Cryptocurrency Tax Software Glossary

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Glossary

Your handy guide to cryptocurrency terms so you don’t HODL a shilled Altcoin.
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51% Attack

A

51% Attack

If more than half the computer power or mining hash rate on a network is run by a single person or a single group.

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API

A

API

An Application Programming Interface is a set of routines, protocols, and tools for building software applications. 

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ASIC

A

ASIC

An acronym for application-specific integrated circuit — a device designed for the sole purpose of mining cryptocurrencies.

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Accounting Token

A

Accounting Token

Credit or debit entries, similar to traditional accounting systems but using tokens.

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Address

A

Address

The place where cryptocurrency can be sent to and from in the form of a string of letters and numbers.

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Aeternity Blockchain

A

Aeternity Blockchain

A blockchain network that works on a hybrid consensus approach; both Proof of Work and Proof of Stake.

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Air Gap

A

Air Gap

A concept that states: if data cannot be accessed, then it cannot be infected or corrupted.

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Airdrop

A

Airdrop

A type of marketing campaign that distributes a specific cryptocurrency or token to a designated audience.

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Airnode

A

Airnode

Airnode is an API blockchain gateway that is deployed by API providers who want to engage in the API3 blockchain protocol. 

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Algorithmic Market Operations

A

Algorithmic Market Operations

These automatically control the supply of algorithmic stablecoins while improving scalability, decentralization, and transparency.

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Algorithmic Stablecoin

A

Algorithmic Stablecoin

A stablecoin that uses an algorithm which can issue more coins when its price increases and buy them off the market when the price falls.

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Algorithmic Trading

A

Algorithmic Trading

An automated trading system where buy and sell orders are placed according to the rules of an algorithm.

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Allocation

A

Allocation

The allotment of equity or tokens that may be earned, bought, or reserved.

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Altcoin

A

Altcoin

Also known as an alternative coin, this is what all other cryptocurrencies are known as because Bitcoin was the first cryptocurrency.

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Altcoin Trader

A

Altcoin Trader

A person who trades cryptocurrencies that are not Bitcoin.

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Annual Percentage Rate (APR)

A

Annual Percentage Rate (APR)

The amount of interest a borrower must pay each year is known as the annual percentage rate (APR). The annual percentage rate (APR) is determined by multiplying the periodic interest rate by the number of periods in a year that the periodic rate is used.

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Annual Percentage Yield (APY)

A

Annual Percentage Yield (APY)

Annual percentage yield (APY) is the rate of return gained over the course of a year on a specific investment. Compounding interest, which is computed on a regular basis and applied to the amount, is factored into the APY.

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Anti-Dumping Policy

A

Anti-Dumping Policy

A set of rules that protects investors from falling victim to a pump and dump scheme, in which a large number of tokens are purchased by an investor to boost the token’s value and then dumped at a much higher price, resulting in losses to investors who purchased the asset later.

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Anti-Fragile

A

Anti-Fragile

An asset that performs better when exposed to volatility and shocks in the market.

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Anti-Money Laundering

A

Anti-Money Laundering

A set of international laws enacted to stop criminal organizations or individuals from laundering money through cryptocurrencies and then back into real-world cash.

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Apeing

A

Apeing

Apeing is when a crypto trader buys a token shortly after the token project launches, without conducting thorough research.

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Arbitrage

A

Arbitrage

The practice of quickly buying and selling the same asset in different markets to take advantage of price differences between said markets.

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Ashdraked

A

Ashdraked

The complete loss of a trader's total invested capital, specifically as a result of shorting Bitcoin.

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Ask Price

A

Ask Price

The minimum price that a seller is willing to accept for an asset. 

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Assets Under Management

A

Assets Under Management

Measures the total market values of all the funds controlled by an individual or financial institution on behalf of their clients.

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Atomic Swap

A

Atomic Swap

The transfer of cryptocurrency from one party to another, without the use of an exchange or other intermediary.

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AtomicDEX

A

AtomicDEX

AtomicDEX offers a cryptocurrency wallet and DEX in one application that is available for multiple platforms.

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Attestation Ledger

A

Attestation Ledger

An account book designed to provide evidence of individual transactions. 

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Automated Market Maker

A

Automated Market Maker

A system that provides liquidity to the exchange it operates in through automated trading.

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BEP-2 (Binance Chain Tokenization Standard)

B

BEP-2 (Binance Chain Tokenization Standard)

A technical standard for tokens on Binance Chain.

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BEP-20

B

BEP-20

BEP-20 is a Binance Smart Chain token standard created with the intention of extending ERC-20.

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BEP-721

B

BEP-721

BEP-721 is a Binance Smart Chain (BSC) token standard that enables the generation of non-fungible tokens (NFTs). It is considered to be an extension of ERC-721 that is one of the most popular NFT standards.

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BEP-95 (Bruno Hard Fork Upgrade)

B

BEP-95 (Bruno Hard Fork Upgrade)

Binance Evolution Protocol (BEP-95) is a Bruno hard fork upgrade that aims to speed up the BNB token burning process.

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Bag

B

Bag

Slang for a large quantity of a specific cryptocurrency. It can also be used to describe a person’s crypto portfolio.

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Bag Holder

B

Bag Holder

A person who holds large amounts of a token, regardless of its performance.

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Banking Secrecy Act

B

Banking Secrecy Act

Implemented in the United States in 1970 to prevent criminals from concealing or laundering their illegal gains.

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Basket

B

Basket

When used in the crypto space, this refers to a collection of digital currencies managed as a single asset.

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Beacon Chain

B

Beacon Chain

A blockchain that coordinates shard chains, manages staking and the registry of validators in a PoS cryptocurrency, such as Ethereum 2.0.

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Bear

B

Bear

Someone who believes that prices in a given market will decline over an extended period. 

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Bear Market

B

Bear Market

When prices of assets in a market fall by 20% or more from recent highs.

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Benchmark

B

Benchmark

A method of comparing the performance of your asset or investment portfolio to that of similar assets to see whether there is a gap that can be bridged by increasing performance indicators.

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Benchmark Index

B

Benchmark Index

A popular index security that is used as a gauge or benchmark, against which the progress of the broader market may be tracked.

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Bid Price

B

Bid Price

The cost that someone is willing to pay for a security, asset, commodity, service, or contract.

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Bitcoin Dominance

B

Bitcoin Dominance

A metric that determines how much share of the overall crypto market share is owned by Bitcoin.

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Block

B

Block

A file containing information on transactions completed during a given time period. Blocks are the constituent parts of a blockchain.

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Block Browser

B

Block Browser

An application enabling a user to view details of blocks on a given blockchain. 

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Block Header

B

Block Header

A unique identifier for a block on a blockchain that is hashed on a continuous basis to supply proof-of-work for mining incentives.

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Block Producer

B

Block Producer

A person or group whose hardware is chosen to verify a block's transactions and begin the next block on most Proof-of-Stake blockchains.

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Block Reward

B

Block Reward

The coins awarded to a miner or group of miners for solving the cryptographic problem required to create a new block on a given blockchain.

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Block Size

B

Block Size

In blockchain technology, block size refers to the amount of data about transactions a single block in the chain can carry.

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Block Trade

B

Block Trade

A large-scale purchase or sale of securities that occur outside of an open market. 

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Blockchain

B

Blockchain

The basis for cryptocurrencies. Blockchains are a distributed ledger system. A sequence of blocks, or units of digital information, stored consecutively in a public database. 

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Blockchain 1.0

B

Blockchain 1.0

Blockchain 1.0 is the first generation of blockchain technology, which focuses on cryptocurrency and decentralization.

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Blockchain 2.0

B

Blockchain 2.0

An extension to blockchain 1.0, it introduced the concept of decentralization of business and markets through smart contracts, improved security, and improved  transparency.

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Blockchain Explorer

B

Blockchain Explorer

A search engine allowing users to browse through blockchain records.

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Blockchain Transmission Protocol

B

Blockchain Transmission Protocol

Enables isolated blockchains to operate as a fully decentralized settlement layer by securely anchoring transactions using a universal protocol.

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Bridges

B

Bridges

A blockchain bridge facilitates the seamless transfer of data or tokens between two different blockchain projects.

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Bubble

B

Bubble

When an asset is traded at a price exceeding that asset's intrinsic value.

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Bull Market

B

Bull Market

A bull market refers to a time during which the prices of assets grow dramatically. These markets act as a source of motivation for both investors and purchasers. This is not a permanent state, although it can linger for months or even years.

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Bull Run

B

Bull Run

A bull run is a period of time in financial markets during which the values of certain assets are constantly rising.

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Burn/Burned

B

Burn/Burned

Crypto tokens or coins are burned when they have been purposely and permanently removed from circulation.

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Buy Wall

B

Buy Wall

A disproportionately large buy limit order placed on a cryptocurrency exchange.

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Call Options

C

Call Options

Financial contracts that give an option buyer the right to purchase a stock, bond, commodity, or another asset at a specific price.

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Capital

C

Capital

Most commonly defined as the large sum of money an individual would use to invest.

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Capitulation

C

Capitulation

The process of selling assets at a significant loss because you have lost hope or belief that it will ever increase in price.

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Central Bank

C

Central Bank

The central bank is responsible for the formulation and transmission of monetary policy and the regulation of member banks.

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Central Ledger

C

Central Ledger

A physical book or an electronic file used to record transactions in a centralized manner.

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Centralized Exchange

C

Centralized Exchange

A type of cryptocurrency exchange that is operated by a company that owns it in a centralized manner.

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Centre

C

Centre

A consortium by Coinbase and Circle to manage USD Coin.

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Chain Reorganization

C

Chain Reorganization

A process in blockchain technology that allows node operators to replace blocks and adopt new ones, in order to create new, longer chains of data.

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Chain Split

C

Chain Split

Chain splits are another term used to describe cryptocurrency forks — the separation of a single original coin into several independently managed projects.

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Change

C

Change

The number of coins sent back to a user after they use their unspent outputs to initiate a transaction.

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Change Address

C

Change Address

Where the change from a transaction is temporarily stored before it is returned to the sender wallet.

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Chunk

C

Chunk

A fraction of each block produced as a result of sharding in the NEAR protocol.

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Circulating Supply

C

Circulating Supply

The best approximation of the number of coins that are circulating in the market and in the general public’s hands.

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Client

C

Client

Software that can access and process blockchain transactions on a local computer. 

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Coin Mixer

C

Coin Mixer

Allows users to mix up transactions between different cryptocurrency addresses, so they become untraceable and cannot be followed back to the initial sender or receiver of the assets.

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Coinbase

C

Coinbase

The number of coins that are generated from scratch and awarded to miners for mining every new block. Also a cryptocurrency exchange.

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Cold Storage

C

Cold Storage

Offline storage of cryptocurrencies, typically involving hardware wallets.

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Cold Wallet

C

Cold Wallet

A crypto wallet that is not connected to the internet.

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Collateral Tokens

C

Collateral Tokens

These tokens are used as a risk mitigation asset when borrowing other types of crypto tokens.

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Collateralization

C

Collateralization

The process of using one asset as insurance for securing a loan in a different asset.

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Collateralized Stablecoin

C

Collateralized Stablecoin

A stablecoin that is entirely or almost entirely backed by collateral held in a reserve.

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Commodity Futures Trading Commission

C

Commodity Futures Trading Commission

The Commodity Futures Trading Commission (CFTC) is an independent federal regulatory agency responsible for regulation the U.S. derivatives market.

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Confirmation

C

Confirmation

The measure of how many blocks have actually passed since a transaction was added to a blockchain.

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Consensus

C

Consensus

When all participants of the network agree on the order and content of the blocks in the blockchain.

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Cross-Border Trading

C

Cross-Border Trading

The opportunity to trade globally using a local currency.

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Cross-Chain

C

Cross-Chain

A technology that enhances the interconnection between blockchain networks because it allows the exchange of information and value.

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Crypto Asset

C

Crypto Asset

Any digital asset that uses cryptographic technologies to maintain its operation as a currency or decentralized application.

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Cryptocurrency

C

Cryptocurrency

The digital currencies that use cryptographic technologies to secure their operation.

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Cryptocurrency Money Laundering

C

Cryptocurrency Money Laundering

A method criminals use to legitimize and enshroud funds by changing fiat to digital currency and then routing it through many pathways. It is an attempt to lose any authorities who may be tracing the money.

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Cryptocurrency Pairs

C

Cryptocurrency Pairs

Used by exchanges to facilitate the trade between different tokens.

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Custodian

C

Custodian

An entity that is responsible for safely holding assets for an institution or individual.

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DAO Summoning

D

DAO Summoning

The act of creating or forming a DAO.

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DeFi

D

DeFi

The infrastructure, processes, and technologies used to democratize financial transactions.

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Decentralization Ratio

D

Decentralization Ratio

The ratio of collateral value that is decentralized over the total stablecoin supply backed for those assets.

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Decentralized

D

Decentralized

The property of a system in which nodes or actors work in concert in a distributed fashion to achieve a common goal.

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Decentralized API

D

Decentralized API

API services that are interoperable with blockchain technology. 

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Decentralized Autonomous Organizations

D

Decentralized Autonomous Organizations

Founded upon and governed by a set of computer-defined rules and blockchain-based smart contracts.

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Decentralized Database

D

Decentralized Database

A storage solution that combines decentralized technologies with cutting-edge computing to randomly store data and files across multiple nodes.

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