NFT, PoW, DeFi, metaverse… The Glossary of Cryptocurrencies

To fully understand the world of cryptocurrencies, it is still necessary to understand the vocabulary and jargon. Here you will find the definitions of the most important terms used in the crypto universe.

AML (“Anti-Money Laundering”): anti-money laundering regulations. The measures are aimed at financing terrorism, tax evasion or international smuggling. The regulations apply to all financial flows and movements.

Bitcoin (BTC): cryptocurrency created in 2009 by a developer using the pseudonym Satoshi Nakamoto. It is the first cryptocurrency in terms of capitalization, with USD 770 billion in April 2022. Bitcoin issuance is limited to 21 million units. At the beginning of April 2022, 19 million bitcoins have already been mined.

Blockchain (or chain of blocks): somewhat like a digital book, the blockchain brings together all the blocks (transactions) of a network, from the oldest to the most recent. The two best-known blockchains are bitcoin (and its own cryptocurrency bitcoin) and ethereum (and its own cryptocurrency ether).

Ether (ETH): cryptocurrency created in 2015 by Russian developer Vitalik Buterin. It is the second largest cryptocurrency in terms of capitalization, at $335 billion, after bitcoin. The issuance of ether is not restricted unlike bitcoin.

Decentralized Finance (DeFi): open financial system, accessible to any user, which makes it possible to carry out certain traditional financial operations (such as loans for example).

FATF (Financial Action Task Force) : intergovernmental body established in 1989 responsible for developing standards in the fight against terrorist financing and money laundering.

KYC: (“Know Your Customer”): is an identity verification. In the world of cryptocurrencies, certain players (cryptocurrency trading platforms, etc.) may be subject to regulations that require them to know the identities of their customers.

Metaverse: network of interconnected virtual spaces, accessible with augmented or virtual reality glasses. Examples of networks: The Sandbox and Decentraland.

NFT (“Non-functioning Token”): digital title deed issued by a blockchain (mainly Ethereum) and linked to a digital asset (photo, video, etc.). Each NFT is unique and cannot be reproduced. NFTs are used in the arts, the luxury sector or for card trading in sports.

PoW (“Proof of Work”): system that aims to secure many blockchains, including bitcoin and ethereum, through miners (person or group of people) who use the computing power of computers to validate transactions and generate new blocks on a blockchain. The fastest miners who validate a transaction on the bitcoin blockchain are rewarded in bitcoins. This practice was the subject of debates in the European Parliament in March 2022, with MEPs calling for a ban in the mica directive due to the high energy consumption required for this method and thus the impact on the environment.

PoS (“proof of stake”) : system that aims to secure many blockchains and is considered an alternative to PoW. A cryptocurrency holder is randomly selected and, in particular, must prove that they own a certain amount of cryptocurrency in order to obtain the right to validate blocks in the network to ensure their security. This method is less energy intensive than PoW.

MiCa (or crypto asset market): European directive aimed at regulating the functioning of the cryptocurrency market and service providers operating in this field.

PSAN (digital asset service providers): registration or authorization issued by the Autorité des Marchés Financiers (AMF) to players in the cryptocurrency ecosystem, confirming their seriousness in many areas (fighting terrorist financing, etc.). The AMF describes the conditions for obtaining the PSAN here.

Cryptocurrency Trading Platforms (or Exchange) : marketplace where cryptocurrencies are exchanged among themselves or against fiat currencies (e.g. euros or dollars). Among the most used are Binance and Coinbase.

TFR (for “Transfer of Funds”): European regulation on money transfers. The aim is the fight against money laundering and the financing of terrorism. The regulation dates back to 2015 and was reopened in 2021 to introduce cryptocurrencies.

Token (or token): crypto asset circulating on a pre-existing network or blockchain. Bitcoin, for example, is a token that circulates on the Bitcoin blockchain.

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