Glossary

An altcoin, or alternative coin, refers to any cryptocurrency that is not bitcoin. Altcoins exist on a number of blockchains and often have different features than bitcoin.

Avalanche started in 2020 with the goal of allowing any financial asset to trade on its platform. Avalanche uses its own Avalanche consensus protocol. Like Ethereum, this proof-of-stake protocol allows users to stake their AVAX tokens and validate transactions. Uniquely, Avalanche uses 3 separate blockchains (X-chain, P-chain, C-chain) to distribute network tasks. Recognized for its financial infrastructure and decentralized applications, Avalanche is one of the stronger competitors with the Ethereum blockchain.

Bitcoin launched in 2009, created by an unknown person or group of people using the pseudonym Satoshi Nakamoto, and is currently the largest and most well-known cryptocurrency around the world. Bitcoin was the first cryptocurrency that can be transferred peer-to-peer using blockchain technology. The Bitcoin network (with an uppercase "B") uses a decentralized proof-of-work consensus mechanism. Its native cryptocurrency, bitcoin, is the reward given to miners for keeping this network secure and has a fixed supply of 21 million.

A blockchain is like a digital accountant, which maintains a ledger of every single transaction in the network, and makes that ledger completely transparent to anyone in the world to see and validate its accuracy.

Cardano is a decentralized proof-of-stake blockchain created in 2017 by Charles Hoskinson, an Ethereum cofounder. Considering itself both an update and alternative to Ethereum, Cardano was designed to be more efficient than blockchains that rely on proof-of-work consensus and to evolve into a system for decentralized applications (dApps) and smart contracts. Cardano’s unique consensus mechanism (Ouroboros) enables users to stake tokens, check transactions, and increase network security. Its token (ADA) is named after Augusta Ada King, an English aristocrat commonly considered the first computer programmer.

Chainlink is a decentralized oracle network launched in 2017 that enables blockchains to connect securely with offchain networks and provides a tamperproof way for blockchains to access data feeds necessary for smart contracts. Hosted on the Ethereum network, Chainlink's network operators receive LINK tokens for performing network operations and staking tokens.

A crypto wallet is a physical device or software program where you can hold cryptocurrency.

Cryptocurrency is a digital form of currency that's transferred peer-to-peer, without using a third party, such as a bank.

A decentralized network is not run by a single authority, such as a bank. Instead, the control is shared by everyone who wants to take part in the network.

Decentralized applications (dApps) are just like the internet apps you interact with on a daily basis, except that they're built on top of blockchains. Users can directly connect their wallets to dApps and interact with them in a variety of ways.

A decentralized autonomous organization, or DAO, is an organization whose rules are embedded in code, usually smart contracts. This allows DAOs to operate without single rulers or authorities. There are often governance mechanisms within DAOs that allow its members to vote on various actions or proposals.

Dogecoin debuted in 2014 as one of the first and most popular memecoins, receiving attention from celebrities and online influencers. Originally developed from the Litecoin source code, Dogecoin uses a proof-of-work consensus mechanism. Dogecoin has no cap on the number of coins that can be issued, making its maximum supply unlimited.

ERC-20 is a standard for fungible tokens (tokens that each have the same value and are interchangeable, like the U.S. dollar). ERC-20 tokens are built on the Ethereum network, and today there are hundreds of thousands of them.

Ether is the native cryptocurrency for the Ethereum blockchain. Ether can make payments and collect fees from users interacting with applications on the network.

Ethereum was launched in 2015 as a project headed by Vitalik Buterin and is now the second largest cryptocurrency by market cap. The Ethereum blockchain is programmable, allowing for the creation of decentralized applications (dApps) and smart contracts. Ethereum's native token is ether, also referred to as ethereum or ETH. Originally a proof-of-work consensus protocol, Ethereum moved to proof-of-stake, which uses validators to stake ether tokens to confirm transactions and secure its network. Validators receive newly created ETH tokens based on how much ETH they stake, and Ethereum burns ether used to pay for transactions to manage the supply over time.

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A halving occurs nearly every 4 years, and this is when the amount of bitcoin a miner can earn per block is cut in half.

Launched by founder Charlie Lee in 2011, Litecoin was one of the first cryptocurrencies to be released to the public as an alternative to bitcoin. Developed from the Bitcoin source code, Litecoin was designed to be an inexpensive and quicker network for cryptocurrency payments. The Litecoin network can currently process and confirm transactions approximately 4 times faster than Bitcoin. With a maximum circulating supply of 84 million tokens, Litecoin has less scarcity, and the network has a lower hash rate to safeguard its blockchain.

Mining is the process through which blockchain networks, like Bitcoin, verify transactions. It's called mining because new coins are released into circulation when transactions are approved.

Non-fungible Tokens (NFTs) represent unique assets that are not interchangeable. Ownership of these assets is represented on the blockchain. These tokens represent some of the biggest use cases for the Ethereum network, and consequently, the ethereum token.

Polkadot is a network and cryptocurrency (DOT) started by Ethereum cofounder Dr. Gavin Wood along with Peter Czaban in 2020. Polkadot uses a parachain, which enables blockchains in the Polkodot ecosystem to become interoperable and share assets and information, making it popular for dApps and Web3. Polkadot has a unique protocol called nominated proof-of-stake. In addition to individual staking, nominators can delegate tokens (DOT) to validators to secure the network.

With proof of stake, miners are replaced with validators posting and confirming transactions, and competition is replaced with randomization.

Proof of work is a consensus protocol that requires miners to work to solve complex mathematical problems. This computational "work" keeps networks secure and verifies cryptocurrency transactions.

XRP is the native cryptocurrency for the Ripple Network (XRPL). The network grew in popularity in 2014 as an institutional payment platform. Ripple uses a unique node list, with trusted validators to approve transactions. This allows the network to process transactions while maintaining an inexpensive cost to transact. XRP has a pre-mined supply of 100 billion tokens.

A satoshi is the smallest amount a bitcoin can be divided into. Unlike the dollar, which can only be divided into a single cent, a bitcoin can be reduced into 8 decimal places. This means a satoshi is equal to 100 millionth of a bitcoin.

Smart contracts are like law contracts, or even just casual agreements, where if a certain condition is met then there is a predetermined output or transaction.

Smart contracts are the basis for decentralized applications, which are made up of one or more smart contract agreements. Smart contract platforms like Ethereum enable decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs).

Solana was launched in 2020 as a blockchain for smart contracts, decentralized applications (dApps), and Web3. Solana uses a unique dual protocol system to maintain consensus and process transactions. The proof-of-history protocol allows nodes to individually process timestamps to increase transaction times. The proof-of-stake protocol allows validators to secure the network by staking its native token (SOL) and validating new blocks.

Staking is the process of locking up capital to become a validator of the blockchain. Similar to miners on the Bitcoin network, validators on a proof of stake network validate and organize new transactions.

When you sell an investment that has lost money in a taxable account, you can generally claim a tax benefit. The wash sale rule prohibits investors from claiming the tax benefit when selling at a loss and buying the same (or substantially identical) investment within 30 days before and after the sale date. The rule applies to most of the investments you could hold in a typical brokerage account, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), and options.