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Glossary
In this section you can find the words used in our business.
A consensus digital ledger comprised of unchangeable, digitally recorded data in packages called blocks. Each block is ‘chained’ to the next block using a cryptographic signature. This allows blockchains to act like a ledger, which can be shared with and accessed by anyone with the appropriate permissions.
A confirmation means that the network has verified the blockchain transaction. This happens through a process known as mining, in a Proof of Work system (e.g., Bitcoin). Once a transaction is successfully confirmed it theoretically cannot be reversed or double spent. The more confirmations a transaction has, the harder it becomes to perform a double-spend attack.
A method for secure communication using code. Symmetric-key cryptography is used by various blockchain networks for the transfer of cryptocurrencies. Blockchain addresses generated for wallets are paired with private keys that allow the transfer of cryptocurrency. Paired public and private keys allow funds to be unlocked.
Also known as the digital decentralised autonomous organisation (DAO). Alternatively, the first known example of a DAO was named The DAO. The DAO served as a form of investor-directed venture capital fund, which sought to provide enterprises with new decentralised business models. Ethereum-based, The DAO’s code was open source. The organisation set the record for the most crowdfunded project in 2016, however, those funds were partially stolen by hackers. The hack caused an Ethereum hard-fork which lead to the creation of Ethereum Classic.
A DEX is a dapp cryptocurrency exchange that allows for peer-to-peer trading. Trading is facilitated without an intermediary maintaining cryptocurrency holders ownership over their cryptocurrency assets. The largest DEX is currently Uniswap, allowing ERC20 tokens to be freely traded in an open market.
Decentralised finance — often called DeFi or open finance — refers to the economic paradigm shift enabled by decentralised technologies, particularly blockchain networks. DeFi represents a shift from a centralised and closed financial system to a universally accessible economy that is based on open protocols that are interoperable, programmable, and composable.
ERC is the abbreviation for Ethereum Request for Comment and is followed by the assignment number of the standard. ERC20 is a technical standard for smart contracts the majority of Ethereum tokens follow. This list of rules states the requirements that a token must fulfil to be compliant and function within the Ethereum network.
The Ethereum Virtual Machine (EVM) is Turing complete and allows anyone, anywhere to execute arbitrary EVM Byte Code. All Ethereum nodes run on the EVM. The project is designed to prevent denial-of-service attacks. It is home to smart contracts based on the Ethereum blockchain.
Decentralised file storage and referencing system for the Ethereum blockchain. IFPS is an open-source protocol that enables storing and sharing hypermedia (text, audio, visual) in a distributed manner without relying on a single point of failure. This distributed file system enables applications to run faster, safer, and more transparently.
A process in which a business must verify the identity and background information (address, financials, etc) of their customers. For example, current regulations and laws require banks and other financial institutions to keep and report customers’ personal information and transactions.
The availability of liquid assets to a company or market. An asset is considered more liquid if it can easily be converted into cash. The harder the ability to turn an asset into cash the more illiquid the asset. For example, stocks are considered relatively liquid assets as they can be easily converted to cash while real estate is considered an illiquid asset. The liquidity of an asset affects its risk potential and market price.
Moreover, liquidity may refer to funds utilised in a liquidity providing contract. and the price slippage/rugs you may receive.
Short for Market Capitalisation, this term refers to the total value held in a particular industry, market, company, or asset. For a publicly traded company, the market cap is the total dollar market value of a company’s outstanding shares. For Bitcoin or Ethereum, the total market cap is a reflection of the current existing supply times the market price.
Similar to the concept of a family tree, where a parent branch splits into children branches, which then extrapolated into grandchildren branches. A Merkle Tree is a data structure in which a single hash code function(cryptographic code) splits into smaller branches. In the diagram Hash becomes “Hash 0” and “Hash 1,” which then splits again and is represented on the blockchain. This type of data structure enables faster verification on a blockchain network.
The process by which “blocks” or transactions are verified and added to a blockchain. In order to verify a block, a miner must use a computer to solve a cryptographic problem. Once the computer has solved the problem, the block is considered “mined” or verified. In the Bitcoin or Ethereum blockchain, the first computer to mine or verify the block receives bitcoin or ether, respectively.
A crypto-asset wallet that requires multiple keys to access. Typically, a specified number of individuals are required to approve or “sign” a transaction before they are able to access the wallet. This is different from most wallets which only require one signature to approve a transaction.
Fungibility refers to an object’s ability to be exchanged for another. For example, an individual dollar is considered fungible as we can trade dollars with one another. Artwork is usually deemed non-fungible as paintings, sculptures, or masterpieces are likely to be unequal in quality or value. A non-fungible token is a type of token that is a unique digital asset and has no equal token. This is in contrast to cryptocurrencies like ether that are fungible in nature.
Any computer connected to the blockchain network is referred to as a node. A full node is a computer that can fully validate transactions and download the entire data of a specific blockchain. In contrast, a “lightweight” or “light” node does not download all pieces of a blockchain’s data and uses a different validation process.
Peer-to-peer (P2P) refers to interactions that happen between two parties, usually two separate individuals. A P2P network can be any number of individuals. In regards to a blockchain network, individuals are able to transact or interact with each other without relying on an intermediary or single point of failure.
A private key is an alphanumeric string of data that corresponds to a single specific wallet or “public address”. Private keys can be thought of as a password that enables an individual to access their crypto wallet/account. Never reveal your private key to anyone, as whoever controls the private key controls the account funds. If you lose your private key, then you lose access to your wallet.
An alternative consensus protocol, in which an individual or “validator” uses their own cryptocurrency to validate transactions or blocks. Validators “stake” their cryptocurrency, such as ether, on whichever transactions they choose to validate. If the individual validates a block (group of transactions) correctly then the individual receives a reward. Typically, if a validator verifies an incorrect transaction then they lose the cryptocurrency that they staked. Proof of Stake requires a negligible amount of computing power compared to Proof of Work consensus (see also Hybrid ConsenSys Model).
A protocol for establishing consensus across a system that ties mining capability to computational power. Hashing a block, which is in itself an easy computational process, now requires each miner to solve for a set, difficult variable. In effect, the process of hashing each block becomes a competition. This addition of solving for a target increases the difficulty of successfully hashing each block. For each hashed block, the overall process of hashing will have taken some time and computational effort. Thus, a hashed block is considered Proof of Work (see also Hybrid ConsenSys Model).
Obtained and used by anyone to encrypt messages before they are sent to a known recipient with a matching private key for decryption. By pairing a public key with a private key, transactions not dependent on trusting involved parties or intermediaries are possible. The public key encrypts a message into an unreadable format and the corresponding private key makes it readable again for the intended party.
Risk is defined in financial terms as the chance that an outcome or investment's actual gains will differ from an expected outcome or return. Risk includes the possibility of losing some or all of an original investment.
Last modified 1yr ago