryptocurrency project can burn tokens by transferring them to a frozen private address; anyone can do the same with their own tokens.
Various projects may differ in their methods of allowing users to partake in token burning, but the idea remains the same. By burning cryptocurrency, a project can reduce the total supply of its tokens in circulation and gradually increase its value over time.
A frozen private address is a burn address with no private keys for granting access to coins.
Once tokens are sent to a frozen private wallet, those tokens are automatically burnt from the overall circulation tokens in the coin market and therefore become inaccessible to any user.
Another example of a method created for burning cryptocurrency is the burn portal created by Shiba Inu for burning Shib tokens and rewarding anyone who uses it.
1: BEP20 is the token standard of Binance Smart Chain (BSC). It is derived and compatible with Ethereum’s ERC20 standard. You could create a native asset as a BEP-20 token & peg it from other blockchains in order to make them usable on the BSC.
2: Basics of BEP
The discussions on the BSC BEP20 standard for tokens rely heavily on a basic understanding of BEP and the BSC connection. BSC or Binance Smart Chain is the first thing you need to understand to set the ground for discussions about BEP20. Binance Smart Chain is the dedicated blockchain of Binance for operating smart contracts. The BSC works in parallel or in collaboration with the Binance Chain, the first blockchain of the Binance crypto exchange.
BEP20 basically refers to a token standard used for creating tokens on BSC, just like ERC20 for creating tokens on Ethereum. It is a critical tool for facilitating smart contract development on the Binance Smart Chain. We shall arrive at a detailed discussion on ‘what is BEP20’ later. For now, you must note that BEP stands for “Binance Smart Chain Evolution Proposal.”
1: Buy walls (BW) are a fairly new thing in public order book exchanges with the rise of crypto trading. BWs are manipulative & designed to scare traders & skew price perception by placing large buy order(s) at a single price point.
2: A buy wall is created when a large number of buy orders are placed at a specific price level, which is usually lower than the current market price. The buy wall is represented on the order book as a horizontal line, indicating the number of buy orders at a particular price level.
3: A buy wall is a massive buy order, or cumulation of buy orders, at a particular price level. The volume of these buy orders is large enough to drive the price of the asset up if the trades are fulfilled. In fact, the presence of the buy wall tends to drive prices up even before the buy wall orders are fulfilled. This is because the asset’s supply will be significantly reduced after the price hits the buy wall. The buy wall also reflects market confidence that the price level will be significantly higher than the price of the buy wall.
As such, traders respond by setting their buy orders even higher than the buy wall to get their hands on the cryptocurrency or stock and to get in on potential profits before the assets are scooped up. This drives prices up even further.
However, it is important to note that buy walls often do not reflect true market sentiment. Small buy walls tend to occur at round numbers due to psychological preferences. This is noted by many traders, who respond by pricing their buy orders just 0.1 or 0.01 cents higher than the buy wall.
Buy walls can also be artificially created. Since buy orders are dynamic and can be added or removed continuously, buy walls can be used as a form of market manipulation and may not represent true interest to buy the crypto at that price.
1: The Beacon Chain will introduce proof-of-stake to Ethereum. It is a coordinated mechanism of the new network. It’s responsible for producing new blocks to make sure that the new blocks are valid, and rewarding validators with ETH for keeping the network secure.
The Beacon Chain was the backbone of Ethereum 2.0’s transition from PoW to PoS as it introduced PoS to the Ethereum ecosystem.
It was created to ensure the PoS consensus logic was sound and sustainable before it could be enabled on the Ethereum Mainnet. That’s why it ran as a parallel chain to the original PoW Ethereum.
A key piece of ETH 2.0, the Beacon Chain was responsible for establishing new parameters for governance, validator operations, staking rewards, and other changes related to the PoS system.
The Beacon Chain did not process any smart contract transactions. Rather conducted the network of Ethereum stakers before they started validating real Ethereum transactions. Besides overseeing validators and managing ETH, along with the formation of validator committees and recording their votes, it also monitored the behavior of the validators. It rewarded validators for their good behavior while penalizing malicious activity by slashing rewards.
1: Bull Flag is a bullish continuation pattern for buying breakouts. It forms after a rise from price action getting more narrow. See example below from dailyfx.com.
2: Bullish and bearish flags are among the most popular continuation patterns, typically spotted when the trend is likely to continue to prevail. Bull flags typically appear in an uptrend when the price trend is expected to continue upward.
1: A basis point is a common unit of measure for interest rates and other percentages in finance. Basis points are typically expressed with the abbreviations bp, bps, or bips. In decimal form, one basis point is 0.0001 (0.01/100). Source: Oxford Languages.
2: One basis point is equal to 1/100th of 1%, or 0.01%. In decimal form, one basis point appears as 0.0001 (0.01/100). Basis points (BPS) are used to show the change in the value or rate of a financial instrument, such as 1% change equals a change of 100 basis points and 0.01% change equals one basis point.
DETAILS ABOUT BASIS POINT:
If an interest rate is currently at 20%, and it is said to rise by 10%, is the new total 30% or 22%? Without clarification, it could be either.
But if you’re told an interest rate is at 20% and it will increase by 1,000 basis points, you know for certain that the new total is 30%. And if it was increasing by 200 BPS, it would be 22%. Basis points make understanding percentage changes a whole lot simpler.
Here’s a basic run-through of key basis point figures to always keep in mind:
1 BP = 0.01%
10 BPS = 0.1%
100 BPS = 1%
1,000 BPS = 10%
10,000 BPS = 100%
C
In simple words, blockchain in the context of cryptocurrency is a digital ledger whose access is distributed among authorized users. This ledger records transactions related to a range of assets, like money, house, or even intellectual property.
The access is shared between its users and any information shared is transparent, immediate, and “immutable”. Immutable means anything that blockchain records is there for good and cannot be modified or tampered with, even by an administrator.
Centralized money refers to the regular money that we use, which is governed by authorities like the Reserve Bank of India. Decentralization in cryptocurrency means there is no similar authority that can be held responsible for supervising the rise and fall of a particular cryptocurrency. This has many benefits over centralized money.
Cryptography is the method that secures data from unauthorized access by the use of encryption techniques. Most of the claims that blockchain makes, like privacy and immutability, are enabled through cryptography.
The roots of cryptocurrency technology can be traced back to the 1980s with the invention of what is called a “blinding algorithm”. The algorithm is all about secure and immutable digital transactions. It remains fundamental to the modern-day digital currency.
In 2008, a group of people (currently known under the pseudonym Satoshi Nakamoto) created the guiding principles of the first and leading cryptocurrency in the market today, Bitcoin. In 2009, Bitcoin was launched to the world. But it would be years before it was formally recognized as a means of payment among leading merchants, starting with WordPress in 2012.
The underlying blockchain technology is today used in banking, insurance, and other business sectors. Growing at a compounded annual growth rate of 12.8% since 2021, the cryptocurrency market is estimated to reach $4.94 billion by 2030, thanks to the need to improve the efficiency of today’s payment systems, rise in global remittances and increased need to secure data.
1: Chain on AVAX acts as a decentralized platform that allows users to create & trade digital smart assets. A representation of a real-world resource (Ex., bonds) with a set of rules that govern its behavior, like “trade only with humans.” Source: Avalanche
2: The AVAX C-Chain is the default smart contract blockchain on Avalanche, which enables the creation of any Ethereum-compatible smart contracts, especially for applications that require total ordering.
1: C-Chain. C stand for contract. It allows for the creation of smart contracts on AVAX. It is EVM compatible and is used for DeFi. The key difference with the other chains is that the c-chain uses an ETH address with 0x at the front, and can be added to MetaMask.
2: The default smart contract Blockchain on Avalanche is called the C-Chain, which is short for contract chain. It functions in conjunction with the X-Chain, which is used for transmitting and receiving money in the form of AVAX tokens, and also permits the construction of any Ethereum-compatible smart contracts.
1: Cold Wallet: It is stored offline & can only be connected to the internet through physical effort (eg. connecting USB, turning on a hardware wallet like Trezor/Ledger). @DeGem2priceless inspired this post b/c he mentioned that an exchange closed with all his coins.
2: A cold wallet is a type of cryptocurrency wallet that securely stores your private crypto keys offline, usually on a physical device. It’s also known as a hardware wallet, and it protects your digital crypto assets from online hackers by using a flash drive-like device that isn’t connected to the internet.
1: Cantillon Effect – A person/company that got wealthy, not by creating a good/service the market benefits from, but by benefitting from govt’s printing money (bailouts). Those closest to the money printers benefit the most like Wall Street, defense contractors, etc
2: The Cantillon Effect describes how new money creation benefits those who receive the money first, at the expense of those furthest from the creation of new money. In today’s monetary system, banks and corporations are closest to new money while the middle class is furthest.
Centralized: An organization structure where in a small group of actors have control over the entire network. Central and commercial banks operate in top down manner & where their ledger is not distributed to anyone who may want to examine it. Source: Coingecko
2: A centralized cryptocurrency exchange is a digital currency trading platform that is controlled by a central entity that acts as an intermediary between cryptocurrency buyers and sellers.
1: Crypto Scammers: Pose as or claim endorsements from celebrities to capture the attention of plebs. It involves selling cryptos that don’t exist. These scams involve glossy websites that to show celebrity endorsements from folks like Elon Musk & the Kardashians.
2: Crypto Scammers: Scammers create fake crypto trading apps to steal your money. The giveaway is usually that they ask you to download the app from their website. They may appear on legitimate platforms like Google Play and Apple, but are usually promptly removed.
1: Commodity: A raw material/agriculture product that could be bought or sold. Examples of commodities include grains, gold, beef, oil & gas. Commodities affect the prices of your food, gas, etc. There are three major categories: agriculture, energy, and metals.
2: A cryptocurrency’s classification as a commodity (rather than a security or something else entirely) determines which organization, if any, regulates the crypto and which rules or principles must be followed.
1: Cold/Hardware wallets are used to store cryptos offline & can only be connected to the internet by plugging it in with a USB to a computer. Being offline is safer than hot wallets that remain online, which increases the probability of hacks.
2: A cold wallet is a type of cryptocurrency wallet that securely stores your private crypto keys offline, usually on a physical device. It’s also known as a hardware wallet, and it protects your digital crypto assets from online hackers by using a flash drive-like device that isn’t connected to the internet.
1: Centralization is the concentration of an activity or organization under one single authority or in the hands of a few people. In terms of blockchains, it’s a non-distributed private ledger. Whereas bitcoin – anyone can get a copy of the ledger by running a node.
2: The idea of centralization refers to the use of a middle man or third party to help conduct transactions. Buyers and sellers alike trust this middle man to handle their assets. This is common in a bank setup, where a customer trusts the bank to hold his or her money.
1: Commingling is when the funds of Party A is mixed with those of Party B. It’s the fiduciary responsibility of an exchange/manager of funds not to improperly mix clients funds. The recent FTX case is a prime example of the commingling of investor funds.
2: Commingling is a process of pooling all funds from different investors into one investment to maximize their benefits. Let’s find out Commingling meaning, definition in crypto, what is Commingling, and all other detailed facts.
1: ChatGPT is a language chat box trained to interact in conversation & answer questions like humans. Created by OpenAI based, it performs the task of predicting the next word in a sentence. GPT-3 has 175 billion parameters and was trained on 570 gigabytes of text.
2: ChatGPT is developed as a language model leveraging natural language processing (NLP) technology. It has many use cases in language and content-based tasks and analytics, but it can also be used by cryptocurrency traders in several ways.
1: Counter Party Risk is the likelihood that the other party in an investment/credit/trading transaction may not keep its part of the deal & may default on the contractual obligations. FTX, BlockFi, Celsius, & others are examples of defaulting on their obligations.
2: Counterparty risk is commonly discussed in the cryptocurrency sphere as it pertains to holding coins on a centralized exchange. Doing so introduces counterparty risk as the centralized exchange controls your private keys, and, thus, may or may not have enough funds to cover every depositor.
1: Contract Accounts (CA) are a smart contract deployed to the network that have a 42 character hexadecimal address. CA can receive, hold, & send ETH tokens. Contract accounts don’t have private keys, since they are controlled by the logic of the smart contract code.
2: CA is a special type of account where Ether is owned and controlled by a piece of code known as the smart contract instead of an entity. However, they still rely on EOA to deploy it and execute their functions.
1: The name ‘Christmas’ comes from the Mass of Christ (Jesus). A Mass service (Eucharist) is where Christians remember that Jesus died & then came back to life. The ‘Christ-Mass’ service was the only one that was allowed to take place after sunset & before sunrise.
It can be defined as the supply that is currently in the hands of the general public. In the case proof-of-work system (e.g Bitcoin), the total supply is approximately equivalent to the circulating supply.
Traditional finance and banking such as Wall Street and banks like Chase that work with centralized ledgers.
D
1: Dead Cat Bounce:
Price rally that is short lived after a prolonged decline. Price charts will show a recovery in anticipation of a market turnaround only to decline further.
Source: Coingecko
2: A dead cat bounce is a temporary, short lived recovery of asset prices from a prolonged decline or a bear market that is followed by the continuation of the downtrend. Frequently, downtrends are interrupted by brief periods of recovery or small rallies during which prices temporarily rise.
1: Deflation: It is when consumer and asset prices decrease over time, and purchasing power increases. Basically, you can buy more goods or services tomorrow with the same amount of money you have today.
Source: Forbes
2: Deflation is when the prices of goods and services decrease across the entire economy, increasing the purchasing power of consumers. It is the opposite of inflation and can be considered bad for a nation as it can signal a downturn in an economy, leading to a recession or depression.
1: Dollar cost averaging is an investment strategy an investor uses to average out their buys over time regardless of the asset’s price.
2: Dollar cost averaging (DCA) means making smaller, equal investments on an ongoing basis, instead of making large or irregular crypto buys. Although cryptocurrency can be considerably more volatile than stocks, dollar cost averaging with crypto can help you reap many of the same rewards traditional equities traders enjoy through the strategy. By regularly buying your favorite coins, you’ll be automatically investing more over time no matter what’s going on in the crypto market. This enables you to grow your holdings, and can lower your overall cost basis during dips.
1: Degen is short for Degenerate, meaning taking unreasonably high trading risks without due diligence and research – basically gambling.
2: Degen is a shorthand term used in the world of cryptocurrency to describe traders who engage in risky, speculative behavior without conducting proper research and due diligence.
1: De-risk: To fully de-risk in DeFi you have to move your crypto portfolio to stable coins. For example you can get 19.5% on UST with Anchor. None of this is risk free. But, it is better than retreating back to low yielding safe assets in traditional finance.
2: While everyone has their own way of lowering risk, personally, de risking means taking profits at certain pre-set levels and moving them into stablecoins or blue chip cryptocurrencies such as Bitcoin or Ethereum.
1: Decentralized Autonomous Organizations (DAO) are open source/decentralized systems. A DAO votes on many systemic aspects without a central operator. Members are token holders whose voting strength are proportional to their holdings relative to the whole ecosystem.
2: A decentralized autonomous organization (DAO) is an emerging form of legal structure that has no central governing body and whose members share a common goal to act in the best interest of the entity. Popularized through cryptocurrency enthusiasts and blockchain technology, DAOs are used to make decisions in a bottom-up management approach.
1: Derivatives are a contract between two or more parties, whose value is derived from an underlying asset like Bitcoin, oil, etc. Derivatives don’t change ownership like they do in spot markets. In derivatives markets contracts are traded rather than actual assets.
2: Crypto derivatives are financial instruments that derive value from an underlying crypto asset. They are contracts between two parties that allow traders to speculate on the price movements of cryptocurrencies without actually owning the underlying asset.
1: DApps are applications that run on “decentralized” peer to peer networks such as Ethereum. DApps are great b/c devs can store all types of info, making it applicable for games etc. DApps function with consensus to finalize transactions on the blockchain.
2: Decentralized applications (dApps) are digital applications or programs that run on a decentralized network, rather than a single computer or server. They are built on blockchain technology and use cryptocurrency as a means of exchange.
1: Daily Active Addresses (DAA) refers to the number of active addresses on a specific blockchain. It is also useful to measure how much activity occurs on a given blockchain.
2: Daily Active Addresses is the number of distinct addresses that participated in a transfer for the given asset on any given day. Each address is counted only once for the day.
1: DeFi-Decentralized Finance is a growing financial tech built on blockchain that is used in crypto. DeFi has no “central authority” & is “censorship free.” DeFi covers many use cases such as stablecoins, lending/borrowing and decentralized exchanges (DEX).
Do Your Own Research
E
1: Encryption is a process where plain text information is converted into a secret code known as ciphertext to hide the true meaning. BTC uses SHA-256 for all hashing & to implement its Proof of Work mechanism. Try encryption for fun emn178.github.io/online-tools/s
2: Encryption generally is the conversion of readable plaintext into ciphertext (encrypted data that is unreadable) with the use of an encryption algorithm or cipher.
1: Ethereum Virtual Machine is the software platform that developers can use to create decentralized applications (DApps) on Ethereum. This virtual machine is where all Ethereum accounts and smart contracts live.
2: The Ethereum Virtual Machine (EVM) is the computation engine for Ethereum that manages the state of the blockchain and enables smart contract functionality. The EVM is contained within the client software (e.g., Geth, Nethermind, and more) that you need in order to run a node on Ethereum.
1: Ethereum Name Service (ENS) is a domain registrar that converts traditional crypto addresses into easy to read URLs. Users can find websites n send/receive crypto with simple names. It also has smart contracts that tracks all domain names, owners, and more.
2: The Ethereum Name Service (ENS) is a distributed, open, and extensible naming system based on the Ethereum blockchain. ENS’s job is to map human-readable names like ‘alice. eth’ to machine-readable identifiers such as Ethereum addresses, other cryptocurrency addresses, content hashes, and metadata.
F
1: Forced liquidation: is the involuntary sale of assets/securities to create liquidity due to unforeseen situations. Often, forced selling usually rekts an investor who uses leverage due to the high volatility of crypto markets. Source: Investopedia
2: Forced liquidation in crypto trading is when an exchange automatically closes a trader’s open positions to ensure their losses do not exceed their account balance. This typically happens in leveraged trading, where traders borrow funds to trade larger positions than their actual account balance would allow.
1: The Floor price of NFTs are determined by the owner of that particular item of a project. It’s the lowest price of a digital item associated with an NFT project. The floor price is an important metric if a project starts to gain momentum.
2: The floor price refers to the lowest-priced NFT within a collection and is one of the most widely used metrics collectors use to evaluate a project.
1: Fully Diluted Valuation (FDV) is the total value of the crypto at today’s price if all tokens are in circulation. FDV is calculated by Current Price x Max Supply. Note that it can take 3, 5, 10 or more years before the FDV can be reached.
2: The Fully Diluted Market Cap, also referred to as Fully Diluted Valuation (FDV), is the value of a token’s market cap after all of its tokens have been completely mined or released.
1: Futures Contract is an agreement to buy/sell an asset at a fixed price & set time. It’s to be delivered & paid later. Futures being the obligation and options being the right. It’s usually a commodity or financial instrument that is traded on an exchange.
2: Futures trading in crypto involves the buying and selling of contracts that obligate the buyer or seller to purchase or sell a crypto asset at a predetermined price and date in the future. This means that traders can speculate on the price of the asset without actually owning it.
When media outlets or individuals spread misinformation about an asset. The goal is to make people act on their emotions rather than think rationally
1: Fiduciary is a person who manages money/assets for someone else. A fiduciary is required by law to manage the person’s money and property for their benefit, & not their own. A friend or family member can be named a fiduciary through a power of attorney.
2: Its any person who has an obligation to act in the best interest of another person or persons is considered a fiduciary. A fiduciary can be a lawyer representing a client, a trustee and a beneficiary, a corporate board and shareholders, and even employees and a company.
Kinds of money that are made legal tender by government decree or fiat. In the world of crypto, fiat currency is being used to describe the currency of nation states such as the Us Dollar, Chinese Yuan, Euro e.t.c.
G
1: Genesis Block: a religious reference used to describe the original/first block of data that is processed and validated to form a new blockchain, typically called as ‘block 0’ or ‘block 1’. Source: Investopedia
2: The Genesis Block was simply the first block of bitcoin (BTC) to be mined. You might see it called Block 0 or Block 1. It’s still there today and will remain there as long as any computer runs the Bitcoin software.
1: Gwei is a denomination of the cryptocurrency ether (ETH), used on the Ethereum network to buy and sell goods and services. A gwei is one-billionth of one ETH. Gwei is the most commonly used ether unit because it is easier to specify Ethereum gas prices.
A token that grants holders the right to participate in the decision making process for a decentralized protocol or platform.
Game Theory is a study of mathematical models of strategic interactions among rational players. In other words, it provides tools for analyzing situations in which players make decisions that are interdependent.
H
1: Halving is an event that reduces the reward Proof of Work miners receive to operate & secure the blockchain network in half. In Bitcoin whenever 210,000 blocks are mined, the supply is cut in half. The next Bitcoin halving in going to be the spring of 2024.
2: Halving: Halving refers to a process that reduces the issuance rate of new proof of work (PoW) cryptocurrency. More specifically, halving is the periodic reduction of the block subsidy provided to miners. Halving ensures that a crypto asset will follow a steady issuance rate until it eventually reaches its maximum supply.
Hash rate is a measure of the total computational power being used by a proof-of-work crypto network to process transactions in a blockchain. It can also be a measure of how fast a cryptocurrency miner’s machines complete these computations.
A strategy used to reduce the risk of adverse price movements by taking an offsetting position in the market.
Some with HTP places more emphasis on their well-being in the short term. Instant gratification is achieved through short term spending, rather than delayed gratification long-term saving and investing.
A way to store crypto online.
I
1: IoT (Internet of Things)
It’s a system that lets any device connected to internet to comunicate without human-to-human or human-to-devices interactions. Example: a home security system than can switch on and off via smartphone
Source: Coingecko
2: The internet of things (IoT) is a set of technologies that uses sensors and actuators to inform us about the status of everyday items such as vehicles, tools and even living beings. It allows us to interact with them, enabling connectivity with platforms in the cloud that receive and process information for posterior analysis. This analyzed data is then used to make decisions.
1: Initial Coin Offering (ICO) is the equivalent of Initial Public Offering (IPO), where a company/cryptocurrency venture raises funds through crowd sales. For instance, $MONX Monster of God is upcoming. Source: Coingecko & CoinMarketCap.
2: An initial coin offering (ICO) is the cryptocurrency industry’s equivalent of an initial public offering (IPO). A company seeking to raise money to create a new coin, app, or service can launch an ICO as a way to raise funds.
1: Interoperability refers to the property of systems that are able to work with systems that are different without any restrictions. Networks such as Cosmos, Polkadot, Harmony have emerged as leading examples of blockchain interoperability. Source: Analyticssteps
2: Blockchain interoperability is the idea of enabling distinct blockchain networks to interact and integrate, communicating seamlessly to allow for the sharing of data between chains.
1: IMMUTABLE – It means data cannot be changed or modified by anyone after its creation, the core defining feature of blockchain.
2: Immutable is a complete end-to-end development platform for building and scaling Web3 games on Ethereum, with industry-leading security and frictionless developer and gaming experiences. Immutable use zero-knowledge Rollups (ZK-rollups) to achieve layer-2 scalability.
K
The process of verifying the identity of customers to prevent fraud and comply with regulations.
L
Liquidity:
1: refers to the ease with which an asset or security (crypto) can be converted into ready cash without affecting its market price. The most liquid asset of all is cash itself.
Source: Investopedia
M
1: Master nodes (MS): unlike nodes don’t add new blocks of transactions to the blockchain. Rather, they serve to verify new blocks & perform special tasks for the governance of the ledger. It takes a lot of coins to run an MS since it functions on collateral basis.
2: Master nodes are part of the infrastructure that sustains cryptocurrencies such as Bitcoin, Ethereum, and Dash. Unlike regular nodes, master nodes do not add new blocks of transactions to the blockchain. Instead, they verify new blocks and perform special roles in governing the blockchain.
N
1: In the crypto context, NGMI is used to stress the point that a crypto investor could miss a huge profit on a certain trade. Source: Pixabay.
2: NGMI is slang for “Not Gonna Make It“ It describes someone missing out on profits or gains because she either doesn’t have diamond hands and is thinking about selling her bag because of a dip, or she wants to lock in profits rather than just hodling and waiting for even bigger gains.
O
1: This means when a crypto is traded outside of the exchange and done directly between two parties. Some people opt for OTC because some coins are too small to be listed on exchanges or the cryptos are banned in certain jurisdictions.
2: Over the Counter (OTC) : The over the counter market commonly known as the OTC market is where securities that aren’t listed on the major exchanges are traded. Stocks and bonds that trade on the OTC market are typically from smaller companies that don’t meet the requirements to be listed on a major exchange.
1: Oracles are a bridge between the real world & blockchains. They provide data to blockchains/smart contracts. Oracles are needed for decentralized programs to function trustlessly. Chainlink is a well known oracle that is used by many blockchains. Source: Gemini
2: Blockchain oracles are entities that connect blockchains to external systems, thereby enabling smart contracts to execute based upon inputs and outputs from the real world. Oracles provide a way for the decentralized Web3 ecosystem to access existing data sources, legacy systems, and advanced computations.
1: An Order Book is an electronic list of current buy orders (bids), & sell orders (asks) for a specific asset. Used by almost all exchanges, order books help to improve market transparency as it shows the price buyer/sellers are willing to pay and order history.
2: An order book lists buy and sell orders investors have made for a crypto asset on a centralized exchange. The numbers table contains information about buyer and seller orders, the prices at which they were executed, and the total amounts involved.
P
1: Passive income is earnings derived from staking, mining, or other enterprise in which a person is not actively involved. As with active income, passive income is usually taxable. Source: Investopedia
2: It is keeping a specific amount of bitcoin in a wallet or on an exchange, participating in the network’s validation process by confirming transactions or adding new blocks to the blockchain, and participating in the network’s consensus mechanism.
1: A public blockchain (PB) such as Bitcoin is free & available to the public. Anyone can join & view its data. PB have no central authority to overwrite anyone’s authority. PB are censorship resistance, immutable, & have no single point of failure.
2: Public blockchain is non-restrictive and permissionless, and anyone with internet access can sign on to a blockchain platform to become an authorized node. This user can access current and past records and conduct mining activities, the complex computations used to verify transactions and add them to the ledger.
1: They are a set of basic rules that permit data to be shared between computers. They establish the structure of cryptocurrency blockchains. These distributed databases allow digital money to be securely exchanged on the internet. Source: Gemini
2: A crypto protocol is a set of rules and procedures governing participants’ behavior in a decentralized network that uses cryptography to secure its operations. Crypto protocols are usually open-source and transparent, allowing anyone to examine and verify the underlying code.
1: Created to address Proof of Work’s energy consumption, Proof of Stake is a consensus algorithm that elects block validators to sign blocks based on how many and how long their coins have been staked.
2: Proof-of-stake is a mechanism used to verify blockchain transactions. It differs from proof-of-work significantly, mainly in the fact that it incentivizes honest behavior by rewarding those who put their crypto up as collateral for a chance to earn more.
1: It is the act of creating a set amount of blockchain-based tokens before their public launch. Pre-mining is associated with initial coin offerings (ICOs) as a way to reward insiders such as founders, developers, or early investors into the project.
2: Pre-mining is the creation of a certain amount of cryptocurrency before the digital currency is made available to the public. In the crypto world, pre-mining is a similar practice to selling a stake in a company to employees before the enterprise goes public via an initial public offering (IPO.)
1: It is a centralized blockchain where nodes are controlled by an authorized entity. Only trusted members are validators of the transactions included on the ledger. This makes transactions faster than decentralized blockchains. Example is VeChain.
2: Permissioned blockchains are blockchains that are closed (i.e., not publicly accessible) or have an access control layer. This additional layer of security means that the blockchain can only be accessed by users with permissions.
1: It is a scheme where a development team/short-term traders hypes up a project without fundamental basis in order to pump up the price of the tokens temporarily & then sells their holdings immediately after launch to earn a profit.
2: Its a form of fraud in which holders of a tradable asset, like stocks or crypto, use misleading information to spike the cost of the asset before selling their stake.
1: It is a legal authority to act on the behalf of another person. POA gives the agent/attorney-in-fact the authority deal with legal, financial, and other issues for a principle. A POA is granted with a notarized letter signed by the principle.
2: Power of attorney (POA) refers to a legal authorization that gives a designated person the power to act for someone else. As such, a POA gives the agent or attorney-in-fact the authority to act on behalf of the principal. The agent may be given broad or limited authority to make decisions about the principal’s property, finances, investments, or medical care.
1: Proof of Burn performs block validation in the same way as Proof of Work, whereby the chances of a miner to mine a block depends on the resource they have commit to increase its mining speed.
2: Proof of burn is a consensus mechanism that requires the users to destroy or “burn” a certain amount of coins in order to participate in the network. The more coins a user burns, the higher their chances of being selected as a validator. Validators receive rewards in the form of transaction fees and newly minted coins.
A perpetual swap permits investors to buy & sell the value of crypto without owning any. They don’t expire, don’t have a settlement date, don’t require any trading of the underlying asset, & are easy to short. It’s a liquid product that offers cheap leverage.
Q
1: Quantitative Tightening is when the US Fed Bank raises interest rates to “reduce” the quantity of money in circulation. The Fed hopes that more expensive loans will discourage borrowers from buying goods & services to “induce” sellers to lower their prices.
2: Quantitative Tightening is a division of monetary policy aimed at reducing the amount of capital (the money supply) in an economy. While each central bank approaches it slightly differently, it generally boils down to selling bonds or letting them mature.
R
1: Relative Strength Index (RSI) is a technical indicator used to analyze markets. By charting the current and historical closing prices to evaluate overbought/oversold conditions, RSI moves between 0 – 100, with <30 indicating oversold and >70 indicating overbought.
2: The relative strength index (RSI) is a technical analysis indicator commonly used in crypto trading for estimating Market Momentum. It evaluates overvalued or undervalued conditions in the price of crypto assets based on the speed and magnitude of their recent price changes.
1: A shorthand slang for “wrecked”, typically describes bad trades that results in losses. Source: Coingecko
2: It is a misspelling of “wrecked”. “Getting rekt” refers to a cryptocurrency trader who is utterly ruined and destroyed due to losses from a recent price crash. Rekt is what happens when crypto traders get swept up by FOMO and end up becoming the victim of a pump and dump.
1: Relative Strength Index (RSI) is a technical indicator used read market prices. Traders use current & historical closing prices to analyze overbought/oversold conditions, RSI ranges between 0 – 100, with <30 indicating oversold & >70 indicating overbought.
2: The relative strength index (RSI) is a technical analysis indicator commonly used in crypto trading for estimating Market Momentum. It evaluates overvalued or undervalued conditions in the price of crypto assets based on the speed and magnitude of their recent price changes.
NFT royalty give the creator a percentage of the sale price each time their NFT creation is sold on a marketplace. Many creators have already been able to realize a newfound passive income stream from NFT royalty payments. Source: Gemini.
S
1: It is a way of earning rewards for holding certain cryptocurrencies, which includes stable coins. Staking rewards varies. One can get anywhere from 1% to an infinite % of apy. The higher the reward, the higher the risk.
2: Staking is when you pledge your cryptocurrency toward helping validate transactions on the blockchain. Usually you won’t personally be validating transactions, but computers in the network will, and you can stake easily through programs at many major exchanges. The incentive for staking is earning rewards.
1: Secure Hash Algorithms 256 bit was first designed by the NSA for secure password hashing. SHA-256 hash algorithms generate one-way irreversible & unique hashes that is used in Bitcoin Proof of Work for verifying transactions. Experts say it can’t be hacked.
2: (SHA) -256 is the hash function and mining algorithm of the Bitcoin protocol, referring to the cryptographic hash function that outputs a 256 bits long value. It moderates the creation and management of addresses, and is also used for transaction verification.
1: A set of solutions built on top of a public blockchain to extend its scalability and efficiency, especially for micro-transactions or actions. Examples include: Plasma, TrueBit, Lightning Network, and more. Source: Gemini
2: Blockchain Layer 2 solutions are protocols that operate on top of a Layer 1 blockchain (like Bitcoin or Ethereum) to improve scalability, privacy, and other characteristics of the underlying blockchain. The most common solutions are state channels, sidechains, optimistic Rollups and zero knowledge roll-ups.
1: Sharding is a way of partitioning to spread out the computational and storage workload across a (P2P) network so that each node isn’t responsible for processing the entire network’s transactional load. This increases transaction speed.
2: Sharding is simply a partitioning technique used to distribute the computational and storage effort across a peer-to-peer (P2P) network so that each node isn’t tasked with handling the transactional load for the whole network. Instead, each node only keeps data about its division or shard.
1: Something that has the capability to be easily sold across space and time. For instance, fiat currency is saleable as well as bitcoin. Gold, on the other hand, is saleable across time, but not across space.
2: Saleability is a technical analysis term used to compare performances of different trading systems or different investments
1: Created for Ethereum smart contracts, Solidity is a curly-bracket programming language. It’s used to implement business logic & generate a chain of transaction records in Ethereum’s blockchain. Solidity is influenced by C++, Python & JavaScript.
2: Solidity is an object oriented programming language created specifically by the Ethereum Network team for constructing and designing smart contracts on Blockchain platforms. It’s used to create smart contracts that implement business logic and generate a chain of transaction records in the blockchain system.
Seed/Recovery Phrase is a series of 12-24 words that grants access to your crypto wallet. It’s used to recover your wallet if your password/cell/hardware device is lost. Seed phrases are not to be shared with anyone. Seed phrases are stored in safe places.
T
1: It’s used by trader to predict trends in asset prices based on past price movements, volume and volatility. Technical analysts believe that historical price charts can be used to assess trading opportunities.
2: Technical analysis is the process of using historical price data to attempt to forecast the likely future direction of price. The technician has many tools at their disposal. All are derived from price and/or volume. Through the study of historical price data that is plotted on charts, the technician is able to make a judgment about the sentiment of market participants.
1: It refers to a event when tokens are removed from the circulating supply. This is achieved by sending the tokens to a burn address “addresses with very improbable private key generation chance”, or to a smart contract that is meant to delete the tokens.
2: It means permanently removing a number of tokens from circulation. Crypto burning is typically done by transferring the tokens in question to a burn address, i.e. a wallet from which they cannot ever be retrieved. This is often described as destroying tokens.
1: It is the number of staked assets in a protocol. It’s also the total quantity of funds that a DeFi protocol has secured. To calculate TVL, multiply the number of tokens deposited in a project by its current price in USD.
2: Total Value Locked (TVL) is a metric used to measure the total value of digital assets that are locked or staked in a particular decentralized finance (DeFi) platform or distributed application (DApp). The higher the TVL, the more trustworthy the platform or DApp is perceived to be.
Trailing Stop Loss Limit was created to permit a trader to specify a limit on the max possible loss, without setting a limit on the max gain.
U
V
1: It is a form of private equity & a type of financing that investors provide to startup companies that may have long-term growth potential. Venture capital generally comes from investors & investment banks. Source: Investopedia.
2: Venture capital (VC) : Crypto venture capitalists specialize in investing in early-stage startups that offer products or services related to cryptocurrency, blockchain technology and digital assets. They typically fund projects through equity investments, token sales or other financial instruments.
W
1: It is a widely used crypto term. Traders and investors use it to show solidarity with each other after receiving good news related to their holdings. Source: Urban Dictionary
2: WAGMI is slang for “We’re all gonna make it“. It’s a rallying cry, seen on social media platforms like Twitter, for building hope and confidence in the crypto markets, especially when good news comes out.
1: Web3 Wallets are a must to access the Web3 space, DeFi, & crypto. Web3 wallets are digital wallets that are used to store assets like NFTs. It also allows you to interact with dApps on different blockchains. Examples of a Web3 Wallet is MetaMask, TrustWallet, etc
2: Web3 wallets are digital wallets designed for interacting with Web3 applications, which are decentralized applications built on blockchain technology. They enable users to store and manage their digital assets, such as cryptocurrencies, NFTs, and other digital tokens.
1: It is a list of addresses that get early and guaranteed access to mint NFTs at a specific date and window of time.
2: Whitelist (allowlist) is a cybersecurity strategy that approves a list of email addresses, IP addresses, domain names or applications, while denying all others.
1: It stands for Wrapped #Bitcoin, and is simply an ERC-20 token that represents Bitcoin; one WBTC equals one BTC.The key advantage of WBTC is its integration into the world of Ethereum wallets, decentralized apps (dapps), and smart contracts.
2: Wrapped bitcoin (wBTC) allows ethereum applications to integrate a cryptocurrency backed by real bitcoin reserves. In this way, wBTC operates as a bridge between bitcoin and ethereum, allowing Bitcoin users to access decentralized finance (DeFi) applications and for ethereum applications to gain additional liquidity.
1: Web3 : A term coined by DOT founder Gavin Wood. It’s used for a new version of the internet. Its main feature is the decentralization of data & content. This contrasts with the centralization of Web2. Critics like Elon Musk believe that Web3 is just a buzz word.
2: Web3 wallets are digital wallets designed for interacting with Web3 applications, which are decentralized applications built on blockchain technology. They enable users to store and manage their digital assets, such as cryptocurrencies, NFTs, and other digital tokens.
1: Birthed by Jack Dorsey, Web5 is a new evolution of the web that enables decentralized apps and protocols. It facilitates the creation of apps that would allow users to store and control their data themselves.
2: Web5 is a decentralized, peer-to-peer vision of the web built exclusively on a second layer of the Bitcoin blockchain. With Web5, users can store and manage access to personal information on their own terms.
1: A 52-week range is a difference between an asset’s highest and lowest prices over the past 52 weeks.
2: The 52-week range is designated by the highest and lowest published price of a security over the previous year. Analysts use this range to understand volatility. Technical analysts use this range data, combined with trend observations, to get an idea of trading opportunities.
Y
1: It is an investment strategy in DeFi. It involves staking/lending crypto to get rewards in the form of transaction fees or interest. This is similar to earning interest from a bank account; you are technically lending money to the bank. Source: Gemini
2: Yield farming is a way to earn rewards by depositing your cryptocurrency or digital assets into a decentralized application (DApp). Yield farming is a colorful term to describe a widespread practice in traditional finance; namely, earning rewards (interest) on assets.
Z
1: It’s a layer 2 construction that increases scalability through mass transfer processing rolled into a single transaction, ZK-Rollups greatly reduce the computing/storage resources required to validate blocks, by decreasing the amount of data in a transaction.
Zk-rollups increase scalability as instead of having to post all transaction data on-chain, they only need to periodically provide valid bundled-up transaction batches that are executed using off chain computation. These bundles are then “rolled up” into one summary of the state changes that are verified by the base layer using a validity proof that proves the correctness of the changes using a zero-knowledge proof, demonstrating with mathematical certainty that the state changes proposed by the layer 2 are correct and are the result of the execution of the given batch of transactions.
Zk-rollups typically rely on the base layer for data availability, settlement, and censorship resistance. The rollup’s state is maintained by a smart contract deployed on the layer-1 network. When a user submits a transaction on the rollup, it’s usually submitted to a layer-2 operator for inclusion in the next transaction batch. These operators can be a centralized entity called a sequencer that executes transactions, bundles them up in batches, and submits the batch to the layer-1 network. Zk-rollups can also use a proof-of-stake system where the role of executing and bundling transactions is rotated between a set of validators who have deposited funds into a rollup staking contract.
1: It is a cryptographic proof that one can prove possession of specific information like a hash without revealing that information. Zk-Snarks is a part of Zcash’s protocol.
2: The acronym zk-SNARK stands for Zero-Knowledge Succinct Non-Interactive Argument of Knowledge and refers to a proof construction where one can prove possession of certain information, e.g., a secret key, without revealing that information, and without any interaction between the prover and verifier.
zk-SNARKs comes from the concept of the zero-knowledge proof, which was first introduced in a 1985 paper written by Shafi Goldwasser, Silvio Micali, and Charles Rackoff. As previously explained, a zero-knowledge proof is a method that allows one party to show only that they have a piece of information without revealing the information itself or any additional information.
Early zero knowledge protocols required the prover and verifier to send messages back and forth. A 2012 paper by Nir Bitansky, Ran Canetti, Alessandro Chiesa, and Eran Tromer coined the term “zk-SNARK” to describe a new zero-knowledge protocol. Unlike prior methods, it wouldn’t require interaction between the prover and verifier outside of a single message.
With most types of cryptocurrency, a transaction is validated by the network checking that certain conditions have been met. Specifically, the conditions are that the sender has the funds available and that they’ve provided the correct private key. to show that the funds are theirs.
zk-SNARKs allow the sender of a transaction to prove all that without revealing any of the addresses or amounts involved. To offer this, the blockchain network encodes some of its consensus rules in zk-SNARKs.
During the transaction process, zk-SNARKs turn the information that needs to be proved into equations. These equations can be evaluated and solved without disclosing the information itself.
1: ZKPs make it possible to anonymize crypto transactions. They allow a user to prove that a situation is real without revealing information about it.
2: Zero Knowledge Proofs (ZKPs) can be used to enhance the privacy and security of both on-chain and off-chain voting systems. By utilizing ZKPs, voters can prove the validity of their votes or the accuracy of the vote tally without revealing sensitive information or individual voting choices.
At a high level, a zero-knowledge proof works by having the verifier ask the prover to perform a series of actions that can only be performed accurately if the prover knows the underlying information. If the prover is only guessing as to the result of these actions, then they will eventually be proven wrong by the verifier’s test with a high degree of probability.
Zero-knowledge proofs were first described in a 1985 MIT paper from Shafi Goldwasser and Silvio Micali called, The Knowledge Complexity Of Interactive Proof System”In this paper, the authors demonstrate that it is possible for a prover to convince a verifier that a specific statement about a data point is true without disclosing any additional information about the data. Zkps can either be interactive, where a prover convinces a specific verifier but needs to repeat this process for each individual verifier or non-interactive, where a prover generates a proof that can be verified by anyone using the same proof.
There are two main types of zero-knowledge proofs:
Interactive zero-knowledge proofs: In this type of ZKPs, the prover and the verifier interact several times. The verifier challenges the prover who provides replies to these challenges until the verifier is convinced
Non-interactive zero-knowledge proofs: In this type of ZKPs, proof delivered by the prover can be verified by the verifier only once at any time. This type of ZKPs requires more computational power than interactive ZKPs. They are also most preferred due to ease of user experience
A zero-knowledge proof (ZKP) method must satisfy the following criteria:
Completeness: If the information provided by the prover is true, then a ZKP method must enable the verifier to verify that the prover is telling the truth.
Soundness: If the information provided by the prover is false, then a ZKP method must allow the verifier to refute that the prover is telling the truth.
Zero-knowledge: The ZKP method must reveal to the verifier nothing else than whether the prover is telling the truth or not.
