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AdTech

AdTech is an abbreviation of “advertising technology”. AdTech comprises the systems and software applications used to create, deliver, manage, and optimize digital advertising campaigns. AdTech is an evolving space and is particularly relevant in the business sphere given the growing ubiquity of the internet and virtual media. 

One notable trend in this area is the application of blockchains to advertising technologies. Blockchains make it possible, for example, for buyers and sellers to exchange digital ad space without any intermediaries, secure and verify audience data, and execute smart contracts based on ad performance. The ad industry is particularly vulnerable to fraud, and blockchains are increasingly being used to overcome common risks. 

Algorithm

In simple terms, an algorithm is a set of instructions a computer can process. An algorithm takes an input, usually in the form of data, and then modifies, changes, or interprets this data to issue an output. 

Algorithms are central to the functioning of blockchains (and consequently cryptocurrencies) and are responsible for the issuing of currency and the updating of transaction ledgers. 

Blockchains rely on “consensus algorithms”, of which “Proof of Work” and “Proof of Stake” are the most common. These algorithms are used for hashing, signing, verification, and mining. 

Blockchains reward users willing to dedicate the hardware resources necessary to run consensus algorithms and thus ensure the ongoing functionality of blockchains, cryptocurrencies, and associated digital assets.

Altcoin

An altcoin – “alternative coin” – is any type of digital currency that is not Bitcoin. Since the launch of Bitcoin, the world’s first-ever digital currency, numerous altcoins (and supporting blockchains) have been created. 

Altcoin digital currencies share many similarities to Bitcoin, but invariably also have important differences. There are nearly 10,000 altcoins, and this number is expected to grow substantially in the coming years. 

Altcoins often improve on Bitcoin’s features. Ethereum, currently the most widely-used blockchain, supports digital contracts and decentralized applications where Bitcoin does not. 

Altcoins are also usually created to cater to the preferences of different users. The Litecoin blockchain, for example, can process payments in a quarter of the time it takes Bitcoin.

Atomic Swap

An atomic swap is a streamlined, trustless exchange of different cryptocurrencies. Atomic swaps allow users to trade directly from their crypto wallets without centralized exchanges such as Coinbase and Gemini. 

Atomic swaps use time-bound, automated smart contracts known as Hash Time-Locked Contracts to ensure the security of the transaction. These agreements demand that the contractors confirm the successful acquisition of funds within a set time limit. If the transaction isn’t acknowledged, the exchange cannot be verified. Coins from unverified atomic swaps remain with their initial owners. 

Basic Attention Token (BAT)

The Basic Attention Token is an ERC-20 compliant Etheruem-based token. Brenden Eich, the co-founder of Mozilla and originator of JavaScript, created the BAT in 2017. The token has real-world applications for publishers, advertisers, and users on the Brave browser. 

Brave is an open-source, decentralized project that aims to offer more equitable and targeted digital advertising through its private browser. Advertisers pay for their ads to be published and are rewarded with BATs based on engagement. Brave browser users can earn BATs by watching customized adverts and reward others with the tokens.

Bitcoin

Bitcoin is the world’s most popular cryptocurrency. Created in 2008, it was the first digital currency to leverage a peer-to-peer network powered by its users that did not rely on a central authority or single administrator. Despite its popularity, Bitcoin is not recognized as legal tender by the majority of national governments and central banks.

Blockchain

A blockchain is a very specific type of distributed database. The technology was first prototyped by the creators of Bitcoin in 2008. This newer type of database consists of individual blocks linked together in a chronological chain. 

Blockchains can be used to store a variety of information types. To date, it has most commonly been used as a public ledger for cryptocurrency transactions. A peer-to-peer network made up of individual nodes utilizes a consensus mechanism to maintain the security and validity of the blockchain. Each node on the network stores a copy of the data publicly and immutably.

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Blockchain (For) Supply Chain

Blockchain technology can be applied to remedy many of the issues associated with managing complex supply chains. Large companies, particularly those that require multiple manufacturing parts and rely on advanced, international logistics networks, face challenges when it comes to dealing with large numbers of transactions and maintaining extensive databases of items. 

Because blockchains are decentralized and offer more security than traditional software systems, several companies, including Walmart and IBM, have trialed the use of blockchains to streamline the process of supply chain management. And while it is a relatively new trend, blockchain for supply management holds the potential to increase accessibility to supply chain databases, allow for greater tracking of products, and reduce fees associated with cross-border payments. 

Blockchain Programming

Blockchain programming is the discipline of creating and managing blockchains and the second-layer services that run on them. Blockchains are composed of nodes, and a node is essentially a program that carries out algorithmic tasks to verify transactions. 

Blockchain programming encompasses elements of traditional programming, cryptography, and complex information technology (IT) systems. 

Blockchains can be built in many programming languages, including C++, Python, JavaScript, and others. The bitcoin blockchain is written in C++. Blockchains and cryptocurrencies are multifaceted, and programmers often opt to focus on one specific development area, such as smart contracts, Dapps (decentralized applications), consensus algorithms, decentralized games, and so on. 

Blockchain Protocol

A “protocol” is a set of rules and systems which govern the operation of a blockchain. A protocol is essentially a framework in which nodes on a network communicate and add new blocks to a distributed ledger. 

There are three main foundational blockchain protocols (or consensus mechanisms): Proof of Work (Pow), Proof of Stake (PoS), and Delegated Proof of Stake (DPoS). 

It’s possible to introduce new protocols onto existing blockchains. The term “protocol” may refer to the underlying parameters that determine how nodes communicate. Alternatively, it may describe the specific mechanisms that work on top of existing blockchains, such as smart contracts on the Ethereum network. 

Competing blockchains have different protocols, each with their benefits and drawbacks.

Blockchain Verification

Verification is the process by which new transactions are added to blockchains. Transactions are added as blocks, which represent discrete units of transaction data. 

The authentication process involves the use of public and private encrypted digital signatures, which link transactions and corresponding digital assets to particular individuals or parties.

Transactions are verified and added to blockchains through consensus mechanisms. A consensus mechanism is a complex algorithm that authenticates the validity of a transaction and renders fraudulent activity financially untenable. Miners are responsible for this process and are usually rewarded with digital currency for expending the resources necessary for verification. 

Blockchain Voting

In simple terms, blockchain voting is the use of blockchains to record, verify, and store votes as part of democratic processes like elections. 

It is a very controversial area. Supporters argue that blockchain voting holds the potential to prevent fraud. Detractors say that such systems are open to manipulation and cybersecurity attacks. Nonetheless, a number of small-scale trials have gone ahead around the world. 

The process of voting on a blockchain happens in much the same way as a digital currency transaction. Individuals use private keys to make votes which are then stored as discrete pieces of data on a blockchain’s digital ledger. These votes can subsequently be verified and counted by the relevant authority.

Blocks

Blocks are files containing data that are linked together in a chain to create a blockchain. Used to record information, a block is like a page of a ledger. On Bitcoin’s blockchain, each block contains a cryptographic hash code, the hash from the block before it, a timestamp, signature, and some additional data. 

New blocks are connected to previous blocks chronologically. Whether or not each new block is verified is decided by an algorithm, most commonly the Proof of Work or Proof of Stake algorithms. These consensus mechanisms rely on a peer-to-peer network to verify the content of a block before publishing.

Buying The Dip

When an asset’s value drops, it can be said to “dip.” The term is used across a range of financial markets and is often used to describe the price fluctuations of cryptocurrencies.

“Buying the dip” is a technique in which investors take advantage of drops in an asset’s value. By purchasing at a lower price, investors “average down” their asset purchase price or maximize profits on undervalued assets. 

Many markets, however, are highly speculative. And this is particularly the case with the cryptocurrency market. A dip in the value of an asset may signify the start of a longer downward trend. A future bounce back isn’t a given. Waiting for price settling, undertaking due diligence, and utilizing incremental buying protects buyers against poor investments.

Centralized exchanges

Centralized cryptocurrency exchanges are platforms run by companies as intermediaries for cryptocurrency transactions and storage. 

On a centralized exchange, customers don’t have access to their private keys and surrender custody of their funds. 

The exchange keeps a record of all buy and sell orders and tracks users’ orders internally, only transforming them into actual currency when withdrawn. 

Centralized exchanges are currently responsible for the vast majority of cryptocurrency transactions due to their convenience, speed, and cost for users. However, some view these exchanges as the antithesis of the ideals of cryptocurrencies such as Bitcoin. 

What’s more, there are risks due to the amount of funds exchanges store. These concerns include wash trading, price manipulation by exchanges, hacking theft, and government censorship.

Examples of centralized exchanges include Binance and Gemini. 

Coinbase

Coinbase is the largest cryptocurrency exchange platform in the United States. As with any other cryptocurrency exchange, Coinbase allows users to buy and trade cryptocurrencies, including Bitcoin, Ethereum, and Litecoin.

Coinbase, and sites like it, have proven instrumental in opening up cryptocurrency investment opportunities to new markets. Its user-friendly interface and variety of digital currencies have made it popular with everyday users. And the size of the platform ensures high levels of liquidity. 

However, it tends to be less popular with professional traders and larger investors because of the high fees levied on transactions and the comparatively smaller variety of currencies on offer compared to other exchanges. 

Consensus Mechanism

Decentralized networks create verified, authentic, and unified databases using consensus mechanisms, which are also called consensus algorithms or protocols. 

Individual nodes on a peer-to-peer network undertake sets of tasks to authorize data. These tasks are determined by the nature of the mechanism being used. Cryptocurrency blockchains reward certain nodes – also called validators or miners – with native cryptocurrency for completing consensus tasks. These algorithms rely on nodes to prove ownership of expensive resources, such as computational power or high stakes in a cryptocurrency.

The two dominant types of consensus mechanisms are the Proof of Work and Proof of Stake algorithms. Other mechanisms include the Delegated Proof of Stake mechanism, Proof of Authority, and Proof of Activity. 

Consensus mechanisms provide protection against some types of economic attacks, such as 51% attacks.

Cryptocurrency

Cryptocurrencies, or “crypto”, are digital assets that are used as mediums of exchange. The secure storage and transfer of cryptocurrencies is ensured by various layers of cryptographic technology. 

Typically, cryptocurrencies rely on decentralized networks and aren’t issued or maintained by central authorities or banking systems. These decentralized systems utilize publicly available distributed ledgers, also known as blockchains, to ensure that cryptocurrencies are not double-spent.

Cryptocurrency Pairs

Cryptocurrency pairs – also referred to as trading pairs – are a type of currency pair. A pair is two tokens or coins that can be traded. Cryptocurrency pairs can include fiat currencies and cryptocurrencies. 

Cryptocurrency pairs allow traders to compare currencies against one another. In a pair, two currency names or abbreviations are presented, separated by a slash or dash, for example, BTC/USD. The first currency in the pair is the base currency with the quote currency listed second. The quote currency is compared against the base currency, showing how much one coin or token of the base currency is equal to in the quote currency.

Knowledge of cryptocurrency pairs is valuable to traders because some altcoins can only be bought with specific currencies. What’s more, awareness of pairs allows investors to explore arbitrage trading and high liquidity trading opportunities. 

Cryptocurrency Wallet

Unlike a physical wallet that holds paper currency, a cryptocurrency wallet stores public and private keys. These keys are required for cryptocurrency transactions to take place.

In a simple “crypto wallet”, keys are used to spend, receive, and track the ownership of cryptocurrencies. A private key grants the user ownership over funds and is used to approve outgoing transactions. A public key allows anybody other than the owner to make payments to the wallet.

Wallets come in a range of types, and each type provides a different level of security. More complex wallets, for example, offer features like multi-key verification. There are also hardware, software, and in-browser options, which can be offline (cold storage) or online (hot storage). What’s more, users can opt for either custodial and non-custodial wallets, which offer third-party key control and individual key control respectively. 

Decentralized Applications (dApps)

Decentralized applications are computer programs that have backend code running on a distributed blockchain system.

dApps fulfill many uses, and range from financial tools to games. dApps are usually open-source and interoperable, allowing creators a high level of autonomy. Using smart contracts to control their logic, dApps are deterministic, and their functions are performed identically in all environments.

Developers are attracted to dApps for many reasons, including the security and privacy of using cryptography, avoiding censorship, and using a market with no downtime. 

Like conventional applications, dApps utilize front-end code written in a common programming language. dApps also offer changeable interfaces that can be self-built or modified with a third-party interface.

Decentralized Autonomous Organization (DAO)

A Decentralized Autonomous Organization (DAO) is a peer-to-peer organization that functions without a corporate hierarchy. DAOs are built on blockchains to protect corporations against forgery, allow trustless distribution, and enhance security. Additionally, DAOs allow for the creation of collaborative, self-governing environments amongst peers. DAOs leverage crypto tokens to designate stakes and democratic rights on a network.

Automated smart contracts sit at the core of the DAO model. These smart contracts communicate autonomously through “if-then” coding statements and thereby enforce the organization’s rules. Theoretically, these automated contracts could eliminate the need for human employees by triggering whenever buyers make orders, items become low in stock, or any other response based on measurable inputs is required.

Decentralized Finance (DeFi)

The term “decentralized finance” refers to an existing global financial system that doesn’t rely on centralized financial intermediaries. Rather than using banks, exchanges, or brokerages to provide financial products and services, DeFi uses non-human smart contracts that consist of code to form agreements between users. 

DeFi applications use open-source code, blockchain technology, and cryptography, enabling anyone with an internet connection and device to transfer funds.

Currently, the Ethereum blockchain is the most prominent DeFi application platform. This type of financial dApp has a selection of core components, including stablecoin, exchanges (dex), money markets, insurance, and Synthetix.

Decentralized exchanges (DEX)

Decentralized exchanges allow peer-to-peer exchanges to take place without a centralized intermediary. 

Decentralized exchanges leverage smart contracts and blockchain technologies to provide the opportunity and security necessary to exchange coins and tokens. 

This type of exchange allows cryptocurrency owners to maintain custody of their funds and private keys. 

Decentralized exchanges can be a safer option than using centralized intermediaries because it decreases the risk of theft through hacking. However, DEXs are more complex for users to employ, and there is more risk of price slippage and front-running. 

Exchanges can be partially decentralized and still utilized centralized elements. 

Airswap is an example of a decentralized exchange. 

Denial-of-Service Attack

A denial-of-service attack (DoS attack) is a type of cyber-attack that aims to disrupt a server or network’s functionality. 

On more traditional server-based systems, this type of attack is often initiated by a malicious computer flooding a server with false traffic to cause it to function poorly or go offline. An attack that stems from multiple computers simultaneously is a “Distributed Denial-of-Service attack” (DDoS attack). DDoS attacks rely on the spread of malicious software, which is uploaded to the servers of unsuspecting individuals. These servers are then utilized to continue the attack. 

On a cryptocurrency blockchain, this style of DoS attack can be effective. On a blockchain, there is a limit to the number of times nodes can register transactions. This allows attackers to overload networks with small transactions that take the same amount of time to process as more significant and authentic transactions. This slows the blockchain down and can allow perpetrators to make other types of attacks. However, this approach is usually costly for malicious users in the long term due to transaction fees.

Digital Signature

A digital signature is a cryptographic value created by a hash function. Digital signatures are used to authenticate and maintain the integrity of messages, transactions, documents, and pieces of digital data. 

Digital data is more vulnerable to attacks and security violations than physical data. The outputted, hashed values used as digital signatures are difficult to forge and prove an item hasn’t been created fraudulently or tampered with. Some digital signatures are legally binding.

Asymmetric cryptography (also called public-key cryptography), which uses a pair of keys, underlies digital signatures on blockchains. Traders use a secret private key to sign and decrypt transactions securely and a public key to receive and encrypt transactions.

Distributed Ledger

Distributed ledgers make up a fundamental part of blockchain technology. 

Distributed ledgers are databases of transactions stored on peer-to-peer servers and updated whenever a new set of data, also called a “block”, is added. 

Unlike a centralized ledger, which is controlled by a single entity and carries much greater cybersecurity risks, distributed ledgers are maintained on multiple servers (or nodes) across a decentralized network. If one ledger is compromised, other ledgers in the network will automatically correct any incongruencies. As such, blockchains are much more resistant to tampering compared to traditional ledger systems. 

Blockchains rely on consensus algorithms to ensure the validity of new entries

Dogecoin

Dogecoin is a satirical cryptocurrency that takes its name from the famous Doge meme (which is featured in Dogecoin’s logo). It was invented by Billy Markus and Jackson Palmer. Although its creation was originally meant as a joke, it has become a serious digital currency with a large online following. 

Dogecoin operates in much the same way as most other cryptocurrencies, relying on a blockchain of distributed ledgers, an active community of miners, and consensus mechanisms to ensure the validity of transactions.

It has several notable backers, including Elon Musk, and has skyrocketed in value since it was first released. The big downside of Dogecoin is that there is no cap on the total number of coins that can enter circulation. As a result, billions of new coins are created every single day, making it highly inflationary and a volatile store of value.

Double-Spending

Double-spending represents a particular risk for digital currencies. It is the fraudulent spending of the same digital currency or token multiple times. Digital currencies are susceptible to this type of theft due to the vulnerability of digital information and delays when processing transactions. 

There are a variety of techniques that malicious individuals utilize, including the sending of multiple transactions concurrently and so-called “51% attacks”, where a malicious entity aims to control a network by setting up a node that is most likely to be responsible for verifying transactions. Blockchains prevent attacks through consensus mechanisms.

Due Diligence

Due diligence is the process of consideration expected of individuals or businesses prior to entering into an agreement or contract.  

The term is commonly used in finance to describe the investigation of potential opportunities and risks, particularly in relation to investments and mergers, preceding purchases and transfer of assets. 

There is a considerable risk in the cryptocurrency sphere due to the proliferation of new currencies, most of which are created without a governing authority to prevent scamming. In addition, legitimate cryptocurrencies are often unpredictable and can fluctuate significantly in price over short timespans. 

Taking this into account, due diligence is recommended before investment. Investigations can involve chart analysis, forecasts, business-model and white paper analysis, consideration of the legitimacy of partnerships, research into team members, and more. 

ERC-20

First proposed in 2015, the ERC-20 is a standard for fungible token creation on the Ethereum blockchain. There are hundreds of thousands of ERC-20 compatible tokens. 

On the Ethereum blockchain, many tokens operated differently from one another. ERC-20 solved this problem by creating rules for token functionality and providing a template for token creation using an API and smart contract technology. The ERC-20 standard simplified the exchange of tokens across the Ethereum blockchain and impacted the whole cryptocurrency market. 

Alternative standards, such as the ERC-223, have been proposed to solve perceived downfalls in the ERC-20 model. 

Ether (ETH)

Often referred to by the misnomer of the blockchain platform it runs on, Ethereum, Ether is a cryptocurrency native to the actively-used Ethereum blockchain. 

It currently has the second-largest market capitalization of any cryptocurrency, behind Bitcoin. On the Ethereum platform, Ether is used to pay for transactions and is rewarded to miners that support the blockchain’s growth. It is sometimes referred to using the Greek Xi character (Ξ).

Ethereum

Ethereum is one of the world’s most actively used blockchain systems. Initially released in 2015, it is a decentralized ecosystem that uses open-source, distributed, blockchain technology. 

Thousands of computers running Ethereum clients maintain its virtual machine (EVM), allowing the platform to run continuously, uninterrupted, and immutably. Ethereum’s native cryptocurrency is Ether (ETH), which trades alongside many other currencies and tokens on the platform. 

Building upon Bitcoin’s blockchain, Ethereum offers a programmable platform that hosts thousands of decentralized applications. Smart contracts are central to the platform and are primarily written in the coding language Solidity. 

Ethereum currently uses the proof of work algorithm as its blockchain consensus method, but it is being phased out in favor of the less energy-intensive Proof of Stake (PoF) model.

Fiat Currency

The term fiat currency refers to any government-issued currency that can be used as legal tender. This type of currency isn’t backed by a commodity and enables centralized financial institutions, such as banks and governments, to control how much money is printed. Because of governmental regulation, fiat currency does not have intrinsic value and can suffer from hyperinflation. Fiat currencies are stores of value, mediums of exchange, and units of account. 

Processing transactions with fiat currencies requires more time than cryptocurrency transactions, and there can be higher charges associated with trading. Most modern-day paper currencies, such as the U.S. Dollar and Euro, are fiat currencies.

FinTech

The term FinTech is an abbreviation of “financial technology.” It refers to the technological transformation in the financial sector. It is a growing field and a wide range of businesses, from start-ups to established companies, are adopting FinTech.

FinTech is innovative and aims to streamline both businesses’ and customers’ financial activities through technological automation. A few examples of financial technologies are data science, machine learning algorithms, cryptocurrencies, and blockchains. These advancements can enhance the speed, safety, value, and inclusivity of financial processes.

Front Running

Front running is the often illegal process of making trades using insider information. Front runners use pending or future transaction data to get ahead of shifts in an asset’s value.

Front running is an issue across all financial markets. However, cryptocurrencies are susceptible to specific types of front running. On blockchains, miners that gain access to pending transaction data in the mempool can use the information to place a trade. The front runner can use insertion, displacement, or suppression to get ahead of the initial transaction. Front runners can also target initial coin offerings and usernames.

Networks can implement techniques such as transaction-ordering and improving confidentiality to prevent front running.

Fungible Tokens

Fungibility is the ability for an asset of an equivalent denomination to be interchangeable. Examples of fungible currencies include most fiat currencies such as the US Dollar and some cryptocurrencies, including Bitcoin. 

Like fiat currencies, fungible cryptocurrency tokens can be divided into smaller parts and easily exchanged. Individual tokens don’t have unique value and should be worth an identical amount. 

The ERC-20 on the Ethereum blockchain set a technical standard for creating fungible tokens to simplify trading. 

Gas (Ethereum)

Gas refers to the cost of completing operations on the Ethereum blockchain. Gas represents an abstract unit of computation on the network and is paid for in fractions of Etheruem’s native cryptocurrency, Ether, called gwei. 

Like car fuel, gas allows the Ethereum Virtual Machine to continue operating. Every transaction on the Ethereum blockchain uses up computational power, and gas fees fund miners’ computational output. Users can set a “gas limit” on transactions, thus restricting the amount of gas used. 

Gas is decoupled from the value of Ether. However, its price is affected by network activity. Gas fees help maintain network security by reducing the risk of denial of service attacks and infinite loops on smart contracts (among other things).

Gossip Protocol

A gossip protocol (also referred to as an “epidemic protocol”) is a procedure used to disseminate information through decentralized networks. It mirrors the way gossip spreads through a human social network. First, only a handful of people are privy to a certain piece of information. Then they spread the information to other people, creating a chain reaction that culminates in the whole group knowing. On a decentralized network, nodes pass transaction data to a small group of close nodes. This action repeats until the entire network of “full nodes” has stored the identical data.

The gossip protocol is generally more scalable and fault-tolerant than a single node broadcasting data to the whole system. However, because nodes have to receive the same data multiple times, the process can be slow and inefficient.

Hash

Hashes are created when a hash function receives data and outputs a fixed-length code. Cryptographic hashes, used on blockchains, operate like a data fingerprint. Hash functions are deterministic. Identical data inputs should create matching codes, while different pieces of data should create unique codes. Even small changes in inputted data should change the whole hash to prevent the input from being guessed. 

Hashes are used for security and are usually preimage resistant, making them practically impossible to reverse engineer. Good cryptographic hash functions produce a high avalanche effect, reducing any correlation between input and output. Hashes are also usually computationally efficient, which prevents them from slowing down the network. 

A variety of algorithms are available for creating hashes. Bitcoin uses the SHA-256 algorithm.

Hash Timelock Contracts (HTLC)

Hash Time-Locked Contracts are smart contracts utilized to increase the safety of trustless over-the-counter transactions across blockchains. Used on atomic swaps and Bitcoin’s lightning network, HTLCs reduce risk by ensuring that transactions are time-bound. These contracts state that both parties must recognize the stated payment within a specific timeframe for the transaction to be valid. If either party does not verify the payment within the set time, the exchange is canceled. 

Central to HTLCs are hashlocks and timelocks. The hashlock is created by the transaction initiator generating a key and passing it through a hash function. The connected private key is used to unlock the hash and validate the transaction. On completion, the preimage stored hash is publicly disclosed. If the trade is not completed within the allocated time limit, the payment is void, and the timelock returns cryptocurrency to its initial owner. 

Hash pointers

Hash pointers are a valuable part of blockchain security. The first block in a chain is called a “genesis block.” After this primary block, the blocks in succession refer back to past blocks using hash pointers. These hash pointers create connections between individual blocks. Hash pointers contain the hash of all the data in the block before it. 

If there is an attempt to alter past data, the modified data’s hash will no longer be correctly matched to the pointers in subsequent blocks. This improves security on the blockchain and makes historical data immutable and tamper-evident.

HealthTech

HealthTech stands for “health technology”. It refers to any health service or product that is administered using digital technology, and has applications both inside and outside of a traditional healthcare context. Wearable gadgets and home diagnosis tools are common examples of healthtech. 

The widespread adoption of healthtech solutions, which offer faster and more efficient health-related outcomes, has caused healtech to become one of the fastest-growing verticals in the healthcare space. 

Blockchains have numerous potential applications to healthtech. In particular, blockchains allow for the decentralized storage of large quantities of personal medical data and medical records, which can be made available to providers much more quickly and securely when compared to traditional systems. 

Helium

Helium is a technology company responsible for launching “the People’s Network”, a fully decentralized wireless 5G network based on its own proprietary blockchain technology.

The Helium blockchain rewards individuals with a cryptocurrency called HNT for setting up hotspots that provide coverage for wireless devices. This mining process uses an innovative and low-energy proof-of-work mechanism called “Proof of Coverage” that relies on radio technology to measure the activity of hotspots. 

Helium is notable because it has quickly garnered a large number of users – 50,000 at the time of writing – and offers an array of exciting opportunities for expanding internet coverage in developing countries. 

Hybrid Blockchain

Hybrid blockchains combine features of public and private blockchains. 

This model offers structural flexibility, aiming to maximize the benefits of both styles of blockchain. 

Hybrid blockchains can have both private and public nodes on the same network. On a hybrid network, members’ authorization and responsibilities can be controlled and data can be stored publically or privately. 

Hybrid blockchains can also leverage democratic processes to manage the blockchain.

This type of blockchain can protect against some types of economic attack, provide privacy, and reduce transaction fees.

Ripple is an example of a hybrid blockchain.

Initial Coin Offering (ICO)

Equivalent to an initial public offering (IPO) on the stock market, an initial coin offering (ICO) is a process in which companies or individuals raise funds to produce new blockchain applications, cryptocurrencies, or financial services. It is a form of crowdsourcing through which investors can buy tokens issued by a company. These tokens function as representations of a stake in a company or a future product or service.

Typically, IPOs use “white papers,” which detail what is on offer and how the ICO will function. If fund requirements are not met, and the ICO is unsuccessful, investors’ money is returned. However, ICOs are often unregulated, and investors should undertake due diligence before investing. 

Know Your Customer (KYC)

“Know your customer” is a widespread practice that helps financial organizations reduce the occurrence of illicit financial actions, such as money laundering and fraud. 

The “know your customer” process validates customer identities using photo identification, proof of address, and other verification methods. Regulations vary depending on institution types but often include Customer Identification Programs, customer due diligence, and monitoring.

“Know your customer” is one component of a more comprehensive set of anti-money laundering regulations. Most financial institutions across the globe are expected to comply with these standards.

As the industry is not fully regulated, centralized cryptocurrency exchanges apply “know your customer” protocols to varying degrees. Nevertheless, users often have to upload photo identification to begin trading.  

Layer-1

The term “layer-1” refers to the foundational architecture of blockchains, on which other “layer-2” structures can be built. Improving the efficiency of layer-1 technology makes both the base blockchain itself and all the systems it supports more scalable. Ethereum is an example of a layer-1 Blockchain. 

However, executing efficiency-driving changes can be difficult and developers often run into the “scalability trilemma.” The trilemma stipulates that improvements in scalability cause drawbacks for decentralization and security. 

Two examples of layer-1 solutions are consensus mechanisms and sharding. The modification of consensus protocols can improve efficiency and security. Developers use sharding to break up transactions into smaller datasets to distribute them across multiple nodes. 

Layer-2

Layer-2 is a secondary structure built upon a base, layer-1 blockchain. Developers leverage layer-2 solutions to increase throughput by remote-sourcing operations from the layer-1 blockchain. 

Layer-2 solutions are often created by third parties and complete processes independently of the layer-1 blockchain. Because of this separation, developers often refer to layer-2 solutions as “off-chain.” However, layer-2 systems are reliant on the layer-1 blockchain’s security and decentralization.

Layer-2 solutions solve the “scalability trilemma”, which stipulates that increased layer-1 scalability reduces security and decentralization. State channels and nested blockchains are two common layer-2 solutions. 

Litecoin

Litecoin is a popular cryptocurrency. Released in 2011, its developers wanted to create an innovative, fair, and safe currency that could act as the “silver to Bitcoin’s gold”. Like Bitcoin, Litecoin uses the Proof of Work consensus mechanism. However, Litecoin offers quicker transactions and higher coin production than Bitcoin.

Litecoin has the most extensive Scrypt-based blockchain worldwide and is currently one of the top twenty largest cryptocurrencies by market capitalization. 

Market Volume

Market volume – or trading volume – is the amount of an asset, security, or specific market that has been traded. It can be calculated over any time period and recorded through both primary and secondary sources.

Market volume is a valuable analytic tool because it demonstrates the activity and liquidity of an asset. 

Trading volume also allows investors and traders to analyze how much an individual trade will affect the market and whether or not a change in asset value was significant.

Merkle Root

A Merkle root is the root hash of a Merkle tree. A Merkle tree consists of a root that connects to branches of data, which in turn link to leaves containing further data. Each section of a Merkle tree has its own hash. Combining all the hashes produces the root hash, and any change in the data linked to the root creates a different root hash.

Merkle trees form the structure of individual block’s data on a blockchain. Peers on a network can utilize Merkle roots to confirm that data has not been tampered with and is complete and intact when dealing with anonymous peers.

When receiving a dataset and a root hash, peers can compare the root hash they receive with the root hash that the dataset produces. Nodes do not need to hold the complete dataset for this to be a viable verification model, as partial verification can also be effective. Merkle roots also link blocks together in hash pointers, which contain the Merkle root and hash pointer of the block before them.

Merkle Tree

A Merkle tree is a type of binary tree that represents datasets. Like an upside-down tree, its structure consists of a single Merkle root at the top that connects down to multiple branches, which then link to individual leaves. Merkle trees increase efficiency and data integrity on peer-to-peer networks by reducing the risk of historical data tampering.

The data from multiple transactions are stored within a block and recorded in a Merkle tree structure on a blockchain. Separate transaction data is stored on a non-leaf node at the base of the tree. Each piece of transaction data is put through a cryptographic hash function to create a hash for each leaf node. Subsequently, two leaves’ hash labels are inputted into the hash function to create the connected branches’ hash. This process continues until there is only one hash code in the top row, the root hash, containing all of the block’s data. 

Mining

Mining is the process of earning new cryptocurrency coins by supporting a currency’s blockchain. On a blockchain, each node of a decentralized network holds a record of each verified transaction that has taken place. 

For currencies that use the Proof of Work consensus model, miners take on the computational expenses of complex machine calculations required to verify a new block for the blockchain. The miner with the machine that successfully confirms the block first is then rewarded with coins from the blockchain’s native cryptocurrency. 

The newer Proof of Stake model removes the element of competition. It instead chooses a node to verify the new block, based on its stake in the currency.  Transaction fees are awarded to Proof of Stake miners. The measurement for mining power is known as a “Hashrate.”

Mining Pool

Mining pools are groups of miners that collaborate to increase their financial gain.

Miners undertake the substantial computational work required to run consensus mechanisms on blockchains. Networks reward miners with native cryptocurrency.

Mining pools use block difficulty ratings and “shares” to judge how much work miners have completed. Miners will join different pools depending on their hashrate. The combined resources of pools increase the odds of individual miners profiting from mining.

Joining a mining pool reduces a miner’s autonomy, however. Mining pools have set terms and take fees. They also manage and coordinate miners and store performance records. Mining pools most commonly pay miners based on the amount of work they complete.

There are many mining pool payment systems, including pay-per-last-N-share, pay-per-share, and proportional mining pools.

Node

Nodes are individual computers that collectively comprise peer-to-peer networks. Unlike a blockchain’s end-users, each node is a separate processor that provides intermediary services, such as transaction verification and blockchain storage, for the decentralized network. 

On public blockchains, participation in the network is open to all. And to maintain security, nodes remain pseudo-anonymous. Blockchains utilize nodes to store a unified and valid chain of records across the network and reward some nodes with native cryptocurrency for mining and validation services. On private blockchains, nodes are known to one another.

Light nodes” have a significantly reduced capacity and do not store the entire blockchain. These more basic computing devices are used primarily for transactions. 

Full nodes” are responsible for validating transactions and storing the entirety of a blockchain’s data. The rights for reading and writing data are equal across all “full nodes.” 

Master nodes” have all the tasks of “full nodes” but can also oversee voting events and complete protocol operations. To be designated a “master node,” the node must own a large quantity of the blockchain’s native cryptocurrency. This collateral-based system deters fraudulent activity. Networks incentivize nodes to become “master nodes” by offering more reliable rewards for their service to the network.

Non-Fungible Tokens (NFT)

Non-fungible tokens are discrete modules of data, stored on a blockchain, that verify ownership of a digital asset. A non-fungible token essentially acts as a virtual fingerprint or signature, tying a specific digital asset to an owner or set of owners.

NFTs represent digital assets. They are not, as is commonly thought, the digital assets themselves. Instead an NFT can be used to verify the authenticity of the original digital asset, which may be stored on the token’s blockchain, a different blockchain, or a third-party server, and prove ownership. 

“Fungibility” is a property of an item that means it can be interchanged with other items that are exactly the same. Non-fungible tokens are “non fungible” because they are entirely unique. Cryptocurrency coins such as Bitcoins, on the other hand, are all alike and can be interchanged.

Peer-to-Peer (P2P)

Peer-to-peer is a type of network that consists of multiple nodes that form a distributed architecture. Tasks are divided between peers, all of whom have equal standing on the network. 

Peer-to-peer networks of nodes distribute requirements, such as processing power and storage, thus removing the need for centralized coordination. Unlike more traditional client-server models, peers function as both suppliers and consumers of resources. Peer-to-peer networks can be unstructured, structured, or hybrid. 

Peer-to-Peer Lending

Peer-to-peer lending utilizes a distributed network model to allow individuals to secure loans from other individuals or businesses. 

Sometimes referred to as “social lending” or “crowdlending,” the peer-to-peer lending concept was first initialized in 2005. Lenders are often individual investors looking to create more significant returns on savings, while borrowers tend to seek lower rates than are traditionally available through other intermediaries.

P2P lending can be unsecured, in which a loan is supported solely by the creditworthiness of the borrower, or secured, in which an issued loan has collateral as backing. Most P2P lending is unsecured. 

Private Blockchain

Private blockchains are closer to conventional shared databases than public blockchains. However, like public blockchains, private blockchains store records on peer-to-peer nodes as append-only ledgers. 

Private blockchains often rely on third parties to complete tasks and are more centralized, with groups or individuals managing the network. Private blockchains aren’t viewable publicly, and nodes are usually non-anonymous groups known to one another, for example, manufacturers and suppliers. Groups or individuals are designated powers by an operator or defined protocol.

Proof of Stake (PoS)

Proof of Stake is a type of consensus mechanism used for blockchains. It selects validators in the network at random using a probability algorithm proportional to the validators’ stakes in the blockchain’s native cryptocurrency. The validating node is rewarded with transaction fees after the computation is completed. 

The Proof of Stake concept was created as an alternative to the Proof of Work mechanism, which lacks scalability due to its energy-intensiveness and the need for miners to have elite hardware to compete to verify blocks. 

Some perceive Proof of Stake as a more secure model because it limits the incentives for miners to attack networks. If a validator verifies false transactions, they lose part of their stake. 

Proof of Work (PoW)

First conceptualized in 1993, the Proof of Work consensus model was designed to reduce the threat of denial-of-service attacks and other malicious computing. 

Used in the cryptocurrency sphere, the Proof of Work mechanism leverages a blockchain’s decentralized nodes to complete complex hash-based computations that are necessary to solve a puzzle for a new block to be verified. This process is known as “mining,” and the prover node is rewarded with some of the blockchain’s native cryptocurrency.

The Proof of Work mechanism provides transactional security without the requirement of a centralized authority. However, it is incredibly energy-intensive. Both Bitcoin and Ethereum currently use the Proof of Work model.

Public Blockchain

Public blockchains are permissionless databases often used for cryptocurrencies. On this type of blockchain, networks are often extensive because anyone can set up a node. Data is open for viewing by the public. To protect people’s identities, nodes and users remain anonymous. 

Consensus mechanisms are necessary on public blockchains to ensure all data added to a network is unified and valid. Nodes function as miners and validators, and many nodes store append-only copies of data. 

Ethereum and Bitcoin are examples of public blockchains. 

Public Ledger

A public ledger is an open record of account information and transactions. These digital ledgers maintain users’ anonymity while publicly showing balances and verified cryptocurrency transactions. The databases are often maintained on a blockchain that doesn’t rely on a central authority. Data is stored securely and immutably across a network consisting of various nodes. 

Pump and Dump

A “pump and dump” scheme is a scam that causes an asset to rise in value then sharply fall. Pump and dump schemes are usually illegal. However, the decentralized crypto market lacks regulation. Crypto “pump and dumpers” are usually found on social media sites and often work in groups to create the illusion of mass interest in a coin or token.

“Pump and dump” scammers mislead their audience by hyping up financial assets, prompting other investors to buy in. When the price has risen sufficiently, the perpetrators exit the investment with a profit while leaving others with a loss. Schemers often buy a significant quantity of the asset to set the “pump” in motion. 

Pump and dump schemes are more common in small and micro-cap assets with low liquidity, where significant value shifts are easier to achieve. Due diligence, skepticism towards unsubstantiated price surges, and awareness of affinity fraud can protect investors from falling victim to a “pump and dump.”

Secure Multi-party Computation (MPC/SMPC)

Secure multi-party computation (SMPC) enables a network to compute data confidentially. SMPC is a trustless method for encrypted data distribution in which inputs remain highly usable despite their secrecy. The input data is split into chunks. Coded functions can later combine and analyze these chunks without decryption. SMPC has “no single point of trust”, which prevents one computing party from achieving unilateral control over input data.

Peers on a network can use SMPC for various tasks, including secure data model creation and voting. What’s more, SMPC has a range of uses in the crypto sphere. Crypto wallets and exchanges use a type of SMPC known as a Threshold Signature Scheme (TSS) to divide private keys into pieces and distribute them across multiple nodes, thereby increasing security. 

 

Security Token

A security token is a representation of a digital contract for a portion of a tradable asset. Security tokens symbolize partial ownership of financial assets like stocks and bonds and constitute a promise of profit. 

Security tokens are traded on blockchains and issued through security token offerings (STOs). STOs are comparatively more regulated than initial coin offerings, thus reducing the risk of scams. Fundraisers that tokenize financial assets can also reach a broad audience on open markets with STOs. 

Securities traded as tokens benefit from transparency due to the public nature of blockchains. Security tokens also enable the divisibility of illiquid assets.

Security tokens are subject to governmental regulations and penalties can be incurred if rules are broken. However, tokens often take advantage of exemptions to get around laws. The Howey Test governs securities in the USA. The test requires that securities be an investment of capital into a common enterprise with the expectation of profit due to third-party initiatives.

Shilling

Shilling is the excessive promotion of securities or assets. In the cryptocurrency domain, shillers promote coins and tokens to maximize the value of their investments. Invariably, they sell their assets when they peak in value. Shilling can be undertaken with either real or fake assets. 

Shillers use platforms like social media and news sites to create hype around assets. Individuals with vast audiences, like celebrities and influencers, raise an asset’s price and profile by publicizing it. 

Shilling is mainly an issue with small-cap DeFi (decentralized finance) tokens and altcoins because external forces quickly impact their value. 

Slippage

Slippage is the variance between a quoted trade price and the price when the order fulfills. A price rise that occurs prior to executing an order is negative slippage, and a price reduction is positive for buy orders. For sell orders, the negative and positive are inverse. 

Slippage is a problem across all financial markets, including forex and the stock market, to varying degrees. 

In the cryptocurrency sphere, the market’s high volatility in combination with delayed order processing on blockchains makes slippage a concern. 

Slippage can also occur due to a lack of order book depth to sustain large orders in illiquid assets, causing a “split order” divided into different price points. 

Traders can conduct market analysis before ordering and utilize limit orders to reduce the risk of slippage. 

Smart Contracts

Conceptualized in 1997, a smart contract is a program stored on a distributed ledger. It contains the terms of an agreement between a buyer and seller along with a balance.

Smart digital contracts are written in code and self-execute based on prior stipulations, functioning as an automated, non-human intermediary between users. Due to their functionality, smart contracts were described by their creator, Nick Szabo, as “digital vending machines.”

Smart contracts are stored on blockchains and are often immutable once deployed. They are faster to execute, more cost-effective, and reusable when compared to traditional contracts. These contracts are often utilized as the building blocks of decentralized applications.

Solidity

Initially proposed in 2014, Solidity is a Turing-complete programming language used in the creation of smart contracts. It is a statically typed, object-oriented, curly-bracket language that supports inheritance, libraries, user-defined types, and more. 

Ethereum’s Solidity team developed the language to be used on the Ethereum Virtual Machine.

Stablecoin

Stablecoin is a type of cryptocurrency that is resistant to extreme value fluctuations. It shares elements of both a fiat currency and traditional cryptocurrency.

To maintain value stability, stablecoins can be either fiat-collateralized, crypto-collateralized, or non-collateralized.

Fiat-collateralized stablecoins utilize fiat currency or assets like gold and silver as collateral. An example of a fiat-collateralized stablecoin is Tether (USDT) which is tied to the US Dollar as its reserve asset.

Non-collateralized stablecoins use an algorithm to control their price. Crypto-collateralized stablecoins are linked to other cryptocurrencies and are often “over-collateralized” to prevent price fluctuation.

Testnet

A testnet is a type of blockchain that is similar to a genuine blockchain but is utilized solely for testing. It is a sandbox where developers can run experiments without the risk of causing disruptions or spending authentic cryptocurrency.

Developers usually test blockchain programs, such as dApps, before releases and updates. Unlike real-value coins and tokens on a mainnet, testnet currency doesn’t have value, and users cannot trade coins between networks. 

Testnets have some important differences from their mainnet counterparts. For example, Bitcoin’s testnet is smaller than the mainnet and uses a different genesis block.

Tezos

Tezos is an open-source blockchain platform for dApps and smart contracts that launched in 2014. It was created to address barriers to blockchain adoption, such as the future of long-term updates, the safety of smart contracts, and open participation.

Unlike the Bitcoin and Ethereum blockchains which currently use an inefficient Proof of Work consensus model, Tezos leverages a Proof of Stake model, which leverages on-chain processes to update chain protocol autonomously once proposals have been community-approved. 

The native token for the Tezos blockchain is the “tez” (XTZ).

Tokenization (Asset Tokenization)

Tokenization is a process that transforms both tangible and intangible tradable assets (or “abilities”) into digital tokens. 

Unlike cryptocurrency coins, tokens are utilized for more than simple buy/sell transactions and storage.

A few examples of these utilities are investment, value storage, purchasing, and crowdfunding. Tokenization opens up a broader market of potential investors, speeds up trade times, and increases liquidity compared to more traditional financial and trading methods.

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Tokenization of Art

Art tokens, also called “art shares”, are digital shares of art pieces. The process of tokenization involves splitting the ownership of a work of art into multiple separate parts, thus allowing numerous investors to each purchase a portion. The sale of tokens is recorded on their respective blockchains. 

As with other industries where tokenization has proved disruptive, the art space has traditionally been characterized by high levels of illiquidity of assets, cliquey markets, and issues on the part of artists and galleries in raising capital. Art tokenization remedies all three of these problems. 

The first multi-million dollar artwork to be sold via this method was Andy Warhol’s painting 14 Electric Chairs. The auction raised $1.7 million for 31.5% of ownership. 

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Tokenization of Gold

As with other tokenized assets, a gold token is a digital representation of a specified quantity of gold. Traders and investors can purchase gold tokens via smart contracts on the blockchain, which can be held, retraded, or redeemed for physical gold.

In a similar vein to other illiquid assets like art and real estate, tokenization increases the liquidity of gold (especially considering high processing fees charged by traditional traders), opens the market to investors that might not typically trade in precious metals, and reduces issues around fraud. 

The tokenization of gold is significant because it involves a highly-valued and stable asset. Gold is viewed by many as a “safe” investment that’s largely immune to economic downturns.

Gold asset tokens should not be confused with other types of gold-backed cryptocurrencies, which are cryptocurrencies whose value is tied to the value of gold but that do not represent physical assets.

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Tokenization of Real Estate

Tokenization of real estate constitutes the creation of crypto tokens that are linked to physical properties. The process of tokenization in this context splits the value of a property into numerous smaller parts, somewhat like shares in a company, which buyers can then purchase. Transactions are recorded on an associated blockchain. 

Real estate tokenization opens up the market to disparate buyers, increases the liquidity of what are traditionally highly illiquid assets, and enables real estate owners to raise capital quickly. 

Property owners issue tokens through an Initial Coin Offering (ICO). Once the property has been “converted” into smaller constituent parts, representative tokens can be traded on the open market. 

Ongoing issues include legal ambiguities around smart contracts on blockchains, cybersecurity concerns, and possible avoidance of taxes on the part of sellers. 

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Tokenomics

Tokenomics is a portmanteau of “token” and “economics” and refers to the study of digital assets, particularly cryptocurrencies, and their value. 

Tokenomics is a large field. It includes the study of creators of tokens, allocation and distribution methods, market capitalization, business models, legality, and the ways in which tokens function in the broader economic ecosystem.

Tokenomics forms part of the due diligence process completed by investors and traders before buying crypto tokens or participating in initial coin offerings.

Tokens

Unlike cryptocurrency coins, which are used for storing and exchanging value, cryptocurrency tokens are digital representations of both fungible and tradable assets, utilities, and the denominations of cryptocurrencies. Tokens are created, distributed, circulated, and sold within the framework of the standard initial coin offering (ICO) process.

Unspent Transaction Output (UTXO)

An Unspent Transaction Output is the amount of unspent digital currency received by a trader after fees have been deducted. The balance an individual has in their crypto wallet is the combined value of their UTXOs. 

On blockchains that utilize the UTXO method, traders must send whole UTXOs to make new payments. Any change the initial trader receives back from a transaction is a new UTXO. The combined amount of UTXOs in a particular currency is the total supply of that currency in circulation.

The UTXO model helps blockchains maintain transaction validity by confirming that the total inputs of each transaction equal the outputs. This method helps prevent double-spending attacks and ensures balance and security. What’s more, knowledge of UTXOS can help traders avoid unnecessary transaction fees. Bitcoin uses the UTXO model. 

Utility Tokens

A utility token is a contract for a portion of a tradable asset. They are created through initial coin offerings (ICOs) on blockchains. 

Utility tokens often act as gateways to products or services. For example, utility tokens can give holders entry to a network, allow prepayment for a product, or provide democratic powers on a network. Unlike security tokens, utility tokens don’t pass the Howey Test and are unregulated, increasing the risk of scams and attacks. However, some utility tokens can face regulations if they are essentially security tokens.

Utility tokens tend to have availability caps, which causes value fluctuations as the quantity available diminishes. Funfair and the Basic Attention Token are examples of utility tokens. 

Wash Trading

Wash trading refers to artificial and illegal activity in a marketplace to manipulate the perceived liquidity of assets and market volume. It is a problem in most financial markets and can occur in many ways. 

In the cryptocurrency domain, centralized exchanges fall victim to wash trading when traders exchange assets among themselves to create false market volume. Wash traders can also create “pump and dumps,” causing an asset’s value to rise and fall sharply. 

Due to the lack of regulation of cryptocurrency exchanges, market volume is an unreliable indicator of liquidity. Exchanges often keep users’ identities confidential, making it easier to wash trade. It is estimated that a significant quantity of Bitcoin trades are impacted by wash trading.

White Paper

In business, a white paper – or whitepaper – is a report designed to inform and influence potential customers, partners, and investors. 

Most professional cryptocurrency startups present white papers alongside initial coin offerings (ICOs) to explain the features of new projects. 

This long-form document presents the token or coin’s concept, technical details, tokenomics, values, strategies, and more. 

White papers are considered a valuable part of an ICO. However, there is no certainty that the information provided on a white paper is valid or reliable. 

A litepaper is a shorter, summarized version of a white paper.