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<ol class="chapter"><li class="chapter-item affix "><a href="about.html">👽Constellation Book🛸</a></li><li class="chapter-item affix "><li class="part-title">Journey of the Dream Weaver🔍</li><li class="chapter-item "><a href="0.JourneytoWeb3/JourneyoftheDreamWeaver.html">Journey of the Dream Weaver</a><a class="toggle"><div>❱</div></a></li><li><ol class="section"><li class="chapter-item "><a href="0.JourneytoWeb3/NavigatingtheFrontiersofTomorrow.html">Future Has Come</a></li><li class="chapter-item "><a href="0.JourneytoWeb3/ThingsaboutCryptoPunks.html">Things About Crypto Punks</a></li><li class="chapter-item "><a href="0.JourneytoWeb3/WhatistheBlockchain.html">What is Blockchain?</a></li><li class="chapter-item "><a href="0.JourneytoWeb3/WhatisEthereum.html">What is Ethereum?</a></li><li class="chapter-item "><a href="0.JourneytoWeb3/Whathappenedtomyprivacyontheinternet.html">What Happened to My Privacy on the Internet?</a></li><li class="chapter-item "><a 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<h2 id="web3"><a class="header" href="#web3">Web3</a></h2>
<p>Web3 is the next generation version of the internet that aims to bring more decentralization, security and transparency to our online world. Imagine that the current internet (what we call Web2) is mainly controlled by a few big companies, while Web3 tries to distribute power and control to users. This means that in the Web3 world, users have more control over their own data and identities, rather than handing them entirely over to companies like Google, Facebook, etc.</p>
<p>The core technology behind Web3 is blockchain, which is a decentralized, secure distributed database. You can think of blockchain as a public ledger that can record transactions and activities for everyone, and once recorded, cannot be tampered with. Blockchain-based applications such as smart contracts, decentralized finance (DeFi), and decentralized apps (Dapps) are all important components of Web3.</p>
<p>Let's use an example to illustrate how Web3 is changing the existing internet. In Web2, if an artist wants to sell their work online, they usually have to rely on some centralized platforms (like eBay, Amazon, etc). These platforms often charge high fees and control the transaction process for users. But in the Web3 world, artists can sell their work on decentralized marketplaces (like OpenSea). Here, artists can turn their work into non-fungible tokens (NFTs) and sell directly to buyers without third party intervention. This way, artists can earn more profits and have more control over the transactions.</p>
<p>Web3 also provides better protection for online privacy. On today's internet, users' data and privacy are often easily compromised. With Web3, users can ensure their data security through encryption and self-sovereign identity. This makes the entire network more secure and reliable.</p>
<p>Web3 represents a new era of the internet built on blockchain technology that redistributes power and control back to users, increasing security and transparency. Through decentralized apps and services, Web3 has the potential to transform how we interact with the internet, creating a more fair and open online world.</p>
<h2 id="smart-contract"><a class="header" href="#smart-contract">Smart contract</a></h2>
<p>A smart contract is like a self-executing digital contract that defines a set of pre-programmed rules. Once these rules are met, the smart contract automatically executes the corresponding actions. It is based on blockchain technology, meaning it is decentralized, secure, and cannot be modified once deployed. Simply put, a smart contract is a piece of self-executing computer code that ensures transactions, agreements, etc. can be carried out between parties without the need for a third party. </p>
<p>It's like a vending machine - you put in $5, it spits out a $5 drink for you.</p>
<p>Imagine you and a friend bet on which football team would win a match. In real life, you may need a trusted third party to hold the stakes. But with a smart contract, you can create a program to replace this third party. This program would receive your stakes, and automatically pay out the winner based on the match result after the game ends. This way, no real person needs to be involved, and you don't need to worry about the other party not keeping their word.</p>
<p>Smart contracts have a wide range of applications in areas like finance, real estate, insurance, etc. For example, imagine an insurance company. If you purchase flight delay insurance, normally you would need to submit paperwork and wait for the insurance company's approval when your flight is delayed. But with a smart contract-based insurance system, as soon as your flight info is confirmed as delayed, the smart contract would automatically execute and instantly pay you the compensation. This makes the whole process much simpler, more efficient and transparent.</p>
<p>Smart contracts are self-executing, blockchain-based digital contracts. They can streamline processes, improve efficiency and ensure transaction security in many different scenarios.</p>
<h2 id="dapp"><a class="header" href="#dapp">DApp</a></h2>
<p>A DApp (Decentralized Application) is an application that runs on a blockchain network and is not controlled by any centralized entity. This means that no single company or individual can fully control it. The design of DApps makes them more secure, transparent and reliable because their data and operations are based on blockchain technology, which is a decentralized, tamper-proof distributed database.</p>
<p>Imagine you are using a centralized social media platform (such as Facebook or Twitter). These platforms control your data and privacy, and they can arbitrarily change rules, censor content or even sell your information. DApps, on the other hand, provide you with a decentralized social media platform that is not controlled by any centralized entity, allowing you to manage your own data and privacy.</p>
<p>A great example of a DApp is a cryptocurrency exchange. In traditional centralized exchanges (such as Coinbase or Binance), users' funds and transaction information are stored on the exchange's servers. However, decentralized exchanges (DEXs, such as Uniswap) are DApps based on blockchain technology that allow users to directly trade digital currencies without involving a third party. In this way, users can enjoy higher privacy and autonomy while keeping their funds secure.</p>
<p>In addition to exchanges, DApps have many other use cases such as decentralized finance (DeFi) platforms, games, markets, etc. These decentralized applications provide users with a freer, more secure and transparent Internet environment.</p>
<p>DApps are decentralized applications based on blockchain technology that are free from the control of centralized entities. By using DApps, users can better protect their data and privacy while enjoying higher security and transparency. DApps are a key part of the Web3 era, and together they help build a fairer, more secure Internet future.</p>
<h2 id="all-in--show-hand"><a class="header" href="#all-in--show-hand">All in / Show hand</a></h2>
<p>Going all in on something or betting everything you have. In poker, "all in" or "show hand" refers to a player betting all of their chips. It's a high-risk, high-reward strategy because a player can either win all of their opponents' chips at once or lose all of their chips.</p>
<p>Imagine you're participating in a game of Texas Hold'em. Players sit around a table with chips in their hands. In each round of the game, you need to determine your chances of winning based on the cards in your hand and the public cards on the table. If you think your hand is very good and you have a high chance of winning, you may choose to go "all in" and bet all your chips. This way, you may win the pot for that round or scare other players into not following suit.</p>
<p>However, going "all in" also carries a lot of risk. If your opponent has a better hand, you could lose all your chips and be eliminated. Therefore, going "all in" is a strategy that requires careful consideration by the player. Before deciding to go "all in", you need to weigh factors such as the odds of winning, the size of the pot, the behaviour patterns of your opponents, etc.</p>
<p>In addition, the concept of "all in" is often used in real life to describe an attitude of taking risks and putting all your effort into something. When a person puts all their savings and energy into their own business venture at a crucial moment to pursue success or achieve their dreams, we can also say that they have gone "all in". For example, an entrepreneur who decides to invest all of their savings and efforts into their own business project demonstrates an "all in" spirit.</p>
<p>"All in" or "show hand" is a term originating from poker that refers to a player betting all their chips. It is both a high-risk, high-reward strategy and an attitude of daring to take risks and forge ahead. In real life, the "all in" spirit encourages us to courageously pursue our goals at critical moments, overcome difficulties and give it our all.</p>
<h2 id="ecdsa"><a class="header" href="#ecdsa">ECDSA</a></h2>
<p>ECDSA (Elliptic Curve Digital Signature Algorithm) is an encryption technology used to ensure data security and integrity. Its principle is to generate a pair of keys: a public key and a private key, through elliptic curve cryptography. The public key is open and can be shared with others, while the private key is kept secret and known only to the key owner. This encryption method can help us securely send information over the network and verify the source of data.</p>
<p>Imagine you are sending a letter to a friend. To ensure the security of the letter, you need to put it in a locked box. In this example, ECDSA is like a special lock: lock the box with your private key, and this lock can only be opened with your public key. This way, when your friend receives the letter, they can use your public key to open the box, verify that the letter was sent from you and has not been tampered with.</p>
<p>ECDSA has a wide range of applications in cryptocurrencies and blockchain technology. Cryptocurrencies such as Bitcoin and Ethereum use ECDSA as their encryption and digital signature standard. In these systems, a user's private key is used to sign transactions, while the public key is used to verify transactions. This ensures the security and integrity of transactions and prevents others from forging or tampering with transactions.</p>
<p>An important feature of ECDSA is that it provides a high level of security while requiring relatively low computing resources and storage space. This makes it very useful in cryptocurrencies and other security-sensitive applications. However, ECDSA also has some limitations, such as its inability to resist quantum computing attacks. Therefore, as technology progresses, new encryption methods may be needed in the future to protect our data security.</p>
<p>ECDSA is an encryption technology based on elliptic curve cryptography to ensure data security and integrity. It plays an important role in network communication and cryptocurrencies, helping us protect information and verify the source of data. Although it has certain limitations, ECDSA remains a key encryption technology for many current applications.</p>
<h2 id="bls"><a class="header" href="#bls">BLS</a></h2>
<p>BLS (Boneh-Lynn-Shacham) signature is an encryption technology whose main advantage is the ability to achieve highly efficient aggregate signatures. This means that multiple signatures can be aggregated into a single signature, greatly reducing storage and transmission overhead. BLS signatures have been widely used in blockchain, distributed systems and cryptography research.</p>
<p>Suppose a group of people work together to complete a project, and each person needs to sign the project report. In traditional signature methods, each person needs to sign the report separately, which takes up a lot of space. However, using BLS signatures, this group of people can aggregate their signatures into a compact signature, greatly reducing the volume of the report. This way, the verifier only needs to check this aggregate signature to ensure that all participants have signed.</p>
<p>BLS signatures have important applications in the blockchain field, especially in some decentralized consensus algorithms, such as Ethereum 2.0's consensus protocol. In these systems, nodes need to sign transactions or blocks to express their consensus. By using BLS signatures, the signatures of multiple nodes can be aggregated into one signature, thereby reducing network transmission and storage overhead. This helps to improve the scalability and performance of the blockchain.</p>
<p>BLS signature is an efficient encryption technology that can aggregate multiple signatures into a compact signature. This method saves storage space and transmission bandwidth and improves system performance. In the fields of blockchain and distributed systems, BLS signatures play an important role in enabling more efficient and scalable consensus mechanisms.</p>
<h2 id="merkle-tree"><a class="header" href="#merkle-tree">Merkle Tree</a></h2>
<p>A Merkle tree is a tree data structure used to store and verify data integrity. You can think of it as a tree where each node has a hash value calculated from the hash values of its child nodes. The bottom layer (leaf nodes) of the tree stores the hash values of the actual data.</p>
<p>For example, suppose we have four files: A, B, C and D. We first calculate the hash values of these four files, resulting in hash values HA, HB, HC and HD. Then we combine these hash values in pairs and calculate their hash values, e.g. combine HA and HB to calculate the new hash value HAB; similarly, combine HC and HD to get the hash value HCD. Finally, we combine HAB and HCD to get the root node hash value HABCD. In this way, the entire Merkle tree is constructed.</p>
<p>So what are the advantages of Merkle trees? First, it can quickly verify data integrity. To check if file A has been tampered with, we only need to calculate the hash value of A and then verify that the root node hash value is correct through the other nodes of the tree (such as HB and HCD). In this way, we can check the integrity of the data without obtaining the complete data. This is very useful for distributed systems and blockchain technologies.</p>
<p>Second, Merkle trees can also efficiently improve data storage efficiency. Because each node stores the hash values of its child nodes, we can calculate the hash values layer by layer to find a piece of data. This avoids the time consumption of traversing the entire dataset.</p>
<p>In summary, the Merkle tree is a very practical data structure that can efficiently verify and store data, especially suitable for distributed systems and blockchain technologies. Like a tree, the root node contains the information of the whole tree, and by simply calculating hash values, we can easily ensure data integrity.</p>
<h2 id="gas-fee"><a class="header" href="#gas-fee">Gas fee</a></h2>
<p>When you want to complete a transaction or call a smart contract on the blockchain network, you need to pay a certain fee. This fee is called the gas fee.</p>
<p>Why is this fee required? This is to provide some incentives for the "miners" who provide computing power to the blockchain network. Miners are responsible for verifying transactions, ensuring the legality of transactions, and bundling transactions into blocks. To incentivize them to work, users need to pay gas fees to them.</p>
<p>The price of gas fees on Ethereum fluctuates depending on the volume of transactions on the network. When many people are using the blockchain network, gas fees will rise, just like taxi fares become more expensive during rush hour traffic. You can set the price of gas fees yourself, but note that if you set the price too low, miners may be unwilling to prioritize your transaction, leading to transaction delays or even failures.</p>
<p>On IC, gas fees are fixed and do not fluctuate arbitrarily with the network. Ordinary users can generally ignore gas fees. Learn more about gas fees here.</p>
<h2 id="decentralized-finance-defi"><a class="header" href="#decentralized-finance-defi">Decentralized Finance (DeFi)</a></h2>
<p>DeFi (Decentralized Finance) is a financial service model based on blockchain technology. It aims to eliminate centralized institutions such as banks, exchanges and insurance companies in the traditional financial system. By utilizing smart contracts and cryptocurrencies, DeFi provides users with a more transparent, open and reliable financial service model.</p>
<p>For example, if you need a loan to purchase a new car. In the traditional financial system, you need to apply to a bank, and the bank will decide whether to approve your loan based on your credit score and income. This process can be both time-consuming and complicated. It can be even more difficult for those without a credit history or unable to provide sufficient collateral.</p>
<p>However, in the DeFi system, you can apply for a loan through a decentralized lending platform. This platform is not operated by a centralized institution but based on blockchain technology and smart contracts. You only need to pledge a certain amount of cryptocurrency as collateral to get a loan immediately without going through a cumbersome review process. In addition, DeFi platforms can also allow you to view the status and interest of the loan at any time, providing higher transparency.</p>
<p>DeFi is not limited to lending services. It also includes a series of financial products and services such as decentralized exchanges (DEX), stablecoins, asset management, prediction markets, etc. These services allow users to trade and invest directly on the blockchain without relying on traditional financial institutions.</p>
<p>DeFi is a financial service model based on blockchain technology. It aims to eliminate centralized institutions in the financial system and provide more transparent, open and reliable financial services. Whether in lending, trading or investment, DeFi promises to change our perception of financial services and make financial markets more inclusive and efficient.</p>
<h2 id="liquidity-providers-and-liquidity-pools"><a class="header" href="#liquidity-providers-and-liquidity-pools">Liquidity Providers and Liquidity Pools</a></h2>
<p>Liquidity providers (LPs) play an important role in the decentralized finance (DeFi) market. They help improve market liquidity by injecting assets into exchanges or decentralized platforms. In short, liquidity providers are like "plumbers" in the financial market. They ensure the smooth flow of funds in the market so that participants can easily trade.</p>
<p>For example, if there are many fruit stalls in the market. Customers can freely buy fruit between these stalls. However, to ensure that customers can find the fruit they want, the stall owners need to maintain sufficient inventory. This is the role of liquidity providers: they provide goods (assets in the financial market) to the market to meet trading needs.</p>
<p>In the decentralized finance market, liquidity providers typically inject their assets into a smart contract called a "liquidity pool". These assets can be cryptocurrencies, tokens, etc. By injecting assets into the liquidity pool, liquidity providers help platform users trade, such as token swaps and lending.</p>
<p>In return, liquidity providers can earn income from transaction fees. This is like fruit stand owners earning profits by selling fruit. In addition, some decentralized finance platforms will also issue reward tokens to liquidity providers to incentivize them to participate and improve market liquidity.</p>
<p>However, liquidity providers also face certain risks, such as "impermanent loss". This risk stems from fluctuations in the prices of assets in the liquidity pool, which may cause liquidity providers to lose value when redeeming assets. Therefore, before becoming a liquidity provider, you need to carefully evaluate the potential risks and rewards.</p>
<p>Liquidity providers play an important role in the decentralized finance market. By injecting assets into the market, they improve trading liquidity so that participants can trade smoothly. In return, liquidity providers can earn income from transaction fees and reward tokens. But at the same time, they also need to pay attention to potential risks such as impermanent loss.</p>
<h2 id="automated-market-maker-amm"><a class="header" href="#automated-market-maker-amm">Automated Market Maker (AMM)</a></h2>
<p>Automated Market Maker (AMM) is an algorithm used in decentralized finance (DeFi) exchanges to ensure liquidity in the market. Unlike traditional exchanges, AMM does not require matching buyers and sellers. Instead, AMM automatically calculates the transaction price of assets using a predetermined mathematical formula.</p>
<p>AMM is implemented through smart contracts and liquidity pools. A liquidity pool consists of assets injected by liquidity providers, and users can exchange assets within these pools. When a user wants to exchange two assets, AMM calculates the exchange ratio based on a predefined mathematical formula. This ratio is adjusted in real time as transactions occur to maintain market balance.</p>
<p>Uniswap is a typical decentralized exchange that adopts the AMM algorithm. It uses a formula called \(x * y = k\) to determine the transaction price. In this formula, x and y represent the quantities of the two assets in the liquidity pool, and k is a constant value. When users trade in the pool, the quantities of x and y change, but the value of k remains constant. This ensures that the transaction price automatically adjusts to maintain market balance.</p>
<p>Suppose we have a decentralized exchange with an AMM-based liquidity pool that allows users to exchange two tokens (Token A and Token B). We use the Uniswap formula \(x * y = k\) as the AMM algorithm.</p>
<p>First, liquidity providers inject Token A and Token B into the pool. Let's say initially there are 1000 Token A and 1000 Token B in the pool. Per the AMM formula: </p>
<p>$$
x*y=k
$$</p>
<p>$$
1000*1000=1,000,000
$$</p>
<p>Here the constant k equals 1,000,000.</p>
<p>Now suppose a user wants to purchase Token B with 100 Token A. They will inject 100 Token A into the pool, changing the Token A quantity to 1100. To keep k constant, we recalculate Token B's quantity per the formula:</p>
<p>$$
1100*y=1,000,000
$$</p>
<p>$$
y≈909.09
$$</p>
<p>So now there are about 909.09 Token B left in the pool. The user got about 90.91 Token B (1000 - 909.09) for 100 Token A. Additionally, trading fees (if any) are awarded to liquidity providers. </p>
<p>In this process, the AMM automatically adjusted the exchange rate of Token A and Token B based on the preset formula. As trades occur, prices adjust in real-time to maintain market equilibrium. This is how AMMs work at a basic level. </p>
<p>Note this is a simplified example - actual implementations may involve additional details like fees, slippage, etc. But it should give you a good grasp of AMM's core concepts and mechanics.</p>
<p>AMMs provide advantages like simplified trading, increased liquidity, and reduced latency. However, they also have downsides like potential impermanent loss and price slippage.</p>
<p>In summary, AMM is an algorithm used in DeFi exchanges to ensure trading liquidity via smart contracts and liquidity pools. AMMs can automatically calculate asset prices to simplify trading and reduce latency. While AMMs have merits, potential risks should also be watched out for when using them.</p>
<h2 id="gamefi"><a class="header" href="#gamefi">GameFi</a></h2>
<p>GameFi is the abbreviation of "Game Finance". It refers to the emerging trend of applying decentralized finance (DeFi) and blockchain technology to the gaming industry. In short, GameFi is an innovative way to combine gaming and finance, allowing players to earn income in virtual worlds while playing games.</p>
<p>Imagine that you are playing an adventure game and have obtained some virtual items and currencies in the game by completing tasks, fighting monsters, etc. Typically, these items and currencies can only be used within the game. However, in the GameFi world, these virtual items and currencies can be converted into real-world value. This is because the items and currencies in the game are often represented by cryptocurrencies (such as NFTs, non-fungible tokens) with uniqueness and scarcity, which can be traded on the blockchain.</p>
<p>Let's use a simple analogy to illustrate the GameFi concept. Imagine you are playing a "pet raising" game where each pet is a unique NFT. By taking care of and nurturing the pet, you can increase the attributes and skills of the pet, thereby increasing its value. In a GameFi environment, you can sell these pets in in-game or out-of-game markets in exchange for other players' cryptocurrencies. These cryptocurrencies can be traded on the blockchain and even exchanged for fiat currencies. This way, you can earn income while enjoying the fun of the game.</p>
<p>In addition, GameFi also encourages players to participate in game governance and ecosystem building. For example, by holding governance tokens in the game, players can participate in decision-making on the future direction and rule-setting of the game. This helps to establish a decentralized and shared game world where players become true stakeholders.</p>
<p>GameFi is an emerging trend of applying decentralized finance and blockchain technology to the gaming industry. It combines gaming and finance, allowing players to earn income in virtual worlds and participate in game governance and ecosystem building. This mode brings new business models and revenue opportunities to the gaming industry, while providing players with more participation and value.</p>
<h2 id="socialfi"><a class="header" href="#socialfi">SocialFi</a></h2>
<p>SocialFi is an emerging field that combines social media and decentralized finance (DeFi). By integrating social networks and financial tools, it provides users with more convenient, interesting and personalized financial services. The goal of SocialFi is to make financial services more socialized while utilizing the advantages of decentralization, security and transparency brought by blockchain technology.</p>
<p>To help you better understand SocialFi, we can metaphore it as a financial social party. At this party, you can not only communicate with friends and family, but also participate in various financial activities together, such as investment, lending and trading. In this way, financial services become more friendly and fun.</p>
<p>A typical application of SocialFi is social tokens. Social tokens are cryptocurrencies issued by communities or individuals that represent the value and trust between community members. Users can participate in community activities by purchasing, holding and trading these tokens, such as voting, obtaining privileges or sharing profits. For example, a musician can issue his own social tokens, fans buy these tokens to support the musician, and get privileges like albums, concert tickets, etc.</p>
<p>In addition, SocialFi also includes a series of social network-based financial tools and services, such as decentralized prediction markets, social investment portfolios, and community governance. These tools and services make the financial market more transparent, fair and inclusive, allowing more people to participate and benefit.</p>
<p>SocialFi is an emerging field that combines social media and decentralized finance. By integrating social networks and financial tools, SocialFi provides users with more convenient, interesting and personalized financial services. It is expected to change our perception of financial services and make the financial market more socialized, fair and inclusive.</p>
<h2 id="multi-party-computation-mpc"><a class="header" href="#multi-party-computation-mpc">Multi-party computation (MPC)</a></h2>
<p>Multi-party computation (MPC) is a cryptographic protocol that allows multiple nodes that don't trust each other to jointly compute something without revealing their private inputs.</p>
<p>Let's take a simple example with Alice, Bob and Carol who want to compute the sum of their account balances but don't want to reveal their individual balances to each other.</p>
<p>They can use a MPC protocol where each party performs encrypted computations using their private data, exchanges intermediate results, and after multiple rounds of calculation, the final result - the sum of all three account balances - can be obtained without any party knowing the inputs of the others.</p>
<p>In blockchains, MPC is mainly used to manage private keys. The private key is split into fragments and held by multiple nodes separately. To use this private key, a threshold number of nodes need to participate in the computation to reconstruct the key.</p>
<p>This distributed approach to private key management ensures both security of the keys and prevents any single node from having full control over the assets.</p>
<p>MPC increases decentralization in blockchain systems since multiple nodes participate in computation and validation rather than relying on a single central node. This enhances the security and reliability of blockchains.</p>
<p>In short, MPC is like a cryptographic technique that allows nodes to perform computations blindly, protecting privacy while maintaining system reliability.</p>
<h2 id="wallet"><a class="header" href="#wallet">Wallet</a></h2>
<p>A blockchain wallet is a tool for storing users' digital assets - simply put, it serves as a bank account in the blockchain world.</p>
<p>For example, if you want to hold and use Bitcoin, you'll need a Bitcoin wallet. This wallet will provide you with a Bitcoin address, similar to a bank account number. You can receive Bitcoins to this address and also send Bitcoins from this address to others. The wallet helps you securely manage the assets in this address.</p>
<p>Take an Ethereum wallet for another example. It stores not only Ether but various ERC-20 token assets, like a digital asset account for multiple cryptocurrencies. You can receive and send different tokens using the wallet address.</p>
<p>The wallet is also responsible for private key management. It uses cryptography to generate the public and private keys. The public key is used to derive the blockchain address, while the private key is used to authorize transactions. Wallet software will require users to set a password to encrypt and protect the private key.</p>
<p>In summary, just like a physical wallet stores banknotes, a blockchain wallet stores digital assets. It enables users to securely control their digital assets and is an essential tool to enter the blockchain world. However, it's not advisable to store large amounts of assets in a wallet. Reliable third-party custody services should be used instead.</p>
<h2 id="token"><a class="header" href="#token">Token</a></h2>
<p>A token is a digital asset based on blockchain technology, usually used to represent a certain value or right. In the cryptocurrency world, tokens can be used to exchange goods, services or as investment tools. Unlike cryptocurrencies (such as Bitcoin, Ethereum, etc.), tokens are usually created based on existing blockchain platforms (such as Ethereum) rather than having independent blockchain networks.</p>
<p>The applications of tokens are wide-ranging, including: Utility Tokens are used to access specific services or applications; Governance Tokens are used to participate in project decision making; and Security Tokens represent ownership of real assets (such as stocks, real estate, etc.). Therefore, when investing in tokens, understanding the underlying project and value is very important.</p>
<h2 id="whale"><a class="header" href="#whale">Whale</a></h2>
<p>A whale refers to an investor who holds a large amount of digital currencies or tokens. These investors have very large assets, so their trading behavior may have a significant impact on market prices. When whales buy or sell large amounts of tokens, market prices may rise or fall rapidly, attracting the attention and following of other investors.</p>
<h2 id="did-decentralized-identity"><a class="header" href="#did-decentralized-identity">DID (Decentralized Identity)</a></h2>
<p>When talking about DID (Decentralized Identity) in blockchain, you can think of it as a digital identity credential that can help us securely verify and manage personal identity information on the Internet. Traditional identity verification methods usually require trusted third-party institutions, such as banks or governments, but DID uses blockchain technology to make the identity verification process more decentralized and transparent.</p>
<p>A DID is a unique identifier consisting of a long string of numbers and letters, similar to your identity card number in real life. However, unlike ID cards, DIDs are not issued by a central authority but are self-created and controlled by individuals. This means you can manage and control your own identity information without an intermediary.</p>
<p>For example, imagine that you want to register an account on an online social platform. Typically, you need to provide a lot of personal information, including name, address, phone number, etc., and then submit this information to the platform for verification and storage. However, this approach poses risks to privacy and security because you do not have full control over your data.</p>
<p>Using a DID, you can create your own digital identity and store the required verification information on the blockchain. The platform only needs to verify that your DID is valid without directly accessing your personal information. This way, your identity information is not centrally stored in one place but is dispersedly stored on different nodes of the blockchain, greatly reducing the risk of data being hacked or misused by hackers.</p>
<p>In addition, DID allows you to reuse your identity information in different scenarios. Imagine that you want to rent a car, usually you need to provide documents such as a driver's license, credit card, and other identity information. But with a DID, you only need to go through one verification process, and then use your digital identity for authentication in multiple scenarios, from car rental companies to hotels to airlines, avoiding the hassle of repeatedly filling in and verifying personal information.</p>
<p>In summary, DID is an innovative digital identity verification method that enables decentralized and secure management of personal identity information through blockchain technology. It provides higher privacy protection and convenience to the Internet, allowing individuals to better control their own identity data.</p>
<h2 id="kyc"><a class="header" href="#kyc">KYC</a></h2>
<p>KYC stands for "Know Your Customer". In the digital currency and crypto asset space, KYC typically refers to the process where users are required to provide identity information for verification by trading platforms to prevent money laundering and other illicit activities. </p>
<p>For example, when registering for a cryptocurrency exchange account, the platform will ask you to provide ID cards, passports and other documents to confirm your identity through facial recognition and other technologies. This is a KYC process.</p>
<p>The purpose of implementing KYC is to enable trading platforms to identify their users and ensure fund flows are legal and transparent. Otherwise it can easily be taken advantage of for money laundering or funding criminal activities. So any new user entering the crypto asset market needs to go through KYC screening.</p>
<p>Over time, KYC rules have also become more stringent. Some platforms may only need your name and phone number to open an account initially, but mainstream platforms now require uploading ID photos, recording videos, etc. The KYC process also often takes some time to complete verification. </p>
<p>In summary, KYC is a necessary security measure for digital asset platforms to ensure regulatory compliance in asset trading. Users need to cooperate and provide authentic information to foster a healthy trading environment.</p>
<h2 id="ama"><a class="header" href="#ama">AMA</a></h2>
<p>AMA stands for "Ask Me Anything." It typically refers to a question and answer interactive activity between project teams and users in crypto communities. </p>
<p>For example, before a new project is launched, the project team may host an AMA event in their community and announce a time. Users can then ask anything about the project, and the team will come back at the scheduled time to answer user questions one by one.</p>
<p>This process is like a face-to-face conversation - users act as the questioners, while the project team serves as the answer provider. The interaction between the two sides is quite active. Users can ask freely about the motivation behind the project, technical architecture, business plans, etc., and the team tries to answer as comprehensively as possible. </p>
<p>Through this method, both the project and community users can gain better understanding of each other, and users feel more engaged in the project. Some projects may host AMAs periodically for users to ask questions anytime. This high level of transparent communication also helps projects gain user trust.</p>
<p>In summary, AMA is an open and efficient communication channel between projects and users. It helps shorten the distance between the two sides, allows users to learn more in-depth about the project, and assists project teams in gathering user feedback to improve the project. This benefits the healthy growth of both the project and community.</p>
<h2 id="roadmap"><a class="header" href="#roadmap">Roadmap</a></h2>
<p>It is the development plan outline formulated by project teams. It visually demonstrates a project's development path to let community users know what the project will do next. </p>
<p>Let's take a simple example of a roadmap for a digital collectibles trading platform:</p>
<p>Phase 1: Establish platform, implement basic collectible minting and trading functions. </p>
<p>Phase 2: Add off-chain trading functions for collectibles, support more blockchain networks.</p>
<p>Phase 3: Develop mobile App to allow trading through mobile phones. </p>
<p>Phase 4: Integrate DEX to enable exchange between collectibles and other tokens.</p>
<p>Phase 5: Launch NFT lending system for users to get funds by staking NFTs.</p>
<p>Through these simple steps, users can clearly understand the development path planned for this platform - what the team will work on, what new features will be launched.</p>
<p>The roadmap serves like a blueprint for the future, guiding teams to develop products and achieve goals in a planned direction. It can also boost community users' confidence by letting them know the project is worth long-term investment. Meanwhile, project teams need to make steady progress following the roadmap, fulfill promises made in it, and maintain community confidence.</p>
<h2 id="whitepaper"><a class="header" href="#whitepaper">Whitepaper</a></h2>
<p>A whitepaper is a detailed technical and operational proposal published by project teams. It serves like a charter document for a project, comprehensively introducing information including technical frameworks, operational models, team backgrounds, etc. </p>
<p>In short, a whitepaper is like an instruction manual for a project that allows investors and users to fully understand its underlying logic.</p>
<p>For example, the whitepaper of a new blockchain project would introduce:</p>
<ul>
<li>
<p>The problems it aims to solve and positioning </p>
</li>
<li>
<p>Technical principles such as consensus mechanisms, incentive schemes, etc.</p>
</li>
<li>
<p>Governance structure and roadmap</p>
</li>
<li>
<p>Token distribution and circulation models</p>
</li>
<li>
<p>Team background and advisor information</p>
</li>
</ul>
<p>Through the whitepaper, users can clearly understand the technological innovations of the project and compare its advantages and disadvantages to similar projects.</p>
<p>Project teams need to put in significant efforts to write and update whitepapers to fully account for technical details. It is an important benchmark to evaluate a blockchain project's professionalism and rigor. Generally, higher-quality whitepapers also help projects gain more attention.</p>
<p>In summary, a whitepaper is the foundation for community members to deeply understand a project, and its quality directly affects the professional recognition the project can gain externally.</p>
<h2 id="seed-phrase"><a class="header" href="#seed-phrase">Seed Phrase</a></h2>
<p>A seed phrase is a group of 12 to 24 words that is used to recover access to an encrypted cryptocurrency wallet. When you create a new digital wallet, the system generates a unique seed phrase derived from the private key. So it is as important as the private key. These words are like keys that allow you to control and access the assets in your wallet.</p>
<p>Note that the seed phrase is extremely important! Be sure to keep it safe and avoid disclosing it to others. Once someone else gets your seed phrase, they can easily control your assets. For security, it is recommended to write down the seed phrase on paper and keep it in a safe place.</p>
<h2 id="ido"><a class="header" href="#ido">IDO</a></h2>
<p>IDO (Initial DEX Offering) is a way for cryptocurrency projects to raise funds. It is similar to IPO (Initial Public Offering) in traditional stock markets, but it occurs on decentralized exchanges (DEXs). The purpose of IDO is to raise funds for new projects and provide liquidity and initial pricing for project tokens.</p>
<p>Let's use a simple analogy to understand IDO. Imagine that a startup company (such as an innovative cryptocurrency project) wants to raise funds to support its business development. In the traditional stock market, this company can choose to conduct an IPO to sell its stocks to the public. In the cryptocurrency market, this company can choose to conduct an IDO to sell its tokens to the public through decentralized exchanges.</p>
<p>The general process of conducting an IDO is as follows:</p>
<ol>
<li>The project party selects a decentralized exchange to conduct the IDO. This exchange needs to provide a platform for initiating IDOs, such as PancakeSwap, Uniswap, etc.</li>
<li>The project party determines the conditions of the IDO, including token price, total issuance, fundraising goals, etc. This information needs to be publicly transparent to allow investors to understand the basic information about the project.</li>
<li>When the IDO begins, investors can purchase tokens issued by the project party. This process is usually first come, first served, and purchase limits are sometimes set to prevent a single investor from occupying a large number of tokens.</li>
<li>After the IDO ends, the project party will use the raised funds for project development, marketing, etc. At the same time, tokens held by investors can be traded on decentralized exchanges. In this way, the token price is determined by the market supply and demand, forming a free market price.</li>
</ol>
<p>IDO is a way for cryptocurrency projects to raise funds on decentralized exchanges. Through IDO, new projects can raise funds, distribute tokens, and provide liquidity and initial pricing for tokens. Compared to traditional IPOs, this approach has advantages such as lower barriers, higher transparency and faster trading speed. However, IDO may also bring higher risks because the cryptocurrency market is relatively new and there may be deficiencies in regulation and market stability. When participating in IDO, investors need to carefully evaluate the potential value and risks of the project.</p>
<h2 id="ico"><a class="header" href="#ico">ICO</a></h2>
<p>ICO (Initial Coin Offering) is a way for cryptocurrency projects to raise funds, similar to IPO (Initial Public Offering) in traditional stock markets. Through ICO, new projects can raise funds to support their development and issue tokens to investors. These tokens often have certain utility, such as using within the project's ecosystem or as governance interests.</p>
<p>For example, imagine that a startup company (such as a cryptocurrency project) wants to raise funds to support its business development. In the traditional stock market, this company can choose to conduct an IPO to sell its stocks to the public. In the cryptocurrency market, this company can choose to conduct an ICO to sell its tokens to the public.</p>
<p>The general process of conducting an ICO is as follows:</p>
<ol>
<li>The project party publishes a white paper detailing the background, goals, technical architecture and other information about the project. The purpose of the white paper is to allow investors to understand the basics of the project and evaluate its potential value.</li>
<li>The project party determines the terms of the ICO, including token price, total issuance, fundraising goals, etc. This information needs to be publicly transparent to allow investors to understand the basics of the project.</li>
<li>When the ICO begins, investors can purchase tokens issued by the project party. This process is usually first come, first served, and purchase limits are sometimes set to prevent a single investor from occupying a large number of tokens.</li>
<li>After the ICO ends, the project party will use the raised funds for project development, marketing, etc. At the same time, tokens held by investors can be traded on cryptocurrency exchanges. In this way, the token price is determined by the market supply and demand, forming a free market price.</li>
</ol>
<p>ICO is a way for cryptocurrency projects to raise funds. Through ICO, new projects can raise funds, distribute tokens, and provide liquidity for tokens. Compared with traditional IPOs, this approach has advantages such as lower barriers, higher transparency and faster trading speeds. However, at the same time, ICO may also bring higher risks because the cryptocurrency market is relatively new and there may be deficiencies in regulation and market stability. When participating in ICO, investors need to carefully evaluate the potential value and risks of the project.</p>
<h2 id="ipo"><a class="header" href="#ipo">IPO</a></h2>
<p>An IPO (Initial Public Offering) is the process by which a company first offers its stocks for sale to the public on the stock market. Through IPO, a company can raise funds to support its business development while providing an investment opportunity for investors. IPO is an important way to turn a private company into a publicly listed company.</p>
<p>Let's use a simple analogy to understand IPO. Imagine that you and your friends created a company. Initially, the company only belonged to a few founders. Over time, the company succeeded and business expanded continuously. You decided to raise more funds to support the sustained development of the company. One feasible method is to sell the company's stocks to the public through IPO on the stock market. This way, the company can raise funds while investors have the opportunity to share in the company's future profits.</p>
<p>The general process of conducting an IPO is as follows:</p>
<ol>
<li>The company decides to conduct an IPO and hires investment banks and other professional institutions to prepare for the IPO. This includes writing a prospectus, auditing financial statements, etc.</li>
<li>The company submits the prospectus and related documents to regulators, such as the U.S. Securities and Exchange Commission (SEC). The regulators will review the submitted documents to ensure that they meet regulatory requirements.</li>
<li>After the review is approved, the company determines the details of the IPO, including stock issue price, issue quantity, listed exchange, etc.</li>
<li>When the IPO begins, investors can purchase stocks issued by the company. Typically, the initial price of stocks is jointly determined by investment banks and the company, while the subsequent stock price is determined by the market supply and demand.</li>
<li>After the IPO ends, the company successfully goes public, and its stocks are publicly traded on the exchange. Investors can buy and sell company stocks to share in the company's growth and profits.</li>
</ol>
<p>In summary, an IPO is the process by which a company first offers its stocks for sale to the public on the stock market. Through IPO, a company can raise funds to support business development while providing investors with an opportunity to share profits. Companies conducting IPOs need to follow strict regulatory requirements and review processes to ensure that investors' interests are protected.</p>
<h2 id="otc"><a class="header" href="#otc">OTC</a></h2>
<p>OTC (Over-The-Counter) refers to transactions conducted outside of exchanges. Unlike transactions conducted on exchanges, OTC transactions are usually conducted directly between the parties without going through a central exchange. This trading method is applied to financial products such as stocks, bonds, derivatives, etc.</p>
<p>If you want to buy a used car. Buying on an exchange is like going to an organized used car market where there are many sellers, buyers and intermediaries (such as exchanges) involved, and the prices and trading rules are standardized and public. Conducting OTC transactions is like buying a used car through private channels. You can communicate directly with the car owner to negotiate the price and trade terms.</p>
<p>The characteristics of OTC transactions are:</p>
<ul>
<li>Flexibility: OTC transactions allow the parties to freely negotiate the terms of the transaction according to their own needs, such as price, quantity, settlement method, etc. This flexibility makes OTC transactions more attractive in some cases.</li>
<li>Privacy: OTC transactions are not as publicly transparent as transactions on exchanges. The parties can maintain the privacy of the transaction. This may be beneficial in some cases, such as large transactions, sensitive information transactions, etc.</li>
<li>Risk: Because OTC transactions do not go through the central exchange, the credit risk between the parties may be higher. To reduce risks, participants may need to conduct additional credit investigations or use third-party guarantee institutions.</li>
<li>Regulatory difficulty: The decentralization of OTC transactions makes regulation more difficult. Therefore, in some cases, OTC transactions may be more susceptible to manipulation, fraud and other misconduct.</li>
</ul>
<p>OTC is a trading method conducted outside of exchanges with features such as flexibility and privacy. However, at the same time, OTC transactions may also bring higher risks and regulatory difficulties. When participating in OTC transactions, investors need to fully understand the counterparty, assess credit risks, and ensure compliance with relevant laws and regulations.</p>
<h2 id="c2c"><a class="header" href="#c2c">C2C</a></h2>
<p>C2C (Consumer-to-Consumer) is a model of direct transactions between consumers, usually conducted through online platforms. C2C platforms act as intermediaries between buyers and sellers, helping consumers find, evaluate and contact other consumers online to complete transactions.</p>
<p>For example, if you want to sell your old bicycle. In the C2C model, you can post an advertisement online describing the condition and price of the bicycle. After other consumers see your advertisement, they can contact you to negotiate the transaction details. In this process, you and the buyer transact directly without going through a merchant or other intermediary. (Xianyu, Zhuazhua Market)</p>
<p>The characteristics of C2C transactions are:</p>
<ul>
<li>Decentralization: C2C transactions are conducted directly between consumers without going through merchants and other intermediaries. This helps reduce transaction costs and allows buyers and sellers to get better prices.</li>
<li>Convenience: C2C platforms usually adopt online operations, allowing consumers to buy and sell anytime, anywhere. This convenience makes C2C transactions more attractive in some cases.</li>
<li>Diversity: There are a wide variety of goods and services on C2C platforms. Consumers can purchase various types of products on the same platform. This diversity makes C2C transactions more rich and interesting.</li>
<li>Risk: Because C2C transactions do not go through merchants, transaction security may be lower. To reduce risks, consumers need to evaluate counterparties and use secure payment methods. At the same time, the platform party also needs to take certain measures, such as real-name registration, credit rating, etc., to ensure transaction security.</li>
</ul>
<p>C2C is a mode of direct transactions between consumers, usually conducted through online platforms. C2C transactions have the characteristics of decentralization, convenience and diversity, which can enable buyers and sellers to get better prices. However, at the same time, C2C transactions may also carry higher risks. When participating in C2C transactions, consumers need to fully understand the counterparty, evaluate transaction security and ensure compliance with relevant laws and regulations.</p>
<h2 id="dex"><a class="header" href="#dex">DEX</a></h2>
<p>DEX (Decentralized Exchange) is a blockchain-based trading platform that allows users to directly trade cryptocurrencies without a centralized intermediary. Unlike traditional centralized exchanges, DEX does not hold user assets, but completes transactions directly between user cryptocurrency wallets.</p>
<p>The characteristics of DEX transactions are:</p>
<ul>
<li>Decentralization: DEX does not hold user assets, transactions are completed directly between user cryptocurrency wallets. This helps reduce trust risk and improve asset security.</li>
<li>Transparency: Because it is based on blockchain technology, DEX transaction records are public and can be queried at any time. This transparency makes DEX transactions fairer and more impartial.</li>
<li>Privacy: DEX allows users to trade without revealing their identity, increasing trade privacy. However, this may also lead to some regulatory difficulties.</li>
<li>Speed and efficiency: Due to its decentralized nature, DEX transactions may be slower and less efficient than centralized exchanges. To increase transaction speed, DEX needs to adopt some technical optimizations, such as off-chain expansion, cross-chain interoperability, etc.</li>
</ul>
<p>DEX is a decentralized exchange based on blockchain technology that allows users to directly trade cryptocurrencies without a centralized intermediary. DEX has the characteristics of decentralization, transparency and privacy, which can improve asset security. At the same time, DEX transactions may face certain challenges in terms of speed and efficiency. When using DEX for transactions, users need to fully understand the platform characteristics, evaluate transaction risks, and ensure compliance with relevant laws and regulations.</p>
<h2 id="cex"><a class="header" href="#cex">CEX</a></h2>
<p>CEX (Centralized Exchange) is a cryptocurrency trading platform where users can buy and sell different cryptocurrencies. Unlike decentralized exchanges (DEX), CEX is operated by a centralized company or organization with user assets held in exchange accounts.</p>
<p>The characteristics of CEX transactions are:</p>
<ul>
<li>Centralization: CEX is operated by a centralized company or organization that holds user assets. This makes the trading process easier, but may also bring some trust risks and asset security issues.</li>
<li>Speed and efficiency: CEX usually adopts high-performance servers and technical architectures to provide higher transaction speed and efficiency. However, this may also make exchanges a target of attacks and increase security risks.</li>
<li>Trading pairs and liquidity: CEX usually provides multiple cryptocurrency trading pairs and higher trading liquidity. This allows users to easily buy and sell different cryptocurrencies to achieve their investment goals.</li>
</ul>
<p>CEX is a centralized cryptocurrency exchange that allows users to buy and sell different cryptocurrencies on an organized platform. CEX has advantages such as speed, efficiency, regulation and compliance, but may also face trust risks and asset security issues. When using CEX for transactions, users need to fully understand the platform characteristics, evaluate transaction risks and ensure compliance with relevant laws and regulations.</p>
<h2 id="airdrop"><a class="header" href="#airdrop">Airdrop</a></h2>
<p>Airdrop is a method of distributing cryptocurrency, typically used to promote a new digital currency or token. In an airdrop campaign, the project party distributes a certain amount of tokens for free to users who meet specific conditions, such as following social media, participating in community activities, or holding certain assets.</p>
<p>Airdrop is like a company giving out free samples to attract more attention and trial of their products. In the cryptocurrency market, airdrops can help project parties expand awareness, attract users, and increase market liquidity. However, it should be noted that investors participating in airdrops should carefully understand the project background and token value to avoid potential risks.</p>
<h2 id="cz"><a class="header" href="#cz">CZ</a></h2>
<p><a href="https://en.wikipedia.org/wiki/Changpeng_Zhao">Changpeng Zhao</a>, also known as CZ, is a Chinese-Canadian entrepreneur and a well-known figure in the cryptocurrency industry. He is the founder of Binance, currently the largest cryptocurrency exchange in the world. He has worked for companies including the Tokyo Stock Exchange, Bloomberg L.P., Blockchain.info, and OKCoin.</p>
<p>CZ is the abbreviation of Changpeng Zhao. He is an ethnic Chinese Canadian entrepreneur and a well-known figure in the cryptocurrency field. He is the founder of Binance, currently the largest cryptocurrency exchange in the world. He has worked for companies including the Tokyo Stock Exchange, Bloomberg L.P., Blockchain.info, and OKCoin.</p>
<h2 id="sbf"><a class="header" href="#sbf">SBF</a></h2>
<p>SBF is the abbreviation of Sam Bankman-Fried. He is an American entrepreneur and a well-known figure in the cryptocurrency industry. He is the founder and CEO of Alameda Research, a company focused on quantitative trading and liquidity provision. He is also the co-founder and former CEO of FTX exchange, a platform that provides a variety of digital asset derivatives.</p>
<p>SBF was born on March 6, 1992. His parents were both professors at Stanford Law School. He studied physics at MIT from 2010 to 2014 and earned a degree. SBF's career began at Jane Street Capital, a proprietary trading firm that primarily trades international ETFs. In 2017, he founded Alameda Research, and in 2019 he founded FTX. With his innovative products and keen sense of market demand, he has made FTX the second largest cryptocurrency exchange in the world.</p>
<h2 id="ftx"><a class="header" href="#ftx">FTX</a></h2>
<p>FTX is a digital asset derivatives exchange founded in May 2019 by SBF. Users can trade Bitcoin, Ethereum and other cryptocurrencies as well as related derivatives on it. In July 2021, FTX completed a $900 million Series B financing with a valuation of $18 billion, the largest financing in the history of the cryptocurrency industry.</p>
<p>The reason for FTX's collapse was that it fell into a liquidity crisis, resulting in its inability to meet customer withdrawal demands. There were reports that FTX's affiliated company Alameda Research used most of its assets to collateralize FTX's self-issued FTT tokens, and these tokens fell sharply in the market, causing a break in the capital chain.</p>
<p>On November 11, 2022, FTX announced that it had filed for bankruptcy in the United States and suspended cryptocurrency withdrawals. SBF resigned as CEO but said he would continue to assist the company in an orderly transition. FTX's collapse triggered a panic in the cryptocurrency market and sharp price declines in major cryptocurrencies such as Bitcoin.</p>
<p>FTX was once a flourishing cryptocurrency exchange, but went bankrupt due to poor capital management and market volatility. This is a heavy blow to both the cryptocurrency industry and investors.</p>
<h2 id="og"><a class="header" href="#og">OG</a></h2>
<p>OG refers to Original Gangster. Originally, OG was a word from American hip hop culture to describe people with senior experience and status in a certain field, community or industry. OG means that this person has extensive knowledge, experience and influence in their field and is usually respected and admired by people around them. In the cryptocurrency and blockchain field, OG can also be used to describe some early participants, innovators and leaders.</p>
<p>OG usually accumulates a lot of experience and knowledge in their field. Due to OG's senior status and extensive experience in the industry, their views and suggestions usually have higher authority and are easily noticed and respected by people around them.</p>
<p>OG is a word used to describe people with senior experience and status in a certain field, community or industry. In the cryptocurrency and blockchain field, OG can refer to those early participants, innovators and leaders. With their extensive experience, influence and innovative spirit, they have made important contributions to the development of the entire industry.</p>
<h2 id="to-the-moon"><a class="header" href="#to-the-moon">To the moon</a></h2>
<p>"To the Moon" is a popular slang in the cryptocurrency and investment fields, meaning that the price of an asset (usually cryptocurrency) is expected to rise sharply. This phrase is often used on social media, forums and chat groups to express investors' optimistic expectations for future market performance.</p>
<p>The cryptocurrency market is a huge rocket launch site, with rockets representing various cryptocurrencies. When the market expects the price of a cryptocurrency to skyrocket, people will say the cryptocurrency is "going to the Moon", as if the rocket is about to launch to the moon.</p>
<p>This phrase reflects investors' optimistic expectations for the future performance of an asset. They believe the asset price will rise sharply. "To the Moon" is usually popular on social media and online communities. People use this phrase to express their enthusiasm and confidence in an investment. "To the Moon" is largely influenced by market sentiment. When the market has a strong optimistic mood towards an asset, the frequency of using this phrase will increase.</p>
<h2 id="bull--bear"><a class="header" href="#bull--bear">Bull & Bear</a></h2>
<p>A bull market is a financial term referring to a prolonged period of rising prices and optimism in the market. </p>
<p>For example, if the price of Bitcoin surges from $10,000 to $30,000 and maintains an upward momentum, this is a typical bull market. Investors would feel it is a great opportunity to buy in and continue holding assets for profit.</p>
<p>We can compare a bull market to a charging bull that powers upward, knocking down all obstacles in its way with no resistance to its rising force.</p>
<p>In contrast, a bear market describes the overall downward trend when asset prices plummet in value. If Bitcoin's price drops from $30,000 to $10,000, that is a bear market. </p>
<p>The crypto market also generally follows this cyclical boom-bust pattern. Identifying market trends and making the right decisions is key to success.</p>
<p>In a bull market, investors need to watch for risks, as a meteoric rise is often unsustainable. A bear market is not without opportunity either, sometimes allowing investors to buy quality assets cheaply for future gains. </p>
<p>In short, a bull market represents upward prosperity while a bear market signals downward corrections. Gauging and harnessing market rhythms is an important part of investing.</p>
<h2 id="fomo"><a class="header" href="#fomo">FOMO</a></h2>
<p>FOMO refers to Fear of Missing Out. It is a psychological phenomenon that people worry about missing an important event, opportunity or trend, resulting in a sense of urgency and anxiety. In the investment field, especially in the cryptocurrency market, FOMO is a common emotional reaction. When the market shows a strong upward trend, people may follow the trend blindly due to the fear of missing opportunities.</p>
<p>The cryptocurrency market is a lively party where everyone is dancing, cheering and enjoying the pleasure of the rising market. At this time, standing outside the party, you see everyone's joy and start to worry that you will miss this rare opportunity. So you decide to join in, even though you may not understand the risks of cryptocurrency investment.</p>
<ul>
<li>Emotionally driven: FOMO is an emotionally based reaction. When people see others succeed or enjoy something, it is easy to have the urge to join in.</li>
<li>Late realization: FOMO often occurs after the market or trend has been going on for some time. People start to consider joining only after seeing others make profits.</li>
<li>Blind following: Due to the psychological pressure caused by FOMO, people may follow the trend blindly without fully understanding the risks, leading to losses.</li>
<li>High risk: In the cryptocurrency market, FOMO may cause investors to buy at market peaks and panic sell when prices fall, resulting in losses.</li>
</ul>
<p>FOMO is a psychological phenomenon that refers to the fear of missing important events, opportunities or trends. In the investment field, especially in the cryptocurrency market, FOMO can lead to blind follow-up and high-risk investment behavior. To avoid FOMO, investors should remain calm, fully understand and analyse the market and investment targets, and follow their investment strategies and risk tolerance.</p>
<h2 id="fud"><a class="header" href="#fud">FUD</a></h2>
<p>FUD refers to Fear, Uncertainty and Doubt. It is a psychological phenomenon that people have negative emotions due to fear, uncertainty and doubt about the future in a certain field, especially in investment markets.</p>
<p>FUD is an emotionally based reaction. When facing fear, uncertainty and doubt about the future, people tend to feel anxious and worried. FUD is usually accompanied by the spread of negative news, which may come from media reports, online forums or social media and can easily trigger market panic. To some extent, FUD can become a self-fulfilling prophecy. The spread of panic and selling behavior of investors may lead to further price drops in the market. For experienced investors, FUD may also bring investment opportunities. During market panic, they may look for undervalued high-quality assets and take countercyclical operations.</p>
<p>In the cryptocurrency market, FUD can lead to market panic, investor selling and price drops. To avoid the influence of FUD, investors should remain rational, fully understand and analyze the market and investment targets, and make wise investment decisions.</p>
<h2 id="pow"><a class="header" href="#pow">PoW</a></h2>
<p>Proof of Work (PoW) is a consensus algorithm used in cryptocurrencies and blockchain networks. Its core idea is to require participants in the network to prove their work by solving complex mathematical problems. This approach ensures network security while incentivizing participation.</p>
<p>PoW is like a math competition where participants race to find a number that satisfies certain conditions. Combined with block data, this number goes through a specific computational process to produce a hash value starting with a certain number of zeros. This process is like cracking a code, as finding the right answer requires a lot of computational trial and error, but verifying the answer is very simple. </p>
<p>To help you better understand PoW, we can use mining as an analogy. In cryptocurrency networks like Bitcoin, mining is participants trying different numbers repeatedly to find a suitable solution to unlock new blocks. Once successfully unlocked, participants are rewarded with a certain amount of Bitcoin, like striking gold while mining.</p>
<p>However, PoW has some issues. First, the computational process consumes huge amounts of energy, impacting the environment. Second, as cryptocurrency prices rise, more and more people join mining, increasing the mining difficulty and making it hard for average users to participate. This may lead to network centralization, going against blockchain's decentralized ethos. </p>
<p>In summary, PoW is a consensus algorithm used in cryptocurrencies and blockchains. It ensures network security and incentives to some extent by making participants prove their work through solving hard problems. But PoW also has issues like energy consumption and centralization. To address these, researchers and developers have proposed other consensus models like Proof of Stake to reduce energy use and improve decentralization.</p>
<h2 id="pos"><a class="header" href="#pos">PoS</a></h2>
<p>Proof of Stake (PoS) is a consensus algorithm used in cryptocurrencies and blockchain networks. Unlike Proof of Work (PoW) which proves work through solving complex math problems, PoS selects block validators based on the quantity and age of cryptocurrencies held by participants. This design aims to reduce energy consumption, increase decentralization, and enhance network security.</p>
<p>To help you understand PoS, we can think of it as a staking savings program for cryptocurrencies. In a PoS network, you can "stake" or "lock up" your holdings at a specific address, a process called staking. The more crypto you stake, the higher chance you get randomly selected as a validator (miner). Validators are responsible for creating new blocks and verifying transactions, and receive rewards after completing these operations. </p>
<p>We can analogize PoS to a lottery drawing. Participants need to purchase tickets to join the draw, and more tickets purchased means a higher chance to win. In a PoS network, cryptocurrencies held and staked are like lottery tickets, increasing your odds of becoming a validator.</p>
<p>PoS has some advantages over PoW. Firstly, PoS reduces computational work, lowering energy consumption and environmental impact. Secondly, PoS encourages long-term holding of crypto which helps price stability. Moreover, PoS lowers the risk of centralization as validator selection does not rely on computing power, making it easier for average users to participate.</p>
<p>Of course, PoS also has some drawbacks like ensuring validator honesty and preventing stake concentration. Still, PoS is considered an effective blockchain consensus model, and many new cryptocurrencies and blockchain projects have adopted PoS algorithms, like Ethereum 2.0, Cardano, etc.</p>
<p>In summary, PoS is a consensus algorithm that selects validators based on crypto holdings. Compared to PoW, PoS has advantages like lower energy use and higher decentralization. It is seen as a promising blockchain consensus mechanism.</p>
<h2 id="subnet"><a class="header" href="#subnet">Subnet</a></h2>
<p>A subnet is a collection of replicas that run their own instance of a consensus algorithm to generate a subnet blockchain, and use cryptographic chain keys to interoperate with other subnets on the IC.</p>
<h2 id="actor-model"><a class="header" href="#actor-model">Actor model</a></h2>
<p>The actor model is a programming model for concurrency and distributed computing. In this model, an actor is a container encapsulating state, behavior, and address. For example, we can think of an actor as a person with their own name (address), personality (behavior), and possessions (state). </p>
<p>Actors can communicate with each other by sending messages. Just like people can make phone calls or send text messages to each other. When an actor receives a message, it will change its state or behavior based on the message content. For instance, when Mike receives a text from his mom saying "Remember to buy groceries", he will change his state from "playing games" to "going grocery shopping", and send back the results of buying groceries to his mom.</p>
<p>Each actor runs concurrently and independently. Message passing between actors is asynchronous. Just like how everyone can do their own thing at the same time, without needing to know what others are doing. This makes the actor model very suitable for writing highly concurrent and distributed programs.</p>
<p>The actor model achieves high performance and scalability through actor concurrency and distribution. It uses message passing for communication and collaboration between actors. This pattern is very common and important in today's internet systems.</p>
<h2 id="boundary-node"><a class="header" href="#boundary-node">Boundary node</a></h2>
<p>A Boundary Node is an entry point into the Internet Computer (IC), allowing users seamless access to the Canister smart contracts running on it. Boundary Nodes make up the globally distributed edge of the IC, and all access to Canister smart contracts must pass through one of these nodes. They provide a public endpoint for the IC, routing all incoming requests to the correct subnet, load balancing requests across replica nodes, and caching responses to enhance performance.</p>
<p>Boundary Nodes provide two ways to access the Canister smart contracts hosted on the IC: One is through the HTTP gateway using a standard browser, and the other is via API Boundary Nodes using API Canister calls. The HTTP gateway enables users to access Dapps hosted on the IC in the same way as any Web 2.0 service through a browser. To this end, the HTTP gateway translates all incoming HTTP requests into API Canister calls, then routes them to the correct subnet. API Boundary Nodes allow native IC applications to directly call Canister smart contracts. In this case, the Boundary Node simply routes the API Canister calls to the right subnet. Therefore, there is no need for trust between the users and the Boundary Nodes.</p>
<h2 id="canister"><a class="header" href="#canister">Canister</a></h2>
<p>Canister is a key concept in Internet Computer (IC) that provides the foundation for an open, private, censorship-resistant and collaborative internet. Canister is a compute unit (i.e. smart contract) designed for internet-scale applications and services running at web speed. They are driven by cycles. </p>
<p>A canister is an instance of a WebAssembly module implemented on the Internet Computer. A canister is not just a WebAssembly module, but an instance of a WebAssembly module. Canisters are based on the Actor programming model, where a canister is an actor. Canisters can contain various Dapps logic, not just limited to finance. It encapsulates all the programming logic, public entrypoint methods, interface descriptions of the messages it provides, and the state information of the Dapp it describes. Canisters are able to export their own APIs to be called by other canisters.</p>
<p>Canisters have unlimited scalability potential, they are the smart contracts of the Internet Computer. They have all the properties of traditional smart contracts, plus additional capabilities and memory to store software and user data, making them an evolution of smart contracts.</p>
<h2 id="candid-ui"><a class="header" href="#candid-ui">Candid UI</a></h2>
<p>Candid UI is a web interface based on the Candid interface description language that allows you to test canister functions in the browser. It presents service descriptions in the form of forms, enabling you to quickly view and test functions, and try different data types as input without writing any frontend code.</p>
<h2 id="controller"><a class="header" href="#controller">Controller</a></h2>
<p>A controller of a canister is a person, organization, or another canister that has administrative authority over that canister. The controller is identified by its principal. For example, a canister's controller can upgrade the WebAssembly code of the canister or remove the canister.</p>
<p>A controller is a Principal with permissions to install, upgrade, and delete Canisters.</p>
<p>In general, a Canister's Controller can be designated as a certain identity, or the Wallet Canister corresponding to a certain identity.</p>
<p>After dfx 0.9, the default "identity" is now the Canister's Controller, and the Wallet Canister is no longer the default Controller (equivalent to dfx specifying --no-wallet).</p>
<h2 id="cycle"><a class="header" href="#cycle">Cycle</a></h2>
<p>On the Internet Computer, a "cycle" is a unit of measurement for processing, memory, storage, and network bandwidth consumption. Each "canister" has a "cycles account", and the resources consumed by the canister are credited to this account. The Internet Computer's utility token, ICP, can be converted into "cycles" and transferred to a canister. "Cycles" can also be transferred between canisters by attaching them to a message between canisters.</p>
<p>ICP can be converted according to the current ICP price in SDR, based on an agreement that one trillion "cycles" corresponds to one SDR.</p>
<h2 id="motoko"><a class="header" href="#motoko">Motoko</a></h2>
<p>Motoko is a new, modern, type-safe programming language designed specifically for developers wanting to build the next generation of distributed applications and run them on the Internet Computer blockchain network. Motoko is designed to support the unique capabilities of the Internet Computer, offering a familiar and powerful programming environment. As a new language, Motoko continues to evolve, supporting new features and other improvements. The Motoko compiler, documentation, and other tools are all open source, and are released under the Apache 2.0 license.</p>
<p>Motoko has native support for Canister smart contracts, with Canisters represented as Motoko Actors. An Actor is an autonomous object that completely encapsulates its state and communicates with other Actors solely through asynchronous messages. For example, the following code defines a stateful Counter Actor:</p>
<pre><code class="language-motoko">actor Counter {
var value = 0;
public func inc () : async Nat {
value += 1;
return value;
};
}
</code></pre>
<p>Its sole public function inc() can be called by this Actor and other Actors to update and read the current state of its private field value.</p>
<p>Motoko has the following characteristics:</p>
<ul>
<li>
<p><strong>Accessibility</strong>: Motoko is a modern language designed to be convenient for programmers familiar with JavaScript and other popular languages. It supports modern programming habits, including special programming abstractions for distributed applications (Dapps).</p>
</li>
<li>
<p><strong>Asynchronous Messaging and Type-Safe Execution</strong>: Each Dapp is made up of one or more Actors that communicate solely through asynchronous message passing. The state of an Actor is isolated from all other Actors, supporting distribution. There is no way to share state between multiple Actors. Motoko's Actor-based programming abstraction allows human-readable message passing patterns and enforces certain rules and avoidance of common errors for each network interaction. Specifically, Motoko programs are type-safe, as Motoko includes a practical, modern type system that checks each program before execution. The Motoko type system statically checks each Motoko program will execute safely on all possible inputs, without any dynamic type errors. Therefore, a whole category of common programming pitfalls common in other languages, and especially in Web programming languages, are excluded. These include null reference errors, mismatched argument or result types, missing field errors, etc.</p>
</li>
<li>
<p><strong>Direct Style Sequential Encoding</strong>: On the IC, Canisters can communicate with other Canisters by sending asynchronous messages. Asynchronous programming is hard, so Motoko allows you to write asynchronous code in a simpler, sequential style. Asynchronous messages are function calls that return future values, and the await construct allows you to suspend execution until the future is complete. This simple feature avoids the "callback hell" of explicit asynchronous programming in other languages.</p>
</li>
<li>
<p><strong>Modern Type System</strong>: Motoko is designed to be intuitive to people familiar with JavaScript and other popular languages, but offers modern features such as sound structural typing, generics, variant types, and static checking of pattern matching.</p>
</li>
<li>
<p><strong>Auto-Generated IDL Files</strong>: A Motoko actor always presents its clients with a suite of named functions with argument and (future) result types as a typed interface.</p>
</li>
</ul>
<h2 id="query-call"><a class="header" href="#query-call">Query call</a></h2>
<p>Users can query the current state of a canister or call a function that does not change the canister's state via a Query call. Responses to Query calls are very fast. Users can send Query calls to any replica within a subnet, with the result not going through consensus. </p>
<p>That is to say, there is an inherent tradeoff between security and performance: replies from a single replica are fast but may not be trustworthy or accurate. Query calls are not allowed to change the state of a canister to persist, so they are essentially read-only operations.</p>
<h2 id="update-call"><a class="header" href="#update-call">Update call</a></h2>
<p>Initiating an Update call can change a canister's state or call a function that changes the canister's state. Update calls are asynchronous and take some time to get a reply. They must be sent to all the replicas that hold the canister within a subnet, with the result going through consensus.</p>
<p>That is to say, there is an inherent tradeoff between security and performance: replies from all replicas are slow but trustworthy and accurate. Update calls allow changing the state of a canister to persist, so they are essentially read-write operations.</p>
<h2 id="replica"><a class="header" href="#replica">Replica</a></h2>
<p>In IC, a replica refers to the client/replica software running on IC nodes. A "replica" is a collection of protocol components that are prerequisites for a node to join a subnet.</p>
<h2 id="wallet-canister"><a class="header" href="#wallet-canister">Wallet Canister</a></h2>
<p>A Wallet Canister is a dedicated smart contract (Canister) that allows storing and managing Cycles. A Wallet Canister belongs to a developer identity. Cycles are used to pay for Gas on the IC. </p>
<p>When a developer needs to deploy a Canister, it is actually the developer's controlled Wallet Canister that allocates Cycles and creates the Canister.</p>
<h2 id="service-worker"><a class="header" href="#service-worker">Service Worker</a></h2>
<p>When a browser requests resources from the Internet Computer (IC), these resources may be stored on a special neuron called an API canister. To make these resources available, a service worker is needed to implement the HTTP gateway protocol, converting the browser's requests into API canister calls, and verifying the authenticity of these resources. Therefore, this service worker will act as an intermediary, connecting the browser and the API canister, thus enabling the browser to access resources stored on the IC.</p>
<p>Its role is to implement the HTTP gateway protocol, converting the browser's requests for static resources into API canister calls for communication with the IC, and verifying resource authentication. In simple terms, it can help the browser request static resources and convert them into API canister calls for communication with the IC (Internet Computer), and also ensure that these resources are trustworthy.</p>
<p>The HTTP gateway protocol refers to the communication protocol between the browser and the service worker, the API canister call refers to the way the service worker sends requests to the IC, and asset authentication refers to ensuring the authenticity and security of assets during the request process.</p>
<h2 id="node"><a class="header" href="#node">Node</a></h2>
<p>A Node is a physical machine node that hosts the IC.</p>
<h2 id="webassembly-wasm"><a class="header" href="#webassembly-wasm">WebAssembly (Wasm)</a></h2>
<p>WebAssembly (Wasm) is a binary instruction format that provides a virtual machine abstraction layer with features like security, portability, efficiency, lightweight, etc. It can easily achieve millisecond cold start time and extremely low resource consumption.</p>
<p>WebAssembly was first applied in browsers, and is now gradually expanding to the backend. It can compile code from languages like C/C++, Rust, Motoko into WebAssembly bytecode and run in a sandboxed environment. </p>
<p>Currently, mainstream public blockchains support WebAssembly. IC is a typical WebAssembly-enabled blockchain where DApps can be written in Motoko or Rust and deployed on IC. </p>
<p>Apart from IC, blockchains like Dot and Near also support WebAssembly.</p>
<h2 id="ledger"><a class="header" href="#ledger">Ledger</a></h2>
<p>IC records all transactions involving ICP tokens in a dedicated governance container smart contract called the Ledger canister. </p>
<p>The Ledger canister implements a smart contract that maintains accounts and balances, and keeps a history of transactions that affect accounts and balances.</p>
<p>It provides the following capabilities:</p>
<ul>
<li>
<p>Minting ICP tokens into accounts</p>
</li>
<li>
<p>Transferring ICP tokens from one account to another </p>
</li>
<li>
<p>Burning ICP tokens to eliminate their existence</p>
</li>
</ul>
<p>The Ledger canister must be owned by an identity.</p>
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