Use our Crypto Glossary to become more familiar with crypto terms.
Active management, also known as active portfolio management or active investment style, is a strategy form of portfolio management, i.e. the active management of assets invested in securities.
Actively Managed Certificate (AMC)
An actively managed certificate (AMC) is a debt instrument that is issued by a special purpose vehicle as a structured product and includes a portfolio of underlying assets (liquid securities, bonds, funds, shares, derivatives, currencies, etc.).
Actively Managed ETP
Exchange-traded products (ETPs) are listed securities that track underlying assets, an index or other financial instruments.
Altcoins are cryptocurrencies that are not Bitcoin, and the term is composed of the word alternative and coin.
Altcoin season is when tokens and coins that are not bitcoins show better performance than bitcoins on a consistent basis.
Alternative investments are not traditional investments such as stocks or bonds, but include, for example, cryptocurrencies, private equity, hedge funds, real estate, venture capital, commodities and many other investment options.
The term bearish market indicates that the market is expected to turn negative. The term comes from the way bears attack, they stand on their hind legs and attack from the top down.
Bitcoin is a decentralized digital currency created in January 2009 by an individual or group of individuals named Satoshi Nakamoto. Bitcoin is one of the first digital currencies to use peer-to-peer (P2P) technology to enable immediate financial transactions.
Bitcoin Captial is an issuer of active and passive exchange traded products (ETPs) with cryptocurrencies as underlying assets.
A blockchain is a distributed database that is shared among members of a computer network. A blockchain stores digital information in strictly chronological order. This makes it an eligible technology to maintain a secure and decentralized transaction history. The innovation with a blockchain is that it guarantees the immutability of the recorded data without the need for a trusted third party.
A broker is an independent person or firm that executes financial transactions on behalf of others.
The term bullish market indicates that one expects the market to develop positively. The term comes from the way bulls attack, with the horns from the downside to the upside.
A crypto coin is a crypto asset that has its own blockchain and is a store of value, similar to fiat currencies such as Swiss franc dollars, or euros.
A cold wallet is an e-wallet that uses specifically designed hardware devices to store private keys. The devices are built in a way that makes it physically impossible for the private keys to ever leave the device unintendedly. Storing private keys in a cold wallet is also referred to as holding them in cold storage. Cold wallets are considered one of the safest ways to store crypto assets.
Consensus mechanisms enable distributed systems to work together and remain secure. By consensus, it is meant that a general understanding has been reached.
The term cross-chain refers to the interoperability between two independent blockchains. Most blockchain ecosystems are siloed in nature. Cross-chain technology allows blockchains to exchange information and value, thus creating an intertwined ecosystem.
Crypto is an abbreviation for cryptography. The term is used to generally refer to the field of crypto currencies and crypto assets. Cryptography is one of the cornerstones that makes crypto assets possible.
Crypto derivatives are secondary agreements or financial instruments that take their value from a primary underlying asset.
A crypto portfolio is a composition of different crypto assets in order to diversify.
Through wallets, cryptocurrency owners can access their holdings, send and receive cryptocurrencies. A distinction can be made between hard wallets and cold wallets.
The price of Bitcoin and the prices of most crypto assets with it have moved in cycles in the past. Initiated by the halving of the Bitcoin block rewards every 4 years, Bitcoin’s scarcity increases which in return leads to significant price increases. The bursting of such price bubbles is followed by a period referred to as Crypto Winter which is characterized by low valuations and little public interest in the crypto market.
A cryptocurrency is a virtual currency secured by cryptography, which makes counterfeiting or spending twice almost impossible.
A custodian is a dedicated financial institution that holds its clients’ securities in order to minimize the risk of misappropriation, abuse, theft and/or loss.
DAO stands for “decentralized autonomous organization,” which describes a group of people who follow a set of rules for a common purpose.
Dapp stands for decentralized applications that are based on open source software and use blockchain technology for operations. This means that all data, reports and source code must be stored on a decentralized blockchain to meet the definition.
Workloads are distributed across multiple computers in a decentralized network architecture, rather than relying on a single central server.
Decentralized Finance, short DeFi, encapsulates financial services and applications that run on decentralized public blockchain networks. This makes them open to anyone and allows users permissionless access without having to go through middlemen like banks and brokerages.
An electronic or digital wallet is a software-based application that securely stores payment information and passwords. Digital wallets allow for easy and quick payments and the execution of monetary transactions. Wallets are also the main interface for using crypto assets and applications. What browsers are to the internet, digital wallets are to the blockchain.
Discretionary trading is decision-based trading. The trader decides (at that moment) when the trade idea appears on the charts whether or not to execute the trade based on the current market conditions.
Ethereum is an open-source decentralized blockchain ecosystem with its own cryptocurrency, Ether. ETH serves as a platform for numerous other cryptocurrencies as well as for the execution of decentralized smart contracts.
ETP stands for Exchange Traded Product and refers to a financial product traded on a regulated exchange, which is available to professional, institutional and retail clients.
An exchange is a regulated trading place where financial products are traded.
Fiat money (from Latin: fiat, “let it be done”) is a type of currency that is not backed by a commodity such as gold or silver and is usually designated as legal tender by a government decree.
FiCAS AG was founded in 2019 and manages the allocation of the investments of the exchange-traded products issued by Bitcoin Capital AG.
GameFi / P2E
Gaming and Finance, short GameFi, describes the possibility to earn and trade monetary assets while playing online games. It represents the financialization of gaming. The concept is also referred to as play-to-earn, short P2E. While the concept is not new, blockchain games operating with tokens and in-game assets (NFTs) have brought GameFi and P2E to a new level and made it accessible for a global audience.
Gaming tokens are the native tokens of blockchain-based games and metaverses such as Axi Infinity (AXIE). Often, the tokens are required to participate in the respective game. They enable the purchase and trade of in-game assets and gaming rewards are usually paid out in the native gaming token. P2E allows gamers to earn gaming tokens, which then can be sold against fiat currencies.
The gas fee is the fee necessary to successfully complete a transaction on the Ethereum blockchain. Gas fees are paid in the Ethereum currency Ether (ETH) and are expressed in gwei.
GAV stands for Gross Asset Value and describes the current value of all assets held in a fund.
The first block ever created in a blockchain is the Genesis Block. It used to be called Block 1, but it is now called 0. The Genesis Block is particularly important because it acts as a kind of “fixed anchor” in all software applications.
High Water Mark (HWM)
The High Watermark is a variant of the fee calculation. The performance-based asset management fees can be calculated using the high watermark method. The highest value reached during a certain period, e.g. at the end of each quarter, is referred to as the high watermark and is used as the reference value.
Hodl is a meme that originated from a typo of the word “hold”. It represents the mindset of investors to hold a cryptocurrency like Bitcoin for a long time. Bitcoiners who hodl are accordingly called hodlers.
A hot wallet is an e-wallet that is used to manage crypto currencies. A hot wallet stores the private keys to coins and tokens and is therefore also referred to as hot storage. ‘Hot’ indicates that the wallet is accessible online (app or browser), thus it is considered less secure than a cold wallet.
Players of blockchain-based games can own and trade in-game assets. These in-games assets are stored as NFTs on a public blockchain. As a result, gamers truly own them in self-custody, and game developers cannot change or even confiscate them. The possibility of true ownership gave rise to the GameFi economy.
The fast-paced innovation in the crypto space led to the development of many siloed public blockchains ecosystems. Interoperability is the attempt to connect these ecosystems by enabling the free flow of data and crypto assets between them through technological innovation. The end goal is that crypto assets can be used seamlessly and interchangeably.
An investment bank is a financial services organization that acts as an agent in major and sophisticated financial operations.
The issue price corresponds to the price at which a product was launched on the exchange.
Layer 1 Blockchain
A Layer 1 blockchain refers to a basic network such as Etherreum or Bitcoin and the associated infrastructure. Layer 1 blockchains can effectively validate and finalize transactions without the need for another network.
Layer 2 Blockchain
To increase the efficiency of a blockchain, layer 2 blockchains have been developed, which are based on a layer 1 blockchain. For example, transactions can be moved from layer 1 to the layer 2 blockchain to validate them before they are fed back into layer 1.
Layer 3 Blockchain
Layer 3 is often referred to as the application layer. It is a layer that hosts decentralized applications (DApps) and the protocols that enable the applications.
Liquidity pools are collections of crypto tokens tied into smart contracts. Liquidity pools help execute trades between assets on a decentralized exchange, with the guarantee of liquidity.
The management fee refers to the fees charged for the management of the investments, e.g. for the management of an exchange-traded product.
To facilitate liquidity, a market maker, which may be an institution or an individual, can buy or sell large quantities of a particular asset.
A market price corresponds to the current price for which a security, e.g. an exchange traded product, can be purchased.
The Market Cap refers to the current market capitalization, which reflects the market value of a crypto asset. This metric can be used to see how dominant and popular a cryptocurrency is.
Open-end means that the securities are traded at times during the day set by the asset managers. There is no limit to how many open-end securities such as exchange-traded products can be offered, in other words, ETPs are unlimited.
Max Draw Down (MDD)
A maximum drawdown (MDD) is the maximum observed investment loss from a high to a low of a portfolio before a new high is reached.
To emphasize its new strategic direction, Facebook has changed its name to Meta. Their vision is to build the next social media space called the Metaverse, which allows for a seamless transition between the physical and the digital world.
In general terms, a metaverse is a futuristic digital world where people can move in an augmented and virtual reality. It’s a vision for the future of the internet combined with the creation of 3D worlds. As of today, Metaverses don’t necessarily exist, yet.
Min. Trade Size / Minimum Investment
Min. Trade Size means the minimum investment in terms of units that can be made e.g. 1 unit.
NAV stands for Net Asset Value and refers to the current value of an investment less the costs contained therein.
Non-Fungible-Tokens describe a specific token type. Each NFTs is unique and non-interchangeable, meaning an NFT is a one-of-a-kind unit of data stored on a decentralized public blockchain. Unlike currency coins and tokens which are fungible, each NFTs only exist once. NFTs are often used to sell unique digital goods like art pieces or membership access.
In the field of crypto, node refers to people who validate transactions ( also known as full node).
An oracle connects a blockchain to real-world data. For example, an oracle can be used to feed weather data onto the blockchain for use in specific applications.
Individual blockchains that are used in parallel alongside the Polkadot blockchain are called parachains. This is intended to increase the speed and scalability of the Polkadot blockchain.
In the case of a financial investment where the instrument is passively managed, the asset manager will not actively act on certain market situations but will leave it to the current market developments, it is therefore called passive.
A performance fee is a fee that is charged once a certain performance has been achieved, e.g. once the value of an ETP is above the high water mark.
The proof-of-history (PoH) mechanism acts as a mechanism of clock and timestamp, which are supposed to ensure the originality of transactions. The PoH makes it possible to add new blocks to the blockchain before they have to be confirmed by the nodes.
Proof of Stake refers to a process by which a blockchain network reaches consensus on which participant may create the next block. A weighted random selection is used, whereby the weights of the individual participants are determined from the participation time and/or the assets (the “stake”).
Proof-of-work is the process that allows the decentralized network to reach consensus or agree on things like confirming and recording Bitcoin transactions without a central authority.
Protocols are basic sets of rules that allow data to be shared between computers. They are a crucial component of blockchain technology because they enable information to be exchanged automatically across cryptocurrency networks securely and reliably. Bitcoin for example is essentially a set of rules. Collectively, these rules make up the Bitcoin Protocol – they are Bitcoin. The same goes for other blockchain-based applications.
The Relay Chain is the core of Polkadot, responsible for the network’s consenus, collective security, and interoperability across chains.
Satoshi Nakamoto is a person or group considered to be the inventor of Bitcoin and released the first version of the reference implementation Bitcoin Core in January 2009, which laid the foundation for cryptocurrencies.
Self-custody refers to the ability to truly possess an asset. In crypto, self-custody is synonymous with owing the private keys to your crypto assets. Self-custody is one of the fundamental principles crypto currencies were built on. Private keys held in self-custody allow for absolute and true ownership of digital assets.
The sharpe ratio is a figure that shows how the return of an ETP (exchange-traded product), for example, develops in relation to the risk taken.
A sidechain is a separate blockchain that runs in parallel to a layer one blockchain like Bitcoin or Ethereum. It operates independently but is connected to the mainchain by a two-way bridge which allows the transfer of assets between the chains. Sidechains are used to enhance a mainchain’s scalability and functionality.
A smart contract is a self-executing contract that is stored on a decentralized public blockchain. The terms of the agreement between buyer and seller are written directly into the code. Once the contract is deployed on a blockchain, the code controls the execution, and transactions are irreversible. Thus, the saying: code is law.
The Sortino Ratio is a statistical instrument that provides a measure of the performance of an investment relative to its downside deviation.
A stablecoin is a digital currency that is tied to a “stable” reserve value such as the U.S. dollar. In the best case, the value of a stablecoin is exactly equal to the value of the FIAT currency such as the U.S. dollar.
Staking allows owners to deposit their cryptocurrencies and be rewarded with new coins. The deposit can take place during a fixed or variable period. With staking, the owners support the network and receive the corresponding rewards in return.
Taproot is the name of a voluntary upgrade to the Bitcoin code for nodes and miners. The upgrade was released in November 2021 and brings enhanced privacy, scalability, and smart contract capabilities to the Bitcoin network.
A token is an asset that is not based on its own blockchain, but can be created on existing blockchains with little effort. There are different types of tokens such as utility tokens, equity tokens, security tokens, asset tokens or payment/currency tokens.
Total return is the value in percentage terms that an investor earns from a financial investment over a given period of time.
Underlying assets are the assets that comprise a financial instrument. The number of assets can differ depending on the product, e.g. it can be one asset or 15 different assets.
The volatility ratio is a technical metric used to identify price trends and breakouts. It helps investors identify the volatility of a financial asset.
The volume corresponds to the number of financial assets, e.g. exchange traded products, which are traded during a certain period.
Web 3.0. is a new generation of the Internet, which is based on blockchain technology. Web 3.0 focuses on security and privacy and includes concepts such as decentralization and token-based economies.
A wrapped token is a token that actually stands for a cryptocurrency from another blockchain or token type standard and has the same associated value as the original crypto asset.
Yield Farming / Liquidity Mining
Yield farming – sometimes also referred to as liquidity mining – describes the providing of liquidity on decentralized exchange platforms (DEX) in exchange for liquidity provider fees, interest, and other rewards. DEXs need liquidity to enable swaps between different currency pairs. Returns are measured in annual percentage yield (APY).
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