Lost in Translation: Common Terms and Phrases in the Metaverse
Metaverse, cryptocurrency, mints and airdrops – common phrases that seem to be known by nearly everyone these days are sometimes hard to understand. We’re here to turn you into a meta-native in no time! đ
Our A to Z Crypto Glossary:
| Term | Description |
| Address | The address is a digital address consisting of numbers and letters – anyone can send you tokens (in the form of cryptocurrencies such as Bitcoin and Ethereum) to this address. You can also send tokens from there. |
| Airdrop | Blockchain projects that are just starting out often give away their native token for free in order to have some early adopters. This is a marketing tactic to attract users to crypto events and find many potential investors (e.g. for their own NFT collection). |
| Attack area/surface | The places on your computer where you are “vulnerable”. More complex software offers more attack surface than simple software. With a good firewall you can protect yourself against malicious “attacks”. |
| Asset | An asset is a digital object to which we as users attribute value. |
| Bitcoin | Bitcoin is the first global, most popular decentralized and anonymous currency. It cannot be counterfeited because each individual token (you can think of them as coins) contains its own signature. This signature must be verified for each calculation operation (for example, for a transaction). |
| Bits | A bit is a subunit of Bitcoin: One Bitcoin contains 1,000,000 bits. |
| Block | Data is always confirmed on the blockchain in packets. Such a packet (which contains the data of about 10 minutes) is called a block. |
| Block reward | Blocks have to be confirmed by users. This is only possible with mathematical tasks that have to be solved. To accomplish this, it requires a fair amount of computing power. For the effort that these users make with their computers, they receive a reward in the form of bitcoins or other decentralized currencies. |
| Blockchain | Blockchain is a network technology in which data is recorded chronologically. It is a decentralized (i.e. divided), public database. This technology is used to manage cryptocurrency transactions. The blocks (see above) are chained (hence the term “chain”) because the data is processed chronologically like a chain. |
| BTC | The abbreviation for Bitcoin. (cf. USD for the American dollar or EUR for the euro). |
| Coin-Market-Gap | The coin market gap refers to the total value of a cryptocurrency. It is calculated by multiplying the number of all coins/tokens by the value of a single one. |
| Collectibles | Digital collectible items |
| Crypto-Wallet | Digital wallet |
| Cyberspace | A virtual environment |
| Defi | Abbreviation for decentralized financial services. These services are provided and controlled on the blockchain by many (non-centralized) participants. |
| Decentralized stock exchange (DEX) | On this digital platform/marketplace, Bitcoins and other cryptocurrencies are traded without the involvement of intermediaries. |
| Decentralized | Something is decentralized if it has no independent authority or controlling party (companies, individuals, governments). Cryptocurrencies and blockchain networks are decentralized, so all decisions and transactions are always made by a group of independent users. |
| Distributed-Ledger-Technology (DLT) | This is the origin of the blockchain: decentralized documentation creates transparency and protects all assets from counterfeiting. |
| ETH | Abbreviation for Ethereum |
| Ethereum | Ethereum is a decentralized network and has its own cryptocurrency, Ether. While Bitcoin is just a payment network, Ethereum also allows you to program, build your own apps, and thus use the blockchain like a marketplace for finance, games, social networks, and more apps that protect your privacy. |
| FIAT-Money / Fiatgeld | Fiat (from the Latin word fiat: âLet it be done! Let it be!â) money is the traditional money. As an economic object, they are the opposite of objects of exchange (such as tobacco, rice or gold), which also have an intrinsic value. |
| Fungible / Non fungible | Fungible means something like “exchangeable”. Currencies or goods can be determined by measurement, number, or weight and are interchangeable (or tradable). One Bitcoin can be exchanged for another Bitcoin and you would still have exactly the same thing. Fungibility is thus also the prerequisite for trading on any exchange. NFTs on the other hand are not fungible – in other words “unique” and cannot simply be replaced with another NFT. You would not end up with the same thing as before. |
| Generative art | This is a contemporary art form that focuses on the creative process and concept rather than the final product. |
| Glitch | The term glitch comes from gaming language or electronics and describes a digital error and is often associated with image and video displays. |
| Hash | A hash is the computing power that a user provides in order to carry out a transaction. In addition to a hash, the proof-of-work system also requires â as itâs name predicts – proof of this work. This requires much more energy than the hash itself. |
| Hot/Cold Wallet | The distinction between a “hot” and a “cold” wallet lies in the network connection. A “hot wallet” is carried on the user’s smartphone or laptop and has an Internet connection; it is usually managed by a provider (e.g. MetaMask). A “cold wallet,” on the other hand, is managed by the user independently and the access data is stored in a secure location (offline) determined by the user. |
| Identity Management | Personal data and proof of legitimacy can be stored securely using blockchain technology. The owner has complete control over this information and can manage it independently. |
| IDO / ICO | An Initial DEX Offering is an initial crypto offering that takes place on a decentralized exchange (DEX). In contrast to an Initial Coin Offering, tokens are immediately listed on the DEX (exchange) through which they are launched. In an ICO, these tokens are sold beforehand. The advantage with an IDO is that developers no longer have to collect assets for pools, but they are formed directly on the exchange after they are listed. |
| Node / Knot | New data blocks (or parts) of the blockchain are saved on a node within a P2P network. This can be a computer or a server. From there, transactions are confirmed and stored in the chronology of the blockchain. |
| Crypto Exchange | On a crypto exchange – similar to the well-known stock exchange – trading is conducted with shares, funds and also cryptocurrencies. On a crypto exchange cryptocurrencies can be bought and sold, the respective price determines the equivalent value in dollars. |
| Crypto currency | These are decentralized and digitally generated means of payment. Decentralized means that these means of payment can be exchanged directly between users without a central party standing between them. Encryption, which is created for each Mint, makes them counterfeit-proof. |
| Ledger | A ledger looks like a USB stick and acts as a “hardware wallet” that can be used for verification. Unlike a purely browser-based or app-based wallet, these have few weaknesses. The Ledger Nano S is the most well-known hardware wallet. |
| Metaverse | The metaverse is the epitome of the digital world. Unlike the Internet, which we look at from the outside, we should be able to move immersively in the metaverse and play a significant role in shaping it. |
| Miner / Mining / Mint | Mining describes the creation of new units (e.g. coins). This mechanism is also called “proof-of-work” and verifies new data blocks on a blockchain. For this purpose, users – these are called miners – have to decode encryptions/solve tasks. Computing power is executed until a correct solution (also called a hash) is found. The fastest miner is rewarded for this effort with a block reward. Bitcoin and Monero, for example, use this mechanism.
Minting refers to the creation of new tokens (comparable to minting of coins) of a native cryptocurrency (coins) by an algorithm or by a computer program. The key difference here is the difference between proof-of-work and proof-of-stake. |
| NFT â Non-Fungible Token | An NFT is a unique token that cannot be exchanged freely. Unlike fungible tokens (e.g., coins such as bitcoin or ether), NFTs have an individual value. They are unique and also cannot be counterfeited due to encryption. This is particularly important for the characteristics of ownership and authenticity. Through the blockchain, it can be traced exactly who owns an NFT. Digital art already uses this. So far, digital art could be easily copied and was difficult to attribute to a single owner. Encryption makes it impossible to forge an NFT. |
| Open Source | A software is called “open source” if it is continuously freely available to the public. The idea behind this is also that the code of the software may and should be downloaded, changed and passed on. Bitcoin, for example, is also not owned by a company, but is always being developed publicly. |
| Paper Wallet | On a paper wallet, the “private key” is printed or written offline on a physical medium (like a piece of paper). It is therefore a type of cold wallet. |
| Peer-to-peer (P2P) | The direct exchange of communication between users, without this communication having to take place via a central unit, is essential and actually also the basic idea for cryptocurrencies. Peer-to-peer is a type of network that is also used by Bitcoin. |
| Private Key, Public Key and the Seed Phrase | A public key is the digital equivalent of an IBAN: it is your address on the blockchain. The private key is used to authorize transactions and assets that are linked to the public key. The two keys are always created together. The Seed Phrase (or “Secret Phrase”) is a sequence of words (usually 12, 18 or 24 – depending on the wallet) with which you can access your wallet and all public-private key combinations.
It is essential to keep this seed phrase safe, as it is the only way to safely recover your wallet and all its contents. |
| Proof-of-Stake vs. Proof-of-Work | Proof-of-work: In this method, the work performed must also be proven, which means a large expenditure of energy. questionable in the long run. Cryptocurrencies such as Bitcoin or Monero work with this method.
Proof-of-Stake: In this method, the sheer number of coins held (and “frozen”) is crucial. The more coins that are staked, the higher the probability of being able to generate a block. And with that, the likelihood of receiving a reward for doing so also increases. Cryptocurrencies like Ether, Dash, and Stellar work with this. |
| Protocol | A protocol is a set of rules for communication between participants. But it also defines how nodes are connected to each other or how many coins exist. |
| QR code | A QR code is a square (composed of dots), two-dimensional and electronically readable code. |
| Satoshi | It is the smallest unit of a Bitcoin. One Bitcoin = 100 million Satoshi. 1 Satoshi = 0.0000001 Bitcoins. |
| Satoshi Nakamoto | The pseudonym with which the founder of Bitcoin signed the founding paper. To this day, it is not known who the founder or the founding collective on Bitcoin really is. |
| SHA-256 | This is the name of the hash function to secure Bitcoin transactions in mining. |
| Smart Contract | A smart contract is – as the name suggests – a software-based contract that is also based on a blockchain. They are self-executing and do not require intermediary entities such as notaries. They use DLT. |
| Staking | This refers to holding a cryptocurrency on a platform or in your wallet. This holding ensures the security and functionality of the blockchain network. While this cryptocurrency is held, it is frozen, so to speak. For this “holding back” of the currency, the owner receives a reward. |
| Token | A token is a single unit on a blockchain that sits on top of an existing blockchain. They are therefore a piece of the whole. Not only coins can represent tokens, but also allocations for authorizations in smart contracts. |
| Tokenization | Tokenization is the process of fragmenting units into their individual parts. |
| Transaction | A transaction is to be understood as an entry on the blockchain. |
| Transaction fee | For each transaction, a “miner fee” is charged, which is used to finance these transactions – which incur costs due to the computing power used by the miners. |
| Signature | As in real life, we give our consent to a contract by signing it. On the blockchain, this is done through the asymmetric cryptosystem and requires the combination of public and private keys. |
| Encryption | Transparency is essential for the blockchain. All information, transactions, etc. are publicly viewable and traceable. To prevent confidential information from being displayed openly, many accounts are encrypted using a hash function and stored in a block on the blockchain. |
| Wallet | Your wallet stores all the private keys you need to spend cryptocurrencies. It does not contain your own assets, but only the access to them. |
| Web 3.0 / Web3 | The Internet began with a first version: Web 1.0, so to speak. It was purely a source of information. With Web 2.0, the social aspect and mobility were added. But even here, we are still external observers of the Internet. That is supposed to change with Web 3.0. Here we become part of this world. Not only through AR and VR technologies, but also economically: decentralized cryptocurrencies and blockchain will enable us to conduct digital transactions in Web 3.0 without being dependent on external entities. |
| Centralized | Centralized means that one company, entity or party has management over a system. Centralized currencies are FIAT currencies such as the euro or the U.S. dollar, but also virtual currencies such as the Payback bonus system. Centralized exchanges are similar to traditional banks. They are designed to ensure the trading and safekeeping of currencies. |
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