The Most Popular Cryptocurrency Terms
Making sense of the jargon associated with cryptocurrencies can be a genuine task for the uninitiated. The crypto industry can be hardly blamed for this, as it simply behaves in a manner similar to any newcomer trend, be it a steam machine or the AI. While cryptocurrency terms are hardly the stuff of dictionaries and standard definitions found in them, you can always try to make a little effort to catch up with at least the most popular of these, and the guide we present to you here is designed as a useful point of reference.
What Does HODL Mean?
The term “HODL” is a great illustration of the off-hand nature in which some of the popular cryptocurrency terms were created – in essence, it means holding on to one’s cryptocurrency tokens at the time of great market volatility, particularly if you buy them as part of intended buy-and-hold strategy. You can see HODLING as acting like an Ebenezer Scrooge with your tokens either out of a general anxiety or as part of the larger investment strategy which requires you to act in a passive manner at a particular moment. In any case, the person swearing by HODLING believes that keeping your tokens in stash now will become a profitable action down the line i.e. as soon as their price goes up.
The term was retroactively turned into a backronym that supposedly stands for “Hold On for Dear Life”, which is sufficiently descriptive of both the attitude and practice.
In reality, the term has a more humble origin, appearing first in a bitcoin forum post by one GameKyuubi user who was supposedly drunk at the time and blissfully unaware that he was creating a universal crypto typo for posterity.
What Does Bearish and Bullish Mean?
Bearing (pun intended) slight relevance to the above mentioned HODL-ing are the terms “bullish” and “bearish” which the crypto pros and amateurs alike often use when describing the current state of the market. Both terms actually have origins in the Wall Street and its trading jargon. A “bearish” market is the one dominated by the anticipation that a currency’s price (or prices) will go up. By analogy, a “bullish” market refers to the dominant mood of expectation that a particular price is going to go down.
Similarly, “bears” and “bulls” are sometimes used as references to a particular type of person making references to the state of the market. Bear, in this context, would be a person who expects the price to decrease and thus behaves pessimistically with regard to it and may engage in HODLING. Bulls are more optimistic about the prices and, by extension, their potential to profit from the upward price movements.
A sub-species of a bull is a bullish “whale” i.e. a person with deep pockets engaging in risky purchases of tokens based on personal optimism, the lack of knowledge or as a result of being goaded on by others. A less rich form of a “whale” is sometimes called a “dolphin”, while those falling prey to larger predators and having smaller amounts of cryptos in their pockets are sometimes called “fish”.
In any case, bears have one additional thing to worry about: the bear trap. This refers to the practice of artificially creating a sense of impending price drop in the market by mass selling a particular asset at the same time. This usually leads to the corresponding mass sales of assets by unsuspecting traders, which eventually decreases an asset’s price. The trap is sprung once the conspirators buy back the desired asset at lower price, hoping to profit from the inevitable price rebound which usually follows.
What Does FOMO Mean?
FOMO is yet another term that gained popularity in the cryptoverse over time. Unlike some of its counterparts, its meaning is relatively straightforward, as it stands for the "fear of missing out". Once again, this has to do with the market movements, as those under the FOMO spell are afraid of the potential failure to capitalize on the predicted rise in the value of a particular cryptocurrency. As a response to suffering from FOMO, they usually start to frantically buy a particular asset, often falling into a trap set for them by those who want to manipulate the market.
Derived from this is the opposite term of “JOMO”, which stands for the “Joy of Missing Out”. This refers to the sense of joy the disbelievers in cryptocurrencies may feel at not having to care about sudden price drops, scams, thefts, etc. These persons are sometimes designated as “no-coiners”.
What Are Pumps & Dumps and How Do You “Shill”?
Closely related to the above practices are the terms “shilling” and “pump & dump”. Someone who wants to generate artificial interest in a particular token can be described as “shilling” for it, either because he/she is being paid for it or out of sheer misguided belief.
Pump and dump schemes follow the pattern of creating hype for a particular cryptocurrency, followed by the meteoric increase in their price and the huge price drop/crash which comes immediately afterward.
What Is a Cryptocurrency’s Market Cap?
A shorthand form for “market capitalization”, this term describes the total value of a particular cryptocurrency. It is determined based on the multiplication of the total number of tokens in supply by the individual price of a token at the time of calculation. Sites such as Coinpaprika offer insights into market cap values for various currencies.
How Do You “Go Short” without “Going Long”?
Trading is an important consideration in all things crypto and margin trading is a term referring to a tactic involving going into overdrive when it comes to trading, even putting into danger the tokens you own. A trader would sometimes use funds borrowed from a broker to actually engage in cryptocurrency trading.
Accordingly, “going long” means that margin trading will go well provided that prices are increased, while “going short” refers to the same effect following a price drop.
What Is Initial Coin Offering (ICO) vs. Initial Exchange Offering (IEO)?
While the ICOs have been part of the cryptocurrency lingo since the dawn of time, “IEO” is a largely novel term whose difference from an ICO goes beyond a mere letter change.
Initial coin offering refers to an instance in which an institution, company or organization publicly offers its tokens for the first time in an attempt to gain access to funding. It is often found in the initial stages of projects as a means to put them on a stable financial footing from the outset.
The term itself is similar to the one used in traditional asset trading, such as one involving stocks (initial public offering) which the companies offer in order to raise funds.
On the other hand, the IEO still bears some similarity to an ICO, with the key difference being the platform that offers tokens. In case of IEO, these tokens are offered on cryptocurrency exchanges instead of using direct channels to reach potential investors.
ICOs are more publicly oriented, while IEOs tend to appeal to a narrower circle of members of the partnering exchange, making ICOs a bit riskier an endeavor overall.
Other Popular Terms
With a term seemingly more suitable for a military maneuver, airdrops do have something to do with “campaigns”, which, luckily, rely on marketing instead of planes and guns. The term refers to a distribution of tokens to people in order to promote their use and popularity. As no lunch is fully ever free, receiving tokens as part of an airdrop will usually come with a requirement to share reports on a token online, refer users and friends, etc.
Support for atomic swap entails allowing users to directly exchange one cryptocurrency for another across different blockchain or outside of them (off-chain) without the need for a centralized third-party platform such as cryptocurrency exchange.
Cold and Hot Storage
Storages can be hot and cold, depending on where you decide to stash away your tokens or private keys. Storing them online i.e. on devices that are connected to the internet is described as “hot storage”. Doing the same offline, usually in paper wallets or offline PCs is known as cold storage. Both approaches come with a set of benefits and weaknesses relating to convenience and associated levels of protection.
Double spending refers to instances in which a single digital token may be spent on more than one occasion. This is a potentially exploitable flaw in various schemes and an inspiration behind various security measures put in place against it.
Faucets are the rewards systems in the form of virtual pipelines that give away tokens in exchange for performing various tasks. They are usually available via websites or apps and serve as promotional tools in generating interest in a specific token.
KYC and AML
Often found in the context of crypto regulations, these terms actually come from the legal world. KYC stands for “know your customer” and refers to the obligation of businesses, including those working with cryptocurrencies, to check and validate the identity of their customers, be it an individual user or a large-scale investor.
Closely related to KYC procedures are AML (anti-money laundering) regulations that set down measures to be taken to prevent using cryptocurrencies as a money-laundering tool for fiat currencies.
Over-the-counter transactions are those taking place outside the environment of a regular platform, such as exchange. They are private in nature and often made through P2P channels. OTC transactions can sometimes be parts of shady deals, but traders often have to engage in them when other trading channels are prohibited or non-existent.