Crypto and Financial Terms

Last Updated on January 21, 2023

  • Lightning Network: A separate, second-layer network that works on top of the main Bitcoin network batching Bitcoin transactions. (Read my article here.)
    • A Lightning node: separate software that communicates with each other and constitutes a new peer-to-peer network.
    • Channels: a connection opened between two Lightning nodes, allowing for payments to flow between them. A channel is literally a Bitcoin base layer transaction, anchoring the channel to the secure chain.
    • Once two nodes open a channel between one another, payments start flowing between them. Each subsequent payment modifies the channel’s state, cryptographically revoking the old one and checkpointing the new one in memory and on disk of both nodes, but critically, not to the base chain.
    • Channels stay open for a long time (e.g., a year or more). If the nodes ever decide to close down their channel, their latest balance after all the off-chain payments is restored to their original wallets. This is cryptographically-secured by hashed time-locked contracts (HTLC) and digital signatures, which we won’t get into detail for the purposes of this article.
    • This allows one to batch billions of payments into two on-chain transactions — one for opening the channel and one for closing it. Once a payment is complete, it is indisputable what the latest balance is between all parties (assuming nodes redundantly store their channel checkpoints).
    • https://mempool.space/
  • SPOs: Stake Pool Operators
  • Deterministic System: Randomness is not involved in the development of future states of the system. A deterministic model will always produce the same output from a given starting condition or initial state. Read More.
  • Crypto Trilemma: The attempt to solve the problems posed by the three basic tenets of blockchain technology – security, scalability, and decentralization.
  • CME Group: The world’s largest financial derivatives exchange, and trades in asset classes that include agricultural products, currencies, energy, interest rates, metals, stock indexes and cryptocurrencies future
  • Self Directed: You have complete control over how you invest your money. That means you aren’t locked into a narrow selection of funds picked by a financial advisor or your employer.
  • Futures Instruments: Futures are derivative financial contracts obligating the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and set price. A futures contract allows an investor to speculate on the direction of a security, commodity, or financial instrument
  • CFTC: Commodity Futures Trading Commission
  • Options: Financial derivatives that give buyers the right, but not the obligation, to buy or sell an underlying asset at an agreed-upon price and date. Call options and put options form the basis for a wide range of option strategies designed for hedging, income, or speculation.
  • Commodities: Basic raw materials that serve as the basis for the production of everyday goods and services.
  • CPI Consumer Price Index: Inflation
  • Open Interest: Open interest is the total number of outstanding derivative contracts, such as options or futures that have not been settled.
  • Deribit Market: The first cryptocurrency options exchange in the world. Even though it was a highly challenging task, in slightly more than two years, the team finished working on system development. In June of 2016, Deribit was officially launched.
  • Derivatives: Financial contracts, set between two or more parties, that derive their value from an underlying asset, group of assets, or benchmark. Can trade on an exchange or over-the-counter. Usually leveraged instruments, which increases their potential risks and rewards.
  • Tradfi: Consumer Banks, Investment Banks, Stock Markets, FinTechs, Hedge Funds, Venture Capital and Private Equity, Financial Regulators
  • Mergers and acquisitions (M&A) is a general term that describes the consolidation of companies or assets through various types of financial transactions, including mergers, acquisitions, consolidations, tender offers, purchase of assets, and management acquisitions.
  • DAO – Decentralized Autonomous Organization: An org that used blockchain tech collectively manage assets, grow a portfolio, and allow all members within the DAO to vote on the direction of the community/org. You can create a DAO with Boralis or Aragon. A common job title of the future will be DAO Community Manager and financial managers.
  • Plunge Protection Team (PPT): A colloquial name given to the Working Group on Financial Markets by The Wall Street Journal. The Plunge Protection Team’s official mission is to advise the U.S. president during times of economic and stock market turbulence. Critics fear the Plunge Protection Team doesn’t just advise, but actively intervenes to prop up stock prices—colluding with banks to rig the market, in effect.
  • Tokenomics: A self-funding strategy for web3, blockchain based startups. The development and deployment of a token within the ecosystem of an ICO and the underlying projects.
  • Float vs Double: https://hackr.io/blog/float-vs-double