A token glossary

Cryptocurrency miners help secure Proof-of-Work blockchains like Bitcoin by verifying transactions and adding new blocks to the network. Miners use powerful hardware to solve complex mathematical problems, and in return they earn a small fee for the “work” they put in. This process is known as “mining” coins. Though mining is key to crypto’s top blockchain, it has faced criticisms due to its high energy consumption.

In the token space, minting refers to the process of creating a new token. It’s most frequently used in the NFT space, when creators “mint” artwork or other work by launching new tokens on the blockchain. Collectors then participate in a launch event to “mint” the work, which involves connecting a cryptocurrency wallet and confirming a transaction. 

While the token universe launched with Bitcoin and later saw the growth of Ethereum, many token enthusiasts believe that the ecosystem will be “multi-chain” in the future. A multi-chain world is one in which many different blockchain networks—from Bitcoin and Ethereum to the likes of Solana, Polkadot, and Cosmos—can be interconnected and users freely move their tokens between each network.

NFT stands for “non-fungible token.” Unlike tokens like BTC and ETH, NFTs are not interchangeable from one another because each token is unique. This property allows for all different kinds of assets to have provable ownership and scarcity, which could disrupt many sectors in the future. NFTs found mainstream attention in 2021 after a boom in the digital art space, but they can also represent tickets, deeds, music, and other types of content. 

If the token ecosystem goes omnichain, it will be home to many different functioning blockchain networks. Many token enthusiasts believe that the ecosystem is already omnichain, but there are still many technological hurdles to overcome, such as free movement between different networks. Some projects pushing innovations such as token bridges are working to address this issue today.

Optimistic Rollups are a type of Layer 2 scaling solution designed to help Ethereum attract more users. Optimistic Rollups make Ethereum more accessible by bundling transactions and “optimistically” assuming the validity of a transaction, which token holders can dispute. They help reduce Ethereum congestion and offer lower fees on a separate network. Optimism and Arbitrum are currently the two leading Optimistic Rollup solutions. 

Oracles are a vital part of the token ecosystem, providing “real-world” data such as price feeds to power decentralised finance and other innovations. By far the most successful oracle project is Chainlink, which is used by many of the top decentralised finance projects in the ecosystem.

On many cryptocurrency exchanges, trades are placed through an order book. Though order books are most frequently found in centralised exchanges, they’re also used by certain decentralised exchanges. Token traders often rely on order books to inform their trading decisions. 

Polkadot pioneered an innovation called “parachains,” individual blockchains that connect to Polkadot and interact with each other as one interconnected ecosystem. Polkadot has plans to support 100 individual parachains.