Defining Our Terms

What's staking all about? What's a bridge? And why are so many folks on Twitter sending messages that just say GM Joining me today, Bloomberg reporters Hannah Milla and Vildanna Hodrick are here to help with a crypto glossary. I am really glad to be joined today by two truly excellent colleagues of mine. One is Hannah Miller, who's joining us from her home studio in San Francisco, and the other is Voldana Hodrick, who's draining us from her home

studio in New York City. Thank you both. So we're gonna talk words today, which I suppose as journalist is like what we do all the time anyway, but today we're gonna specifically talkwards when it comes to defining some of the terms like a thrown around a lot in crypto, because this is a word that's been in the news a lot, or should say, two words that have been in the news a lot. We're gonna kick things off

with algorithmic stable coins. Yeah, this has been such a hot topic as of late, considering the crash of terror USD coin. Algorithmic stable coins are pretty complex but also very interesting. They have their price maintained by a relationship with another cryptocurrency and also through just complex mathematical equations.

So in the case of Terra USD that was pegged to the Luna token, and basically if the price of one dropped, investors would be incentivized to buy the other one, and the hopes that this would maintain a peg for USD coin and keep it close to a dollar. Okay, so da old coins tell us more. An alt coin

is basically just any coin that isn't Bitcoin. You might hear people referring to alts or alt coins alternative coins, and they're really just talking about any smaller token or smaller coin that isn't bitcoin, And they also are in the news recently just because we're having to sell off in the crypto market and you see bitcoins sometimes holding up just a lot better than some of these alternative coins, and so you're hearing people talking all coins and just

how much they've been suffering through the recent downturn. Speaking of bitcoin, what is a bitcoin maximal list? Yeah, bitcoin maximalist or you know Bitcoin maxi for sure. Um, they're all in on Bitcoin, which is the most widely held cryptocurrency, and these people believe that the future is only for Bitcoin. This will be the only digital currency that we're going to need. They don't care about all coins. They're basically all in. And some people also consider this term to

be a little derogatory. Do the Bitcoin maxis consider this m to be derogatory or do other people consider it to be derogatory? You know, I've spoken to some maxis who are proud to wear the label, you know, and you know, wear it as a badge of honor. But I've also spoken to others who are like all in a bitcoin, but they're like, don't call me that. So I think it depends a bit on personal preference. Got it. Well, that was fun. So now let's go complicated crypto bridge. Yeah.

So crypto bridge just have been in the news as of late. Um we saw with the hack of the Ronan bridge, which is essential to the Axi Infinity and FT game. And crypto bridges basically connect different blockchains and allow people to transfer digital assets from one block chain to another. And there are questions about than being vulnerable and whether they pose a security risk because these are

very complex tools within the crypto space. Got it. So a way for somebody to think about that is like they act almost as translators, just mechanisms for you to move something from a to B in one way or another. And people might think of bridges is like, well, here's a physical structure or here's a place, but like what how do bridges work? Exactly? Like are these just software? Are they programs? Are they companies? Like what are these things? Yeah?

Their software? Um, you know, I think it's a good visual seeing that bridge, but really at the end of today, these are very complex pieces of software that could be open to security flaws and holes that hackers can exploit. So there is a question of how do we make these bridges safer? Well, Another thing that has certainly been super topical is this idea of crypto winter. A great chill has descended on the markets. A chill has descended on the Market's what a great way to put it.

But a crypto winter is just a prolonged stretch of time where crypto prices are in a decline. So they might be stagnant for a while, but you know, overall, we're talking about a major downturn in the market. When you think about the winter, you're thinking about freezes, stagnation, unpleasantness, really cold temperatures, and so that's exactly what crypto winter,

the term is supposed to emote. We had one back in two thousand and eighteen when crypto prices were declining, and we also have some people calling what's happening with the market this year a crypto winter, just because we've had this huge downturn in prices. One of the more I suppose topical parts of crypto or the contrast between what's called defy and trod FI or decentralized finance and

traditional finance. Traditional finance is a concept that I think people pretty much understand right It's like it's the idea of wall streets, it's banks, it's it's brokers, it's insurance companies. What's defined exactly? Yeah, So DEFY is short for Decentralized Finance UM, and basically it envisions a world where financial transactions are conducted over blockchain and where middlemen like banks or brokers are cut out. It hinges on peer to

peer transactions. So this is really what people see as the future of finance if they're you know, big DEFIVE supporters, and there's obviously really exciting stuff going on there. There's concerns of a regulation and we've also seen two people migrate from working in trad FI to DEFY, which is

something that I'm really interested in writing about. Right, so they're going from like a citadel to a pure play crypto company exactly now on the idea of pure play crypto companies, there's also a concept of AX help me understand or help our audiences understand what a dex is. A dex is just a decentralized exchange. So if you're thinking about traditional financial markets, you're thinking about the stock market, you might think of a stock exchange like the New

York Stock Exchange. Then nicey that has sort of like a power structure in place, and a decentralized exchange is something like a unit swap maybe you've heard of unit swap or d y d X, where users can trade coins, they can trade crypto derivatives, but it's anonymously and there

are no intermediaries, there are no banks involved. Earlier kind of you mentioned acci Infinity and an FT game, which brings us to this concept of game five, which, as far as I'm concerned, is a slightly misleading thing because I don't think that any of the crypto games I've played are actually fun, but I will leave that to you to say more on. Yeah, game five is a

really interesting area that I love reporting on. UM it's you know, combination the words game and finance, and basically it's a way to describe n f T and crypto games that place a heavy emphasis on earning crypto tokens through the game. And it's also connected to the term play to earn, which would be something used to describe a game like Acxie Affinity, where a lot of the

main objective is focused on earning money. So a lot of people describe these sort of play to earn games is just sort of financial tools and investment platforms with debatable Yeah, basically it is a very charitable way of pussing as Yes, but these these games do have people playing them right there. There's a fairly lively ecosystem in them.

Oh yeah, they've actually become part of the gig economy in certain places like Accie Affinity is really popular in the Philippines, and we saw a lot of interest grow there during the pandemic when people were quarantined and at home and you know, just on their computers all day. So it's become a job for people in a way to earn a living income. Got it, Thank you, Hannah and Voldonna. We'll be right back with more terms from

our Bloomberg cryptoglossary. Well, we've said n f T a couple of times now, so now we get to explain it. So n f T s are non fungible tokens. People, if they know what they are, they might think of them just as monkeys, but are what else are they? This has been a super hot topic the last couple of years, especially since the pandemic has broken out. So, as you said, they're non fungible tokens. They basically just allow holders of like an art piece or collectible to

track ownership of that art on the blockchain. So a meme can be an n f T, art can be an n f T. A clip of something that happened maybe in a sports game, can also be an n f T. Like I said, they were super popular last year. The markets sort of come down a bit since then. But we did have notably Ukraine selling their own n f T s to fund their war efforts earlier this year. So let's say I spent five which I'm not making up. People have done that. Where would I show it off?

A lot of people show it off on their Twitter profile pictures basically, or you might tell your friends about it, or you might hold it in your your crypto wallet. But yeah, it's just code basically on the blockchain. That seems less fun. This does seem fun. Talk to me about ship coins. Yeah, it's okay for me to say ship absolutely alight only on the show Cool Cool So ship coins. Yeah. This is a derogatory term for cryptocurrencies that are perceived to have little or no value and

no real discernible purpose. You know, we've seen it used to describe things like meme coins like dodge coin, where people are just like, this is dumb. To make matters even more complicated, there actually is a cryptocurrency chitcoin, just for maximum fun. Oh yeah, do we know what that coin is trading at. I just looked it up, the shipcoin cryptocurrencies trading it for actions of a scent appropriately

enough makes sense. Another concept that people say makes sense but other folks have questions about is the whole idea of who's going to talk to me about that? So staking is when, if you're a crypto investor, for instance, you actually let your coin be used to help facilitate other transactions on the blockchain. So if you have some coins laying around, you might actually deposit them in a digital wallet, you lock it there, and then what you're hoping is just to get rewards in return or a yield.

So it's almost like crypto screw. You agree to lock up your your crypto for some amount of time, which allows other people to make transactions on those things, and in return you get paid a yield of some kind. That's right. Yeah, you're hoping to get these rewards. You're

hoping to get something in return. And one of the bigger areas of controversy as it relates to staking, which is a key element of DEFY is the idea that the yields that you're getting are just massive, right Like, if you have your money in a bank, and you have it there, and it means that the bank can lend your money to other people in the form of loans, you're getting you know what, like sub fractions of a

percentage interest rates. There are folks in crypto that are offering you know, a thousand percent a p y or or even more like, how is that possible? It's it's only possible in defy, really, And this has been such a sort of like striking point of what's been happening in crypto markets over the last couple of years. So you had during the pandemic, you had really rock bottom low interest rates, and so if you had cash sitting around in your bank account, you really weren't earning very much.

And so what was happening in the DeFi space was attracting a lot of attention because some of these yields, as you say, we're just astronomical, but really it's just it's a function. It's a characteristic of the DeFi space. Another characteristic of the DeFi space or something that describes the characteristic of the defied space is tv L. What

does that stand for and what does it mean? Standsford Total value locked and this for first to how on DeFi platforms people will deposit crypto and the hopes of earning interest and yield. The processes like lending and TBL just basically refers to the total value of those deposited assets on a DeFi protocol. So it's almost like assets under management exactly. Another sort of big concept that gets thrown around the laws, especially by venture capitalists, is this

whole idea of Web three. What I would love to hear from you is what web three is and what it isn't. Web three is just a brand new version of the Worldwide Web basically, but it's built on the blockchain. So if you think about the Internet that we have currently, a lot of people might argue that we have a lot of tech companies that have just taken so much ownership there and they just control so much of the Internet.

Web three sort of shifts the power back to the user away from some of the tech come niece that have sort of been sucking up all of our data and selling all of our data and information to advertisers, so gives the ownership back to the users. How is that actually happening or is that like the sales pitch.

It's very debatable. It's a super hot topic, um within you know, venture capital investing in crypto, especially, you know, when investors are putting a lot of money in platforms in exchange for tokens that give them control over how the platform is managed. So they're getting these massive amounts of tokens that give them voting rights in terms of how you know, a protocol is moving forward, and they help shape how it exists. Um And they can also

stand to benefit enormously if the protocol takes off. So yes, this is an area of debate whether or not web threes actually decentralized space. Because in an actually decentralized space, like we could all quit our jobs and sell art on the blockchain and monetize that art directly and you know not need agents or brokers or or anything like that. But that's not so we are happening at scale yet,

not yet. I mean we've seen attempts, We've seen you know, things pop up like decentralized social media networks, and you know, really interesting applications. But Web three is only of the way there, and I've heard that from people who are really gung how about the space? Okay, well, a thing that's happening today is yield farming. I am not allowed to yield farm because I am a reporter reposing on finance, but some people are and they're making money. You tell

us how this works. Yeah, so yield farming. You make your crypto work for you. You want to earn interest through things like lending out your crypto. You might actually get a new coin in exchange for lending your own holdings. So this is like a pretty exciting area where people think that they can make a make a big buck on,

you know, lending out their crypto. So one of the big I don't know, perhaps more fun parts of crypto is the idea that like there's literally a meme for everything, and you know, there's also some acronyms that people throw around a lot. You know, I will have um friends say, Okay, I keep seeing these people like typing on Twitter GM or w A g M I and I don't know what these things mean. Help me, So let's translate a couple of those two. This is one of the more

fun parts of the crypto space. So you have a lot of the crypto dialogue and discourse taking place on Twitter. So you might see people log on in the morning they'll say GM, which means good morning, g N means good night. So you have a lot of people talking to each other through these memes or acronyms. So just to give you maybe a quick rundown of some of

the more popular ones. Is just an aspirational meme that refers to Lamborghini's where a couple of years ago, during a huge crypto boom in two thousand seventeen, you've had people buying really fancy fancy sports cars and showing them off at different crypto conferences, and so you have people sort of saying when Lambo, as in, you know, when are we going to hit the riches. Lf G is

another abbreviation. It means let's blank and yes. So it's just it's a rallying cry for people in the crypto space. H f SP means that actually it's a taunt. You'll see it on Twitter all the time. It's pretty derogatory. It's you know when somebody is sort of calling out crypto for whatever bad influence it's having, or for lack of regulation, or for prices crashing, or for anything that

that's sort of been negative in the crypto space. Crypto fans might reply with h f SP, have fun staying poor, And I'm sure in the past couple of weeks those crypto critics are now replying to crypto fans with h f SP. They might be. There's a lot of interesting, fun, crazy stuff happening on Twitter in regards to a lot a lot of McDonald's applications being passed around. Oh man, what else should our listeners know? How can they go bravely forth into the crypto wonderlandes and know what people

are talking about? Yeah? No, I mean, there's so much information online for people to sift through that it can be hard to cut through the noise. But there are some really good educational resources out there where you know, you can learn about these terms and you know, kind of figure out your own way within the space. And basically, I also think the new rule is if it exists in crypto, there's a meme a bit. Yeah, so you have to have a sense of humor when looking at

this space. D y o R means do your own research exactly. That's a popular one and very linked to what Hannah was saying. Fact, there's always always a way to find something out. The problem is not everything that's out there is necessarily reliable. But hey, um, well this this, this is great. I'm going to just send this episode around any time anybody in my family sends me what's up and they're like, what does this mean? I'm like, here you go. Here's Hannah and hold on explaining this

to you. So thank you so much both of you for joining us. It has been a real pleasure and look forward to having you back on again soon. Thank you, thanks for having us. You can find more of all Donna and Hannah's reporting on the Bloomberg Terminal, on Bloomberg dot com and on Twitter. Hannah is h G. Miller twenty nine and vil Donna is at Vildanna Hadrick on

the next episode of Bloomberg. Crypto Fidelity, one of the largest investment managers in the world, made headlines when it announced its intention to offer clients the ability to invest in crypto through their four oh one Keve retirements accounts. In such a volatile environment, is it a risky bet

to add digital assets to your retirement plan. I'll talk to Bloomberg reported Susann Woollie about the recent history of four O one, key investments in crypto, and why the US Labor Department is less than enthusiastic about fidelities move. I'm Stacy Marie Ishmael, and this is Bloomberg Crypto, a daily podcast from Bloomberg and I Heeart Radio. For more shows from I Heart Radio, visit the I Heart Radio app,

Apple Podcasts, or wherever you get your podcas tests. Email your comments, questions or suggestions to Crypto at bloomberg dot net. Find us on Twitter at Crypto. The producer and editor of this episode is Vicky Vergolina. Our engineer is Blake Maples. Original music by Leo Sidron. Bloomberg's head of Podcasts is Francesco Levi.