Custody, Exchanges, & Transactions Flashcards
Private Keys
generates public keys can’t go backwards
Public Keys
Links private-public wallet transaction
Wallets
software, tracks what you can do with $
Hard Wallets
(Like USB), has firmware, includes seed phrase
Seed Phrase
words/code to access private key
required to transaction from wallet
if lost, gone forever
Soft Wallet
application (no hardware), phone, browser
Cold Storage
stored offline (hard wallet)
Hot Storage
stored online
Multi-Sig Wallets
requires multiple seed phrases, sign-ons Think estate
Metamask
wallet controller
can set-up multiple wallets Personal, company, investment
Can put wallets on different chains
each one has it’s own seed phrase
On/Off Ramps
Coinbase, Gemini, Cashapp Retail
OTC, own exchanges Institution
On-ramping sees you leave the traditional monetary system, and enter into the decentralized, blockchain ecosystem instead. Conversely, off-ramping is when you “cash out” of crypto, converting your coins or tokens back into fiat money, or sometimes goods and services
DCA
Swan, Ryze ($ cost average)
Coinbase-Bank (KYC/AML) Plaid
Security-2FA
2FA
provides an extra layer of security on top of your account password and email verification. This ensures that both your assets and personal information continue to remain safe and secure
Exchange
place to trade fiat to DA and between DA’s
user gives username/pass-2FA
Exchange owns the wallet Owns the private keys
Private insurance/ not FDIC ins.
accounting entry/ledger to transact
Order Book
Bid
Ask
Bids/Asks
highest price someone will pay
lowest willing to sell
market buy
buying at lowest ask
Custody
transfer agent/brokerage APEX-large custodian
Custodian owns the assets, transactions are just ledger entries
Private key=self-custody
Platforms
eToro, Webull, Paypal, cashapp buy/sell crypto, equities can't take off exchange not on/off ramps must sell and convert into fiat to get into bank account mirror transactions
Volatility
feature of BTC
when btc drops, others get liquidated, causing cascading event
cascading causes buy/sell on delayed pricing
Arbitrage
profiting from simultaneously buying a cryptocurrency from an exchange and selling it on a different one with a slightly higher price
Derivatives
work like traditional derivatives in the sense that a buyer and a seller enter into a contract to sell an underlying asset. Such assets are sold at a predetermined time and price.
BTC Futures
cash settled, no btc is traded Bybit
miners will do this to hedge
leverage
high leverage w derivatives
Perpetual Swap
derivative instruments that allow traders to buy and sell crypto without having to constantly roll over expiring contracts.
