Every week Blockchain Sensei will be walking you through the basics of blockchain technology. Consider this your crash course in all things web3!
The world of cryptocurrencies can be daunting for newcomers, with its own unique jargon and technical terms. To help you, we’ve put together another list of crypto terms that every enthusiast should know.
For part one, see HERE
Layer One (L1): The base layer of a blockchain network, where transactions are settled directly on the main blockchain. Ex: Bitcoin and Ethereum.
Layer Two (L2): A secondary framework built on top of an existing blockchain (Layer One) that aims to improve scalability and efficiency. Ex: the Lightning Network for Bitcoin and Polygon for Ethereum.
RWA (Real-World Assets): Physical or traditional financial assets that are tokenized and represented on a blockchain, allowing for fractional ownership and easier trading.
DePIN (Decentralized Physical Infrastructure Networks): A system where the physical infrastructure supporting a blockchain network is decentralized and distributed among many participants, increasing security and resilience.
Convergence: The coming together or merging of different technologies, such as blockchain, artificial intelligence, and the Internet of Things (IoT), to create new and innovative solutions.
Staking: The act of locking up cryptocurrency holdings to support a Proof-of-Stake blockchain network and earn rewards in return. Stakers help validate transactions and secure the network.
Bearish: A market sentiment characterized by pessimism and the expectation that prices will fall. The opposite of bullish.
Governance: The process by which decisions are made and implemented within a blockchain network, often involving token holders voting on proposals.
APY (Annual Percentage Yield): The yearly rate of return on an investment, taking into account the effect of compounding interest.
By familiarizing yourself with these key terms, you’ll be better equipped to understand the conversations, news, and developments in the crypto world.