Blockchain Glossary For Beginners
A
Absolute Advantage
Absolute advantage is when a producer can produce a good or service in greater quantity for the same cost, or the same quantity at lower cost, than other producers.
Absolute advantage can be the basis for large gains from trade between producers of different goods with different absolute advantages.
Specifically, it refers to the ability to produce a certain good or service at lower cost (i.e., more efficiently) than another party. (A “party” may be a company, a person, a country, or anything else that creates goods or services.)
Active Management
Active management is the use of human capital to manage a portfolio of funds. Active managers rely on analytical research, personal judgment, and forecasts to make decisions on what securities to buy, hold, or sell.
Investors who do not follow the Efficient Markets Hypothesis believe in active management. They hold the belief that there are some inefficiencies in the market that allow for market prices to be incorrect.
Therefore, it is possible to profit in the stock market by identifying mispriced securities and employing a strategy to take advantage of the price correction.
Active management aims to generate better returns than a benchmark, usually some sort of a market index.
Unfortunately, a majority of active managers are unable able to consistently outperform passively managed funds. In addition, actively managed funds charge higher fees than passively managed funds.
Ad Hoc
The term “ad hoc” is a Latin phrase that literally means “to this” and commonly understood as meaning “for this purpose.”
It can also be used to mean “as needed.” It is commonly used in both business and government. settings.
Airdrops
Cryptocurrency airdrops are basically free coins that are dropped directly into your wallet. It is literally free money handed over to you.
Airdrops are calculated marketing maneuvers which actually saves companies a lot of money in the long run.
Airdrops are basically a process by which a company distributes its tokens to the wallets of certain users, completely free of charge.
Algorithm
Cryptocurrency is a digital currency in which encryption is used for the regulation and generation of units of currency.
Cryptocurrency uses cryptography for security and blockchain technology to record transactions.
This mechanism from adding to the chain of records to validating transactions in its entirety is referenced as a blockchain algorithm.
Blockchain developers are working on ensuring that each individual controls their own algorithms and personal data related to identity.
Allocation
Allocation is an allotment of tokens or equity, that may be earned, purchased, or set aside for a certain investor, team, group, organization, or other related entity. … For example, a team may sell allocations of a set “ticket size”, or maximum amount, to early investors in a private sale round.
All Or None Order (AON)
Used in context of general equities. A limited price order that is to be executed in its entirety or not at all (no partial transaction), and thus is testing the strength/conviction of the counterparty.
Unlike an FOK order, an AON order is not to be treated as cancelled if not executed as soon as it is represented in the trading crowd but instead remains alive until executed or cancelled.
Altcoin
“altcoin” refers to any of the thousands of prevalent cryptocurrencies that aim to work alongside bitcoin and each other, or are competing for ultimate domination. Altcoins may differ from Bitcoin in every possible way, such as mining mechanisms, coin-distribution methods or the ability to create decentralized applications.
Although Bitcoin is innovative and massively influential, it has some problems that developers are trying to fix with their own products. There is an altcoin that makes faster transactions, there is an altcoin that is less volatile, there is an altcoin that is more private and so on.
Angel Investor
Originally a term used to describe investors in Broadway shows, “angel” now refers to anyone who invests his or her money in an entrepreneurial company (unlike institutional venture capitalists, who invest other people’s money).
Angel investing has soared in recent years as a growing number of individuals seek better returns on their money than they can get from traditional investment vehicles. Angels come in two varieties: those you know and those you don’t know.
Anti-Money Laundering
The term “anti-money laundering” specifically refers to all policies and pieces of legislation that force financial institutions to proactively monitor their clients in order to prevent money laundering and corruption. These laws also require both that financial institutions report any financial crimes they find and that they do everything possible to stop them.
Anti-money laundering laws entered the global arena soon after the Financial Action Task Force was created.
Application Programming Interface (API)
API is the acronym for Application Programming Interface, which is a software intermediary that allows two applications to talk to each other. Each time you use an app like Facebook, send an instant message, or check the weather on your phone, you’re using an API.
ASIC-Resistance
ASICs, or “Application Specific Integrated Circuit” are computers that are created to serve a specific use case and task. For Cryptocurrencies, ASIC devices are designed to participate in the process of mining Bitcoin (or other cryptocurrencies). Bitcoin, being the largest cryptocurrency by hashrate and having true decentralized consensus (through worldwide mining operations), is an example of a cryptocurrency that cannot be considered ASIC-resistant.
Arbitrage
Arbitrage is the process of simultaneous buying and selling of an asset from different platforms, exchanges or locations to cash in on the price difference (usually small in percentage terms). While getting into an arbitrage trade, the quantity of the underlying asset bought and sold should be the same.
Only the price difference is captured as the net pay-off from the trade. The pay-off should be large enough to cover the costs involved in executing the trades (i.e. transaction costs). Else, it won’t make sense for the trader to initiate the trade in the first place.
Ask Price
The ask price represents the minimum price that a seller is willing to take for that same security. The ask price represents the minimum price that a seller is willing to take for that same security.
Asset Management
Asset management is the process of developing, operating, maintaining, and selling assets in a cost-effective manner. Most commonly used in finance, the term is used in reference to individuals or firms that manage assets on behalf of individuals or other entities.
Asynchronous
Asynchronous describes the relationship between two or more events/objects that do interact within the same system but do not occur at predetermined intervals and do not necessarily rely on each other’s existence to function. They are not coordinated with each other, meaning they could occur simultaneously or not because they have their own separate agenda.
Atomic Swap
Atomic swap is a peer-to-peer exchange of cryptocurrencies from one party to another, without going through a third party service like a crypto exchange. During this entire process, the users have full control and ownership of their private keys. On September 20, 2017, Decred and Litecoin did the first known successful implementation of the atomic swap.
Attack Surface
An attack surface refers to all the ways your apps can possibly be exploited by attackers. This includes not only software, operating systems, network services, and protocols but also domain names and SSL certificates.
Auction
Common name for several types of sales where the price is neither set nor arrived at by negotiation but is discovered through the process of competitive and open bidding. The two major types of auction are (1) Forward auction in which several buyers bid for one seller’s good(s) and (2) Reverse auction in which several sellers bid for one buyer’s order. An auction is complete (and a binding contract is created) when a bid is accepted by the seller or the buyer (as the case may be).
B
Bag
A significant quantity of a specific cryptocurrency is considered a “bag.” How many depends on the definition of the person using the expression.
Bear markets
Bear markets are cyclical, and typically shorter than an average bull market. However, this is quite different from a market correction. Actually, a bear market is when prices fall 20 per cent or more from recent highs, signalling pessimism and a negative outlook among most market participants. It is widely used in both cryptocurrency market and traditional market.
Benchmarking
Benchmarking is a process where you measure your company’s success against other similar companies to discover if there is a gap in performance that can be closed by improving your performance. Studying other companies can highlight what it takes to enhance your company’s efficiency and become a bigger player in your industry.
Beta Coefficient
The Beta coefficient is a measure of sensitivity or correlation of a security or an investment portfolio to movements in the overall market. We can derive a statistical measure of risk by comparing the returns of an individual security/portfolio to the returns of the overall market and identify the proportion of risk that can be attributed to the market.
Bid Price
The term “bid” refers to the highest price a buyer will pay to buy a specified number of shares of a stock at any given time. The term ask refers to the lowest price at which a seller will sell the stock.
The bid price will almost always be lower than the ask or “offer,” price. The difference between the bid price and the ask price is called the “spread.”
Bid-Ask
The bid-ask on stocks, also known as the “spread” is the difference between a stock’s bid price and its ask price. Individual stock exchanges like the New York Stock Exchange or NASDAQ work with stock specialists and brokers to set a security’s bid and ask.
The bid-ask spread is also the key in buying a security for the best possible price. Normally, the ask price is higher than the bid price, and the spread is what the broker or market maker earns in profit from managing a stock trade execution.
In essence, the bid is the price that an investor is willing to pay to buy a particular stock, at a given time, and the ask is the price for which an investor is willing to sell a stock at a specific point in time.
Bitcoin
Bitcoin is a type of digital cryptocurrency. Functionally, it serves the same purpose as U.S. dollars or Japanese yen, except that it’s not tied to a central bank and isn’t regulated by a government body such as a treasury. Bitcoin transactions take place entirely online and offer a degree of anonymity to users, and they are securely recorded in a public ledger called a blockchain. Users purchase bitcoins in an exchange and have the option of “storing” them in a digital cryptocurrency wallet.
Bitcoin Address
A Bitcoin address is a unique identifier that serves as a virtual location where the cryptocurrency can be sent. People can send the cryptocurrency to Bitcoin addresses similarly to the way fiat currencies can often be sent to email addresses.
However, the Bitcoin address is not intended to be permanent, but just a token for use in a single transaction. Unlike a digital wallet, a Bitcoin address cannot hold a balance. The address itself consists of 26–35 alphanumeric characters. This string is the public half of an asymmetric key pair.
Bitcoin Pizza
On May 22, 2010, programmer Laszlo Hanyecz completed the first documented commercial Bitcoin purchase, paying 10,000 for two Papa John’s pizzas. The deal was valued at $41 at the time.
Bitcoin Dominance
Bitcoin Dominance is a measure of how much of the total market cap of crypto is comprised of Bitcoin. It can help you understand the trend of BTC and alts.
Black Swan Event
A black swan event, a phrase commonly used in the world of finance, is an extremely negative event or occurrence that is impossibly difficult to predict. In other words, black swan events are events that are unexpected and unknowable.
The term was popularized by former Wall Street trader Nassim Nicholas Taleb, who wrote about the concept in his 2001 book Fooled by Randomness. The most important thing about Bitcoin Dominance is that it can help you understand if altcoins are in a downtrend or uptrend against BTC.
- When BTC Dominance increases, alts on the whole lose BTC value.
- When BTC Dominance decreases, alts on the whole gain BTC value.
This means in most cases you’ll want to be in Bitcoin when Bitcoin Dominance is in an uptrend, and then be in alts when Bitcoin Dominance is in a downtrend.
Blocks
Blocks are records, which together form a blockchain. In the world of cryptocurrencies, blocks are like ledger pages while the whole record-keeping book is the blockchain. A block is a file that stores unalterable data related to the network. Blocks hold all the records of valid cryptocurrency transactions. They are hashed and encoded into a hash tree or Merkle tree.
Block Explorer
A block explorer is a tool that people use to view all cryptocurrency transactions online. Specifically, to view all current and past transactions on the blockchain. It gives the user information on the blockchain’s hash rate. It also tells us the rate of transaction growth and provides other useful information.
In other words, a block explorer is an online blockchain browser which reveals the data of individual blocks and transactions. With the tool, we can monitor transaction histories and balances of addresses.
Block Header
The main way of identifying a block in the blockchain is via its block header hash. The block header hash is calculated by running the block header through the SHA256 algorithm twice. A block header hash is not sent through the network but instead is calculated by each node as part of the verification process of each block.
Block Height
Block height, as it pertains to cryptocurrency, refers to the current number block in a blockchain. The genesis block, which is the very first block in any blockchain, has a block height equal to zero. Therefore, the block height is always a positive integer greater than zero.
A block is simply a collection of individual transactions such as Alice sends 1 bitcoin to Bob. When transactions are bundled together, the bundle then becomes referred to as a block. As well as containing a batch of transactions, each block will contain a cryptographic hash and a timestamp in order to ensure the integrity of the block, as well as the entire blockchain.
Block Reward
The bitcoin block reward is a particular rule for the bitcoin cryptocurrency. Bitcoin’s developer, Satoshi Nakamoto, thought up the bitcoin reward as a way to control circulation. The bitcoin reward dictates what amount miners get for mining bitcoin.
Blockchain
A blockchain is a digital, public ledger that records online transactions. Blockchain is the core technology for cryptocurrencies like bitcoin. A blockchain ensures the integrity of a cryptocurrency by encrypting, validating, and permanently recording transactions. A blockchain is similar to a bank’s ledger but open and accessible to everyone who utilizes the cryptocurrency is supports.
Bloom Filter
A Bloom filter is a data structure designed to tell you, rapidly and memory-efficiently, whether an element is present in a set. The price paid for this efficiency is that a Bloom filter is a probabilistic data structure: it tells us that the element either definitely is not in the set or may be in the set. The base data structure of a Bloom filter is a Bit Vector.
Bounty
A bounty can mean an abundance of fresh produce, in the sense of “the season’s bounty” or “nature’s bounty.” As a result, it can also mean something that is given generously. A bounty can be a reward by a local government to help track criminals. Someone who makes a living by locating wanted persons is called a bounty hunter.
A bounty hunter might track down someone who skips bail and get paid a percentage of the bail when they catch the criminal. Some governments might offer a bounty or a subsidy to an individual who enlists in that country’s armed forces. A bounty can also be a grant paid by the government to encourage certain industries.
Break-Even Point
In business accounting, the break-even point refers to the amount of revenue necessary to cover the total fixed and variable expenses incurred by a company within a specified time period. This revenue could be stated in monetary terms, as the number of units sold or as hours of services provided.
The break-even point also can be considered as the point in time when revenue forecasts are exactly equal to the estimated total costs. This is where a company’s losses end and its profits start to accumulate. At this point, a project, product, or business is financially viable.
Bull Market
A bull market is the market condition when prices continue to rise. Markets follow two general trends over time. Either prices are in an upswing (increase) or they are in a downswing (decrease). Think of a bull market as when a bull uses its horns in an upward motion.
When prices fall over a period of time, that’s a bear market. Think of a bear swiping downward with its claws, knocking the market down. A bull market and bear market are used when describing the trends of securities.
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C
Candidate Blocks
Candidate blocks are blocks created by miners as part of a proof-of-work consensus process. A miner will receive a block reward when it produces a candidate block with a valid block hash and broadcasts this block to the network’s nodes, who verify the hash’s authenticity. In this manner, every (non-genesis) block on a blockchain begins its life as one of many pre-validated candidate blocks.
Candlesticks
Candlesticks are used for charting price action by displaying the high, low, open and close prices for the time period specified. Depending if the candlestick closes higher or lower from the opening price, it will have a different color, usually either red or green where red marks a down candle and a green marks a candle that closed higher. They can be displayed in different time frames, from a monthly and daily chart all the way down to less than a minute of data.
Capitulation
Capitulation is the kind of panic selling that builds momentum, causing a dramatic decline in stock prices and dropping them to a “bottom.” This floor is often near or below previous support levels. A bottom is a mythical place where almost everything looks cheap enough to buy.
The bottom, by definition, marks a turn in the market, and is followed by a broad, sustained rally. During a “capitulative” selling period, market watchers talk incessantly about whether there is enough fear in the market. The more fear there is, the more it looks like the market will hit a bottom.
Censorship Resistance
Resistance to censorship via cryptosystems comes through censorship-resistant transactions, which are unalterable. There is no way to rewrite a blockchain’s history. However, if blockchain is to protect the accessibility of information for all, it is imperative that it remains public.
Censorship-resistance implies that everyone can transact with the network on the same terms, regardless of their personal identifying characteristics. If true censorship-resistance is to be achieved, then users should not be able to exclude others from the information.
Central Bank
A central bank is an independent national authority that conducts monetary policy, regulates banks, and provides financial services including economic research. Its goals are to stabilize the nation’s currency, keep unemployment low, and prevent inflation.
Central Processing Unit (CPU)
Central processing unit (CPU), principal part of any digital computer system, generally composed of the main memory, control unit, and arithmetic-logic unit. It constitutes the physical heart of the entire computer system; it is linked various peripheral equipment, including input/output devices and auxiliary storage units. In modern computers, the CPU is contained on an integrated circuit chip called a microprocessor.
Cipher
A cipher is a method of hiding words or text with encryption by replacing original letters with other letters, numbers and symbols through substitution or transposition. A combination of substitution and transposition is also often employed.
Cipher also refers to the encrypted text, cryptography system or encryption key for the original text.
Encrypted text is also known as ciphertext. Plaintext is the original, unencrypted text.
Circulating Supply
Circulating supply is the number of coins currently available and in the hands of people. Coins that are locked, reserved or not able to be sold and traded are not included in the circulating supply.
Cloud
“The cloud” refers to servers that are accessed over the Internet, and the software and databases that run on those servers. Cloud servers are located in data centers all over the world. By using cloud computing, users and companies don’t have to manage physical servers themselves or run software applications on their own machines.
Collateral
The simple definition of collateral is that it’s a tangible or intangible asset that a borrower pledges to a lender to secure a loan. If a borrower defaults in their obligations to the secured lender under the loan documents, the secured lender can exercise remedies to foreclose on the collateral and try to sell it to recover the loan amount.
Colocation
A colocation (colo) is a data center facility in which a business can rent space for servers and other computing hardware. Typically, a colo provides the building, cooling, power, bandwidth, and physical security while the customer provides servers and storage. Space in the facility is often leased by the rack, cabinet, cage, or room. Many colors have extended their offerings to include managed services that support their customers’ business initiatives.
Commodity Futures Trading Commission
The Commodity Futures Trading Commission (CFTC) is an independent U.S. federal agency established by the Commodity Futures Trading Commission Act of 1974. The Commodity Futures Trading Commission regulates the commodity futures and options markets. Its goals include the promotion of competitive and efficient futures markets and the protection of investors against manipulation, abusive trade practices, and fraud.
Confirmation Time
Confirmation time is defined as the time elapsed between the moment a blockchain transaction is submitted to the network and the time it is finally recorded into a confirmed block. In other words, it represents the total time a user has to wait until their transaction gets collected and confirmed by a miner node.
Cryptocurrency
A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology — a distributed ledger enforced by a disparate network of computers.
A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.
Cryptography
Cryptography is associated with the process of converting ordinary plain text into unintelligible text and vice-versa. It is a method of storing and transmitting data in a particular form so that only those for whom it is intended can read and process it. Cryptography not only protects data from theft or alteration, but can also be used for user authentication.
D
Daemon
A daemon is a type of program on Unix-like operating systems that runs unobtrusively in the background, rather than under the direct control of a user, waiting to be activated by the occurrence of a specific event or condition.
Daemons are usually instantiated as processes.
A process is an executing (i.e., running) instance of a program. Processes are managed by the kernel (i.e., the core of the operating system), which assigns each a unique process identification number (PID).
Dead Cat Bounce
‘Dead Cat Bounce’ is a market jargon for a situation where a security (read stock) or an index experiences a short-lived burst of upward movement in a largely downward trend. It is a temporary rally in the price of a security or an index after a major correction or downward trend.
Decentralized Applications
Decentralized applications (dApps) are digital applications or programs that exist and run on a blockchain or P2P network of computers instead of a single computer, and are outside the purview and control of a single authority.
Decentralized Autonomous Organizations (DAOs)
DAOs involve a set of people interacting with each other according to a self-enforcing open-source protocol. Keeping the network safe and performing other network tasks is rewarded with the native network tokens.
Blockchains and smart contracts hereby reduce transaction costs of management at higher levels of transparency, aligning the interests of all stakeholders by the consensus rules tied to the native token.
Individual behaviour is incentivized with a token to collectively contribute to a common goal. Members of a DAO are not bound together by a legal entity, nor have they entered into any formal legal contracts.
Decentralized Exchange
A decentralized exchange is an exchange market that does not rely on a third-party service to hold the customer’s funds. Instead, trades occur directly between users (peer-to-peer) through an automated process. Such a system can be established by creating proxy tokens (crypto assets that represent a certain fiat or cryptocurrency) or assets (that can represent shares in a company for example) or through a decentralized multi-signature escrow system, among other solutions.
Decryption
Decryption is the process of transforming data that has been rendered unreadable through encryption back to its unencrypted form. In decryption, the system extracts and converts the garbled data and transforms it into texts and images that are easily understandable not only by the reader but also by the system.
Decryption may be accomplished manually or automatically. It may also be performed with a set of keys or passwords.
Deep Web
The deep web refers to secret sections of the Internet whose contents are not accessible through standard search engines like Google, Yahoo, or Bing.
Delisting
Delisting involves removal of listed securities of a company from a stock exchange where it is traded on a permanent basis.
Difficulty
Difficulty is a parameter that bitcoin and other cryptocurrencies use to keep the average time between blocks steady as the network’s hash power changes. Bitcoin and other cryptocurrencies that use proof-of-work blockchains are maintained through a process called mining.
In this system, miners — computers running the cryptocurrency’s software client — compete to find a new block, adding the most recent batch of transaction data to the chain. They receive fees and (in some cases) a reward of new tokens in return.
Diversification
Diversification can be understood as the corporate strategy that a company implements to increase the market share and sales volume by introducing new products in new markets or industries, which is distinct from its core business.
Simply put, diversification refers to the expansion of business by entering into a completely new segment or investing in a business which is external to the scope of the company’s existing product line. Businesses use this strategy for managing risk by potential threats during the economic slowdown.
Dollar-Cost Averaging
Dollar-cost averaging is the strategy of spreading out your stock or fund purchases, buying at regular intervals and in roughly equal amounts. When done properly, it can have significant benefits for your portfolio.
This is because dollar-cost averaging “smooths” your purchase price over time and helps ensure that you’re not dumping all your money in at a high point for prices.
Dollar-cost averaging can be especially powerful in a bear market, allowing you to “buy the dips,” or purchase stock at low points when most investors are too afraid to buy. Committing to this strategy means that you will be investing when the market or a stock is down, and that’s when investors score the best deals.
Double-Spending
One of the primary concerns of any cryptocurrency developer is the issue of double-spending. This refers to the incidence of an individual spending a balance of that cryptocurrency more than once, effectively creating a disparity between the spending record and the amount of that cryptocurrency available, as well as the way that it is distributed.
The issue of double-spending is a problem that cash does not have; if you pay for a sandwich with a $10 bill, turning that bill over to the maker of the sandwich, you cannot turn around and spend that same $10 elsewhere. A transaction using a digital currency like bitcoin, however, occurs entirely digitally.
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E
Eclipse Attack
A node will depend on “x” number of nodes selected using a Peer selection strategy to have its view of the distributed ledger. But if an attacker can manage to make the node to choose all the “x” number of nodes from his malicious nodes alone, then he can eclipse the original ledger’s view and present his own manipulated ledger to the node.
Efficient Market Hypothesis (EMH)
The Efficient Market Hypothesis (EMH) essentially says that all known information about investment securities, such as stocks, is already factored into the prices of those securities.
Therefore, assuming this is true, no amount of analysis can give an investor an edge over other investors, collectively known as “the market.”
Encryption
Encryption is the process of using an algorithm to transform information to make it unreadable for unauthorized users. This cryptographic method protects sensitive data such as credit card numbers by encoding and transforming information into unreadable cipher text. This encoded data may only be decrypted or made readable with a key. Symmetric-key and asymmetric-key are the two primary types of encryption.
Enterprise Ethereum Alliance
The Enterprise Ethereum Alliance is a member-led industry organization whose objective is to drive the use of Ethereum blockchain technology as an open-standard to empower ALL enterprises. Its members are thought leaders from around the globe with a shared vision to create enterprise-ready solutions.
ERC-20
The popular cryptocurrency and blockchain system known as Ethereum is based on the use of tokens, which can be bought, sold, or traded. In this case, “tokens” represent a diverse range of digital assets, such as vouchers, IOUs, or even real-world, tangible objects. In this way, tokens are essentially smart contracts that make use of the Ethereum blockchain.
One of the most significant tokens is known as ERC-20, which has emerged as the technical standard used for all smart contracts on the Ethereum blockchain for token implementation.
The ERC-20 commands vital importance, because it defines a common list of rules that all Ethereum tokens must adhere to. Consequently, this particular token empowers developers of all types to accurately predict how new tokens will function within the larger Ethereum system.
Exchanges
Exchanges provide highly varying degrees of safety, security, privacy, and control over your funds and information. Perform your own due diligence and choose a wallet where you will keep your bitcoin before selecting an exchange.
F
Falling Knife
The falling knife stocks represent the stocks that have felt a speedy decline in the price and it happened in a short time. A ‘falling knife’ is a metaphor for the quickly sinking in the price of stocks. Also, it could happen with other assets too.
That means be prepared but wait for the price to bottom out before you buy it. Why is this so important, why to wait for the stock price to bottom out? Well, the falling knife can rebound quickly. That is called a whipsaw. But also, the stocks may fail totally, for example, if the company goes bankrupt.
Fiat
Fiat money, in a broad sense, all kinds of money that are made legal tender by a government decree or fiat. The term is, however, usually reserved for legal-tender paper money or coins that have face values far exceeding their commodity values and are not redeemable in gold or silver.
Fill Or Kill Order
The fill or kill (FOK) is a specific type of limit market order which tells the broker to execute the order immediately and entirely or not to fulfill it at all (kill it). In other words, the order gives a choice to the market maker to fulfill all contracts immediately at a particular price or kill the order. These orders usually pressure the market makers in their decision-making and in most cases, they get “killed,” not fulfilled.
When you use a standard buy order, you announce your willingness to buy a stock at a particular exchange rate and the broker executes the order when the stock reaches that particular price.
First Mover Advantage
The first-mover advantage refers to an advantage gained by a company that first introduces a product or service to the market. The first-mover advantage allows a company to establish strong brand recognition and product/service loyalty before other entrants.
It is important to note that the first-mover advantage only refers to a large company that moves into a market. For example, Amazon was not the first company to sell books online. However, it was the first company to achieve significant scale in that line of business.
Fiscal Policy
Fiscal policy is the use of government spending and taxation to influence the economy. Governments use fiscal policy to influence the level of aggregate demand in the economy in an effort to achieve the economic objectives of price stability, full employment, and economic growth.
Forced Liquidation
A situation in which an outside party can force the sale of an asset belonging to another. For example, a bank may force a borrower to sell his/her collateral in order to repay the debt. Likewise, a brokerage can force a client to sell securities if the client is unable to meet a margin call and preferred stockholders can (sometimes) force the liquidation of a publicly-traded company if it does not make preferred dividend payments.
Foreign Exchange (Forex or FX)
Foreign Exchange, also known as Forex or FX, is an over-the-counter market. Forex trading is how individuals, banks, and businesses convert one currency into another. It is considered the largest liquid market in the world.
Unlike stocks and commodities, there is no central market for trading forex. Instead, a forex market trades via a global network of banks, dealers, and brokers. This means forex trading can take place 24 hours a day, 5 days a week.
G
Gas
Ethereum Gas is a unit that measures the amount of computational effort that it will take to execute certain operations. Every single operation that takes part in Ethereum, be it a transaction or smart contract execution requires some amount of gas.
Every single operation that takes part in Ethereum, be it a transaction or smart contract execution requires some amount of gas. Miners get paid an amount in Ether which is equivalent to the total amount of gas it took them to execute a complete operation.
Gas Limit
The term gas limit is used in two different ways in Ethereum. There’s limit for the total gas that can be spent on the transactions contained within a block. Limiting the gas consumed in each block helps manage the growth of the Ethereum blockchain and the cost of operating a miner or node.
Miners collectively have the ability to increase or decrease Ethereum’s block gas limit within a certain range. Theoretically, raising the limit would allow the Ethereum network to process more transactions per second. So when transactions start to pile up, you’ll often hear discussion about miners signaling for higher gas limits.
General Public License
GPL is the acronym for GNU’s General Public License, and it’s one of the most popular open source licenses. Richard Stallman created the GPL to protect the GNU software from being made proprietary. It is a specific implementation of his “copyleft” concept.
If you have used a GPL component in your software, then your entire software is considered a ‘work based on’ a GPL and, therefore you are not allowed to claim patents or copyright on the software. Moreover, you are obligated to display a copyright notice, disclaimer of warranty, intact GPL notices, and a copy of the GPL.
Genesis Block
The genesis block is the first block in any blockchain-based protocol. It is the basis on which additional blocks are added to form a chain of blocks, hence the term blockchain. This block is sometimes referred to Block 0. Every block in a blockchain stores a reference to the previous block.
In the case of Genesis Block, there is no previous block for reference. In technical terms, it means that the Genesis Block has it’s “previous hash” value set to 0. This means that no data was processed before the Genesis Block.
GitHub
At the heart of GitHub is Git, an open source project started by Linux creator Linus Torvalds. Matthew McCullough, a trainer at GitHub, explains that Git, like other version control systems, manages and stores revisions of projects. Although it’s mostly used for code, McCullough says Git could be used to manage any other type of file, such as Word documents or Final Cut projects. Think of it as a filing system for every draft of a document.
GitHub is a Git repository hosting service, but it adds many of its own features. While Git is a command line tool, GitHub provides a Web-based graphical interface. It also provides access control and several collaboration features, such as a wikis and basic task management tools for every project.
Gossip Protocols
Gossip protocols were initially used as a way to maintain consistency on databases that were replicated at several hundreds sites. From then on it was seen that the gossiping could be used to solve other problems, like calculating averages across a network of nodes; or as a way to build an overlay of nodes in a network. Maintaining node membership is another problem that’s been tackled with gossiping.
Gwei
Gwei is a denomination of the cryptocurrency ether (ETH), which is used on the Ethereum network. Ethereum is a blockchain platform, like Bitcoin, where users transact with each other to buy and sell goods and services without a middle man or interference from a third party.
H
Hacker
A hacker is an individual who uses computer, networking or other skills to overcome a technical problem. The term hacker may refer to anyone with technical skills, but it often refers to a person who uses his or her abilities to gain unauthorized access to systems or networks in order to commit crimes.
A hacker may, for example, steal information to hurt people via identity theft, damage or bring down systems and, often, hold those systems hostage to collect ransom.
Halving
Halving refers to the number of coins that miners receive for adding new transactions to the blockchain being cut in half. This will now diminish from 12.5 bitcoin to 6.25 and will halve again every 210,000 blocks until the last bitcoin is mined in 2140.
Hard Cap
Hard cap is defined as the maximum amount of money a cryptocurrency can receive from investors in its Initial Coin Offering (ICO). An ICO is a limited-time process by which new cryptocurrencies make their coins publicly known and begin selling them directly to people.
People invest their money in these coins in the hopes that they will later be worth many times more than what was paid. A hard cap is the major financial goal and is always larger than the small-cap.
Hash
A hash is a function that converts one value to another. Hashing data is a common practice in computer science and is used for several different purposes. Examples include cryptography, compression, checksum generation, and data indexing.
Hash Rate
The hash rate is the measuring unit of the processing power of the Bitcoin network. The Bitcoin network must make intensive mathematical operations for security purposes. When the network reached a hash rate of 10 Th/s, it meant it could make 10 trillion calculations per second.
Hashed TimeLock Contract (HTLC)
It enables implementation of time-bound transactions. In practical terms, this means that recipients of a transaction have to acknowledge payment by generating cryptographic proof within a certain timeframe. Otherwise, the transaction does not take place.
HODL
HODL is a term derived from a misspelling of “hold” that refers to buy-and-hold strategies in the context of bitcoin and other cryptocurrencies. The term HODL (or hodl) originated in 2013 with a post to the bitcointalk forum.
The price of bitcoin had surged from under $15 in January 2013 to a high of over $1,100 at the beginning of December 2013. In the 24 hours to 10:00 a.m. UTC, Dec. 18 — possibly in response to reports of a Chinese crackdown — the price of bitcoin fell 39%, from $716 to $438.
Honeypot
A honeypot is a security system designed to detect and counteract unauthorized access or use of a computer system. The name “honeypot” is used in reference to the way the system traps unauthorized users, such as hackers or spammers so they can be identified and prevented from causing further problems.
I
Iceberg Orders
An Iceberg order executes a large quantity into smaller disclosed orders. When one disclosed portion fills, the next portion is sent to the market. This process continues until the order is filled. You may set a variance percentage so that the quantity of each disclosed portion is different.
Immutability
Immutability can be defined as the ability of a blockchain ledger to remain unchanged, for a blockchain to remain unaltered and indelible. More succinctly, data in the blockchain cannot be altered. Each block of information, such as facts or transaction details, proceed using a cryptographic principle or a hash value.
That hash value consists of an alphanumeric string generated by each block separately. Every block not only contains a hash or digital signature for itself but also for the previous one. This ensures that blocks are retroactively coupled together and unrelenting. This functionality of blockchain technology ensures that no one can intrude in the system or alter the data saved to the block.
Index
An index is a method to track the performance of some group of assets in a standardized way. Indexes typically measure the performance of a basket of securities intended to replicate a certain area of the market. These may be broad-based to capture the entire market such as the Standard & Poor’s 500 (S&P 500) or Dow Jones Industrial Average (DJIA), or more specialized such as indexes that track a particular industry or segment. Indexes are also created to measure other financial or economic data such as interest rates, inflation, or manufacturing output.
Initial Coin Offering (ICO)
Initial Coin Offering (ICO) is the cryptocurrency’s world public crowdsale. Whenever a project wants to launch a new coin or dApp, they can conduct an ICO to attract investors into their ecosystem. The most alluring part of ICOs is the lack of red tape and formality. More often than not, a company simply has to submit a whitepaper to qualify for an ICO. Companies have been able to raise millions of dollars in mere seconds, thanks to ICOs.
Initial Exchange Offering
An Initial Exchange Offering, as its name suggests, is conducted on the platform of a cryptocurrency exchange. Contrary to Initial Coin Offerings (ICOs), an IEO is administered by a crypto exchange on behalf of the startup that seeks to raise funds with its newly issued tokens.
As the token sale is conducted on the exchange’s platform, token issuers have to pay a listing fee along with a percentage of the tokens sold during the IEO. In return, the tokens of the crypto startups are sold on the exchange’s platforms, and their coins are listed after the IEO is over. As the cryptocurrency exchange takes a percentage of the tokens sold by the startup, the exchange is incentivized to help with the token issuer’s marketing operations.
Initial Public Offering
Initial public offering is the process by which a private company can go public by sale of its stocks to general public. It could be a new, young company or an old company which decides to be listed on an exchange and hence goes public.
Initial Public Offering
Initial public offering is the process by which a private company can go public by sale of its stocks to general public. It could be a new, young company or an old company which decides to be listed on an exchange and hence goes public.
Companies can raise equity capital with the help of an IPO by issuing new shares to the public or the existing shareholders can sell their shares to the public without raising any fresh capital.
Integrated Circuit
An integrated circuit, or IC, is small chip that can function as an amplifier, oscillator, timer, microprocessor, or even computer memory. An IC is a small wafer, usually made of silicon, that can hold anywhere from hundreds to millions of transistors, resistors, and capacitors. These extremely small electronics can perform calculations and store data using either digital or analog technology.
Interoperability
The absence of standards in blockchain may give freedom to developers but it is also likely to give IT departments a headache in case blockchains lack interoperability and cannot communicate. Interoperability here means the possibility to freely share value across all blockchain networks without the need for intermediaries.
In an interoperable ecosystem, you can interact with users from other blockchain networks without spending resources on translation or experiencing downtime. You can receive information from other members, process what they sent, and respond accordingly.
InterPlanetary File System
IPFS (InterPlanetary File System) is a peer to peer, version controlled, content-addressed file system. It makes use of Computer Science concepts like Distributed Hash Table, BitSwap (Inspired by BitTorrent), MerkleDag (Inspired by The Git Protocol). IPFS was created by Juan Bennet at Protocol Labs in 2015. There are multiple applications currently being built on top of IPFS.
Isolated Margin
The isolated margin mode depicts the margin placed into a position is isolated from the trader’s account balance. This mode allows traders to manage their risks accordingly as the maximum amount a trader would lose from liquidation is limited to the position margin placed for that open position.
Issuance
The basic definition of issuance is to create something and make it available. But in the crypto space, issuance refers to the generation of new cryptocurrency tokens or coins and this process can occur in a variety of different ways, according to the parameters specified by the creators of the project.
J
Jager
In short, one Jager is the smallest unit of a BNB. For a related example, one Satoshi is the smallest unit of a Bitcoin (BTC). Most cryptocurrencies have the ability to be divisible up to a certain amount of decimals, as dictated within each cryptocurrencies protocol (set of rules).
K
Know Your Customer (KYC)
Although the phrase “know your customer” may seem insignificant to most people, it has a very important meaning in the business world.
The process of knowing your customer, otherwise referred to as KYC, is what businesses do in order to verify the identity of their clients either before or during the time that they start doing business with them.
The term KYC can also reference the regulated bank practices that are similarly used to verify clients’ identities.
L
Latency
In computing, “latency” describes some type of delay. It typically refers to delays in transmitting or processing data, which can be caused by a wide variety of reasons. Two examples of latency are network latency and disk latency.
Network latency describes a delay that takes place during communication over a network (including the Internet).
Disk latency is the delay between the time data is requested from a storage device and when the data starts being returned. Many of other types of latency exist, such as RAM latency (a.k.a. “CAS latency”), CPU latency, audio latency, and video latency.
Law Of Demand
The law of demand states that other factors being constant (cetris peribus), price and quantity demand of any good and service are inversely related to each other. When the price of a product increases, the demand for the same product will fall.
Layer 2
Layer 2 blockchain technology is often referred to as an “off-chain” solution. Its main purpose is to scale blockchain transaction capacity while retaining the decentralization benefits of a distributed protocol.
Solving the scalability problem will significantly help with blockchain mainstream adoption.
Ledger
A general ledger represents the record-keeping system for a company’s financial data with debit and credit account records validated by a trial balance. The general ledger provides a record of each financial transaction that takes place during the life of an operating company.
Lightning Network
Lightning Network is essentially like having a person you want to talk to on speed-dial: you just need to press ‘1’ and your friend’s phone is already ringing. To put it simply, the idea behind the Bitcoin Lightning Network might’ve sounded something like this: we really don’t need to keep a record of every single transaction on the blockchain.
Instead, the Lightning Network adds another layer to Bitcoin’s blockchain and enables users to create payment channels between any two parties on that extra layer. These channels can exist for as long as required, and because they’re set up between two people, transactions will be almost instant and the fees will be extremely low or even non-existent.
Liquidity
Liquidity refers to the ease with which an asset, or security, can be converted into ready cash without affecting its market price. In other words, liquidity describes the degree to which an asset can be quickly bought or sold in the market at a price reflecting its intrinsic value. Cash is universally considered the most liquid asset because it can most quickly and easily be converted into other assets.
M
Mainnet
Opposite to the testnet, a mainnet is the main blockchain network for a project to run on after rounds of testing on the testnet. It is deemed as the final product of a project and the realization of the promise made in the white paper. In layman’s terms, It’s the real deal.
Mainnet Swap
Essentially, a mainnet swap consists of switching from one blockchain network to another. In most cases, the swap takes place when a cryptocurrency project migrates from a third party platform (e.g., Ethereum) to their own native blockchain network.
Malware
Malware is the collective name for a number of malicious software variants, including viruses, ransomware, and spyware. Shorthand for malicious software, malware typically consists of code developed by cyberattackers, designed to cause extensive damage to data and systems or to gain unauthorized access to a network.
Malware is typically delivered in the form of a link or file over email and requires the user to click on the link or open the file to execute the malware.
‘Margin Trading’
In the stock market, margin trading refers to the process whereby individual investors buy more stocks than they can afford to.
Market Capitalization
Market cap — or market capitalization — refers to the total value of all a company’s shares of stock. It is calculated by multiplying the price of a stock by its total number of outstanding shares. For example, a company with 20 million shares selling at $50 a share would have a market cap of $1 billion.
Why is market capitalization such an important concept? It allows investors to understand the relative size of one company versus another. Market cap measures what a company is worth on the open market, as well as the market’s perception of its future prospects, because it reflects what investors are willing to pay for its stock.
Market Momentum
In physics, momentum is a measure of the force of an object’s movement. In the trading world, that definition isn’t far off. To a market technician, momentum is the acceleration of a stock’s price movement, and it’s one of the key determinants of a stock’s behavior.
Market Order
A market order is an order that will buy or sell cryptocurrency coins and tokens for whatever the going price is. The goal of a market order is to fill the order at any cost, and that makes it something you’d want to use if you need to be sure the order will execute and not get hung up.
Masternode
Masternode is defined as a governing hub in some cryptocurrency networks. … A node is defined as any computing device (computer, phone, etc.) that is maintaining a network. Cryptocurrencies are supported by a network of computers each keeping a digital record of the data known as a blockchain.
Mempool
The mempool is where all the valid transactions wait to be confirmed by the Bitcoin network. A high mempool size indicates more network traffic which will result in longer average confirmation time and higher priority fees. The mempool size is a good metric to estimate how long the congestion will last whereas the Mempool Transaction Count chart tells us how many transactions are causing the congestion.
Merged Mining
Merged mining is the process of allowing two different crypto currencies based on the same algorithm to be mined simultaneously. This allows low hash powered crypto currencies to increase the hashing power behind their network by bootstrapping onto more popular crypto currencies. Two of the best examples of this are scrypt mining of both litecoin and dogecoin, as well as namecoin and bitcoin with sha-256.
Merkle Tree
Merkle tree also known as hash tree is a data structure used for data verification and synchronization.
It is a tree data structure where each non-leaf node is a hash of its child nodes. All the leaf nodes are at the same depth and are as far left as possible. It maintains data integrity and uses hash functions for this purpose.
Metadata
Metadata is data that describes other data. Meta is a prefix that — in most information technology usages — means “an underlying definition or description.” Metadata summarizes basic information about data, which can make finding and working with particular instances of data easier.
Mining
Mining is the process of adding transaction records to Bitcoin’s public ledger of past transactions (and a “mining rig” is a colloquial metaphor for a single computer system that performs the necessary computations for “mining”. This ledger of past transactions is called the block chain as it is a chain of blocks.
Monetary Policy
Monetary policy is the macroeconomic policy laid down by the central bank. It involves management of money supply and interest rate and is the demand side economic policy used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth and liquidity.
Moon
“To the Moon” is an exclamation used when cryptocurrency prices are rising off the charts. By the same token, when a coin’s price is “mooning,” that means that the price has hit a peak.
Multisignature
Multisignature (multisig) refers to requiring multiple keys to authorize a Bitcoin transaction, rather than a single signature from one key. It has a number of applications. Dividing up responsibility for possession of bitcoins among multiple people.
N
Node
A full node is basically a device (like a computer) that contains a full copy of the transaction history of the blockchain. 7 nodes (servers/computers), all connected to each other, running a blockchain together.
Non-Fungible Tokens
Non-fungible tokens, or NFTs, contain identifying information recorded in their smart contracts. It’s this information that makes each different and as such, they cannot be directly replaced by another token.
Nonce
In cryptography, a nonce is an arbitrary number that can be used just once in a cryptographic communication. It is similar in spirit to a nonce word, hence the name. It is often a random or pseudo-random number issued in an authentication protocol to ensure that old communications cannot be reused in replay attacks.
O
Off-Chain
Off-chain transactions refer to those transactions occurring on a cryptocurrency network which move the value outside of the blockchain. Due to their zero/low cost, off-chain transactions are gaining popularity, especially among large participants. Off-chain transactions can be contrasted with on-chain transactions.
Offshore Account
The term offshore refers to a location outside of one’s national boundaries, whether or not that location is land- or water-based. The term may be used to describe foreign banks, corporations, investments, and deposits.
A company may legitimately move offshore for the purpose of tax avoidance or to enjoy relaxed regulations. Offshore financial institutions can also be used for illicit purposes such as money laundering and tax evasion.
One Cancels The Other (OCO)
Considered the most basic form of trade automation, one cancels the other (OCO) is an order combining 2 entry orders. It is basically a conditional order stipulating that, if one order is executed, then the remaining one is automatically cancelled. Ultimately, regardless of the price movement, only one order can be executed or remain active in the market at any given time.
Trade automation is vital for success in the markets. This is what an OCO achieves. It essentially eliminates emotions from trading activity and promotes systematic trading by ensuring triggered entering of trades.
Open Source Software
Open source software is released through a specific kind of license that makes its source code legally available to end-users. There are many such licenses, but typically software is considered open source if:
It is available in source code form without additional cost, meaning users can view the code that comprises the software and make any kind of changes to it they want.
The source code can be repurposed into other new software, meaning anyone can take the source code and distribute their own program from it.
Order Blocks
Order blocks are a different way of looking at support/resistance and supply/demand. There are two possibilities how a trader can use the concept of order blocks to improve his chart reading and trading skills:
- Identifying re-entry opportunities into reversal trades
- Finding high impact price key levels
Orphan Blocks
Orphan blocks are verified and valid blocks, but not accepted by the block chain network due to a time lag in the acceptance of the block. Orphan Blocks are the rejected blocks which are very much valid. They will remain as detached blocks in the cryptocurrency network.
This article was originally published at newszii.com