From A to Z
Welcome to Web3 - the next evolutionary stage of the Internet. On the one hand, this world is full of revolutionary technologies and accompanying innovations. On the other, long acronyms, market-moving tweets, and jargon that changes faster than the floor prices of artificially inflated NFT projects regularly create confusion. For those completely new to Web3, the terms can create barriers to understanding and turn an already technological field into a confusing one. For this reason, we would like to define the most important terms briefly and concisely in this article. In doing so, we refrain from using terms that are exclusively used in the context of trading NFTs and cryptocurrencies.
An airdrop is a marketing activity that attempts to generate awareness for digital assets such as cryptocurrencies by transferring them into the wallets of prospective customers for free - for example, as part of a sign-up bonus or reward.
ATH - All time high
The highest price an asset like an NFT or a coin has ever had.
ATL - All time low
The lowest price an asset like an NFT or a coin has ever had.
The highest price an asset such as an NFT or a coin has ever had. Originally, the term "altcoin" referred to any cryptocurrency that was not Bitcoin. Today, it can refer to any new cryptocurrency with a relatively small market cap.
A blockchain is a decentralized database shared by the nodes of a computer network. Blockchains store a continuously growing historical ledger of information, such as transactions, in blocks. The process is considered particularly tamper-proof because computers validate each other's mirrored copies and a tampered or altered record would be noticed immediately.
The term for a prolonged period of decline in a financial market.
The term for a pessimistic assessment of the value of a market or asset. When one is bearish about a particular cryptocurrency, they believe that its value will decline over time. Those who are pessimistic can be referred to as bears.
The term for a prolonged period when market prices are rising.
The term refers to an optimistic view that a market or asset will rise in price, similar to a bull market. If you are bullish on Bitcoin, you believe that its value will continue to rise over time.
The process of removing tokens from a cryptocurrency's circulating supply, usually by sending them to an inaccessible wallet address. Other digital assets, such as NFTs, can also be burned via the same process.
A protocol that allows separate blockchains to interact with each other to enable the transfer of data, tokens, and other information between systems.
Crypto assets such as tokens or currencies are stored in a wallet. Here, the wallet owner transfers responsibility for security to the custodian. This means that the provider has the private key and thus control over the assets associated with the wallet.
An offline device used to store cryptocurrencies. Cold wallets can be hardware devices or simply sheets of paper that contain a user's private keys. Because cold wallets are not connected to the Internet, they are generally a more secure method of storing cryptocurrencies.
Cryptocurrencies are digital currencies based on blockchain technology that can be traded on crypto trading venues. It is an alternative form of payment created with the help of encryption.
DeFi - Decentralized Finance
The ecosystem of borderless, trusted peer-to-peer financial tools built on public blockchains without the use of banks. DeFi apps are open and interconnected so they can be used in conjunction with each other.
DApp - Decentralized Application.
Software that is based on open source code and lives on the blockchain. Dapps exist independently of centralized groups or individuals and often incentivize users to maintain them through rewarded tokens.
DAO - Decentralized Autonomous Organization.
An organization based on open source code and managed by its users. DAOs typically focus on a specific project or task and trade the traditional hierarchical systems of older companies for policies written on the blockchain.
A system that does away with the control of a central figure or authority, replacing it with a distributed peer-to-peer network.
Ethereum is a decentralized, open source blockchain network launched in 2015 by its founder, Vitalik Buterin. Ethereum is the leading smart-contract-enabled blockchain in the world, and its native token, ETH, is the second largest digital asset by market cap. Blocknative's APIs support the Ethereum blockchain and Ethereum testnets such as Ropsten, Rinkeby, Goerli, and Kovan.
The Ethereum token standard, which provides a standardized smart contract structure for fungible tokens.
The Ethereum token standard that enables the creation of unique tokens, also known as NFTs (non-fungible tokens). Unlike the ERC-20 standard, ERC-721 tokens have specific properties that allow each token to be uniquely identified and independently valued.
The Ethereum token standard that allows fungible, non-fungible and semi-fungible tokens to be managed simultaneously by a single smart contract. These are commonly used in gaming and collectibles trading to reduce the number of transactions required.
The "Fear of missing out" is a behavioral phenomenon that describes the feeling of missing out on lucrative trading opportunities.
The lowest price for which an asset such as an NFT can currently be purchased
A token that is interchangeable with something like it.
Currencies that are legal tender and are often backed and regulated by a government, such as the euro.
A fee that a user pays to conduct a transaction or execute a smart contract on the Ethereum blockchain. This fee depends on the complexity of the transaction and the current demand on the network.
Gwei is one of the smallest units of measurement of ETH, equal to 1/1,000,000,000 of 1 ETH (1 ETH = 1,000,000,000 Gwei). It is the most commonly used alternative term for ETH and is often used when talking about gas prices.
Hashing is a process in which a data record is divided into many small sections and structured by so-called hash values. Hashing allows a record to be secured, stored and retrieved with a unique identification code. This is the backbone of blockchain technology, which allows data and transactions to be verified and stored in a secure manner.
ICO - Initial Coin Offering
The sale of tokens to the public to raise capital for a crypto-based project. The tokens represent ownership or revenue shares in the project and can be purchased by investors - similar to a digital share.
IRL - In Real Life
An abbreviation used to explain when a person is talking about something real and outside the digital world of communication, gaming, or virtual reality.
This is the actual blockchain, also referred to as the base layer, mainchain, or mainnet.
Solutions built on top of a Layer 1 blockchain, typically used to improve scalability and data protection and for cross-chain communication. Unlike sidechains, which use their own consensus mechanisms, Layer 2 solutions are secured by their underlying mainchain.
A metaverse is a global virtual reality that exists simultaneously with the real world. Currently, users access this experience with VR devices or game consoles in the form of avatars.
The process of generating a token on a blockchain network is called minting.
Mining stands for the process of generating new cryptocurrency units as well as for the validation of transactions in crypto networks, for which so-called miners are rewarded with coins.
The description stands for main network and is a layer 1 blockchain, as opposed to a testnet or layer 2 solution.
NFT - Non-fungible Token
An NFT is a digital certificate of authenticity used to assign and verify ownership of a unique digital or physical asset. Unlike fungible tokens, NFTs are not interchangeable.
Any transactions or data that exist outside of the blockchain are referred to as off-chain. Because transactions on the blockchain can be expensive and inefficient, Layer 2 solutions, which have higher transaction throughput, perform much of the processing work off the blockchain and transmit information at less frequent intervals on the chain.
An umbrella term that encompasses all transactions or data that are available on the blockchain and visible to all nodes on the blockchain network.
A mechanism in which miners must solve complex mathematical tasks to verify transactions in order to mint blocks on de chain. When a miner solves a task correctly, he gains access to mint the next block and receives the corresponding block reward and transaction fees. Since this requires a lot of computing power, the PoW approach is the more polluting approach.
A mechanism where validators have to deposit a certain amount of cryptocurrency into the blockchain to verify transactions and mint blocks. Since less computing power is required here, this is the greener form of transaction validation.
P2P - Peer to Peer
A distributed network of two or more computers that interact directly with each other without a central server or facility.
PBT - Physical Backed Token
This revolutionary technology enables brands to take the experience around their physical products to a new level with the help of NFTs. This is because until now, the link between physical objects and digital proofs of ownership has been limited. With the help of PBT, a link between the actual ownership of the object and the representative NFT can now be realized on the blockchain in a very user-friendly way.
POAP - Proof Of Attendance Protocol
POAPs are NFTs that confirm that the owner has participated in something, completed something, or achieved something.
A passcode required to withdraw assets from a blockchain wallet and authorize digital transactions. Because these private keys are long and difficult to remember, wallets usually associate them with a seed or recovery phrase that is easier to remember.
A code that serves as an address for a blockchain wallet, similar to a bank account number. Other users can send digital assets to your wallet using your public key, but only you can access the contents of your wallet using the corresponding private key.
The value of some NFTs depends on their rarity value. The rarity describes this and indicates which rank the respective NFT has in a collection.
Rust is the programming language used to write smart contracts on the Solana blockchain. Rust is considered one of the fastest growing programming languages.
Rinkeby is a proof-of-authority test network for Ethereum where smart contract developers can test code before deploying it to the Ethereum mainnet.
Ropsten is the primary Ethereum test network where blockchain developers can test their smart contract code in a live environment without having to spend money.
Soulbound tokens are a form of NFTs that cannot be transferred. We can imagine that passports, certificates or medical records, i.e. all documents that are personal, will be stored as Soulbound Tokens in the wallet in the future.
A self-executing code provided on a blockchain. Smart contracts enable transactions without an intermediary and without the parties involved having to trust each other for compliance.
The secondary market refers to marketplaces where NFTs can be resold. OpenSea, Rarible and LooksRare are the most commonly used marketplaces.
Solidity is the programming language used to write smart contracts on the Ethereum blockchain.
A sequence of words used as a password to access a crypto wallet. Since a single wallet may contain multiple accounts, each with its own private keys, a seed phrase facilitates access to all accounts with the same password.
A token whose value is pegged to another asset. Stablecoins are usually backed by a fiat currency like the U.S. dollar, but can also be pegged to physical assets like precious metals or even other cryptocurrencies like Bitcoin.
Token gating means restricting access to certain content, areas, products, or even communities to holders of a specific cryptocurrency token or non-fungible token (NFT). In this process, the tokens act as keys that reside in a user's digital wallet.
Unlike a coin, a token is a digital asset created on an existing blockchain.
A software environment that mimics a mainnet blockchain and is used to test network upgrades and smart contracts before they are deployed on the mainnet.
Tokenomics is made up of "token" and "economics" and is a catch-all term for the elements that make a particular token or cryptocurrency valuable and interesting to investors. This includes everything from what a token offers and how it is issued to things like its utility.
A software application or hardware device used to store private keys. Unlike a traditional wallet, a blockchain wallet does not store the coins or tokens themselves. Instead, it stores the private key that proves ownership of a particular digital asset.
Also known as a public key. It is an address for a blockchain wallet, similar to a bank account number.
Wrapped Ethereum (wETH) is a tokenized version of Ether on the ERC-20 standard. wETH can always be exchanged 1:1 for ETH. It enables functionality with DApps on Ethereum and other blockchains.
Web 3 is the current evolution of the Internet, characterized by decentralization and digital ownership, as opposed to Web 1.0 and Web 2.0, which were characterized by users being able to read (Web 1.0) and write (Web 2.0) content.
A ZK or "zero-knowledge" rollup is an Ethereum Layer 2 scaling solution that bundles off-chain transactions into a single cryptographic proof. This transaction is then returned to the main chain for validation. ZK rollups use proofs of validity to confirm the legitimacy of transactions.