Crypto Glossary

The constituent parts of a blockchain. They contain information and data from transactions in certain time periods.

A type of distributed ledger that is principally used by Bitcoin. Blockchains store the sequence of blocks in a public database.

CBDCs differ from cryptoassets such as Bitcoin as they are issued by a central bank. Unlike bitcoin, CBDCs do not need to be based on a distributed ledger.

An OECD led automatic exchange of information agreement. This will provide tax administrations with information on transactions in cryptoassets.

A crypto that exists on it’s own distributed ledger

A coinbase is the quantity of newly created coins given to miners for each newly discovered block in mineable cryptocurrencies.

Also a well known cryptoasset exchange.

Where cryptocurrencies are stored offline using hardware such as a USB stick.

Privately run websites known as cryptocurrency exchanges make it possible to trade one cryptocurrency for another, including fiat money and NFTs.

Cryptoasset is an umbrella term that includes the different types of crypto that exist. These can be loosely identified as exchange, utility and security token.

Cryptocurrencies are digital currencies which operate through a decentralised system using cryptography.

A discipline of study and practises that focuses on information security, which prevents unauthorised parties from accessing information.

Dapps are generally a digital application with the additional feature of using distributed ledger. Dapps can combine a user interface and a smart contract.

A DAO is not defined by law or regulation therefore it can mean different things to different people. In our view, a DAO is a business that is not controlled by a handful of individuals, but rather a community of users. Typically, those users will exercise that control through ownership of tokens native to the blockchain, protocol or application.

Typically, many DAOs are housed within a traditional legal structure so as to manage tax and regulatory risk.

A ‘true’ DAO is one that is not within a legal entity or contractual arrangement.

AKA decentralised trading protocol . A platform that allows users to buy and sell crypto without going through intermediaries.

An umbrella term for financial services provided by a cryptoasset platform. These can include services such as loans or insurance usually provided by a centralised intermediary.

The Digital Currency Group is a firm that has multiple crypto firms.

A particular alt-coin with the name and logo based off of a meme.

AKA Payment token. Exchange tokens are intended to be used as a means of payment. The most well-known token, bitcoin, is an example of an exchange token.

Term applied where there is fear and uncertainty amongst users and investors.

Fiat currencies are government issued currency that is not backed by a physical commodity. Most modern currency is fiat currency.

Hash’s create unique codes that ensure the security of data.

ICOs are a way that start-up companies can use their own tokens to raise capital without giving away equity in a company or where the business is decentralised and operates outside the confines of a legal construct.

A second layer that is built on top of the distributed ledger to facilitate increased scalability by increasing the number of transactions that can occur and reduce the time for the transaction to be validated.

The metaverse is the internet as an immersive virtual world.

Mining is linked to the consensus methodology Proof of Work where computer networks verify transactions on a particular blockchain and earn new cryptocurrencies native to that blockchain as a reward.

A NFT is documented on a blockchain and is connected to a specific tangible, or intangible asset. It is non-fungible since it is unique.

A node is a critical part of a blockchain as it is the element which allows information, and transactions to pass through it.

Allows users to ‘sign’ a transaction. Generally if a private key is lost it cannot be recovered.

Consensus method that required participants to provide collateral to become a network validator. It is now largely associated with the Ethereum blockchain as the largest PoS network. PoS has a much smaller energy demand than the more commonly known Proof of Work approach.

Closely associated with the Bitcoin protocol PoW requires miners to use computers (also termed rigs) to solve an equation to validate a transaction. The aim was to render it uneconomical to be a bad actor and allow double spending transactions. PoW has been criticised for the high energy use which is more than some counties.

Where investors have provided value only to find that it was a scam and the value has been withdrawn.

A security token is one that provides the holder with particular rights or interests in an underlying business such as ownership, right to share in profits, right to assets on
winding up, ownership, voting etc.

Like a traditional contract a smart contract establishes the terms of an agreement. Unlike a traditional contract these are written into the token and not separately held on paper.

Separate from Proof of Stake staking can also be used as a term to provide liquidity to a DeFi lending platform. A return is given to the participant for providing liquidity.

Stablecoins are intended to have a stable value by being pegged to something that is stable. The underlying stability can be provided by fiat currency, commodities or algorithmically.

Tokens are a subset of cryptocurrencies, they are utilised on the blockchain as an asset or to represent a specific use.

The term is also used to identify a unit of cryptocurrency.

Utility tokens provide the holder with access to particular goods or services on a platform. A business or group of businesses will normally issue the tokens and commit to accepting the tokens as payment for the particular goods or services in question. In addition, utility tokens may be traded on exchanges or in peer-to-peer transactions in the same way as exchange tokens.

A wallet contains the private key. There are differing types of wallets depending on the means of storage. Unlike a conventional wallet a cryptoasset wallet does not store crypto. Cryptoasset value exists on the distributed ledger and can only be accessed using a private key.

Web3 is the current version of the internet on the blockchain. In our view it is a constructive word (as opposed to ‘crypto’) used to encompass blockchain, protocols and tokens.

Individuals and institutions that have a significant crypto holding of more than 5% in any given crypto.

Projects will be advertised by a whitepaper, much like a prospectus, that details how the creator anticipates how the project will work and develop.