NFT, PoW, DeFi, metaverse … 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 most important terms used in the crypto world.

AML (“Anti-Money Laundering”): the rules against money laundering. The measures are aimed at financing terrorism, tax evasion or international smuggling. The rules 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 the form of capitalization with $ 770 billion in April 2022. The issuance of bitcoin is limited to 21 million units. As of early April 2022, 19 million bitcoins have already been mined.

Blockchain (or chain of blocks): a bit like a digital book, blockchain brings together all the blocks (transactions) in a network, from the oldest to the most recent. The two most well-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 with $ 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 perform certain traditional financial operations (such as loans for example).

FATF (Financial Action Task Force) : Intergovernmental body set up 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 rules that require them to know the identity of their clients.

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

NFT (“Non Fungible Token”): digital deed, issued by a blockchain (mainly Ethereum), and connected to a digital asset (photo, video, etc.). Each NFT is unique and can not be rendered. NFTs are used in the arts, 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 debate in March 2022 in the European Parliament, where MEPs called for it to be banned in the Mica Directive due to the high energy consumption required by this method and therefore its impact on the environment.

PoS (“Proof of Stake”) : system which aims to secure many blockchains and which is considered as an alternative to PoW. A holder of a cryptocurrency is selected at random and, in particular, must prove that he owns a certain amount of cryptocurrency in order to obtain the right to validate blockages 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 field.

PSAN (Digital Asset Service Providers): registration or authorization issued by the Autorité des Marchés Financiers (AMF) to players in the cryptocurrency ecosystem, which confirms their seriousness in many areas (combating terrorist financing, etc.). AMF describes here the conditions for obtaining PSAN.

Trading platforms for cryptocurrency (or stock exchange) : marketplace where cryptocurrencies are exchanged with each other or against fiat currencies (eg euro or dollar). Among the most used are Binance and Coinbase.

TFR (for “transfer of funds”): European regulation on remittances. The aim is to combat money laundering and terrorist financing. The regulation dates from 2015 and was reopened in 2021 to introduce cryptocurrencies.

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

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