Essential Cryptocurrency Terms You Need to Know
Navigating the world of cryptocurrencies can be overwhelming, especially when it comes to understanding the jargon associated with it. But don’t worry, we’ve got you covered! In this guide, we’ll break down some of the most popular cryptocurrency terms to help you better understand this exciting and ever-evolving industry.
Let’s start with “HODL.” This term originated from a bitcoin forum post by a user who misspelled “hold” while drunk, and it has since become a popular term in the crypto community. Essentially, HODLing means holding onto your cryptocurrency tokens through market volatility, either out of anxiety or as part of a larger investment strategy. The belief is that holding onto your tokens now will lead to profitable outcomes in the future. It’s also been retroactively turned into an acronym for “Hold On for Dear Life.”
Next up are the terms “bearish” and “bullish,” which are used to describe the current state of the market. A “bearish” market refers to one in which traders anticipate that a currency’s price will go down, while a “bullish” market refers to the dominant mood of expectation that a particular price will go up. “Bears” and “bulls” are sometimes used to refer to traders who have pessimistic or optimistic expectations, respectively.
“FOMO” is another popular term in the cryptoverse that stands for “fear of missing out.” It describes the anxiety traders feel about not capitalizing on a predicted rise in the value of a particular cryptocurrency. This can lead to frantic buying and falling into traps set by those who want to manipulate the market. On the opposite end of the spectrum is “JOMO,” or “joy of missing out,” which refers to the sense of joy non-believers in cryptocurrencies may feel at not having to worry about sudden price drops, scams, thefts, and the like.
Lastly, there are “pump & dump” schemes, in which someone generates artificial interest in a particular token, and “shilling,” which refers to someone promoting a token either out of misguided belief or being paid for it. It’s important to be aware of these practices and do your own research before investing.
And don’t forget about “market cap,” which is a shorthand for “market capitalization” and refers to the total value of a particular cryptocurrency. It’s determined by multiplying the total number of tokens in supply by the individual price of a token at the time of calculation. This is a crucial metric to consider when evaluating different cryptocurrencies.
We hope this guide has helped demystify some of the jargon associated with cryptocurrencies. Remember, the more you educate yourself, the better equipped you’ll be to navigate this exciting and ever-changing industry!
To “go short” in trading means to bet on a cryptocurrency’s price decreasing, while “going long” means to bet on the price increasing. So, if a trader wants to “go short” without “going long,” they would only place bets on price decreases and avoid placing bets on price increases.
Regarding initial coin offerings (ICO) and initial exchange offerings (IEO), ICOs involve companies publicly offering their tokens to gain funding, while IEOs involve the tokens being offered on cryptocurrency exchanges. IEOs tend to have a narrower audience than ICOs since they are offered only to members of the partnering exchange, making them less publicly oriented.
Other popular terms in cryptocurrency include “airdrop,” which refers to a distribution of tokens to promote their use and popularity, “atomic swap,” which allows users to directly exchange one cryptocurrency for another without using a centralized third-party platform, and “cold and hot storage,” which refers to storing tokens offline (cold storage) or online (hot storage).
“Double spending” refers to instances in which a single digital token may be spent on more than one occasion, which is a flaw that security measures aim to prevent. “Crypto faucet” refers to rewards systems that give away tokens in exchange for performing various tasks, and “KYC and AML” are legal requirements that check and validate the identity of customers and prevent cryptocurrencies from being used for money laundering. Finally, “over-the-counter” (OTC) transactions take place outside regular platforms and are often private, although they can sometimes be part of shady deals.