Besides, they do not need collateral since there is no risk associated with counterparty or credit.</p>\n<p>In regards to that, flash loans are super capital-efficient since they provide big amounts of leverage. This type of capital efficiency can only be achieved in DeFi and not in the traditional financial marketplaces.</p>\n<p>Speaking of traditional finance, there are two types of loans - <strong>secured and unsecured</strong>. Banks will offer their clients unsecured loans based on their credit history.</p>\n<p>Lenders frequently require borrowers to put up collateral in order to assure that if the borrower is unable to repay the loan, the lender will still be able to recover their money. Even if the client has an excellent credit score, there are no assurances that the bank would grant a loan.</p>\n<p>This is where the idea of &ldquo;secured loans&rdquo; came from.</p>\n<p>So, an unsecured loan is when no collateral is needed. This absence of collateral does not imply that the flash loan lender will not get their money back. It simply indicates that it will just be sent back in a different manner.</p>\n<p>Rather than providing collateral, the borrower has to pay back the funds in an instant.</p>\n<p>A flash loan allows a customer to take as much as they desire without incurring any upfront fees. For instance, if someone wants to borrow $20,000 in ETH, a lending protocol will offer it to them quickly, but this does not indicate that the funds now belong to the borrower.</p>\n<p>Instead, they must use the borrowed cash to repay the obligation and maybe keep any funds that are left.</p>\n<p>In order for this to function, the operation must be fast, and the debt must be repaid to the protocol as soon as possible, otherwise, the transaction will be canceled. A blockchain enforces the loan pledge, therefore a decentralized ledger does not require collateral from the user.</p>\n<p>Even though the transactions are quick, flash loans are vulnerable to manipulation. Flash loan attacks are a sort of DeFi attack in which a malicious user acquires a flash loan through a lending protocol and distorts the market to their advantage utilizing various types of <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-black-hat-hacker/">black hat</strong></a> tactics.</p>\n<p>The cheapest to perform and the easiest to get away with are the flash loan attacks. Since DeFi skyrocketed in popularity, these types of attacks have become more frequent. To specify, there are already hundreds of millions of dollars in losses. Likewise, attackers of flash loans depend on devising new ways to manipulate the market and also adhering to the blockchain laws.</p>\n<p>Rather than relying on a single DEX for its price feed, DeFi platforms might use decentralized pricing prophets like Chainklink and Band Protocol to reduce the attack vector for flash loan assaults.</p>\n<p>One of the most crucial factors that allow malicious actors to get away with flash loan assaults is the latency in response time from DeFi platform manufacturers. Automated tools should be employed to prevent this from taking place.</p>\n<p><strong>OpenZeppelin Defender,</strong> for example, is a solution that allows project managers to spot <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-smart-contract/">smart contract</strong></a> flaws and other unusual activity, allowing them to respond fast and eliminate risks.</p>\n<p>In addition, flash loans are fundamentally forms of loans, with special characteristics. They were created as part of a larger trend to make financial instruments more available to the general public, eliminating the necessity of middlemen such as banks and other traditional financial organizations.</p>\n<p>Obtaining a satisfying loan is a lengthy procedure. In a usual case, a borrower is required to repay the loan over a period of months or perhaps years. However, this is not the case with flash loans. It is instantaneous with flash loans.</p>\n<p>The smart contract for the loan must be executed in the same transaction that it is leased out, which implies that the borrower must call on other smart contracts to make quick transactions with the loaned funds before the transaction closes.</p>","level":"hard","meta_title":"What is Flash Loan? Definition & Meaning | Crypto Wiki","meta_description":"Flash Loan meaning: Flash Loan - is a type of uncollateralized lending that is utilized across decentralized finance (DeFi) protocols based on the Ethereum network.","meta_keywords":null,"language":"en","created_at":"2022-03-18T06:46:44.000000Z","updated_at":"2022-05-13T14:32:23.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-flash-loan"},"prevSection":{"id":373,"original_id":null,"author_id":41,"translator_id":null,"title":"What are Futures?","slug":"what-are-futures","section":"F","keyword":"Futures","status":"published","definition":"legal agreement between parties stating that an asset must be purchased at a predetermined date in the future for a predetermined price.","content":"<p><strong>Futures, or futures contracts, are legally binding financial agreements</strong>. They determine that traders must buy a specified asset or commodity at a predetermined date in the future for a prearranged price. The parties involved in the agreement must track the price movements of an underlying asset.</p>\n<p>These financial tools are usually employed by speculators and hedgers. It's used as a method of foreseeing future price movements. It can be a way to gain profit and avoid risks.</p>\n<p><strong>Futures are considered as <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-derivative/">derivative financial instruments</strong> because their worth derives from an underlying asset. Investors typically use futures to track the prices of assets and commodities such as natural gas, bonds, wheat, or cryptocurrencies. The expiration date of futures can significantly impact the market results.</p>\n<p>In addition, futures contracts may be used to trade a variety of assets, including <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-fiat/">fiat currencies, equities, indices, government-issued debt instruments, and cryptocurrencies. Futures contracts are also used to trade oil, rare metals, agricultural products, and other assets.</p>\n<p><strong>Futures assets can be described using the expiration month</strong>. October Bitcoin means that certain <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/buy-bitcoin-btc/">Bitcoin (BTC)</strong></a> futures contracts are to expire in October.</p>\n<p>While futures contracts can be kept until they expire, many investors and traders choose to purchase and sell them on the open market before they expire.</p>\n<p>Futures trading platforms are able to offer leverage functionalities. Traders require just a percentage of the whole value of the contract. A futures trading platform can leverage or lend the remaining value.</p>\n<p>The initial amount that a trader must hold is known as the margin. A margin is determined based on the creditworthiness of the trader and the conditions of the trading platform.</p>\n<p>Once they approach their expiration date, futures contracts can be either cash-settled or physically settled. <strong>Cash-settled contracts</strong> mean that the underlying asset is settled by being converted into cash. <strong>Physically settled futures contracts</strong> require underlying assets to be exchanged during expiry.</p>\n<p>Traders are able to track ticks &ndash; the smallest price movements of futures contracts within a 24-hour window. Ticks refer to both increases and decreases in price.</p>\n<p>Futures traders, like other investing and trading products, frequently utilize technical analysis indicators in conjunction with fundamental research to gain additional insights into the price activity of futures contracts markets.</p>","level":"easy","meta_title":"What are Futures? Definition & Meaning | Crypto Wiki","meta_description":"Futures meaning: Futures - legal agreement between parties stating that an asset must be purchased at a predetermined date in the future for a predetermined price.","meta_keywords":null,"language":"en","created_at":"2022-03-16T07:32:57.000000Z","updated_at":"2023-01-26T09:15:02.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-are-futures"},"currentChapter":"F","currentSection":"what-is-financial-crime-enforcement-network-fincen","chapterTitle":"F","readingLevel":"medium"},"url":"/crypto/learn/crypto-terms/what-is-financial-crime-enforcement-network-fincen","version":"cdd198d50cbe5c9c21c9329d7c096ffc"}" class="container-fluid d-flex crypto-book p-0">

All Crypto From

Scratch!

Crypto 101 Handbook

Chapter 1: Blockchain

• 1.1

  What is the Blockchain?
  1.2

  Anonymous & Decentralized Blockchains: The Cornerstone of Crypto
  1.3

  What is a Blockchain Transaction in Crypto?
  1.4

  The Different Types of Crypto Fees Explained
  1.5

  The Key Notion Behind the Concept of Bridging in Crypto
  1.6

  Different Types of Blockchains: What to Look Out For?

Chapter 2: Cryptocurrencies

• 2.1

  What is a Cryptocurrency?
  2.2

  How Does Cryptocurrency Work?
  2.3

  Is Cryptocurrency a Good Investment? The Pros & Cons
  2.4

  Coin VS Token: How Do They Differ?
  2.5

  What are Stablecoins, Altcoins & Wrapped Coins?
  2.6

  Bitcoin: the Pioneer of the Crypto World
  2.7

  The Ultimate Blockchain for dApp Creation: Ethereum
  2.8

  What is Cardano and What is It Used For?
  2.9

  Shiba Inu: the Dogecoin Killer
  2.10

  Is Solana an Improved Version of Ethereum?
  2.11

  The Bridge Between Blockchains: Polkadot
  2.12

  Polygon: the Essential Scaling Solution for Ethereum
  2.13

  The Practical Use of Crypto

Chapter 3: Crypto Exchanges

• 3.1

  How do Cryptocurrency Exchanges Work?
  3.2

  DEX VS CEX: Two Sides of the Crypto Exchange Industry
  3.3

  Crypto Day Trading: The Difference Between Buying, Trading, and Swapping
  3.4

  KYC & AML: The Key to Complying With Legal Industry Standards
  3.5

  From Fiat to Crypto: How to Buy Crypto for the First Time
  3.6

  Taking Profits: Turning Crypto Into Fiat
  3.7

  You’ve Got Crypto: What Can You Do With It?

Chapter 4: Crypto Wallets

• 4.1

  What is a Crypto Wallet?
  4.2

  Hot Wallet VS Cold Wallet: Which One to Pick?
  4.3

  What are Non-Custodial Crypto Wallets?
  4.4

  Metamask: The Leading Non-Custodial Wallet
  4.5

  The Key Crypto Wallet Safety Practices: How Safe Can Crypto Be?

Chapter 5: NFTs

• 5.1

  What are Non-Fungible Tokens (NFTs)?
  5.2

  NFT Trading: The Ins and Outs
  5.3

  Tips and Tricks of Choosing the Right NFTs
  5.4

  How to Store NFTs: Best Practices
  5.5

  How to Create Your Own NFTs?
  5.6

  Making Passive Money with NFTs

Chapter 6: dApps & Defi

• 6.1

  What is Decentralized Finance (DeFi)?
  6.2

  DeFi 2.0: The New Version of Decentralized Finance
  6.3

  What Are dApps and How Do They Work?
  6.4

  Picking the Right dApps: Dos and Don'ts
  6.5

  Web 3.0: The Future of the Internet
  6.6

  What is the Core Purpose of Smart Contracts?
  6.7

  The Notion of a Decentralized Autonomous Ogranization (DAO)
  6.8

  What is the Goal of Staking Crypto Assets?
  6.9

  What is a Liquidity Pool and How Does It Work?
  6.10

  Automated Market Maker: the Cornerstone of the Decentralized Crypto Exchange Industry
  6.11

  The Main Yield Farming Techniques
  6.12

  Crypto Oracles: The Link Between Blockchain and Outside World Data
  6.13

  The Peculiarities of Decentralized Crypto Gambling
  6.14

  Metaverse: A New Perception of Reality

Chapter 7: Trading & Investing

• 7.1

  Where Can You Trade Cryptocurrencies?
  7.2

  Investing in Crypto: What Investing Options Do You Have?
  7.3

  ICO vs IDO vs IEO: Which One is the One?
  7.4

  What are Crypto Airdrops and How to Get Them?
  7.5

  How to Get Free Crypto Assets?
  7.6

  What is Crypto Arbitrage: The Main Principles
  7.7

  What is FUD: How to Use It to Your Advantage While Investing in Crypto?
  7.8

  Investing in Cryptocurrency: How to Manage Your Risks?
  7.9

  What is a Rug Pull in Crypto?
  7.10

  How to Spot and Avoid Rug Pulls?
  7.11

  The Key Legal Techniques of Avoiding Crypto Taxes

Chapter 8: Crypto Analysis

• 8.1

  Bearish and Bullish Markets: Do They Matter?
  8.2

  5 Best Crypto Technical Analysis Indicators You Must Know About
  8.3

  Technical Analysis: What are Candlesticks, Trendlines, and Patterns?
  8.4

  Crypto Tracking: How to Track Your Favorite Coins & Tokens?
  8.5

  Crypto Research Fundamentals & Social Signals: Your Daily Trading Strategy

Chapter 9: Mining

coming soon

Chapter 10: Crypto Terms

• 10.1

  All Crypto Terms

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