A cheat sheet for the wonderful maze of digital assets

February 2022. Reading Time: 10 Minutes. Author: Prachi Chavda.

  1. 51% attack: When one single entity is able to obtain more than 50% of the hashing power and potentially causing the network disruption, is called 51% attack or majority attack. They can also reverse transactions and carry out double spending
  2. Airdrop: A marketing tactic, where a blockchain project distributes new tokens or coins to the community for free
  3. Altcoin: Simply put, it is any kind of cryptocurrency that is not Bitcoin
  4. Apeing: When a cryptocurrency trader buys a token soon after the token project launches, without any in-depth research
  5. Asset backed tokens: Cryptocurrencies that are backed by physical assets like gold, crude oil etc.
  6. Atomic swap: Trading of cryptocurrencies between strangers directly without any intermediary or crypto exchange
  7. Authority nodes: They are used by consensus algorithms for networks that aren’t fully decentralized, and keeps full copy of the blockchain
  8. Basket: In context of cryptocurrency, it is a collection of digital currencies managed as a single asset
  9. Bitcoin (BTC): First decentralised cryptocurrency released in 2009. Denominations of Bitcoin are (ascending) Satoshi, uBTC, MBTC, cBTC, dBTC, BTC
  10. Block: It is a place in a blockchain where information is stored and encrypted. There are 3 types of blocks: Genesis block (origin/first block), Valid block (mined & added), and Orphan block (not part of blockchain)
  11. Block reward: A crypto asset payment to miner or block validator upon creating or adding blocks into the blockchain
  12. Block size limit: As the name suggests, it is the maximum amount of data that can be stored in a block, it measured in bytes. Bitcoin’s block size limit is 1MB, but it is enough to store around 2000 transactions
  13. Blockchain transmission protocol (BTP): It is a communication standard, which enables two completely different blockchains to communicate
  14. Bridges: A protocol that allows the flawless transfer of data or tokens between two different blockchain projects
  15. Buy wall: Created by whales, it is a disproportionately large buy limit order placed on a cryptocurrency exchange
  16. Caduceus metaverse protocol (CMP): Caduceus is a blockchain protocol designed for Metaverse development and the decentralized digital world
  17. Casascious coin: It is a physical unit of Bitcoin as brass, silver or gold-plated coins. It’s typically owned by niche collectors, though not all Casascious coins contain actual Bitcoin
  18. CeDeFi: Centralised Decentralised Finance, as the name suggests, is the merging of conventional regulatory policies with modern financial products and infrastructure
  19. Central bank digital currency (CBDC): Unlike most cryptocurrencies, CBDCs are digital currencies issued by a central bank and are basically a digitized version of domestic currency that is equal to physical cash. As of now, no countries have officially launched their CBDC. But several governments, such as China and its DCEP network, are in the final stages of creating their CBDCs
  20. Chaffing: When purposely false signals are sent between nodes on a network using fake IP addresses such that they only see information that has already been seen by another node(s), and hence making consensus impossible for any new data added in the chain
  21. Coin: Type of cryptocurrency, a unit of value that operates on its own blockchain, independently of any other platform. It can be used to store value and pay for services in much the same way that you would use physical money
  22. Cold wallet: This wallet is less risky to get hacked as a private key is stored on a device that is not connected to the internet
  23. Confirmation: It means how many blocks have passed & confirmed since the transaction was added on the blockchain
  24. Consensus: Reaching consensus in blockchain means having at least 51% of nodes agree on the state of the blockchain network. It’s an automated process to ensure that there exists only one single valid copy of the record shared by all the nodes. There are three types of consensus mechanisms: proof of stake, proof of work and proof of authority
  25. Consensus nodes: Also called master nodes, they check on other master nodes for forming a consensus
  26. Cross-chain: Interconnection between two independent blockchain networks, allowing the exchange of information. Examples: Wanchain and Fusion
  27. Cryptocurrency: A decentralized digital asset that is based on blockchain and uses cryptography as its main security measure to control the creation of additional units and verify transactions. Examples: Ripple, Litecoin, Dogecoin and more
  28. Dead coin: A cryptocurrency that is no longer available. A project that was launched with intentions of being used as a digital currency but failed
  29. Decentralized applications (DApps): These are apps that are on a blockchain peer-to-peer network instead of a centralized owner of the app like Facebook, TikTok, Amazon. DApps are built using smart contracts. Some types of DApps are DeFi (finance), game DApps, tracking apps, marketplaces and more
  30. Decentralized autonomous organization (DAO): A company or business that is run by smart contracts autonomously and governed by its token-holding community
  31. Decentralized exchange (DEX): A peer-to-peer direct trading of cryptocurrencies without a third party or intermediary taking fees along the way
  32. Decentralized finance (DeFi): It is an umbrella term used for peer-to-peer financial services on blockchain
  33. Distributed Ledger (DLT): A database that is spread out across several nodes in different locations and entities so that it can remain decentralized as well as transparent to those involved with keeping records on it
  34. Double-spend: In the context of crypto, when someone tries to send a transaction but ends up sending it twice since they did not wait for the first one to be confirmed on-chain; this is often done by those with malicious intent and can lead to losing all of your funds if you fall victim
  35. Dumping: Offloading of large quantities of coins on crypto exchanges all at once driving down prices since there is more supply than demand for that cryptocurrency
  36. Emission: The speed at which new coins are produced and released
  37. ERC-20: A technical standard on the Ethereum blockchain which ensures that all tokens and transactions comply with certain rules (such as how many decimals points to use)
  38. Fan Token: A cryptocurrency issued by a sports team and allows its crypto holders to participate in the governing activities and attain exclusive rewards & discounts. A way of fan engagement
  39. Faucet: A website or app that rewards users in crypto payments for completing certain tasks
  40. Fear, uncertainty & doubt (FUD): The acronym for crypto discussions
  41. Fiat currency: A legal tender declared by a government like the United States Dollar (USD)
  42. Fiat gateways: A cryptocurrency exchange that allows users to deposit fiat currencies such as the USD into their account for crypto trading
  43. Fiat-pegged cryptocurrency: A crypto coin, token or asset that is linked to a government issued currency
  44. Fish: Someone who has small crypto investment
  45. Flippening: The moment when a cryptocurrency’s market capitalization (or the total value of its tokens in circulation) surpasses that of another crypto
  46. Fork: When software changes are made to blockchain technology they’re referred to as a “fork”
  47. FUDster: A person who spreads FUD (fear, uncertainty and doubt) about a specific crypto coin or blockchain project, often for self-benefit
  48. Full Node: Nodes that download a blockchain’s entire history
  49. Fungible: In cryptocurrency, fungibility is when a coin or token can be replaced by any other identical coin or token
  50. GameFi: Better known as play-to-earn (P2E) games, gives the players crypto rewards
  51. Gas: The transactional cost of running a smart contract, used on Ethereum and other platforms. It is paid in units called Gwei, which are a billionth of an Ether
  52. Genesis block: The first block in a blockchain, often referred to as block-0 or block-1, is usually hardcoded into the system
  53. Gwei: The denomination used in defining the cost of gas in transactions involving Ether, also nicknamed as “shannon” (1ETH = 1 billion Gwei)
  54. Halving: The process by which Bitcoin mining rewards are reduced by 50% every four years; this is done to create scarcity and control the total supply (since no more than 21 million Bitcoins can ever be mined)
  55. Hard cap: A hard cap is the absolute maximum supply of a digital asset
  56. Hard fork: A hard fork is a radical change in the networks protocol which can result in new digital currencies. For example, in 2017 Bitcoin blockchain split into two, Bitcoin (BTC) and a new one, Bitcoin Cash (BCH)
  57. Hard peg: A hard peg is an exchange rate policy, where a currency is set at a fixed rate against another currency
  58. Hardware wallet: Also known as cold storage/wallet, it’s essentially a USB stick that can be used for offline transactions and keeping your private keys safe. It’s considered more secure than most other forms of wallets since they’re harder to access by someone else. There are different types including paper and digital ones but each has its own pros and cons
  59. Hash function: An algorithm or cryptographic function which maps data of any size to a fixed size output
  60. Hashing power / Hash rate: Hash power, or hash rate, are interchangeable terms used to describe the combined computational power of a specific cryptocurrency network or the power of an individual mining rig on that network. The hash rate of a mining rig is the number of hashes that it can calculate per second
  61. Hot wallet: Any cryptocurrency wallet that is connected to the internet and therefore at a higher risk of being hacked
  62. Hyperledger: Hyperledger is an umbrella project of open-source blockchains and blockchain-related tools started by the Linux Foundation in 2015 to support the collaborative development of blockchain-based technologies
  63. Initial coin offering (ICO): A way for a company to raise capital by selling new cryptocurrency. ICO is the very first offering for public purchase and sale of tokens
  64. Initial decentralized offering (IDO): Similar to an ICO but lets users interact with the project before it goes live
  65. Initial exchange offering (IEO): This is when a coin is sold for the first time via a digital currency exchange
  66. Layer 0: A network framework running beneath the blockchain made up of protocols, connections, hardware, miners
  67. Layer 1: Refers to a blockchain network
  68. Layer 2: Third-party integration that can be used with layer 1 for scaling a solution that enables high throughput of transactions
  69. Light nodes: Lightweight nodes or “light nodes” do not hold full copies of the blockchain saving users significant download time and storage space
  70. Lightning network: The Lightning Network is a “layer 2” payment protocol layered on top of a blockchain-based cryptocurrency such as Bitcoin or Litecoin. It is intended to enable fast transactions and has been proposed as a solution to the Bitcoin scalability problem
  71. Lightning nodes: The main idea of a lightning node is to establish a connection between users outside of the blockchain, enabling what are referred to as “off-chain transactions”. This reduces the load on the network and allows for much faster and cheaper transactions. Bitcoin lightning transactions typically cost 10 or 20 Satoshis, or the equivalent of a fraction of a penny
  72. Liquidity: Refers to ease of buying and selling a cryptocurrency without impacting the overall market price
  73. Market capitalization: A way to measure the total value of the circulating supply of a cryptocurrency, it is calculated by multiplying its current price with its total supply
  74. Masternodes: They cannot add blocks to a blockchain. They only serve to validate and record transactions
  75. Merkle tree: A tree structure in cryptography, used to store hash value of a block and all the transactions inside that block
  76. MetaMask: An online digital wallet that allows users to manage, transfer and receive Ethereum, operating as an extension to a regular browser
  77. Metaverse: A metaverse is a digital universe, with elements of real world. It is a form of Mixed reality which is a combination of augmented and virtual reality
  78. Miner: An individual or group of people compete to solve the problem first, verifying transactions on blockchain to get crypto reward in return
  79. Mining: The process of creating new cryptocurrency units by solving complex mathematical problems, which are then verified and added to the blockchain network
  80. Mining as a service (MaaS): Cloud mining or mining-as-a-service companies allows users to rent the mining capacity of hardware
  81. Mining difficulty: The difficulty level serves as an indicator of how competitive mining is at any given moment in time
  82. Mining rigs: Dedicated computers used for mining cryptocurrencies such as Bitcoin, Litecoin etc. These are custom-built machines designed specifically for the purpose of mining coins through finding solutions to complex mathematical problems
  83. Moon: A slang term to describe a crypto price going up astronomically
  84. Node: A connected computer that is part of the blockchain network
  85. Non-fungible token (NFT): Refers to digital assets that are unique, non-exchangeable on blockchain
  86. Permissioned ledger: A distributed ledger where only certain members are allowed access.
  87. Private key: A cryptographic key allowing users to send cryptocurrency from their wallet. They’re unique and usually consist of 64 characters which are used for decrypting a wallet or making digital signatures
  88. Proof of authority (PoA): A consensus mechanism where validators are required to demonstrate possession of a certain amount or type of stake before being allowed into nodes on the network for verifying transactions
  89. Proof of stake (PoS): A consensus mechanism requiring members/nodes to prove ownership over a certain amount of cryptocurrency to guarantee their right to vote on transaction validation. Examples of PoS blockchains: Cardano, Polkadot, Solana and more
  90. Proof of work (PoW): A consensus mechanism requiring users to solve complex computational puzzles to add new blocks onto the chain. Examples of PoW blockchains: Bitcoin, Ethereum and more
  91. Public key: A cryptographic key that allows a user to receive cryptocurrency from another user, but cannot be used to send funds. They’re unique and usually consist of 64 characters to encrypt a wallet or make digital signatures
  92. Scalability: System capability to handle a growing amount of work on a blockchain network without compromising safety/integrity or performance/speed requirements
  93. Scalping: Buying and selling a coin/token multiple times on the same day within a short time to profit from small price fluctuations
  94. Sharding: Splitting a blockchain network into smaller groups of nodes called shards, each responsible for processing transactions in parallel
  95. Shilling: A hype over social media about a cryptocurrency, with no regard for the quality of the particular coin
  96. Smart contract: A self-executing program on the blockchain when certain pre-defined conditions are met
  97. Stablecoin: A crypto coin whose value or supply is set against a physical asset such as fiat currencies like the US dollar or metals like silver and gold
  98. Staking: A reward system. When you stake coins, you are effectively locking them away in a digital wallet for the purposes of maintaining the network. You are rewarded with more coins/tokens when your wallet is staking, but it also means that you cannot trade these coins while they’re locked up
  99. Tokens: It can represent any asset, from commodities like gold or coffee beans, to loyalty points, real estate, or even other cryptocurrencies
  100. Wallet: A location to store your private and public keys and crypto funds
  101. Whale: Slang term for an investor who owns large amount of cryptocurrencies, significant enough to influence its price


Prachi Chavda, an alumna of IIT Bombay, class of 2017, is part of the investment team at Jackdaw Capital. She previously worked at IIM-Ahmedabad’s incubator, CIIE.CO, in sector research for blockchain, biotech, insurtech & other sectors. Prior to this she worked with RBL Bank (India) across payments, fintech-bank partnerships, and digital banking products.