Bitcoin Terms Beginning with C
A call option is a contract that gives the buyer the right but not the obligation to sell an asset for a specified price.
The Cantillon Effect describes the uneven effect inflation has on goods and assets in an economy. As a result of the Cantillon Effect, inflation can be seen as a non-legislative and regressive tax on the purchasing power of citizens by the government.
Capital controls are any regulations that restrict the way residents can move money in or out of a country. These policies are normally implemented by a government or a central bank.
Capital expenditures are purchases made by a business as an investment, including physical and intangible assets.
Capital gain is the realization of an increase in a capital asset’s value when the asset is sold. Short-term capital gains are the sale of an asset within a year. Long-term capital gains are the sale of an asset after a year or more of holding the asset.
A capital loss is the loss incurred when a capital asset decreases in value. A capital loss is realized when an asset is sold for less than the original purchase price. Capital losses can offset capital gains taxes.
Capital markets are platforms that facilitate the trading of assets. These markets facilitate the matching of buyers and sellers.
Cash is any asset used as a unit of account, medium of exchange, and store of value; most importantly, cash is a bearer instrument with no counterparty risk. Bitcoin is cash.
Bitcoin is censorship resistant in the sense that no single entity has the ability to reverse a Bitcoin transaction or blacklist a wallet or address.
Chain analysis uses heuristics to analyse the blockchain and trace ownership of bitcoin across transactions. Chain analysis is performed by companies who contract with governments and regulated institutions to provide insight into how individuals send and receive bitcoin.
When bitcoin is sent, a piece of bitcoin is broken up into the amount to be sent to the receiver, and the amount to be returned to the sender, like the change you receive from a store when paying with cash. This change is called a change output, and is identical to other bitcoin you may receive.
A checksum is a small string of bytes appended to a larger piece of data in order to easily verify its validity and protect against typos or tampering. Most checksums are generated via the hash of the target data.
A form of transaction which allows the receiver of funds to raise the fee on the transaction in which they are receiving bitcoin. By raising the fee, the receiver speeds up the confirmation of their transaction, thus receiving their payment faster.
A clearinghouse is a financial intermediary that facilitates transactions between banks and other financial institutions, or acts as a broker for trading assets. The most well known clearinghouse is the Automated Clearing House (ACH).
The Coase Theorem is an economic theory which claims that a party creating a negative externality may negotiate or bargain with a counterparty to reach a socially efficient outcome, provided transaction costs are low and property rights are clearly defined.
Coin clipping is a practice of physically shaving down or clipping metal coins as a form of taxation. Coin clipping was practiced by many ancient empires, and it is an early example of currency debasement.
Coin selection is the process of choosing a subset of the UTXOs owned by a wallet in order to create and fund a transaction.
The first transaction in each block is the coinbase transaction. This transaction mints new bitcoin and pays it, along with the cumulative transaction fees, to the miner of the block. The coinbase transaction is the only type of transaction which includes no inputs.
CoinJoin transactions provide increased privacy for users by breaking the heuristics used by chain analysis companies. A CoinJoin transaction combines inputs from several users and returns to each user the exact same amount, making it difficult to track users and their coins.
CoinSwap is a proposed method for making Bitcoin transactions cheaper and more private. CoinSwap would have two parties send one another coins in separate transactions, such that chain analysis could not prove that the two transactions are connected.
Cold storage describes any method of storing data which does not connect to the internet or any other devices. A Cold wallet is a form of cold storage often used by bitcoiners to protect bitcoin which they do not plan on moving frequently.
Collateral is a valuable good or asset offered by a borrower to secure a loan. Typical forms of collateral are real property, future interests, or other items with economic value.
The Commodity Trading Futures Commission (CFTC) regulates the risk management markets. Designated Contract Markets (DCM) and Swap Execution Facilities (SEF) must comply with CFTC core principles and rules.
The Common Input Ownership Heuristic is used by chain analysis companies to determine the owner of specific UTXOs. This heuristic currently assumes that all inputs of a given transaction are owned by the same owner.
A Bitcoin transaction is confirmed when it has been included in a block. Before then, it is simply pending, and exists only in the mempool. After a transaction is added to a block, each subsequent block is an added confirmation for the transaction, indicating a higher level of security.
Consensus is the ideal and the method of coordination between individuals in a decentralized system. Consensus is achieved at the development level with regards to changes to the Bitcoin protocol, and it is also achieved with regards to agreement on the state of the blockchain.
CPI measures price levels by taking a weighted average of a basket of several goods. This is used to assess the purchasing power of a currency.
Contango is a market phenomenon which occurs when the futures price of a commodity is higher than the spot price because the asset price is expected to rise over time. Contango can be recognized as an upward sloping forward curve.
A correlation measures the relationship between the returns of two assets. Monitoring correlations helps investors manage portfolio risk.
Cost basis determines the original value of an asset, and is used to calculate capital gains and losses for tax purposes.
Cost of capital is the cost associated with deploying capital into a potentially productive investment. Companies can raise capital through both debt and equity, and the cost of capital can vary across these two methods.
A counterparty is the other participating party in a financial transaction. Every transaction must have a counterparty; every buyer of an asset must have a seller who is willing to sell in order for the transaction to be completed. There can be multiple counterparties in a transaction.
Counterparty risk is the financial risk associated with another party failing to meet their contractual obligation. Companies often fail to meet their obligations if they become insolvent.
A coupon measures the annual rate of interest on a debt instrument such as a bond. This value is measured from the face value of the bond and does not change as the price of the bond changes.
Credit is money provided to a debtor in exchange for repayment plus interest. If the parties trust one another, the lender will extend a line of credit consistent with the borrower's ability to repay the loan.
The study of hashing algorithms, encryption and decryption, and public and private keys all fall in the realm of cryptography. Bitcoin leverages cryptography to achieve many of its central properties.
A custodial wallet or solution is a method of storing Bitcoin keys through a third party. Instead of controlling one's own keys, a user allows a custodian to hold the keys, trusting that they will allow the user access to their funds in the future.
A cyclical stock is a stock whose value is highly susceptible to macroeconomic events. The stock's price will increase or decrease depending on whether the economy is in a phase of expansion, peak, recession, depression, or recovery.
Cypherpunks are an unofficial group of individuals focused on building hardware and software to protect privacy and individual sovereignty. Cypherpunks are concerned with governments’ race towards a surveillance state as well as corporate domination of intellectual property.