Crypto Frontline

ICO Glossary

Accredited investor – The definition was set by the Securities and Exchange Commission and the term means anyone with an income above $200,000 in the last two consecutive years, or has a net worth above $1,000,000, alone or together with a spouse. Simply put, an accredited investor is some with a reasonably high net-worth.

Airdrop – a process that aims to facilitate a wider distribution and usage of tokens. The process happens in the early stages of the project and the creators are literally sending tokens randomly to wallets on a public blockchain that are meeting certain criteria. Airdrop is intended to stimulate the use of the newly created token.

51% Attack – refers to a situation when an entity, a person or a small group control more than half of a proof of work network’s hashing power, giving them a huge advantage over the other people involved in that particular project.

HODL –is an abbreviation for Hold On for Dear Life, which refers to a buy-and-hold strategy, regardless of the market volatility

ERC-20 – a standard or set of rules for tokens that are based on Ethereum platform. Most of the newly-created ICOs comply with this set of rules.

FUD – Fear, Uncertainty, and Doubt used to describe the situation in a particular market at a certain period of time.

FOMO – Fear Of Missing Out. A psychological crowd reaction which is characterized by people entering the market after they see prices move fast in a certain direction. The main reason for that is the fear of losing the profit potential. That is why it is called this way.

Altcoins – the terms refers to digital coins, other than Bitcoin and Ether.

AML – Anti-money laundering is a regulatory framework which requires financial-related institutions to adopt compliance obligations in order to detect, prevent and report any suspicious money laundering activity.

BIP/EIP – Bitcoin Improvement Proposal/Ethereum Improvement Proposal; it means the protocol changes proposed by the community.

CODE – Centrally Organized Distributed Entity; a legal construct established in Switzerland which takes care of structuring companies that will engage in token sales.

Coin mixing – a process consisting of randomly sending coins to newly created addresses, which is done through third-party services. The main goal of the process is anonymity and avoiding forensic detection.

Convertible Virtual Currency – the definition set by the IRS refers to a digital or virtual currency that has an equivalent value in real currency, or acts as a substitute for existing real currency.

Crowdsale – a process that implies raising money in a public token sale. It is also called Initial Coin Offering, token sale (with the mention that token sales might be private, which means only private investors will have access to it, not the “crowd”) or token offering.

DAO – Decentralized Autonomous Organization, known for being hacked and losing $50 million worth of cryptocurrency. This lead to the Ethereum hard fork. DAO can also refer generically to decentralized autonomous organizations which are based on smart contracts.

DApp – the term refers to a decentralized application built using smart contracts.

DDoS – abbreviation for Distributed Denial of Service Attack. This happens when a system is flooded with traffic from a huge number of sources.

DLT – abbreviation for Distributed Ledger Technology, traditionally known as blockchain.

EEA – abbreviation for Enterprise Ethereum Alliance. It represents a group of companies which aim to explore the Ethereum platform possibilities for enterprise applications.

Fork – A process that consists of cryptocurrency blockchain splitting into two distinct branches. This kind of events usually happens before the network reaches consensus on which branches to use. If the network decides not to reach consensus and to use both blockchains, there will be two different cryptocurrencies, one for each of them.

Howey Test – is a test that is being used in order to determine if a particular instrument can be qualified as a security, according to the US Securities Act of 1993.

HyperLedger Project – a project initiated by the Linux Foundation which aims to use blockchain technology for enterprises. It does not have its own cryptocurrency.

PPM – abbreviation for Private Placement Memorandum. It is provided by a token issuer to accredited investors.

SAFT – abbreviation for Simple Agreement for Future Tokens. A mechanism used for selling new tokens to accredited investors. It is considered to be a security. Also called SAFTE (Simple Agreement for Future Tokens or Equity).