NFT, PoW, DeFi, metaverse… The glossary of cryptocurrencies

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

AML (“Anti-Money Laundering”): anti-money laundering regulations. The measures target the financing of 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, at 770 billion dollars in April 2022. The issuance of bitcoin is limited to 21 million units. At the beginning of April 2022, 19 million bitcoins have already been mined.

Blockchain (or chain of blocks): a bit 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 limited 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 created in 1989, responsible for developing standards in the fight against the financing of terrorism 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 requiring them to know the identity of their customers.

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

NFT (“Non Fungible Token”): digital title deed, issued by a blockchain (mainly Ethereum), and associated with a digital asset (photo, video, etc.). Each NFT is unique and cannot be reproduced. NFTs are used in art, the luxury sector or for trading cards 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 to validate a transaction on the bitcoin blockchain are rewarded in bitcoins. This practice was the subject of debates in March 2022 in the European Parliament, with MEPs calling for its ban in the Mica Directive due to the large energy consumption required with this method and therefore its impact on the environment.

PoS (“Proof of Stake”) : system that aims to secure many blockchains, and which is considered an alternative to PoW. A holder of a cryptocurrency is selected at random and must in particular prove that he owns a certain amount of cryptocurrency to obtain the right to validate blocks in the network in order to guarantee his security. This method is less energy intensive than PoW.

MiCa (or Market in crypto assets): European directive aimed at regulating the operation of the cryptocurrency market and service providers operating in this area.

PSAN (digital asset service providers): registration or authorization issued by the Autorité des Marchés Financiers (AMF) to players in the cryptocurrency ecosystem, attesting to their seriousness in many areas (fight against the financing of terrorism, etc.). The AMF details here the conditions for obtaining the PSAN.

Cryptocurrency trading platforms (or exchange) : market place where cryptocurrencies are exchanged between themselves or against fiat currencies (euro or dollar, for example). Among the most used are Binance and Coinbase.

TFR (for “Transfer of Funds Regulation”): European regulation on transfers of funds. The objective is to fight against money laundering and the financing of terrorism. Dating from 2015, the regulation was reopened in 2021 to introduce cryptocurrencies.

Token (or token): crypto-asset that circulates on an already existing network or blockchain. For example, bitcoin is a token that circulates on the Bitcoin blockchain.

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NFT, PoW, DeFi, metaverse… The glossary of cryptocurrencies

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