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Crypto, blockchain, DeFi, and DAO: Here are the terms you need to know for Super Bowl ads this year

February 12, 2022, 2:30 PM UTC

Cryptocurrency, once a niche industry unknown to most Americans, will make arguably its biggest leap into the mainstream this weekend as a barrage of related ads debut at the Super Bowl.

Companies in the crypto industry, like exchanges FTX and Crypto.com, have forked over millions for 30-second ad slots to be aired during the face off between the Los Angeles Rams and the Cincinnati Bengals. Super Bowl broadcaster NBC said some ad spots have sold for up to $7 million per 30 seconds, a 27% jump from last year.

But the crypto industry, unlike other Super Bowl advertisers, has its own vocabulary that is unfamiliar to most people. Terms like NFTs, DAOs, DeFi, Bitcoin, and Ethereum could be mentioned in ads this weekend. For those who are new to crypto and its curious lexicon, here is a breakdown of some of the most important terms to watch out for during Sunday’s big game.

Cryptocurrency and the Blockchain

First, let’s start with cryptocurrency, or crypto for short. 

Cryptocurrency refers to a digital currency whose transactions are recorded on an online ledger called a blockchain. 

Of course, we already have currencies like the U.S. dollar, and most of us make transactions online, so what’s the difference? 

Cryptocurrencies, unlike the U.S. dollar, aren’t controlled by one organization or government. The blockchain is maintained on a global network of computers. This digital ledger is transparent, and because it relies on many computers to hold data, it is difficult for a person to forge a history of purchases and sales

Cryptocurrency can be used as an investment, because the price can vary like stocks, although it has been much more volatile. If you buy low and the price goes up, you can make money. But you can lose a lot of money as well. 

You can also use cryptocurrency to buy things online on websites that accept crypto as a form of payment—and you can now use it to pay for purchases at places like Starbucks, or any retailer that accepts PayPal.

Bitcoin and Ether

The most popular cryptocurrencies are Bitcoin and Ether. 

Bitcoin was first proposed in 2008 by an anonymous person (or group of people) going by the name Satoshi Nakamoto. Since it was created, Bitcoin has become the most widely-recognized cryptocurrency. Around this time in 2019, one Bitcoin was worth about $3,600. As of Friday, one Bitcoin was worth $43,500, according to CoinMarketCap

Because Bitcoin has increased so much in price since its inception, and because some people think that will continue, it is considered more of a long-term investment, akin to gold, and is not as commonly used to buy things compared to other cryptocurrencies. 

Ether, on the other hand, is a cryptocurrency used more often for transactions. It is the currency of the Ethereum network, which is a separate blockchain from Bitcoin. Ethereum was conceptualized in a white paper in 2013 and launched by then-21-year-old Vitalik Buterin, a Russian-Canadian programmer, in 2015. 

Developers can also build games and apps using the Ethereum blockchain. The NFT marketplace OpenSea and the metaverse platform Decentraland are built on the Ethereum network. People using these applications can buy and sell things using Ether. 

Bitcoin and Ether are just two kinds of several different cryptocurrencies. Other popular crypto includes Solana, Tether, BNB, and Cardano.

Non-fungible tokens (NFTs)

Non-fungible tokens, or NFTs, are digital items that have been uploaded to a blockchain. They can range from an image, to an audio clip, to a gif, and their ownership can be tracked through a ledger that everyone can see. 

They can also be bought and sold through third-party marketplaces like Rarible and OpenSea.  

NFTs burst into the public consciousness in 2021 after an NFT by artist Beeple was sold last March for $69 million. Since then, celebrities like socialite Paris Hilton, late night talk show host Jimmy Fallon, and Golden State Warriors basketball star Steph Curry have all bought an NFT. The most expensive NFTs have sold for millions of dollars, and certain NFT collections, including Bored Ape Yacht Club and Crypto Punks, have skyrocketed in value over the past year.

DeFi

DeFi, short for decentralized finance, refers to a new kind of financial application built on the blockchain that enables digital transactions between two or more parties without the involvement of banks or other traditional financial organizations. 

In short, DeFi applications can enable you to receive loans or hold currency without a bank account. 

Although it can be easy to set up DeFi applications as opposed to the hurdles that sometimes come with setting up traditional bank accounts, the ecosystem is largely unregulated and prone to hacks. Wormhole, a DeFi application that allows users to swap the cryptocurrency Solana for other tokens, was hacked in early February and thieves made off with about $325 million in stolen crypto.

DAOs

Decentralized Autonomous Organizations, or DAOs, are a group of people with a central mission but no overarching leader who come together to accomplish a common goal using cryptocurrency to execute specific actions.

The goal can be something like acquiring and selling metaverse land, or raising money for WikiLeaks founder Julian Assange’s legal defense fund. These groups can be made up of a few individuals or thousands of people, and often organize with the help of messaging applications like Discord and Telegram. 

A DAO acts like a company run purely by shareholders, with no chairperson. But it’s governed by a number of strict rules encoded into the blockchain. For example the DAO may have a rule that none of the organization’s money can be spent on a proposal unless there is a majority vote. Therefore, the DAO’s funds, which it collects by selling its own cryptocurrency to members, will be locked until a vote is taken on a proposal and the code recognizes that a majority has voted in favor of an action via blockchain records. 

After a DAO is established, members will create a cryptocurrency for the group. When members buy that currency, with U.S. dollars or another real-world currency, they get a certain number of voting rights proportional to the number of crypto tokens they buy. 

If one member wants to change the name of the DAO, for example, they can put forward a proposal to the full group. Members of a group can vote, with the tokens they already own to either reject or accept a proposal. The more governance tokens you’ve bought, the more sway you have on decisions, similar to how larger shareholders have more votes at a public company’s annual shareholder meeting. 

Some notable DAOs are MakerDAO which built and manages the cryptocurrency Dai, and Flamingo DAO which aims to buy rare and expensive NFTs.

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