Your completely free resource hub designed to boost your knowledge of cryptocurrencies
Glossary
o
- Off-Chain Off-chain refers to actions, transactions, or processes that occur outside the blockchain. The approaches do not concern the blockchain directly and thus are not depending on it in terms of speed, cost, or even congestion. Off-chain systems handle most processing independently, settling only the final results on the blockchain when needed. Among the off-chain activities, one can find actions as simple as signing a transaction before submitting it or possibly there are very complicated systems such as payment channels, sidechains, or Layer 2 networks. Nevertheless, the concept is the same in each instance: the primary chain is relieved of its workload and the outcome is still secured and validated. One of the most well-known off-chain actions is the Lightning Network for Bitcoin. Where normally on the blockchain, every small payment would be recorded, the users would first go on to the off-chain channel and open a payment channel. They can transact an unlimited number of times, super-fast, and without getting public. Only when the channel is closed, is the balance that the final one is disclosed on-chain. In other words, off-chain simply implies that the activity takes place outside the blockchain and only the minimum necessary information is eventually recorded on-chain.
- On-Chain On-chain refers to any activity, transaction, or data directly recorded on a blockchain. When an event happens "on-chain," it is included in the everlasting history of the blockchain, and it can be seen by anyone as well as being protected by the consensus rules of the network. Such kinds of activities include sending coins and tokens, engaging with a smart contract, generating NFTs, participating in a DAO, or confirming a block. The reason for on-chain actions being included by the blockchain is that they receive the main features of the network: openness, unalterability, and security. A transaction cannot be modified or deleted once it is confirmed. Anyone can check it using a block explorer, which gives users the ability to monitor the distribution, engage in contract activities, and the flow of funds without depending on a single authority. Normally, on-chain transactions come with the cost of a fee, frequently termed “gas”, because the computers of the network have to handle, confirm, and keep the data. As a result, on-chain operations are seen as very reliable but at the same time being the most costly or slowest, particularly when the network traffic is high. However, many of the latest protocols now opt for "off-chain" processing to enhance the speed factor, submitting only the final results back to the blockchain. Nevertheless, the on-chain layer still holds the truth.
- Optimistic Rollup An Optimistic Rollup is a Layer 2 scaling solution that was developed to enhance the performance of a blockchain, in particular Ethereum, by making it faster and less expensive to operate. An optimistic rollup does not limit itself to just processing transactions on the main chain, but rather batches its workload off the chain and only reports a summary of the transactions back to Ethereum. By doing so, the system not only relieves congestion but also slashes costs while still depending on the security of Ethereum. The term “optimistic” is derived from the manner in which these rollups treat validation. They operate on the optimistic assumption that transactions are valid unless proven otherwise. Users don’t need to do heavy calculations while submitting. Rather, the system provides an interval for the other users to dispute a transaction if they suspect that there is an error. If a user submits a valid fraud proof during that time span, the rollup reverts the invalid state, discards the batch, and penalizes the proposer. The main benefit of these optimistic rollups is to process large transactions at once. The likes of Optimism, Arbitrum, and Base have all adopted this model and as a result, have their users enjoying a smoother experience with lower gas costs. Taking advantage of off-chain speed alongside on-chain security, optimistic rollups effectively make Ethereum scale, without having to give up the aspect of decentralization. They have been one of the essential breakthroughs that are leading the way for the blockchain technology to reach the mass markets by making the daily transactions faster and cheaper as well as more user-friendly.
- Orange Pilled The term Orange pilled describes the process of converting someone into a complete Bitcoin supporter who understands all its core principles according to cryptocurrency users. The phrase comes from popular culture and is adapted to crypto to suggest a moment of realization, when a person begins to see Bitcoin as an alternative to traditional financial systems. People who achieve orange pilled status learn about Bitcoin core concepts which include its limited supply, its decentralized structure, and its ability to withstand censorship. The people who identify themselves as orange pilled explain that their beliefs changed after they studied inflation, central banking, monetary policy and financial crises. People view Bitcoin as more than a speculative asset because they consider it to be a permanent store of value which protects their wealth. Bitcoin serves as the primary focus of the term, which people use to describe cryptocurrency assets despite its existence in the broader digital currency market. The process of orange pilling people who choose to execute digital currency payments, specifically Bitcoin, excludes all other assets and their value fluctuations which happen in short time intervals. People who become orange pilled start to pay less attention to market excitement, while they develop a preference for educational resources and maintaining their assets for extended periods of time. People begin to learn about Bitcoin through discussions and literature and audio programs and their experiences of actual events which include currency devaluation and banking restrictions. Supporters believe that once people understand how the traditional financial system works they will become more open to Bitcoin as an alternative. Crypto journalists use the term orange pilled to indicate a change in someone's mental state which, does not involve any technical procedures. The framework explains why some people and organizations transition from disbelief to complete faith in Bitcoin. The term shows how people in the cryptocurrency field develop their views through learning and personal experiences, which occur during times of economic instability.
- Order book Exchanges use order books to display current buy and sell orders. The system displays two types of information, which show traders asset purchase prices and other traders' asset selling prices. The order book is one of the core tools used to understand market activity and price formation. The order book is usually divided into two sides. The bid side contains buy orders which represent demand. The ask side contains sell orders which represent supply. Each side lists prices along with the quantity available at each level. The highest bid and the lowest ask are especially important because they define the current spread which measures the distance between buying and selling prices. All order books maintain constant updates because traders create new orders, change current orders, or complete trades. Market orders link with existing limit orders through order book submission. Buyers and sellers create price movements through their trading activity. Price levels which contain large orders function as short-term support and resistance points but traders can cancel those orders anytime. A market displays liquid conditions when its order book contains extensive buy and sell orders across various price points. A market with a low order book threshold experiences increased price volatility because even minor transactions can cause major price fluctuations. In cryptocurrency reporting, the order book serves as a tool to demonstrate three key elements which include market price fluctuations and available liquidity and trader activities. The system provides a market sentiment overview which shows current market conditions while enabling readers to track price movements based on supply and demand interactions.
- OTC Over-the-counter trading (OTC) is the means of direct asset buy and sell between the sellers and buyers, and not through a public exchange. In the case of cryptocurrency, OTC desks manage large transactions with complete discretion and thus prevent sharp price fluctuations in the open market caused by the transfer of large amounts of Bitcoin, Ethereum, or stablecoins. OTC is usually the preferred option by organizations, wealthy individuals, and companies that constantly need liquidity. Rather than placing a large order via a normal exchange, where one would experience an instant price swing, the buyer and seller come to terms off-exchange. After both parties have agreed on the price, the assets are then exchanged through secure methods oftentimes with the aid of a broker or specialized OTC desk. The benefits of these desks include the customized service, improvement in the case of massive volumes pricing, and the faster settlement. Additionally, they offer more privacy since OTC trading is not listed on public order books. This is one of the reasons why large players choose OTC for million-dollar transactions; they need confidentiality. On the other hand, OTC trading is based on trust and good verification processes. Trustworthy desks comply with KYC and AML checks to scam and to launder money. To summarize, OTC trading is a hidden part of the crypto market where great transactions take place without being noticed and without having an impact on public exchange prices.