Crypto glossary

Airdrop — distribution of a project's native cryptocurrency to users for marketing purposes.

Altcoin — any cryptocurrency created after Bitcoin.

Anti Money Laundering (AML) — a set of measures employed by financial institutions to combat money laundering.

AppChain — is a blockchain designed to exclusively support a single specific application.

51% Attack — a blockchain attack where one user or a group of participants gain control of a significant portion of the network's computational power, enabling them to exclude and alter blockchain records as they see fit.

Automated Market Maker (AMM) — is a liquidity control and cryptocurrency pricing algorithm used in decentralized exchanges.

Bitcoin — a blockchain and its associated cryptocurrency, comprising a P2P payment system. Whitepaper Bitcoin was first introduced in 2008 by an anonymous user using the pseudonym Satoshi Nakamoto.

Bitcoin Improvement Proposal (BIP) is a formatted proposal for enhancing Bitcoin, following established standards. Within the BIP framework, any user can suggest making changes to the Bitcoin network's operations, and these changes get added if approved by the majority of participants.

Blockchain — a distributed ledger containing information about all transactions conducted by system participants. Data is recorded in blocks, which are subsequently added to the shared chain. Importantly, information can only be added to the blockchain, and once recorded, it is virtually impossible to delete or alter.

Blockchain Bridges — protocols that connect two blockchains, enabling them to interact with each other. Specifically, with blockchain bridges, users can transfer cryptocurrencies between blockchains.

Blockchain oracle is like a smart contract tool that lets a smart contract share data with external sources outside the blockchain. This enables the smart contract to take specific actions based on information obtained from beyond the network, such as changes in market quotes for a particular asset.

Central bank — a government financial institution responsible for managing the monetary policy of a country or its region, including the issuance of fiat currency.

Centralized Exchange (CEX) — is a cryptocurrency exchange that is managed and fully controlled by a single company.

Consensus algorithm — a mechanism that allows blockchain nodes to coordinate their actions and reach an agreement on the network's state.

Cross-chain compatibility is the ability of a blockchain to exchange information with other networks. This capability allows smart contracts in different blockchains to interact with each other without the actual transfer of tokens between them.

Crypto wallet — a device, program, or service that stores both public and private keys for blockchain operations. Contrary to common belief, crypto wallets do not store cryptocurrency themselves.

Crypto сard — a payment card linked to an account holding cryptocurrency. When making a payment, a portion of the cryptocurrency is converted into fiat currency, which is then transferred to the seller's account.

Cryptocurrency — is a digital currency based on blockchain technology, enabling peer-to-peer (P2P) transactions.

Сryptojacking — is a type of cybercrime in which malicious actors use devices for cryptocurrency mining without the owners' consent.

DApp (Decentralized Application) — a blockchain-based application operating on smart contracts.

Decentralized Autonomous Organization (DAO) is an organization that operates based on smart contracts following predefined rules coded into the program. DAOs perform the same tasks as traditional companies and communities, bringing people together around common goals. A significant distinction of DAOs from regular companies is the absence of a vertical hierarchical structure. Instead, all DAO participants are equal and make decisions through direct voting.

Decentralized Exchange (DEX) is a cryptocurrency trading platform that operates on blockchain and automated smart contracts. A key distinction of DEX from centralized exchanges is that the platform itself doesn't control trading operations and doesn't hold user funds (transactions are conducted directly from the user's wallet).

Decentralized Finance (DeFi) — is an ecosystem of online blockchain-based projects encompassing various financial instruments. The core concept of DeFi is to provide an alternative to traditional financial institutions built on principles of decentralization.

Dusting Attack — the act of sending a small amount of cryptocurrency (referred to as "dust") to a user's cryptocurrency wallet with the aim of tracking its subsequent movement and eventually determining the owner's identity.

Emission (in the context of cryptocurrency) — the process of issuing new tokens and introducing them into circulation.

Ethereum — a blockchain platform for decentralized applications and the second-largest cryptocurrency by market capitalization.

Exchange Traded Fund (ETF) — is an exchange-traded fund that manages assets.

Fork (in the context of blockchain) — the process of making changes to the algorithms of a blockchain or creating a new cryptocurrency based on an existing one. Depending on the subsequent compatibility of updated and old nodes, forks are classified as soft forks and hard forks.

Fractional ownership — a form of ownership where the rights to a single asset are divided among multiple individuals. This concept is applicable to virtually any high-value asset, including real estate.

GameFi — is a concept that combines gaming and finance. It encompasses gaming projects created on the blockchain that enable users to monetize their in-game experiences.

Governance Tokens — are tokens that enable their holders to vote on key development matters within blockchain projects.

Halving — is the scheduled reduction of the reward for mining a block that occurs at regular intervals.

Hardfork — the implementation of significant changes that alter the fundamental rules of a blockchain. During a hardfork, the blockchain splits into two copies. Nodes that reject the update continue to operate with the old version, while participants who accept the changes begin to interact with the new version under the modified rules.

Hash (in the context of blockchain) — a unique digital fingerprint of a block computed based on the data it contains. Each subsequent block contains the hash of the previous one. Attempting to alter the data in a block will change its hash, breaking the linkage between blocks.

Know Your Customer (KYC) — the process of collecting users' personal data and verifying their identity.

Layer 1 (L1) refers to the foundational blockchain network, essentially the blockchain itself, such as Bitcoin or Ethereum.

Layer 2 (L2) is a network that operates on top of the main blockchain (Layer 1) and aims to address scalability issues by increasing throughput and transaction processing speed.

Liquid Staking — is the issuance of tokens collateralized by cryptocurrency held in staking.

Metaverse — the concept of a next-generation internet space, comprising a virtual three-dimensional world that integrates various aspects of human life.

Mining is the process of creating new blocks in a blockchain, loading them with information, and adding them to the main chain of blocks. Block mining involves solving a complex mathematical problem using computational equipment. The first user to solve the problem earns the right to add the block and receive a reward in the form of a specific amount of cryptocurrency.

Mining Pools — are a group of miners who combine their computational power for more efficient mining and consistent earnings.

Node — any user device connected to the blockchain network.

Non-fungible token (NFT) — a type of token where each instance is unique and cannot be replaced with a similar token.

Peer-to-Peer (P2P) — a network of devices based on the equality of participants. P2P also refers to a type of transactions in which funds are sent directly from one user to another without intermediaries.

Play to Earn (P2E) — is a category of games that includes projects that allow users to earn rewards with real value.

Private Key / Seed Phrase — a combination of 12 or 24 words. Knowing it grants full access to the wallet. Therefore, the secret phrase should not be shared with other users to prevent fund loss.

Proof of Stake (PoS) — a consensus algorithm in which the right to add blocks and verify transactions is granted to cryptocurrency owners who have staked their coins.

Proof of Work (PoW) — the original consensus algorithm (used in Bitcoin) that involves solving a complex computational problem using mining hardware. The miner who first solves it adds a new block to the blockchain and receives a reward for doing so.

Proof-of-Authority (PoA) — is a consensus algorithm that operates with a limited group of authoritative validators.

Public Key — a wallet address, a kind of account number, open to all network users. It is used to receive cryptocurrency from other users, so it can be freely shared with others. Also, the public key can be used to track all wallet activity.

Rollups — are a scaling solution for Ethereum that enables transactions to be conducted in Layer 2 beyond the main chain.

Satoshi Nakamoto — an anonymous user who created Bitcoin, whose true identity is entirely unknown.

Sidechains are a blockchain scaling technology where additional blockchains are created alongside the main chain. This approach helps reduce the load on the main blockchain and enhances transaction processing speed in the network.

Smart Contract — an algorithm recorded on the blockchain that automatically executes specific actions when corresponding triggers occur.

Softfork — the implementation of minor changes to the blockchain. After a softfork, nodes that have adopted and those that have rejected the update continue to work together without splitting the blockchain.

Soulbound Token — is a non-transferable token that, upon issuance, is permanently bound to a specific token.

Stablecoin — a cryptocurrency whose price is pegged to a fiat currency, most often the USD, and maintained at a fixed level through collateral or algorithms.

Staking is the process of adding new blocks used in blockchains operating on the Proof-of-Stake (PoS) algorithm. The user granted the right to add a new block is randomly selected from those who have temporarily locked their coins within the staking system. The user adding the block receives a reward in the form of cryptocurrency.

Token — a term that lacks a universally accepted definition and can refer to multiple categories of digital assets. According to one of the most popular views, a token is a digital asset that does not have its "own" blockchain and exists on another network. Additionally, a token can serve as a digital representation of another real-world asset, such as in the case of Sabai Property, which represents real estate.

Token Burning — is the irreversible removal or "destruction" of a certain amount of cryptocurrency from circulation.

Tokenization — the process of representing ownership rights to something valuable with one or more crypto tokens. The value can be either a tangible asset, such as real estate, or an intangible one, like digital art or copyrights.

Vampire Attack is a development strategy in a blockchain project where it copies an existing similar service from a competitor but offers users more favorable conditions. Through this approach, a project employing a Vampire Attack gains a portion of the competitor's user base.

Vitalik Buterin — co-founder of the Ethereum project.

Volatility — is the degree of price fluctuation of a particular asset or group of assets, such as an entire market.

Web3 — is the concept of the third generation of the internet, which is expected to differ from the current (Web2) with greater decentralization, integration of blockchain technologies and cryptocurrencies, as well as a range of other features.

Whitepaper (in the blockchain context) — a document that provides a detailed description of a blockchain project, including its concept, key features, and technical specifications.