id="article-body" class="row" section="article-body" data-component="trackCWV">
[img][/img]

Axie Infinity. 

Sky Mavis



proof of work

Proof of work is a consensus mechanism through which blocks are added to a blockchain. POW requires miners to solve complicated cryptographic puzzles, which demand large amounts of energy from powerful mining rigs, in order to validate new blockchain transactions. 

POW is a safe and decentralized consensus mechanism, but it's notoriously inefficient. It's how bitcoin's and ethereum's blockchains operate, although ethereum will soon shift to the more efficient proof of stake. 

proof of stake

Confronted with the huge energy demands of proof of work, proof of stake is an updated consensus mechanism that allows blocks to be mined much more efficiently. POS allows holders of a cryptocurrency to validate new blocks onto the relevant blockchain. 

They do this by staking their cryptocurrency. Users of a network stake their cryptocurrency, and if their stake is chosen by a randomized algorithm, they get the opportunity to validate a new block -- for which they'll get a reward in the form of more cryptocurrency. The more cryptocurrency staked, the higher chance a user is to be chosen to validate a new block. 

Where proof of work rewards those who have spent the most computational power to solve a cryptographic puzzle, proof of stake rewards those who invest their cryptocurrency over a long period of time. 

pump and dump

Pump and dump schemes involve the building up of artificial excitement over a product, which leads people to buy it and raise its price. Pump and dump orchestrators then sell their assets at a high, which then causes the price to fall precipitously. 

These exist in traditional markets, but are more common in cryptocurrency trading as the low liquidity of micro cap cryptocurrencies makes their prices easier to manipulate. 

rug pull

Rug pulls are when the creator of a cryptocurrency vanishes, taking funds with them. A phony Squid Game coin is a recent example, although these are far from rare. "Rug" is essentially shorthand for "scam."

Satoshi Nakamoto

The pseudonymous creator of bitcoin. The white paper explaining the need for decentralized finance and explaining how bitcoin works was signed by a Satoshi Nakamoto, but no one knows who the real person is. It's been speculated that Satoshi Nakamoto is actually several people. Computer scientist Craig Wright claims to be him, but his claim has not been verified.

sats, satoshis 

A fraction of a bitcoin.

scamcoin

A cryptocurrency that has been rugged. 

seed phrase

When you create a cryptocurrency wallet, you'll be given a 12-word seed phrase. Each time you log into your wallet on a new device, you'll need to use your seed phrase. Never give your seed phrase to anyone. 

sharding

Sharding distributes network load across a blockchain, allowing for more transactions to be processed per second. This sounds dry, but it's extremely important. Ethereum will integrate sharding next year, which will make using it cheaper and much less environmentally damaging. 

shiba inu

Created in the ilk of Dogecoin, Shiba Inu is a memecoin with a massive market cap of $14.6 billion at the time of writing. It markets itself as the "Dogecoin Killer". 

shitcoin

A shitcoin is an altcoin that provides no utility, either a memecoin or an ineffective altcoin. Read more about altcoins here.

Silk Road

Silk Road was an online black market that was shut down by the FBI in 2013. It's where many people got their first exposure to cryptocurrency, as bitcoin was a popular payment method for the site's illegal wares. 

smart contract

A smart contract is a digital contract that executes itself if the required conditions are met. For instance, if Wallet X sends 0.08 ether to Wallet Y, Wallet Y sends NFT Z to Wallet X. They're most commonly used to automate transactions, but can also be used from more sophisticated purposes such as flash loans. 

solana

Solana is a blockchain made in the ilk of ethereum. Like ethereum, and unlike bitcoin, it's designed to run smart contracts. Unlike ethereum, it uses proof-of-stake and thus is far more efficient, requiring less energy and with far cheaper network fees. Solana also utilizes "proof of history," which is explained at length .

stablecoin

Stablecoins are cryptocurrencies that are[url=/personal-finance/crypto/stablecoins-what-they-are-how-they-work-and-why-they-are-freaking-out-crypto-investors/] pegged to the US dollar. These include tether and USDC. Their purpose is to allow cryptocurrency traders to keep their tokens in a crypto ecosystem without experiencing the volatility of bitcoin's and ether's price movements. 

staking

Certain cryptocurrencies allow you to stake a lump sum of tokens in exchange for receiving a percentage of that lump sum at regular intervals for as long as it's staked. For instance, Token X may give you a 10% monthly return on any stake above 5,000 tokens. In that case, you'd deposit 5,000 tokens in exchange for receiving 500 Token X each month. This is a passive income investing strategy: In the above situation, it could take 10 months to recoup the initial 5,000 tokens, after which time each monthly payment of 500 Token X would be pure profit (assuming the value of Token X remains steady). 

Bitcoin does not offer staking, nor does ethereum -- though ether eventually will when it adopts proof of stake.

TLT

Short for "think long term."

'This is gentleman'

The phrase originated from a 2014 Reddit thread on r/bitcoin where the overly excited poster titled the thread "This is gentlemen" instead of "This is it gentlemen." It's since been used as a sarcastic remark whenever good bitcoin news is shared.

Usage of this phrase has died down in recent years, but it's too funny to not share. 

token

Tokens are blockchain assets that come in many forms. Cryptocurrencies like bitcoin are a type of token. Other types include governance tokens, which grant the holder voting rights in a DAO or service, or utility tokens, where access to a service is granted in accordance with the number of tokens held. 

txn

Short for transaction. 

utility token

A token that aims to provide a function of some kind. These can be access to an application, service or game. Examples include filecoin, which grant access to blockchain-based digital storage, and link, which connects smart contracts of off-chain types of data. 

vanity address

A personalized wallet address provided by companies like Ethereum Name Service. It allows you to change your wallet address into a word or phrase of your choice, like CNET.eth. 

vaporware

A product that's promised but never actually comes to market. The term gained popularity in the late '90s with the original internet boom and has been revitalized thanks to shady cryptocurrency creators. 

Vitalik Buterin

The creator behind the ethereum blockchain.

wallet

Cryptocurrency wallets are where you can store your cryptocurrency and NFTs. These wallets can be hot or cold -- that is, browser wallets connected to the internet or physical hardware unconnected to the internet. Wallets can both read and write, meaning they can receive information but also act as a signature or online ID.

Web3

Web3 is the next iteration of the internet as imagined by blockchain enthusiasts. Web1 was read-only internet, from the internet's invention until around 2005. Web2 refers to the advent of people being able to produce content and upload it onto the internet. Web3 would be an internet that is blockchain integrated. Imagine owning your social media posts as NFTs, using a cryptocurrency like ether as a universal currency and having your wallet as a form of ID instead of a email-password combo. 

whale

Someone with large holdings of cryptocurrency. 

whitelist 

A presale list for cryptocurrencies and NFTs. Whitelisted investors are able to buy the asset before public launch, sometimes for a discounted price. 

WAGMI

Short for "we're all going to make it."