Altcoin is a collective and general term that is used to describe alternative coins (cryptocurrencies) compared to Bitcoin that try to improve on the flaws on Bitcoin. However, correct definitions vary widely.
Bitcoin is the first and currently most popular decentralized currency on the market. The currency was created in 2008 by an anonymous person, or a group of anonymous people, named Satoshi Nakamoto.
A blockchain is a digital ledger in which transaction data is stored according to regular timestamps and linked to its predecessor block all the way back to the genesis block, therefore creating a chain of blocks. In the case of a public blockchain, this ledger is open to all users (nodes).
Central bank digital currency (CBDC)
A central bank digital currency is a digital token issued by a central bank that digitally represents a fiat currency. Compared to decentralized cryptocurrencies, such as Bitcoin, CBDCs are of a centralized nature.
A consensus algorithm is a tool to reach a common decision within a group of users. In the case of blockchain technology, depending on the project, a separate consensus algorithm is used to ensure equality and fairness within the online world.
A cryptocurrency is a currency that exclusively exists in digital form, usually is not centrally regulated, and is protected against counterfeiting and fraudulent transactions by cryptographic security mechanisms.
A cryptocurrency exchange is a digital marketplace where cryptocurrencies are traded.
A custodian is an institution that holds on to assets on someone else’s behalf and is usually fully responsible for those assets. Custody in the area of cryptocurrencies means that the custodian holds on and secures the private keys giving the client the advantage of not needing to interact with cryptocurrencies directly.
Decentralized finance (DeFi)
Decentralized finance is a collective term for digital financial markets that use blockchain technology and smart contracts to offer a range of progammable services without the need for intermediaries. Common use cases are decentralized lending and borrowing platforms or decentralized exchanges.
Digital assets are assets that are available solely in a digital format and are associated with rights of use.
Distributed ledger technology (DLT)
Distributed ledger technology is a decentralized infrastructure, distributed across a multitude of nodes, which allows participants to view and validate entries.
Exchange traded fund (ETF)
An exchange-traded fund (ETF) is a security that tracks an index or asset like an index fund, but can be traded like a stock on an exchange.
Exchange traded notes (ETN)
Exchange traded notes (ETNs) are securities traded on an exchange in the form of a bond issued by a bank. With this product, the investor takes a credit risk which significantly depends on the creditworthiness of the bank.
Exchange traded product (ETP)
Exchange Traded Products (ETPs) are securitized debt instruments that are designed to track the performance of an underlying asset and bear no interest. In the case of cryptocurrencies, a wide range of currencies can be replicated and the primary difference to an ETF is that ETPs are debt securities.
Fiat money is money that is not backed by a physical commodity such as gold or silver and whose value depends significantly on the trust of its users and the rate of supply by the issuer of central or private banks.
The Genesis Block is the first block of a blockchain and is usually hard-coded into the application software.
Halving is the process of reducing the block reward by half which leads to a reduction in the inflation rate of newly created coins in the ecosystem. In the case of Bitcoin, halving takes place every four years.
Latency describes the communication ability over a network. Low latency would therefore indicate a fast flow of information which, for example, is especially important when implementing quantitativ trading algorithms in which speed is an essential factor to successfully execute trading strategies.
Liquidity refers to the degree to which an asset or security can be bought or sold in the market without affecting the asset’s price and to the ability to convert an asset to cash quickly.
Mining is the process of adding transaction records to the blockchain ledger after confirming the validity of the transactions. In the case of Bitcoin the process involves solving a mathematical problem by providing computational power and the successful miner gets rewarded with the block reward.
A private key is a cryptographic code that enables the owner access to their cryptocurrency funds. Private keys may not be shared publicly for security reasons.
A public key is a cryptographic code being used to enable transactions between parties and allow users to receive cryptocurrencies on their accounts. Public keys may be shared publicly.
Quantitative Trading (Quant)
Quantitative trading is a trading form in which algorithms are developed to detect market opportunities and automate the process of trading. Hereby backtesting the market is a valuable tool to elaborate the profitability of a trading algorithm.
In finance reporting refers to the communication of financial information, such as financial statements, to the users, like investors, creditors or regulatory authorities. In the cryptocurrency context, this mostly refers to regulatory guidelines, especially related to taxation.
Security token offering (STO)
A security token offering (STO) describes the process by which digital securities are issued, where security tokens are understood to be digital assets.
In finance, the term settlement refers to the fulfillment of a spot or forward transaction whereby securities or interest in securities are delivered against a form of payment. Especially in the DeFi context in the area of lending, payments or decentralized exchanges (DEX) the term is of higher importance.
A Smart Contract is a self executing and unalterable digital contract stored on the blockchain. Especially in the financial industry, there is a wide range of possible applications, such as automated trading, financial data security and data recording or insurance applications.
Smart Order Routing (SOR)
Smart Order Routing (SOR) is a process ensuring the best order execution under consideration of the current prices and the liquidity on the crypto market.
A Wallet is a software that holds private keys. They are used to access and control cryptocurrency-holdings.