The A-Z of Digital Assets

The digital assets glossary for decision-makers seeking to expand
their knowledge with insights and signals from industry experts


Application-Specific Integrated Circuit (ASIC)

Most devices we use, such as PCs, tablets, and smartphones are built to run multiple applications. We use them for everything from a work Zoom call to playing games (possibly at the same time!).

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To perform these different functions and computations, these devices are fitted with multi-purpose integrated circuits called CPUs (central processing units) which can handle the instructions from different programs. These CPUs are built for a variety of functions, but not for efficiency.

In contrast, an Application Specific Integrated Circuit (ASIC) is designed to perform a single function very fast. ASICs are used across various areas of computing, such as machine learning and IoT devices. Since 2013, they have also been used for bitcoin mining. Bitcoin mining was first done with basic CPUs, then high-end GPUs (Graphic Processing Units), then field-programmable gate arrays (FPGAs), and finally with ASICs.

Why are ASICs suitable for bitcoin mining? 

For a new block of transactions to be written to the blockchain (the public database), computers (bitcoin miners) work on finding a proof-of-work code for this block by performing a complex calculation known as a hash. 

The miner that gets the proof-of-work code is rewarded with bitcoin, which is how new bitcoins enter into circulation. That’s why bitcoin mining is a competitive process: the more hashes you perform, the higher the chances of you getting bitcoin, which incentivizes people to invest in machines and chips that can perform these calculations faster. 

In addition, the difficulty of these calculations is constantly increasing so mining power is added to the network to keep up, which also creates an incentive to invest in faster throughput. 

This is why bitcoin mining is now done by ASICs and why these ASICs get faster all of the time.

For more detail on mining, see M is Mining.

Some facts

The Avalon chip, produced by Canaan Creative, was the first application-specific integrated circuit (ASIC) designed for bitcoin mining and it entered the market in 2013.

Like all chips, the R&D expenditure is extremely high which means the chips must be produced at high scale for the chip maker to be profitable. This results in a highly concentrated industry. 

Today, the three largest producers of ASICs for bitcoin mining, Microbt, Cannan, and Bitmain – all Chinese – collectively have over 90% market share.

Most bitcoin miners are formed into pools to spread the risk/reward: to split the cost of the equipment and to increase the chances of getting bitcoin. While some of the pools are located in places like Iceland, where electricity is cheap, the majority of these pools are in China.

What to know more?

For a deeper dive into how hardware for cryptocurrency mining has evolved, as well as the economic impact and much more, we recommend this excellent report from ARK Invest. 

The Metaco view

“Bitcoin mining is a competitive process that incentivizes the industry to invest in producing ever more efficient ASICs. Inevitably, this weaponization of the mining industry leads to concentration in large specialized firms and pools, which some people argue increases the risk of 51% or other attacks. 

However, we see this as just another sign of the professionalization of the crypto ecosystem. The more specialized firms invest in ASICs and other technology, the more skin in the game they have and the less likely are to want to disrupt it.”

Digital Assets Glossary ASIC

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Bitcoin is the first cryptocurrency to ever hit the market. It’s also the best-known, most widely traded cryptocurrency, and the one with the highest market cap.

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Bitcoin first came to prominence in October 2008, when Satoshi Nakamoto published a white paper in which he explained how the trust underpinning our financial system could be replaced with mathematical proof. Shortly thereafter, in January 2009, the first Bitcoins entered circulation.

Unlike fiat currencies, Bitcoin isn’t issued by a central authority. It’s mined. Mining is a process in which computers solve complex mathematical problems in exchange for Bitcoin. This is called proof of work. 

In theory, anyone can mine Bitcoin. But the process is expensive and resource-heavy. It’s estimated that mining consumes more electricity in one year than the entire Republic of Ireland, and five times more than is produced by the largest wind farm in Europe. 

Proof of work is also difficult to produce (though easy to verify). So, someone’s mining efforts may result in very few Bitcoins or none at all. This is intentional. The aim is to prevent a single individual or group from being in a position where they can exercise undue influence on the system or corner the market.

Bitcoin transactions are made using public and private keys. 

The public key is an address made up of random letters and numbers which you share with the person you want to transact with. 

The private key is like a password which authorizes the transaction. 

Transactions are recorded on the blockchain, which acts as a shared public ledger. Every transaction, or block in the chain, is time-stamped and has to be verified by the entire network. 

Crucially, once a transaction is recorded, it can’t be modified. Any modifications would invalidate all subsequent blocks. 

AtoZ-Digital Assets Glossary Bitcoin-04

Some facts

  • One of the first purchases ever paid for in Bitcoin were two take-away pizzas. Developer Laszlo Hanyecz paid 10,000 Bitcoins for them. Today, those Bitcoins would be worth $100 million
  • Bitcoin may be the first cryptocurrency, but it’s not the first attempt at creating one. The credit for that belongs to David Chaum, whose staunch views on privacy led him to invent ‘blinded cash’ — a system that anonymised transactions using cryptographic protocols. 

Chaum’s company DigiCash made waves when it was founded in 1989. Sadly, the internet was still in its infancy, so DigiCash didn’t catch on. The company declared bankruptcy in 1998.  

  • It’s been more than a decade since the Bitcoin white paper was published, but Satoshi Nakamoto’s true identity remains a mystery.

Some of the people touted as being Bitcoin’s elusive inventor include: 

  • Physicist Dorian Nakamoto
  • Scientist Craig Wright
  • Computer engineer Nick Szabo 

Interestingly, Szabo worked for DigiCash. 

Want to know more?

Nakamoto’s white paper — Bitcoin: a peer-to-peer electronic cash system — explains in great detail the philosophy and mathematical formulas that underpin Bitcoin and the blockchain.

If you’re looking for a less technical introduction, this course on Khan Academy is endorsed by, Bitcoin’s official site and the place where Nakamoto’s white paper was originally published.  

The Metaco view

Bitcoin and the blockchain are the most transformative innovations of our time, because they can unlock financial sovereignty for everyone. 

As someone who’s personally struggled to find financial backing for entrepreneurial projects, I feel very strongly about its potential. That’s why, at Metaco, we work hard to further the vision of a financial system in which there are no gatekeepers.”

Nicolas Dorier, Founder and VP of Digital Currencies. 

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Central Bank Digital Currency (CBDC)

Central Bank Digital Currencies — CBDCs for short — are digital fiat currencies, or digital cash.


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CBDCs are inspired by cryptocurrencies, in that they allow users to transact anonymously. This is because they use a system of encrypted signatures — known as ‘blind signatures’ — to keep the payer and payee’s identities hidden. 

That said, CBDCs differ from cryptocurrencies in two key ways. 

Firstly, where cryptocurrencies are decentralized, a CBDC is, by definition, centralized. It’s established by law, backed by the state, and has official status as legal tender in the country or countries where it’s issued. 

Secondly, while some proposed CBDCs are blockchain-based, distributed ledger technology isn’t necessary for them to work. 

The blockchain’s purpose is to provide a replacement for trust. Put simply, complex mathematical calculations fulfil the role that would usually belong to counterparties and other actors that ensure the integrity of a fiat currency transaction. 

That’s important in decentralized systems. But in the case of a CBDC, the central authority that controls and manages it provides that trust.

The concept of CBDCs has started gaining momentum because we’re living in increasingly cashless societies. This has made it harder for the unbanked, those who are predominantly paid in cash, and other vulnerable sectors of the population to participate in economic life. 

Going cashless has also had other unintended negative consequences. In particular:

  • Digital payments have concentrated power in private actors’ hands
  • Credit risk and liquidity risk are increasing, because ever more transactions involve private deposits settled through other banks, rather than through the central bank
  • Some central banks have seen drops in seigniorage revenue — the profit they make from the difference between cash’s face value and the cost of manufacturing and recycling it

It’s thought that CBDCs will address these problems and ensure everyone continues to have access to cash, even if physical notes and coins are eventually phased out. 

Some facts

  • Ecuador was the first country to roll out a CBDC. Sistema de Dinero Electrónico was launched in 2014 to support dollarisation (the country replaced the failing Sucre with the US Dollar in 2000). Ironically for a CBDC trailblazer, Bitcoin and other cryptocurrencies are illegal in Ecuador. This doesn’t seem to be deterring Ecuadorians — Bitcoin’s popularity keeps growing
  • Ben Broadbent is credited with coining the term ‘Central Bank Digital Currency’ while serving as the Bank of England’s deputy governor. He used the term in a March 2016 speech at the London School of Economics in which he also acknowledged that Bitcoin inspired the idea.


Want to know more?

This 2019 paper from the Institute and Faculty of Actuaries explains the origin, rationale, and issues surrounding CBDCs in detail, but it’s highly readable and easy to follow. 

Of particular interest is page 20, a table summarizing different countries’ attitudes to cryptocurrencies. A number of countries classified as having a ‘generally negative view’ of cryptocurrencies and crypto assets — most notably Australia, Japan, and the UK — are now regulating them.

See also this great article in Forbes about how our partner Giesecke & Devrient is moving from printing physical banknotes to providing the infrastructure for CBDCs.


The Metaco view

As the enthusiasm for going cashless increases, it’s crucial that we take steps to keep our financial system resilient… and make sure nobody is left behind. We believe CBDCs represent a natural progression in the evolution of money, one that allows for easier and cheaper transmission of payments and monetary policy, which benefits everyone.” – Adrien Treccani, CEO METACO


How CBDC differs from fiat currencies

Digital Assets Glossary CBDCs Central Bank Digial Currency

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Decentralization is a fundamental feature of crypto assets. Cryptocurrencies, tokenized assets, and the networks they run on — blockchains — are decentralized by design.

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There’s no single body with ultimate decision-making authority to act as gatekeeper. Instead, the system runs by distributed consensus. Put simply, a transaction is approved when a mathematical calculation is completed successfully and it’s accuracy is verified by the entire network. 

The rationale for decentralization is that it makes the financial system more resilient, efficient, and democratic. By contrast, systems that rely on a central authority have a single point of failure. Should things go wrong at that point, the negative effects would inevitably spread to the whole system. 

Over the years, the concept of decentralization has been extended beyond cryptocurrencies and crypto assets to other blockchain-based applications. 

Here are four key terms worth getting familiar with:

  • Dapps, or decentralised applications 

Unlike traditional apps, which typically run on a few dedicated servers, Dapps run on the excess power of thousands of servers. They’re also fully autonomous. Their operation is governed by mathematical calculations, so they don’t need to be overseen by humans

  • DeFi, or decentralized finance

This is a catch-all term for blockchain-based apps that cut intermediaries out of financial transactions, whether direct — that is, purchases of goods or services — or contract-based transactions like loans, mortgages, and insurance

  • DEX, or decentralized exchange

DEXs are a type of DeFi. They’re exchanges that exist on the blockchain and aim to make trading more transparent. 

When you trade on a DEX, orders are completed using smart contracts — digital agreements written in code that are enforced automatically when predetermined rules are met. Crucially, unlike traditional exchanges, you don’t give up custody of your funds until a trade is complete

  • DAO, or decentralized autonomous organization

This is an organization that uses the blockchain as a replacement for human management. For example, a shop could store its inventory on the blockchain and smart contracts could manage stock based on historical demand, including triggering purchase orders, specifying delivery dates, and settling supplier invoices.

Some facts

  • Bitcoin is often regarded as the first fully-functional DAO. But it was the Ethereum blockchain that brought wider attention to DAOs by perfecting the environment in which smart contracts could be developed, tested, and deployed
  • While the Ethereum blockchain was crucial in popularising smart contracts, the concept dates back to the mid-90s. Computer scientist Nick Szabo first described smart contracts in 1996 and spent several years developing the idea, publishing a number of papers in the process
  • Interestingly, Szabo has been mooted as the true identity of Bitcoin’s inventor Satoshi Nakamoto. Szabo has categorically denied this.


Want to know more?

This article on CoinTelegraph is an excellent primer on DAOs and Dapps.

You can also learn more about decentralised exchanges on Binance Academy. What’s particularly noteworthy about this article is that it acknowledges that, despite their many advantages, decentralised exchanges aren’t always the cheapest or most practical option.

The Metaco view

Decentralization creates complete transparency, and that means a fairer, more inclusive financial system for all. 

But the concept has the potential to be revolutionary well beyond finance. 

DAOs, for example, can negate the need for any admin, freeing up businesses so they can focus on more important tasks… including having more time to spend with their loved ones.” – Seamus Donoghue, VP of Sales & Business Development at METACO

Digital Assets Glossary Decentralized


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Ethereum is often compared to Bitcoin and thought of as an alternative to it. But while Ethereum uses blockchain technology and has its own cryptocurrency — Ether — that’s where the similarities with Bitcoin end.


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Bitcoin’s ultimate aim is to provide a medium of exchange that’s better than traditional money. By contrast, Ether is only one small part of the Ethereum project. First and foremost, Ethereum is a multipurpose, public, and open source software platform: a decentralised internet, if you will.

Ethereum’s blockchain is a transaction-based state machine. Put simply, this means that when a transaction — or block — is verified, Ethereum’s blockchain transitions from one state to another. Verification happens through mining, a process in which computers either solve complex mathematical problems or confirm that those problems have been solved correctly.

Ethereum’s biggest upside is that it can store not just information about financial transactions, but also computer code. This means that the Ethereum blockchain has practical applications that go well beyond currency or financial services.

AtoZ-Digital Assets Glossary Ethereum-05

Developers can use the Ethereum blockchain to build and deploy Dapps — decentralised, autonomous apps — with a wide range of possible applications. They can also create decentralised autonomous organisations (DAOs) for any industry imaginable.

Dapps and DAOs built on the Ethereum blockchain are powered by smart contracts. These are agreements written using computer code that is designed to enforce what’s been agreed automatically when a set of predetermined criteria are met. As a result, Dapps and DAOs can operate continuously and autonomously, without the need for human monitoring or intervention.


Some facts


  • Ethereum’s inventor, Vitalik Buterin, first put forward his ideas in a 2013 white paper he sent to a few close friends for feedback. The white paper was so well-received that his friends forwarded it to several other people until, eventually, around 30 interested parties got in touch to discuss how they could make the project happen. Buterin was just 19 years old at the time.
  • Ether is a cryptocurrency, but it’s also the ‘fuel’ of the Ethereum blockchain. You need to pay a fee in Ether to change an app, execute a smart contract, or do some other action on the Ethereum blockchain. The fee is worked out based on how long the action will take and how much computing power is needed to perform it.
  • Ethereum has four times more developers than any other blockchain. The Ethereum Alliance, or EEA, is an association of developers and block startups and includes the likes of Deloitte, Intel, JP Morgan, Microsoft, and Samsung SDS.


Want to know more?

The Ethereum white paper — A Next Generation Smart Contract & Decentralised Application Platform — is a fascinating insight into Buterin’s thought process. Buterin’s initial intention was to improve on Bitcoin by introducing features such as blockchain-based escrow and withdrawal limits. But he quickly realised that blockchain technology could be applied to any type of transaction imaginable.

If you’d prefer a lighter read, this article on CoinTelegraph is a good overview of what Ethereum is, how it works, and its pros and cons.

And if you want to go deeper and find out more about Ethereum 2.0, also known as Eth2 or “Serenity”, which is the planned upgrade to the Ethereum network that aims to make the blockchain more scalable, secure, and sustainable, read our dedicated article.


The Metaco view

“Ethereum has been pivotal in opening up mainstream consciousness to the blockchain’s potential. With Ethereum, the conversation is no longer about theoretical potential. There’s an infinite number of real world use cases that can materially improve our everyday lives and revolutionise industries that are ripe for change.”

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A fork is a split in a blockchain network. It can be accidental or intentional. An accidental fork happens when two or more miners find a block at the same time.
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When subsequent blocks are added, one chain becomes longer than the other. The system will ignore blocks on the shorter chain, and this resolves the fork. The abandoned blocks are known as ‘orphaned blocks’.

Intentional forks happen when someone purposefully modifies the blockchain’s rules. Blockchain software is open source. So anyone can access it and make changes.

Intentional forks can be soft or hard.

Soft forks happen when some network nodes are upgraded while others aren’t, but the upgrade is compatible with the old rules. In this case, the upgraded and non-upgraded nodes can still communicate with each other.

By contrast, in a hard fork, the upgrade isn’t compatible with the old rules, so upgraded and non-upgraded nodes can no longer communicate. As a result, the blockchain splits into two separate networks: one that follows the old rules and one that follows the new rules.

When a blockchain splits, the two chains will share the same history up to the time of the split. But, from the moment the split happens, each blockchain will take on a life of its own, creating its own history.

Needless to say, hard forks have wide-ranging — indeed, divisive — implications, whereas soft forks tend to have mainly cosmetic effects. That said, the only way to reverse the effects of a soft fork is a hard fork.

METACO Digital Assets Glossary A-to-Z Fork


Some facts

  • Most forks are short-lived. Typically, they’re used to add new features or fix bugs. P2SH (pay-to-script-hash), for example, was added to Bitcoin in 2012 to enable users to send Bitcoins without having to worry about how the recipient would gain access to them
  • Bitcoin XT is one of the first known hard forks. Its aim was to increase the number of allowable transactions from seven per second to 24 per second. Sadly, interest waned quickly. And while Bitcoin XT is technically still available, it’s fallen into disuse
  • Bitcoin Cash, a 2017 hard fork also on the Bitcoin network, was far more successful. It currently has a market cap of $4.6 billion. This fork was a result of disagreements in the Bitcoin community on the best way to scale.


Want to know more?

This article and accompanying video on Binance Academy walks you through the different types of forks and the rationale behind them. It also offers a fascinating insight into the politics of cryptocurrency decision-making.

If you want a better grasp of how common disagreements are in the crypto community, this post lists every hard fork there’s been on every cryptocurrency network.


The METACO view

As much as disagreements are healthy and change can be for the better, forks, whether hard or soft, can have significant implications on crypto asset holdings. It’s critical to have strong frameworks and governance in place, as this will help ensure any divergence is handled smoothly.

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In crypto, gas can mean one of two things:

  • Gas coin, a cryptocurrency;
  • A unit that measures how much computer power is required to perform an action on the Ethereum network.
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Gas coins are tokens generated on NEO, a decentralised app platform based in China and originally called Antshares. NEO’s aim is to create a smart economy by using blockchain technology and smart contracts to issue and manage digital assets.

Gas coins are one of two types of tokens created on NEO, the other one being NEO tokens. Gas coins are utility tokens, not assets. This means that, rather than having value as a medium of exchange, they grant the holder access to specific services.

Users need Gas coins to execute smart contracts and pay for the cost of transaction fees on the NEO network.

Gas (Ethereum)

On the Ethereum network, gas is a unit of measurement. It’s the fee required to execute a smart contract or perform a transaction.

Gas compensates miners — the network users that carry out the complex mathematical calculations necessary for processing and verifying transactions on the Ethereum network — for the computing power required to perform the action. It’s worked out as a fraction of Ethereum’s cryptocurrency Ether and typically referred to as gwei.

The minimum amount of gas, or gwei, required in a given situation is determined by the miners themselves. A transaction may fail or be declined if the amount of gas the user offers doesn’t meet the threshold the miners set.

AtoZ-Digital Assets Glossary Gas-07


Some facts

  • It’s no coincidence that Gas coins share the same name and purpose as gas on the Ethereum network. NEO is a direct competitor of Ethereum, to the point where it’s been dubbed the “Chinese Ethereum”
  • According to the Ethereum yellow paper — a more technical version of the white paper Ethereum’s inventor Vitaliki Buterin wrote in 2013 — every transaction on the Ethereum network requires at least 21,000 gwei. This is equal to 0.000021 Ether
  • The rising popularity of decentralized finance apps — apps aimed at cutting out intermediaries from financial transactions — is increasing network congestion. In turn, this is increasing gas fees, because more congestion means more computing power is needed to perform an action. On 1 September 2020, Ethereum miners earned a whopping $500K in gas fees in one hour.


Want to know more?

If you want to learn how gas works on Ethereum, this article stands out for its thoroughness. It starts with what prompted the idea for Ethereum in the first place and goes on to explain smart contracts, the Ethereum Virtual Machine — which developers use as a sandbox for building and testing decentralized apps — and how gas fits into the picture.

Want to learn about Gas coin? This article is an excellent introduction to it and to the NEO network.

The METACO view

Rising gas prices are exposing some scalability issues for Ethereum, which could have negative implications on the network’s usability and the viability of many of its most exciting use cases. On the upside, rising gas prices create the incentive for miners to invest in more and better technology to improve scalability as well as opening the door for competitors to swoop in and steal market share.

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