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

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

AML (“Anti-Money Laundering”): anti-money laundering legislation. The measures target terrorist financing, tax evasion or international smuggling. The regulation applies to all financial flows and movements.

Bitcoin (BTC): cryptocurrency created in 2009 by a developer under the pseudonym of Satoshi Nakamoto. It is the first cryptocurrency in terms of capitalization, at $ 770 billion in April 2022. Bitcoin issuance is limited to 21 million units. As of early April 2022, 19 million bitcoins have already been mined.

Blockchain (or blockchain): a bit like a digital book, the blockchain brings together all the blocks (transactions) of a network, from the oldest to the newest. 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 by capitalization, with $ 335 billion, after bitcoin. The issuance of aether is not limited unlike bitcoin.

Decentralized Finance (DeFi): open financial system, accessible to any user, which allows you to carry out some traditional financial operations (such as loans).

FATF (Financial Action Group) : intergovernmental body created in 1989, in charge of developing standards in the fight against the financing of terrorism and money laundering.

KYC: (“Know your customer”): it is a verification of identity. In the world of cryptocurrencies, some players (cryptocurrency trading platforms, etc.) may be subject to regulations that require 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 (photos, videos, etc.). Each NFT is unique and cannot be reproduced. NFTs are used in art, in the luxury industry or for figurines in sports.

PoW (“Proof of Work”): system that aims to secure many blockchains, including bitcoin and ethereum, through miners (person or group of people) that use the computing power of computers to validate transactions and generate new blocks on a blockchain. The miners fastest 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 a ban in the MICA directive due to the large energy consumption required by this method and therefore its impact on the environment.

PoS (“Proof of Participation”) : system that aims to protect many blockchains and which is considered an alternative to PoW. A holder of a cryptocurrency is selected at random and must in particular demonstrate that he possesses a certain amount of cryptocurrency in order to obtain the right to validate blocks in the network in order to ensure its safety. This method requires less energy than PoW.

MiCa (or cryptocurrency market): European directive aimed at regulating the functioning of the cryptocurrency market and the service providers operating in this sector.

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

Cryptocurrency (or exchange) trading platforms : market where cryptocurrencies are traded with each other or against fiat currencies (euro or dollar, for example). Among the most used are Binance and Coinbase.

TFR (for “Fund Transfer Regulation”): European regulation on transfers of funds. The aim is to combat money laundering and the financing of terrorism. Dating back to 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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