Glossary

An actively managed certificate (AMC) is issued by a special-purpose entity as a structured product and provides a wrapper for a portfolio of underlying assets (equities, bonds or cryptocurrencies).

Unique character sequences that serve to identify crypto wallets.

Refers to tokens or coins that are distributed directly to the wallet addresses of active users via the blockchain. The tokens or coins are not distributed against purchase by the recipient. Instead, the distribution is based on criteria defined by the protocol managers. These may include active use, for example.

The two terms denote the highest or lowest price that a crypto asset has reached during its trading history.

The period during which altcoins, i.e. alternative tokens and coins besides Bitcoin, post a better performance than the mother of all cryptocurrencies as measured in BTC.

Abbreviation that stands for anti-money laundering and covers measures that serve to combat this issue.

Stands for automated market maker. A pricing mechanism based on a mathematical formula that allows for automated trading on a decentralised exchange by means of self-regulating liquidity pools.

Short for anonymous. This term is used to address random individuals in the crypto world via social media.

A token category defined in the FINMA guidelines of 2018 that covers assets such as shares in real assets, companies, income and entitlement to dividends or interest payments.

Refers to investors who have invested in a digital asset, irrespective of its type, that has depreciated in value since the point at which the investment was made. In literal terms, bagholders are investors who now find themselves sitting on a “bag” of crypto assets that they are hoping will increase in value once more.

This term refers to layer-one blockchains, such as Bitcoin and Ethereum, which serve as the basis for higher-level scaling solutions.

The Beacon Chain forms the consensus level of the Ethereum system and is where the proof-of-stake mechanism for validating blocks is found.

A bear market is when the prices of digital assets fall continuously after they hit a temporary all-time high. During such periods of declining or stagnating prices, the market is dominated by pessimistic sentiment, making investors cautious and causing them to refrain from investing. The opposite is a bull market.

Stands for “Bitcoin improvement proposal” and denotes a proposal to improve the Bitcoin blockchain. The proposal is debated intensively by the community until it is ultimately either discarded or accepted.

Bitcoin was the first and remains the best-known cryptocurrency. It was introduced back in 2009 by a person or group under the pseudonym “Satoshi Nakamoto” and uses decentralised blockchain technology for transactions and issuing new units. The term “Bitcoin” is used to refer to both the Bitcoin network as a whole as well as the individual unit of value.

Bitcoin halving does not halve Bitcoin or its price, but the amount of new Bitcoins paid out to miners every ten minutes. The halving is based on the number of blocks processed and is expected to be triggered every 210,000 blocks. Nobody can predict the impact on the price.

A block is a data set containing the data of several transactions. The individual blocks of transaction data are linked to each other and together form a chain referred to as the “blockchain”.

The block height is the number assigned to each block in the blockchain so as to ensure that it can be uniquely identified. It represents the position of every block that has been added to the blockchain since the genesis block, i.e. the very first block in the chain.

Block producers are those decentralised entities that attach individual blocks to a blockchain. These are either miners or validators.

The block reward is the number of new cryptocurrency units that a block producer receives as an incentive for adding a new block to the blockchain.

The block size denotes the maximum amount of data and thus the maximum number of transactions that can be stored in a single block.

A blockchain is a decentralised and distributed digital database that saves transactions in the form of blocks and links them in a chronological chain. The blockchain forms the underlying technology of many cryptocurrencies.

A blockchain explorer is a web application that enables users to locate transactions, blocks and other on-chain information of a blockchain.

This refers to the trade-off between three critical aspects of blockchain technology. A blockchain can only fulfil two of the following three properties at any one time: scalability, decentralisation and security.

“BUIDL” is a deliberate warping of the word “build” and emphasises the idea of not only investing in the crypto world, but rather also participating actively in projects and helping to shape them.

A bull market describes the market phase in which the prices of digital assets continually move upwards. The mood is generally optimistic and investors are more relaxed with their money than during other market phases. The opposite is a bear market.

This refers to a mechanism that sees cryptocurrency units permanently removed from circulation by destroying them. The aim is to reduce the total supply of a cryptocurrency, thus making it scarcer and leading to a rise in the value of the remaining units.

CBDC stands for “central bank digital currency” and refers to the digital form of a country’s fiat currency. These digital currencies represent a direct liability of central banks.

Stands for “centralised exchange” and refers to a centralised cryptocurrency exchange on which traders can trade crypto assets. These exchanges are operated by a central organisation and manage the client funds centrally.

A coin is a cryptocurrency belonging to a blockchain or, put another way, is a specific blockchain’s native cryptocurrency. Examples include Bitcoin and Ether.

This is a specific type of custody of digital assets and is considered to be the most secure storage method. The private access keys are kept offline, away from the Internet and other networks. The purpose is to prevent online threats such as hacker or malware attacks.

A cold wallet is a special kind of crypto wallet that is used to store private access keys offline. Cold wallets thus usually offer the highest possible level of protection. Both hardware wallets and paper wallets are examples of cold wallets.

Collateral refers to assets that are deposited in order to secure loans or other financial transactions. Cryptocurrencies such as Bitcoin and Ether, in particular, are used as a collateral basis for various DeFi protocols (e.g. credit protocols).

The point in time from which a transaction in the blockchain is deemed to be verified as valid and has been included in the blockchain.

Blockchains are consensus systems, meaning that in order to function they depend on the entities controlling the system (full nodes) reaching a consensus on the existing transaction history at all times.

Different blockchains have different consensus mechanisms that are used to verify transactions, add new blocks to the blockchain and establish agreement on the transaction history. The best-known consensus mechanisms are proof of work (PoW) and proof of stake (PoS).

This refers to the ability to execute transactions across different blockchains. This is made possible, in particular, by interoperability solutions such as bridges.

A crypto asset is a digital asset that is based on cryptographic technologies such as blockchain. The term can be seen as an umbrella term and can likewise be regarded as a synonym for “digital asset”.

A service that sees cryptocurrency holders lend their cryptocurrencies to other users, often in return for interest. This approach allows lenders to generate returns on their cryptocurrencies, while borrowers gain access to crypto assets without having to purchase them. Crypto lending can either take place on a centralised basis via CeFi providers or on a decentralised basis via DeFi protocols.

This is the name given to the region around the city of Zug that is home to a large number of blockchain and cryptocurrency companies.

A digital or virtual asset that is based on cryptographic techniques and often serves as a decentralised medium of exchange. Generally speaking, cryptocurrencies use a blockchain or a similar technology in order to verify transactions and keep records.

This refers to a custody solution under which a third party guarantees the custody of cryptocurrency and the associated private access keys.

A “cypherpunk” is an individual who advocates the use of cryptography and technology as a means of promoting privacy, security and individual freedom. Cypherpunks have greatly influenced the development of cryptocurrencies and encryption technologies.

DApp stands for “decentralised application” and usually refers to the user interface via which users can interact with DeFi protocols and the associated smart contracts.

Dollar cost averaging is an investment strategy that sees investors regularly invest a fixed sum of money in a specific investment product irrespective of its price. This approach is intended to spread the risk and reduce the influence of market fluctuations. The DCA method represents a popular investment strategy, especially in the crypto space.

An attack in which a large number of requests are sent simultaneously to a (blockchain) network with the aim of overloading and temporarily paralysing it.

This term refers to the concept of distributing the control and management of a network to as many participants as possible. The objective is to ensure transparency, security and resistance to censorship and manipulation.

DeFi stands for “decentralised finance” and describes the newly emerging field of blockchain-based finance. Traditional financial services and instruments such as trading, loans and derivatives, among others, are offered via so-called DeFi protocols using blockchain technology and smart contracts without an intermediary.

A consensus mechanism in which coin holders delegate their coins to a validator who then helps to validate the blockchain on their behalf.

Describes the process by which a digital asset is removed from a crypto exchange, meaning it is no longer tradeable on its platform.

A wallet from which private access keys are derived from a defined starting point. This allows for all keys in the wallet to be generated from a single starting point. In practice, this means that this wallet creates a virtually unlimited number of new blockchain addresses that can all be managed using the same original private access key (seed).

A decentralised exchange on which users can trade directly with one another without a central authority acting as an intermediary. DEXs use smart contracts to process trades.

The rate at which the difficulty level in cryptocurrency mining is adjusted in order to keep the average time it takes to add new blocks to the blockchain constant.

A digital asset that is issued on a blockchain.

A digital signature is a cryptographic technique that is used to ensure the authenticity, integrity and non-repudiation of messages or transactions. It plays a key role in securing cryptocurrency transactions.

A software (or hardware) application (wallet) used for sending, receiving and utilising digital assets as well as holding them in custody.

A dip refers to a short-term drop in the price of a cryptocurrency. This event is often viewed as an opportunity to purchase digital assets at a discounted price.

A system in which several copies of the same ledger are distributed across a network of computers. It allows for transactions that can be tracked and verified in a transparent and secure manner. Blockchains are a kind of distributed ledger.

DLT stands for “distributed ledger technology”. Blockchains are considered an example of this technology.

The double spending problem refers to the risk that the same cryptocurrency units could be spent more than once. Bitcoin has succeeded in solving this problem for the first time.

This stands for “do your own research” and is often used as an abbreviation to allude to the fact that you should conduct independent and thorough research before investing in a cryptocurrency.

The group of individuals who use a new technology such as blockchain at an early stage.

Stands for “Ethereum Improvement Proposal” and indicates a proposal to improve the Ethereum blockchain that can be discussed by the community before ultimately being accepted or rejected.

Stands for “Ethereum Name Service” and makes it possible to generate more easily recognisable Ethereum domain names that refer to Ethereum addresses.

The best-known smart contract blockchain on which all kinds of applications can be launched. The Ethereum coin is called Ether or ETH.

An application usually accessible via certain websites that allows users to obtain tiny amounts of cryptocurrencies free of charge. These faucets are chiefly used for educational purposes.

A traditional national currency such as the US dollar, euro or Swiss franc that is issued by a central bank.

A platform or method that allows for fiat currencies to be exchanged for cryptocurrencies and vice versa.

This is a stable cryptocurrency that is pegged to a fiat currency and collateralised in fiat-denominated assets. The best-known examples are US Tether (USDT) and USD Coin (USDC).

This refers to the moment when one cryptocurrency overtakes another in terms of market capitalisation. The term is most often used in connection with Bitcoin and Ethereum. A flippening situation would be considered to have arisen if Ethereum were to surpass Bitcoin in the ranking of the world’s most capitalised cryptocurrencies.

Stands for “fear of missing out” and describes the fear of investors of missing out on a potentially lucrative investment opportunity.

A fork is what happens when a blockchain splits into two separate chains owing to protocol code changes.

The process by which a blockchain splits into two new blockchains. See “hard fork”.

A computer that contains a complete copy of a cryptocurrency’s blockchain and verifies and distributes transactions. Such computers are ultimately responsible for enforcing a blockchain’s consensus rules. 

A term derived from the word “game” and the abbreviation “DeFi”. It describes the combining of gaming with elements from the world of blockchain finance.

This is the name given to the fee unit that is used in the Ethereum blockchain for the execution of smart contracts.

The price that a user is willing to pay to execute a transaction on a blockchain. It is stated in gwei (a sub-unit of one ether) and influences the priority with which a transaction is executed.

The first block in a blockchain. It defines the starting point for the entire blockchain.

Governance is a system that allows for decisions to be taken regarding the development, modification and direction of blockchain and DeFi protocols and is distributed to as many people as possible using governance tokens.

A token that gives its holder the right to participate in governance decisions, which may include votes on protocol changes and upgrades as well as other aspects of the platform.

A recurring event in which the newly created amount of coins or tokens that have entered into circulation is halved. This means that miners receive less and less block reward for the provision of their computing power. Halvings occur at regular intervals and serve to limit the inflation of a cryptocurrency.

A split or fork in a blockchain that leads to a permanent split in the blockchain. New rules are introduced that are no longer compatible with the previous version, giving rise to two independent blockchains. The opposite of this scenario is a soft fork.

This is a physical device for the storing of cryptocurrencies and their private access keys. Generally speaking, the latter are held offline, offering a higher level of security relative to so-called soft wallets.

A cryptographic fingerprint that is created from data using a hash function. Hashes are used to verify the integrity of data and are a key concept in the area of cryptocurrencies.

The hash rate is a measure of the computing power used per second for mining. Simply put, it is the speed of mining. The higher the hash rate, the higher a blockchain’s computing power requirement. The same applies vice versa.

A term that has developed from the misspelling of the word “hold”. In other words, it denotes the conviction not to sell cryptocurrencies even if prices drop.

A digital wallet that is connected to the Internet. Hot wallets are less secure than cold wallets, as they are more susceptible to hacks and allow for quick access to cryptocurrencies.

Stands for “initial coin offering” and is a method for raising capital. In most cases, projects issue their own token and sell it to investors. This method was used particularly frequently during the bull market of 2017.

Interoperability refers to the ability of various blockchains to exchange data, coins and tokens with one another.

Stands for “in real life” and is used to emphasise that something happens outside the realms of the digital world.

The well-known abbreviation for “know your client”. A process by which cryptocurrency exchanges and services verify the identity of their clients in order to prevent money laundering and other illegal activities.

This term refers to foundational blockchains that form the lowest level within a cryptocurrency architecture.

These extended blockchains are so-called layer-2 solutions that are based on layer-1 blockchains and intended to solve their inherent scaling problems. Layer-2 solutions allow for transactions to be processed outside the blockchain and for only the result to be stored on the main chain. This improves both speed and scalability.

A specific layer-2 solution for the Bitcoin blockchain. This protocol allows for quick, cost-effective and scalable transactions by executing transactions in so-called payment channels outside the Bitcoin blockchain.

Liquidity pools are managed by smart contracts and are used by decentralised exchanges to provide liquidity for digital assets. This liquidity is made available by decentralised liquidity providers.

Stands for “liquidity provider” and denotes an entity that provides coins or tokens in a liquidity pool of a decentralised exchange. This allows for decentralised trading and sees the LPs rewarded with the collected trading fees.

This refers to a cryptocurrency’s actual blockchain network on which real transactions take place. This is in contrast to the testnet, which is used for both development and testing purposes.

Also referred to as simply “market cap”, market capitalisation denotes the total value of all units of a cryptocurrency in circulation multiplied by the current market price per unit.

A special network node in some cryptocurrencies that provides additional functions and services and, as a rule, requires a certain amount of cryptocurrency as collateral.

The maximum amount of a cryptocurrency that will ever be in circulation and thus does not correspond to the current quantity in circulation.

A cryptographic construct in the blockchain that is used to ensure the integrity of transaction data. As its name suggests, it is a tree-like structure of hash values that allows for large quantities of data to be checked in an efficient manner.

A virtual, expanded universe created by combining physical reality and the digital world. Blockchain technology plays an important role in the development of decentralised metaverses.

Stands for “miner extractable value” and refers to the value that miners can achieve in specific blockchains through the targeted arrangement of transactions and sequences of transactions.

This is the process by which new units of a cryptocurrency are put into circulation and transactions are checked with respect to their validity. Miners use computing power to mine and in return receive a block reward and transaction fees.

The term refers to a group of miners who share their computing power in order to increase the likelihood of receiving rewards by mining blocks. The rewards are shared between the members of the mining pool.

Also refereed to as multi-signature, it describes a security mechanism in which several private keys are required in order to authorise a transaction. This enhances security, as it is not sufficient to compromise just one private key.

Generally regarded as a measuring stick for decentralisation. The higher the Nakamoto coefficient, the greater a blockchain network's censorship resistance should be.

This is an informal expression used to describe a person who does not hold any cryptocurrencies and has a negative stance towards them.

Also referred to as a network node. These nodes form the backbone of a blockchain network and come in various kinds, including full nodes and light nodes.

Non-custodial means that users retain control over their own cryptocurrencies and private access keys with respect to custody and thus do not pass them on to third parties.

An NFT, as it is also known for short, is a unique token that is issued on a blockchain to represent the uniqueness and authenticity of a digital or physical asset.

A random number or string of characters that is used in a mining process in order to generate a valid hash for a new block.

Transactions that take place outside the blockchain. Off-chain solutions are often used to overcome scalability problems and allow for quick transactions.

Transactions that are executed directly on the main blockchain. These transactions are public and permanent.

An external data source or service that feeds information into a blockchain so that smart contracts can access this information. Oracles make it possible to integrate external events into the blockchain world.

A valid block in a blockchain that, however, is not included in the blockchain, as another block was created by a different miner at the same time. Orphan blocks can occur when two miners create new blocks simultaneously.

Stands for “play to earn” and refers to games in which players can earn coins or tokens by performing activities in the game world.

A physical method for storing cryptocurrencies in which the private key is printed or written down on paper.

A token category defined by FINMA that is intended to be used, now or in the future, as a means of payment for acquiring goods or services or as a means of money or value transfer.

Peer-to-peer means that the participants and users of a network interact directly with one another without the need for an intermediary.

A system in which anyone can participate without requiring prior authorisation or permission. Cryptocurrencies are often permissionless, as everyone is able to conduct transactions and participate in the blockchain.

Stands for “proof of attendance protocol” and refers to a protocol that creates digital badges or collectables for participation in events and activities on the blockchain.

A cryptographic key that is used to sign transactions. The private key is secret and should never be publicly known, as it facilitates access to the associated cryptocurrencies.

A procedure performed to prove ownership and reserves of held cryptocurrencies as a crypto exchange as a means of promoting both transparency and trust.

A consensus mechanism that sees participants use cryptocurrencies as collateral in order to secure a blockchain. The probability of creating a new block depends on the quantity of cryptocurrency staked.

A consensus mechanism that sees miners provide computing power to secure a blockchain. The provision of computing power in turn requires electricity to keep the processors intended for mining running.

A cryptographic key that is linked to a private key and used to generate cryptocurrency addresses and verify transactions. A public key can be shared with anyone in order to receive cryptocurrencies.

An often deceptive practice in which a deliberate attempt is made to greatly increase a cryptocurrency’s price by means of incorrect or misleading information (pump) in order to subsequently sell at a higher price before the price collapses again (dump).

This term refers to the ability of a cryptocurrency or a cryptographic system to be protected against attacks by powerful quantum computers in the future. Such cryptocurrencies possess a quantum-resistant algorithm. This is important, as quantum computers could pose a threat to conventional cryptographic processes.

A recovery phrase refers to the sequence of words that is generated when a crypto wallet is set up and which is used to restore the corresponding cryptocurrencies.

A cryptographic technique that is used to conceal the identity of a signatory within a group of users. Ring signatures are used for so-called privacy coins, which are cryptocurrencies that preserve anonymity (e.g. Monero).

The smallest unit of bitcoin, named after its inventor Satoshi Nakamoto. One bitcoin equals 100 million satoshis.

The person or group behind Bitcoin. The true identity of Satoshi Nakamoto remains unknown to this day.

Technologies or approaches that aim to increase the scalability of blockchain networks in order to process more transactions in a shorter space of time.

Tokens that represent the real value of an equity, bond, property or a precious metal. They are thus classed as securities.

A seed is a random series of words that is used to create a cryptocurrency wallet. It serves as a secure starting point for the generation of all private keys and public addresses in the wallet. It is extremely important that the seed is stored securely, as it allows for the cryptocurrencies held in the wallet to be accessed.

An upgrade of the Bitcoin protocol that was introduced in 2017 and paved the way for the Lightning Network. This has chiefly increased the transaction capacity and solved a number of security and scalability problems.

The act of storing cryptocurrencies in your own wallet instead of having them held in custody with a crypto exchange or other third-party providers. This gives users complete control over their own digital assets, but also comes with a high level of responsibility.

A scaling concept in which the blockchain is broken down into smaller, manageable sections (shards) in order to accelerate transaction processing.

An additional blockchain that is connected to the main blockchain. Sidechains are primarily intended to increase the scalability of otherwise rather limited blockchains. They are located adjacent to the main blockchain and used to process certain transactions.

A mechanism in some blockchain networks that punishes participants who breach the network rules. This can mean the loss of cryptocurrency units or staking rights. Slashing serves as a security mechanism for proof-of-stake blockchains.

Considered to be self-executing contracts that deterministically generate a certain output on the basis of a specific input. Smart contracts are launched as program code on the blockchain.

A change in a blockchain’s protocol that is backwards compatible, meaning that not all nodes have to be updated. A soft fork thus does not necessarily have to result in a split of the blockchain. The opposite of this scenario is a hard fork.

An electronic wallet that runs as a software application on a computer or mobile device and enables access to cryptocurrencies.

A programming language that is used for the development of smart contracts on the Ethereum platform.

A cryptocurrency that is pegged to a fiat currency and thus less prone to fluctuations in price. In principle, it is thus a price-stable cryptocurrency.

Staking describes the process of securing a blockchain by providing coins or tokens. The cryptocurrencies provided are blocked by the blockchain and only released once more when the holders wish to refrain from staking.

Stands for “security token offering” and refers to the process by which security tokens are sold to investors. While similar to an ICO, this process should take place in accordance with the local securities laws. At present, there are still very few jurisdictions in which security tokens are recognised.

A model used to approximately measure the scarcity of bitcoins. It does so by comparing the annual amount of newly created units (flow) with the existing volume (stock).

A parallel network to the main blockchain that enables developers and testers to test new functions and applications without using real cryptocurrencies.

A short symbol or abbreviation that is used to identify a specific cryptocurrency on exchanges and in financial news (e.g. BTC for Bitcoin and ETH for Ethereum).

Timestamps are used in blockchain technology in order to record the exact time at which a transaction was executed or an event took place. This ensures the chronology of transactions and events in the blockchain.

A token is issued via a blockchain. Tokens can either have governance functionalities or represent payments of network fees. Alongside such usage features, a token can also function as a digital representation of an asset such as a commodity, house or equity.

The permanent removal of cryptocurrency tokens from circulation, often as part of a deflation strategy.

The process by which a token from one blockchain is exchanged for a token from the same or another blockchain, normally as part of a project or a platform migration.

The process by which tokens are generated and issued on a blockchain. The term tokenisation is also often used to describe the process of creating a digital representation of real assets on the blockchain.

Tokeonomics refers to an emerging field concerned with the supply structure, utilisation and demand potential of a token or coin. It covers aspects such as the distribution of tokens, reward mechanisms, the inflation or deflation rate, governance and other factors that can influence the performance and utilisation of the token.

Users have to pay transaction fees in order for transactions to be executed on the blockchain. These fees serve as incentive for miners or validators to confirm transactions

Describes the group of people who still have no or only inadequate access to traditional banking services. These individuals are therefore considered to be especially predestined to use cryptocurrencies and blockchain applications.

An unconfirmed transaction is a transaction that has been sent to the network but has not yet been included in a block on the blockchain.

The biggest decentralised exchange (DEX). It is based on the AMM model and so-called liquidity pools.

A utility token is a kind of token that is chiefly used to access certain services or functions within a blockchain ecosystem. These tokens have a practical use and are normally not viewed as an investment instrument, especially as they do not convey any binding rights.

The process by which blockchain transactions are checked for validity. This validation process is performed by the full nodes, which check whether the transactions comply with the protocol’s rules. 

Term used to denote the investments made by venture capital firms in blockchain and cryptocurrency projects to help them grow.

Stands for “we are all going to make it” and expresses the optimism that assumes the entire crypto movement will one day be successful.

A wallet is a digital software application (hot wallet) or a physical device (cold wallet) that is used to store, manage and transfer cryptocurrencies. 

A term that describes the vision of a decentralised, web-based future in which blockchain and cryptocurrency technologies play a pivotal role. Web3 is often seen as the next iteration of the Internet.

The smallest unit of the cryptocurrency ether, similar to satoshis for bitcoin. One ether (ETH) equals 1,000,000,000 wei.

A person or organisation that holds a large amount of one or more cryptocurrencies and can therefore exert significant influence on the market.

Holders of cryptocurrencies deposit them in DeFi protocols. In return, they receive a reward that is usually paid out in liquidity provider fees and the protocol’s own tokens.

A transaction that has not yet been confirmed in a block on the blockchain and that is thus not yet attached to the blockchain.