Dictionary of web 3, real estate and tech-focused investing terms.
ACH is an acronym for Automated Clearing House. Established in the mid-1970s in US, ACH is an electronic funds-transfer system that facilitates payments in the U.S, and it is run by Nacha. Thanks to the ACH, especially with some recent rule changes, most credit and debit transactions can be cleared on the same business day, making international money transfers quick and easy.
Blockchain 1.0 is the first generation of blockchain technology, which focuses on cryptocurrency and decentralization. Blockchain 2.0 is an extension to blockchain 1.0 as it introduced the concept of decentralization of business and markets through smart contracts and improved security and transparency. Blockchain 3.0 is the final developmental stage of blockchain technology, defined by global, institutional and enterprise adoption.
In web3, blockchain has enabled various NFT items to be owned, from music files, artworks, memes, memorable video clips, to concert tickets, or trading cards or even gaming items, the properties of which can be specified through smart contract rules. Most of these can be collected, making them collectibles.
A commercial property is any type of property that is used to generate a profit. The property may generate profit from either rental income or from capital gain. Some countries and states also consider residential properties with more than certain numbers of units as commercial properties.
Compound interest is the interest that is paid on the original principle of a loan and the unpaid interest that has accrued. For any type of investments, compound interest is the principle that allows a positive ‘snowball’ effect, allowing the investor to start gaining much more in time.
DeFi (or “decentralized finance”) is an umbrella term for financial services on public blockchains, primarily Ethereum. With DeFi, you can do most of the things that banks support — earn interest, borrow, lend, buy insurance, trade assets, etc — but faster and without paperwork or a third party.
Flipping refers to purchasing an asset with a short holding period with the intent of selling it for a quick profit rather than holding on for long-term appreciation. It represents a classic investment technique in a lot of areas, including real estate, Initial Public Offerings (IPOs) or digital assets such as NFTs and tokens.
A measure of the profitability of a rental property. The gross yield is a useful metric for comparing the profitability of different rental properties, as it provides a simple way to compare the potential return on investment. However, it is important to note that the gross yield does not take into account expenses related to owning and maintaining the property, such as property taxes, insurance, and repairs, which can impact the overall profitability of the investment.
High frequency trading is a type of algorithmic trading in which large volumes of shares are bought and sold automatically at very high speeds. It represents a particular investing activity enabled by modern technology, where the algorithm and speed of trading optimize the trader’s earnings.
A market correction for any type of market (real estate, stocks, crypto etc.) is when that market declines by more than 10% (but less than 20%) from its most recent peak. It's called a correction because historically the drop often "corrects" and returns prices to their longer-term trend.
An NFT is, in the simplest terms possible, a type of inalienable, non-fungible token enabled by blockchain technology. The ownership or rights it provides can refer to anything (stock shares, event tickets, etc.), not necessarily digital art. The NFT is a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership.
The total amount of money that has been earned from renting out a real estate property over a specific period of time. It is calculated by adding up all the rental income received from tenants, and then subtracting any expenses associated with the property, such as property taxes, insurance, and maintenance costs. The resulting number is the cumulative net rental income, which represents the overall profitability of the property as a rental investment.
The profit on purchase is a number indicating the difference between the asset purchase price and a market valuation (Fair Market Value or FMV). When you buy an asset or fractions of an asset with a very good price (under the official market valuation level), you make instant profit (a one-time upside) on purchase simply because you own something more valuable than what you paid for it. The real-estate assets offered by MetaWealth™ are always falling under market valuation so that our token holders (investors) can benefit from an immediate profit on purchase in addition to the future rental income.
A staking pool allows multiple stakeholders to unite their staking power in the process of verifying and validating new blocks, so they have a higher probability of earning the block rewards. Especially since the ETH transition from the proof-of-mine to proof-of-stake model, staking pools are a strong community pillar.
Working capital is a key indicator of a company’s ability to withstand an economic downturn or a financial crisis. It refers to the difference between the company’s assets (cash or any assets that can be converted into cash within a year) and the company’s current liabilities, such as payroll, accounts payable and accrued expenses.
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