TamilBTC
This thread in designed to break down the barriers of entry for every crypto participant, starting at Tier One, which are the most common topics, all the way down to Tier Five, which are some of the most complex topics in crypto.
TIER ONE: Topics that most beginners are familiar with Blockchain — A digitally distributed, decentralized, public ledger that exists across a network. Ledger — An immutable database that stores a series of blocks of transactions after being confirmed by the network
Bitcoin — The first iteration of digital currency created by Satoshi Nakamoto Ethereum — A generalized platform aiming to go beyond just digital currency through the use of smart contracts and dApps
Alt L1’s — Layer 1 protocols taking alternative approaches toward solving the scalability trilemma Memecoins — Cryptocurrency that originates from an internet meme or has some other humorous characteristic. (Doge, Shiba Inu)
TIER TWO: Topics most crypto native’s are familiar with Smart contracts — Programs that run when predetermined conditions are met, used to automate the execution of an agreement dApps — Apps that offer similar functions of normal apps, but run on a peer to peer network
Gas — On $ETH, gas is used to describe a unit of measurement for the amount of computational power needed for executing specific operations on the network Gas Limit — The maximum amount of gas you’re willing to spend on a particular transaction
CEX’s — Exchanges that act as a trusted intermediary for the buying and selling of cryptocurrency (custodial) DEX’s — A type of cryptocurrency exchange which allows for direct peer-to-peer cryptocurrency transactions to take place online (non-custodial)
Consensus Mechanisms — A fault-tolerant mechanism used to reach an agreement on a single state of the network among distributed nodes. These are protocols that make sure all nodes are synchronized with each other & agree on transactions, which are then added to the blockchain
PoW — Proof of work (PoW) is a consensus mechanism that requires members of a network, called miners, to expend effort solving an arbitrary mathematical puzzle to verify transactions and add blocks to the blockchain
PoS — Proof of stake (PoS) is a type of consensus mechanism used by blockchain networks to achieve distributed consensus. It requires users to stake their crypto to become a validator in the network. Validators are responsible for the same thing as miners in Proof of Work
Blocks — Data structures within a blockchain, where transaction data in a cryptocurrency blockchain are permanently recorded Miners — A computer or group of computers responsible for adding new transactions or verifying blocks created by other miners.
TIER THREE: Topics only the most seasoned of crypto investors are familiar with DeFi — Decentralized finance offers financial instruments without relying on intermediaries such as brokerages, exchanges, or banks. Instead, it uses smart contracts on a blockchain.
NFTs — A non-fungible-token is a non-interchangeable unit of data stored on a blockchain that can be sold or traded. Types of NFT data units can be associated with digital files such as photos, videos, and audio.
Metaverse — The Metaverse is a massively complex and interoperable network of real time rendered 3D virtual worlds which can be experienced synchronously and persistently by an unlimited amount of users.
Scalability Trilemma — The blockchain scalability trilemma, coined by Vitalik Buterin, states that trade-offs are inevitable between three components: decentralization, security, and scalability. You can have one or two, but not all three.
Difficulty — Difficulty is one of the most important aspects of Proof of Work mining. It is derived using the network hash rate and determines the speed at which miners are able to validate an encrypted block.
Bitcoin Halving — Every 4 years, $BTC undergoes a “halving” event, which cuts the amount of $BTC coming into supply in half via block rewards to miners, and aims to tighten the issuance of supply until all 21m $BTC is mined.
Layer 2s — Layer 2 refers to a secondary framework or protocol built on top of an existing blockchain system. The main goal of these protocols is to solve the transaction speed and scaling difficulties being faced by the major cryptocurrency networks.
Yield Farming — The crypto equivalent of earning APY on deposits with banks. At its core, yield farming is a process in which liquidity providers lock up their assets in a liquidity pool, & receive incentives in the form of trading fees or emissions of a governance token
AMMs — An AMM (Automated Market Maker) is the underlying protocol that powers DEX’s AMMs allow assets to be traded permissionlessly through the use of liquidity pools, instead of a traditional market of buyers and sellers.
Liquidity Pool — A liquidity pool is a crowdsourced pool of cryptocurrencies or tokens locked in a smart contract that facilitate trades on decentralized exchanges Trading with liquidity pool protocols like Uniswap requires no buyer and seller matching for orders to go through.
Lending/Borrowing — Crypto lending is similar to the concept of traditional lending. Crypto lenders are able to lend out their idle assets to borrowers, who in turn pay out interest on the lender assets
Synthetics — Synthetic assets are essentially tokenized derivatives. In TradFi, derivatives are representations of stocks or bonds that a trader does not own but wants to buy or sell. Synthetics assets allow investors to tokenize and trade anything on the blockchain.
Indexes — A crypto index is a way of gaining exposure to a basket of different crypto assets. Each index is composed of a variety of different crypto assets. These indexes allow investors to gain exposure to a wide variety of tokens without having to buy each one individually.
Oracles — Blockchain oracles are entities that connect blockchains to external systems, thereby enabling smart contracts to execute based upon inputs and outputs from the real world.
Governance — In the absence of a central authority, decentralized networks rely on governance structures for their projects. Blockchain governance typically employs mechanisms to make decisions on project direction, on-going updates, and to make sure everything runs efficiently
Stablecoins — Cryptocurrencies where the price is designed to be pegged to a cryptocurrency, fiat money, or exchange-traded commodities.
Algo Stablecoins — An algorithmic stablecoin is designed to achieve price stability & circulating supply of an asset. In other words, algo stablecoins use an algorithm which can issue more coins when its price increases and buy them off the market when the price decreases.
Flash Loans — A flash loan is a new sort of undercollateralized lending. Flash loans enable users to take out near instant crypto loans without having to provide collateral in return
Arbitrage — Crypto arbitrage is a type of trading strategy where investors capitalize on slight price discrepancies of a digital asset across multiple markets or exchanges. Ex. Buying an asset on one exchange and selling it instantly on an exchange where price is higher
Rebase — A rebasing token is an elastic supply smart contract that works by expanding or contracting a token’s supply due to change in a token’s price.
Creator Tokens — Creator tokens are social tokens that allows creators, influencers, athletes, musicians and more to launch their own cryptocurrencies to monetize and multiply their audience.
PART-2 Soon
