Blockchain and cryptocurrencies have long ceased to be a topic for geeks; their regulation and use are seriously discussed at the state level. While bitcoin is breaking new records, we have compiled a glossary of basic concepts and terms in the field of blockchain and cryptocurrencies to make it easier for you to navigate.
Airdrop is a marketing campaign that distributes a specific cryptocurrency or token to an audience.
Altcoin generally means any cryptocurrency other than Bitcoin.
APY is a commonly used acronym for annual percentage yield, is the rate earned on an investment in a year, taking into account the effects of compounding interest. Allows you to simplify the comparison of the yield for annual compound interest with different intervals of income accrual (when interest is calculated several times a year at the annual compound interest rate). Annual Percentage Yield (APY) shows the rate of return as if the annual compounding interest was calculated once a year and would produce the same accrued value (future value) as the annual compounding interest in question, which is paid several times a year.
Arbitrage means taking advantage of a difference in price of the same commodity or instrument on two different exchanges. For instance, if a cryptocurrency is being sold for USD 10.00 at Exchange A, and being bought for USD 10.50 at Exchange B, the arbitrage opportunity would be to buy the cryptocurrency at Exchange A and then immediately sell it at Exchange B. The arbitrage profits would then be USD 0.50.
Blockchain is the classification of a technology. Blockchains are distributed ledgers, secured by cryptography. They are essentially public databases that everyone can access and read, but the data can only be updated by the data owners. Instead of the data residing on a single centralized server, the data is copied across thousands and thousands of computers worldwide.
Coin is a cryptocurrency with its own blockchain, usually created by developers from scratch or through a fork. You can also come across the term "altcoin", which means an alternative coin, that is, any coin that is not Bitcoin.
Dapp means Decentralized Application, which is an application that uses a smart contract as it’s back-end code.
Decentralization refers to the property of a system in which nodes or actors work in concert in a distributed fashion to achieve a common goal. This method excludes the control of one person or a group of people.
Decentralized exchange is the same as DEX.
Decentralized finance is a blockchain-based form of finance that does not rely on central financial intermediaries such as brokerages, exchanges, or banks to offer traditional financial instruments, and instead utilizes smart contracts on blockchains, the most common being Ethereum & Tron. DeFi platforms allow people to lend or borrow funds from others, speculate on price movements on a range of assets, trade cryptocurrencies, insure against risks, and earn interest in savings-like accounts. Some DeFi applications promote high interest rates but are subject to high risk.
DEX is a peer-to-peer exchange allowing users to trade cryptocurrency without the need for an intermediary.
Dump is a sudden sell-off of digital assets. This is an artificial decline in the cryptocurrency rate by major market players. They sell coins in large quantities, thereby creating an oversupply in the market. After the fall in the rate, they buy it back at a lower cost.
Exchange means a website where you can buy and sell cryptocurrencies.
Farming / Yield farming is the act of putting your money into decentralized finance (DeFi) applications as a liquid provider to earn interest, fees, or other rewards. Put simply, yield farming is the act of loaning out your cryptocurrency to earn more cryptocurrency in the form of interest. It’s very similar to putting money away in your savings at a traditional bank and earning interest on that; only with crypto, your funds are locked into a blockchain rather than a bank account.
But why would a platform give you its tokens? To increase its value. Take the UswapMe platform for example. As UswapMe rewards users for lending cryptocurrency, the platform is ensuring its tokens is actually put to use. Tokens with a valuable use case go up in price, meaning more users flock to the network. It’s a cycle.
Fiat currency means currency that a government has declared to be legal tender, but it is not backed by a physical commodity. Examples of Fiat currency is USD and EUR. The value of fiat currency is derived from the relationship between supply and demand rather than the value of the material that the money is made of. Fiat is Latin for “let it be done.”
HODL is a type of passive investment strategy where you hold an investment for a long period of time, regardless of any changes in the price or markets. The term first became famous due to a typo made in a Bitcoin forum, and the term is now commonly expanded to stand for “Hold On for Dear Life.”
Liquidity (or market liquidity) is an asset’s ability to be sold without causing a significant movement in the price and with minimum loss of value. Liquidity is characterized by a high level of trading activity. Assets that can be easily bought or sold are known as liquid assets.
Liquidity pools are tokens (funds) that are currently in the UswapMe smart contract and are available for exchange between users. This is a kind of vault in which market participants put their assets together in order to provide a very large supply of liquidity for everyone who wants to exchange this asset.
In other words Liquidity pools are crypto assets that are kept to facilitate the trading of trading pairs on decentralized exchanges.
Liquidity providers are decentralized exchange users who fund a liquidity pool with tokens they own. They receive a commission of 0.3% on all trades carried out on the Uswap platform, in proportion to their share in the pool.
LP tokens (from Liquidity Provider) are tokens that a liquidity provider receives when he places liquidity in a pool. They denote his ownership of a part of the crypto assets in the pool, and he can exchange them back for the original coins at any time.
Market Capitalization/Market Cap is total capitalization of a cryptocurrency’s price. It is one of the ways to rank the relative size of a cryptocurrency. Market capitalization is determined by multiplying the total number of coins issued by the market value of one coin.
Moon (to the moon) means – in the crypto world – the price of a cryptocurrency going up to astronomical levels.
Private Key/Secret Key is a piece of code generated in asymmetric-key encryption process, paired with a public key, to be used in decrypting information hashed with the public key. This is the key to your wallet. Never give it to anyone else, otherwise you risk losing all your crypto assets. We advise you to print out all private keys and keep them on paper in a safe place.
Public address (Public key) is the cryptographic hash of a public key, allowing the user to use it as an address to request for payment.
In the TRON blockchain, the address looks like this: TQn9Y2khEsLJW1ChVWFMSMeRDow5KcbLSE
Scam is a fraudulent cryptocurrency project that, for whatever reason, stopped fulfilling its obligation to investors.
Smart Contract means a code that is deployed onto the TRON or Ethereum blockchain, often directly interacting with how money flows. Simplistically put, a normal transaction allows you to send money from A to B. Smart contracts allow you to send money from A to B, on the condition that C happens.
Staking is participation in a proof-of-stake (PoS) system to put your tokens in to serve as a validator to the blockchain and receive rewards. In the USWAP project liquidity pool tokens participate in staking for farming UME or EFT tokens.
Swap is an exchange. The operation of exchanging one asset for another through a decentralized exchange.
Token is a digital virtual unit issued by someone. The accounting and operation of such units is based on blockchain technology. The main difference from a coin is that a token does not have a blockchain itself. For example (TRX is the native coin of the TRON blockchain, UME is the token on the TRON blockchain).
Trading is the analysis of the current market situation and the conclusion of trade transactions, trading in cryptoassets.
Transaction (or tx) is an operation of storing data in the blockchain, during which crypto assets or other information are transferred between wallets or between a wallet and a smart contract.
The transaction is sent after it is created in the wallet and signed with a digital signature based on the private key. Transactions are verified by blockchain miners (validators) who receive a commission for this. The transaction fee is always paid by the sender. The confirmed transaction is included in the block - part of the chain (blockchain), it is impossible to send the same coins (tokens) twice. Once a transaction is saved on the blockchain, it can be found by a hash, often referred to as the transaction identifier (tx id). The hash of each transaction is unique within the blockchain.
TRC20 is the TRON blockchain token standard.
TRON is a blockchain-based operating system on which one can create decentralised applications, and share media content. The TRX token itself is used to gain access to certain features of the operating software. Therefore, the token’s main purpose is for use on the Tron network. However, it is still a store of value and can be traded on exchanges, therefore it can also be described as a virtual currency.
It was created in 2017 by Justin Sun. Originally TRX were ERC-20-based tokens, underpinned by Ethereum but in 2018 they separated to become their own token. In that same year, Tron acquired Bit Torrent, the internet’s largest file-sharing site, which was a necessary step on their journey to creating a level media playing field on the internet.
Volatility is a statistical measure of the spread of returns, measured using the standard deviation or variance of returns on the same asset. This term is often used in the meaning of an unstable rate, sharp jumps in quotations with a large amplitude.
Whale means someone that owns so much cryptocurrency that he/she has the power to alone substantially affect the price of such cryptocurrency (by e.g., issuing a sell order)