Crypto Accounting Glossary

A type of blockchain protocol upgrade that is not backward-compatible, resulting in a split of the original chain.

A hardware wallet is a physical device designed to store private keys securely, providing offline storage and protection against potential cyber threats for cryptocurrencies.

Hash rate refers to the computational power miners contribute to a cryptocurrency network, which determines the network's security and efficiency.

Originating from a typo for "hold," it refers to the strategy of holding onto a cryptocurrency long-term rather than selling it.

IPFS, short for InterPlanetary File System, is a peer-to-peer distributed file system that aims to revolutionize the way we store and share data on the internet.

Immutable means unchangeable or permanent in the context of blockchain technology, ensuring that data recorded on the blockchain cannot be altered.

Income is the money an individual or business receives in exchange for providing a good or service or through investing capital

An income statement, or profit and loss statement, is a financial statement that presents revenues, costs, and expenses during a specific period, providing insights into a company's financial performance.

In the context of cryptocurrencies, inflation refers to the rate at which the supply of a cryptocurrency increases for a specific set of goals. Crypto inflation can impact the value of a cryptocurrency, which may have implications for how it's accounted for.

An Initial Coin Offering (ICO) is a fundraising mechanism in which new projects sell their underlying crypto tokens in exchange for bitcoin or ether. It's somewhat similar to an Initial Public Offering (IPO) in the non-crypto world. ICOs can have implications for revenue recognition and investor rights in crypto accounting.

An Initial Exchange Offering, as its name suggests, is conducted on the platform of a cryptocurrency exchange. IEOs offer tokens to raise funds for the development of new blockchain projects. The exchange takes a percentage of the tokens sold, which can have revenue recognition implications in crypto accounting.

An input is information or data sent to a system.

A complete list of assets or goods in a particular place.

An investment is defined as the acquisition of an asset or an item with the anticipation that it will generate income or appreciate in value in the future.

An accounting method of keeping track of transactions where each transaction affects at least two accounts.

KYC refers to the process of a business verifying the identity of its clients. It's a standard in the investment industry that ensures investment advisors know detailed information about their clients' risk tolerance, investment knowledge, and financial position. Crypto exchanges often have KYC processes, and these records can be important for regulatory and tax compliance in crypto accounting.

LIFO is an asset-management and valuation method in which assets produced or acquired last are sold, used, or disposed of first. For crypto accounting, this could be the method used to calculate the cost basis of a cryptocurrency holding.

A ledger is a record of financial transactions. In crypto, it's a record of all transactions on a blockchain.

Leverage in trading refers to the use of borrowed capital to increase potential returns.

Liabilities are debts or obligations that an individual or entity owes to creditors or other parties.

A limit order is a type of order to purchase or sell a cryptocurrency at a specified price or better.

Liquidity refers to the ease with which an asset, or security, can be converted into ready cash without affecting its market price. In crypto markets, coins with higher trading volumes typically have higher liquidity. This can impact the ease of trading and valuing crypto assets.

A liquidity pool is a smart contract containing locked digital assets, providing essential liquidity for decentralized trading networks.

Litecoin (LTC) is a peer-to-peer cryptocurrency created by Charlie Lee that operates on a decentralized blockchain, aiming to provide fast and low-cost transactions.

In crypto trading, a long position means that you buy a cryptocurrency with the expectation that the value will increase.

A Loss is a decrease in capital, typically from investment.

Maker and taker fees are paid by traders to crypto exchanges. Makers add liquidity to the market and are charged with maker fees. Takers take liquidity out of the market and are charged with taker fees. These fees can impact the cost basis of crypto trades.

Margin Trading is the practice of trading with borrowed funds, amplifying potential gains or losses.

Market capitalization, known as market cap, is a financial metric that investors use to evaluate the size and value of a company or a cryptocurrency network.

A market cycle refers to the natural and repetitive fluctuation observed in an investment market or other economic environment over time.