Tokenization Glossary: blockchain & financial terms



Audacia Group uses blockchain technology to tokenize its shares, in collaboration with Taurus SA. If you’re keen to learn more about the process of assets tokenization, blockchain concept and all the related financial terms, then have a look at the following glossary!

AML: Anti-Money Laundering, refers to the set of international laws enacted to curtail criminal organizations or individuals laundering money through cryptocurrencies into real-world cash.

Asset: Resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit. It can be tangible (a house, car, cash, land) or intangible (patents, copyrights, branding).

Bitcoin: Cryptocurrency created in 2009 distributed, traded and stored in a blockchain. One of the first digital currencies to use peer-to-peer technology to facilitate instant payments.

Blockchain: Storage and transmission of information technology, shared & immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.

CMTA: Capital Markets and Technology Association, an independent association formed by leading actors from Switzerland’s financial, technological and legal sectors to create common standards around issuing, distributing and trading securities in the form of tokens using distributed ledger technology.

Crypto asset: Any digital asset that uses cryptographic technologies to maintain its operation as a currency or decentralized application.

Cryptocurrency: A digital asset usually stored on a network that is distributed across a large number of computers. This decentralized structure allows them to exist outside the control of governments and central authorities. Bitcoin became the first decentralized cryptocurrency in 2009.

Dogecoin: Cryptocurrency introduced in 2013 and quickly developed its own fun & light online community. It is based on Litecoin and has the same technology behind its proof-of-work.

Ether (ETH): Cryptocurrency of the ethereum network and world’s second-largest virtual currency by market capitalization.

Ethereum: Launched in 2015, open-source, blockchain-based, decentralized software platform used for its own cryptocurrency. It enables smart contracts and distributed applications to be built and run without any downtime, fraud, control, or interference from a third party.

FINMA: Swiss Financial Market Supervisory Authority, from German Eidgenössische Finanzmarktaufsicht.

ICO: Initial Coin Offering, fundraising method using cryptocurrencies as a means of raising capital for early-stage companies. Blockchain-based utility tokens without regulation and investor protection.

IPO: Initial Public Offering, traditional fundraising tactic that refers to the process of offering shares of a private corporation to the public in a new stock issuance. IPOs provide companies with an opportunity to obtain capital by offering shares through the primary market.

Issuer: The corporation/company that issues the shares to be tokenized.

KYC: Know Your Customer, standard in the investment industry that ensures investment advisors know detailed information about their clients’ risk tolerance, investment knowledge, and financial position.

NFT: Non-fungible token, token that we can use to represent ownership of unique items (unique properties). They let us tokenize things like art, collectibles, even real estate.

Ripple: Technology released in 2012 that acts as both a cryptocurrency and a digital payment network for financial transactions. The coin for the cryptocurrency is premined and labeled XRP. Third-largest cryptocurrency by market cap, following Bitcoin and Ethereum.

Token: Digital unit designed with utility in mind, providing access and use of a larger crypto economic system. It does not have a store of value on its own, but is made so that software can be developed around it.

Tokenization: Process of turning various items into digital assets called tokens. Tokens typically operate on blockchains and are controlled through smart contracts and algorithms. Many different types of assets can be tokenized (real estate, pieces of art, percentages of ownership in a company, etc.)

Security: Fungible and tradable financial instrument used to raise capital in public and private markets. There are primarily three types of securities: equity—which provides ownership rights to holders; debt—essentially loans repaid with periodic payments; and hybrids—which combine aspects of debt and equity.

Share: Unit of equity ownership interest in a corporation that exists as a financial asset providing for an equal distribution in any residual profits, if any are declared, in the form of dividends. Shareholders may also enjoy capital gains if the value of the company rises.

STO: Security Token Offering, combines the efficiency of blockchain technology, with the legal protections found in standard securities offerings. This form of fundraising creates a safer investment climate for potential investors. This process is accessible to MPEs and unlisted companies.

Sources: Investopedia, IBM.com, CMTA.ch, coinmarketcap.com