The cryptocurrency vocabulary guide:
Digital assets offer a fresh alternative to the traditional markets; however, it is more important than ever to do your due diligence and homework about the coins you want to invest in. To understand cryptocurrencies, it takes a lot of time and effort to find the relevant information that lets you know a project. To avoid, to make a wrong decision, knowing the terminology beforehand often helps.
Let us obtain a deep understanding of what cryptocurrencies are and what they do. The best way to get started is with terminology.
Bitcoin – is a decentralized digital currency that allows an individual to send value to another individual through open-source, peer-to-peer software without using a central bank. Bitcoin is a scarce asset that cannot be inflated artificially. Many love Bitcoin because of its economic properties.
Altcoins – Any other digital currency next to Bitcoin is called Altcoins. Examples for Altcoins are Ripple, Bitcoin Cash, Cardano, Monero, or Litecoin. Altcoins follow alternative protocols differing from Bitcoin.
Shitcoins – Often used to refer to Altcoins. Bitcoin fanatics call Altcoins “Shitcoins” because of their effort to be like Bitcoin.
Blockchain – Is the technology behind digital assets. It is a distributed ledger system that stores information unchangeable and not erasable. A blockchain consists of a series of blocks that contain all the information of transactions completed in the network.
HODL – Commonly referred to as “hold” but actually means “hold on for dear life.” Slang to imply that you will keep on holding your asset and not selling it.
Long, going long, long position – Stands for “expecting the value of the asset to increase.” If you long Bitcoin, you expect its value to increase. Going long just simply means to buy an asset.
Short, going short, short position – Stands for “expecting the value of an asset to decrease”. If you short Bitcoin, you expect its value to decrease. Going short just simply means that you sell an asset.
Moon/ mooning – If Bitcoin moons, it appreciates in value rapidly.
Exchange – Market where you can buy digital assets. Not every exchange offers every token. Having more than one exchange will help get exposure to as many tokens and coins as possible.
ICO’s or Initial Coin Offerings – Describe the process where a company offers its token or coin the first time to the public to raise the value of the project. ICO comes from the initial term IPO (initial price offering) used in the conventional markets to describe the same situation just with stock and bonds instead of tokens or coins.
Airdrops – This is a method of distributing assets of a specific currency without exchanging value for it. In other words, you can participate in airdrops to get free tokens by signing up for an ICO.
Fiat currency – A currency established by a government with no real intrinsic value. Fiat currencies are inflationary currencies that can be printed more of. Examples are the USD, Euro, and Swiss Franc.
ATH or All-time high – Refers to the highest value Bitcoin has reached up to this date. If Bitcoins value has been 30k in 2020 but has never exceeded that value, this is called the all-time high.
ATL or All-time low – Refers to the lowest value Bitcoin has reached up to this date.
FOMO – This stand for “fear of missing out” and means that if Bitcoin dramatically increases in value, people tend to make a bad decision while buying or selling it because they fear to miss out on a new all-time high.
Market Cap or Market capitalization – The total market value of an asset. This can be easily calculated by multiplying the number of Bitcoin in holding times the price of Bitcoin.
Pump and dump – A scheme that involves people buying into a project to inflate the asset’s price unnaturally. As soon as they reached a specific value, they sell all their holdings and letting the currency drop to virtually zero.
Rekt – Means “getting wrecked” in the crypto-trading slang. Getting rekt means that an asset loses all its value, and the trader trading that value loses a significant amount of cash.
Bullish – This means that optimism in the market is high, and an asset’s value is appreciating. Assets are bought in a bullish market.
Bearish – This means that pessimism in the market is high, and the value of an asset is depreciating. Assets are sold in a bearish market.
ROI or return on investment – Indicates the expected amount of profits to be made on an investment. The anticipated return on investment is usually calculated before investing.
Whales – This is commonly referred to as traders or investors that move a significant amount of money. If an asset has low liquidity, one whale can determine an asset’s price by selling or buying it.
Satoshi Nakamoto – Is the famous pseudonym used to describe the founder of Bitcoin. His real identity is still, to this day, unknown.
Mining – Describes the process of forming new units of a specific digital asset. Every 10 minutes, a block gets mined on the Bitcoin network.
Noob – Beginners or newcomers are often referred to as “noobs” because they lack the necessary experience to understand the crypto buzz. It is not a very nice word.
To conclude, to understand the markets, you got to speak their language. This list of the essential terms you need in the crypto world will surely help you orient yourself and become a better investor or trader. Remember, always do your due diligence, especially when you dive into the deep ocean of altcoins.