Navigating the world of cryptocurrency and blockchain technology can be daunting with its unique terminology. This glossary provides clear definitions for essential terms you'll encounter, especially within The Open Network (TON) ecosystem and the broader crypto space.
Core Blockchain Concepts
Blockchain
A blockchain is a distributed digital ledger that records transactions across a network of computers. Each block contains a list of transactions, and once verified, it is cryptographically linked to the previous block, forming a secure, unchangeable chain.
Decentralization
Decentralization is a core principle of blockchain technology, distributing power and control away from a central authority. TON and other networks achieve this through a global network of nodes, ensuring no single entity controls the system, which is fundamental to the vision of Web3.
Smart Contract
A smart contract is a self-executing program stored on a blockchain. It automatically executes the terms of an agreement when predefined conditions are met, removing the need for intermediaries and enabling trustless automation for everything from financial services to digital ownership.
Token
A token is a digital asset built on top of an existing blockchain. Tokens can represent various things, including a unit of value (currency), a share in a project, or access to a specific service or application within a ecosystem.
Key TON Ecosystem Terms
TON
TON, or The Open Network, is a fast, scalable, and user-friendly blockchain platform designed to onboard millions into the Web3 space. It aims to integrate blockchain technology into everyday life.
Toncoin (TON)
Toncoin is the native cryptocurrency of the TON blockchain. It is used for network operations like paying transaction fees, securing the network through staking, and facilitating payments within TON-based decentralized applications (dApps).
TVM
The TON Virtual Machine (TVM) is the computational engine that powers the TON blockchain. It executes smart contracts and computes the state of the network after each new block is added, similar to how a computer's CPU operates.
FunC
FunC is the programming language used for writing and deploying smart contracts on the TON blockchain. Developers use it to create the logic that governs dApps and services on the network.
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Financial and Trading Terminology
DeFi
DeFi, or Decentralized Finance, refers to a ecosystem of financial applications built on blockchain networks. These applications aim to recreate traditional financial systems (like lending and borrowing) in a decentralized, permissionless manner using smart contracts.
Staking
Staking involves locking up cryptocurrencies to support the operations of a proof-of-stake blockchain network. In return for helping to secure the network and validate transactions, participants earn rewards, generating a form of passive income.
APY
APY, or Annual Percentage Yield, is the real rate of return earned on an investment over a year. It accounts for compound interest, which is the interest you earn on both your initial deposit and any accumulated interest from previous periods.
Market Cap (Capitalization)
Market cap is a measure of a cryptocurrency's total market value. It is calculated by multiplying the current price of a single coin by the total number of coins in circulation. It helps investors gauge the relative size and dominance of a crypto asset.
Types of Wallets and Exchanges
Custodial Wallet
A custodial wallet is a cryptocurrency wallet where a third-party service holds the private keys to your funds on your behalf. This offers user convenience but means you do not have full control over your assets.
Non-Custodial Wallet
A non-custodial wallet gives the user sole control and responsibility for their private keys and funds. This aligns with the core ethos of decentralization, as you truly "own" your assets without relying on an intermediary.
DEX
A Decentralized Exchange (DEX) is a peer-to-peer marketplace where users can trade cryptocurrencies directly with one another without a central authority. Trades are facilitated automatically by smart contracts on a blockchain.
CEX
A Centralized Exchange (CEX) is a platform operated by a company that facilitates the buying and selling of cryptocurrencies. Users trade with the exchange itself, which acts as an intermediary and custodian of funds, often requiring identity verification (KYC).
Frequently Asked Questions
What is the main goal of The Open Network (TON)?
TON aims to create a scalable and user-friendly blockchain ecosystem that can integrate seamlessly with the Telegram messenger app and beyond. Its goal is to bring blockchain technology to a mass audience by offering fast transactions, low fees, and a simple user experience.
How is Toncoin different from Bitcoin?
While both are cryptocurrencies, they serve different purposes and use different technologies. Bitcoin is primarily a decentralized digital currency and store of value using a proof-of-work consensus. Toncoin is the native asset of the TON blockchain, which uses proof-of-stake, and is designed for paying network fees, staking, and powering dApps.
What does 'non-custodial' mean and why is it important?
Non-custodial means you alone hold the private keys to your cryptocurrency wallet, giving you complete control and ownership of your assets. This is important because it eliminates the risk of a third party freezing, losing, or mismanaging your funds, embodying the principle of "not your keys, not your crypto."
What is yield farming in DeFi?
Yield farming is a strategy where users lend or stake their crypto assets in a DeFi protocol's liquidity pool to earn rewards, typically in the form of additional tokens or a share of transaction fees. It allows asset holders to generate passive income on their holdings.
How does staking contribute to network security?
In a proof-of-stake network like TON, staking involves validators locking up a significant amount of coins. This financial commitment incentivizes them to act honestly and validate transactions correctly. If they approve fraudulent transactions, they risk losing their staked coins, which secures the network.
What are NFTs used for on TON?
On TON, NFTs (Non-Fungible Tokens) represent unique digital ownership of items like collectible art, in-game assets, membership passes, or identity credentials. Their integration with Telegram allows for easy display and transfer, enabling new use cases for creators and communities.