10 Crypto Buzzwords You Need To Know
This article is brought to you by Bitbuy, a FINTRAC registered Canadian cryptocurrency exchange.
You will quickly realize there are a lot of acronyms and concepts, in the crypto sphere in general and in the world of crypto trading in particular, that can be confusing to beginners.
All cryptocurrencies, for example, have their abbreviation in two, three, four or even five letters. Bitcoin becomes BTC, Ethereum is transformed into ETH, and Tether into USDT. You’ll find dozens of other acronyms such as "BIP", "DAO", "P2P" or "DPoS", which is why it seems important for us to give you what we think are the 10 words and concepts that you will most likely encounter when starting to use crypto exchanges.
Let's see here an acronym that you are likely to come across often in the world of crypto exchanges: ATH. This abbreviation stands for “All Time High”. This is quite simply the highest value ever reached by a cryptocurrency. In the same way that sports records are only valid until they are broken, the ATH will be updated as soon as the price of a specific cryptocurrency exceeds the previous ATH. All cryptocurrencies have their own ATH. For example, Bitcoin’s ATH is, at the time of this writing, $19,665.39 and was reached on December 16, 2017. We can also take shorter periods and look for example the ATHs year after year to analyze the evolution of the cryptocurrency in question. To find out the ATH’s of the different cryptocurrencies, you can use the site https://athcoinindex.com.
Buy the dip
Being a crypto trader is anything but an easy task. Those who think that making a profit with day trading is easy, have certainly never tried this out. Analyzing the market, taking the news into account to anticipate bullish or bearish movements requires real talent. Among the expressions that you will frequently see in the world of cryptocurrency trading is the famous "Buy the dip". It simply means buying an asset after its price has fallen. The concept of “buying the dip” is based on the theory of price waves. When an investor buys an asset after its price has fallen, he is buying it at a lower price. These investors are counting on the market to rebound in order to profit from future price increases. Like all trading strategies, buying low is not a guarantee that an investor will profit. An asset can indeed continue to fall. The phrase has arisen in opposition to a trend of some hobbyist traders rushing in as soon as they see the price going up. They are often victims of what is called FOMO, our next acronym.
When I told you that acronyms were everywhere in the crypto sphere, here's another one to add to your collection: FOMO. This abbreviation is short for “Fear Of Missing Out”. When trading, when you have to make constant money decisions, and fear is a feeling that most traders would like to pass on, but is very much present. When it comes to crypto, one of the most pernicious forms of fear is the fear of missing out on the next price hike and therefore missing out on potential profits. It is the infamous FOMO that grabs you by the throat! This is how it goes most of the time: we notice that a cryptocurrency is on the rise, that traders are boasting on social networks that they have made significant profits recently with it, so we take a good look at the curve on CoinMarketCap, and realize that it is indeed increasing, which makes us say that we are missing a unique opportunity to earn money and that we urgently need to invest! We are afraid, we rush to buy the crypto in question without doing any additional research first… and here we are, the latest victim of FOMO. It goes without saying that the opposite should be done, that is: Never to make an impulsive decision, especially if you have not studied the subject thoroughly.
Contrary to what many people think, one cannot buy cryptocurrencies “just like this”, or 100% anonymously, as much as the mainstream media would like to say. Most crypto exchanges (those platforms where you can buy and sell cryptocurrency) must therefore verify the identity of their customers. This verification process is called KYC, an abbreviation for “Know Your Customer”. KYC verifications are different from site to site. Some platforms will be very demanding and will require many documents before validating their customers when others will be more flexible. For their KYC, here are the type of documents that exchanges can request:
- Recent photos,
- Proof of residence (electricity bill, internet ...),
- Proof of identification (driver's license, passport),
- Photo of the customer holding a sheet of paper on which information is written (the name of the platform in question, the current date, ...).
The existence of KYC is the reason why it is said that buying a cryptocurrency like Bitcoin is “pseudonymity” rather than anonymity. By providing your personal information to an exchange, your identity is then linked to your purchases. But there’s a good reason for doing so ! KYC verifications are set up to prevent fraud and money laundering as well as prevent users from being scammed by fake or so-called “crypto advisors” now crawling social medias.
A “stop order” is a handy feature used in traditional financial exchanges as well as cryptocurrency exchanges. With a stop order, a user can choose a sell price that only executes if the security (or the price of the cryptocurrency) reaches a specific amount to enter or exit the market. This way, traders can protect themselves by limiting their losses if prices were to suddenly collapse. Let us take an objective example: If you recently bought a cryptocurrency for $10 and it was now worth $40, you might be aware that its volatility is high and that you are not immune to experiencing a crash in prices. In this case scenario, you can place a “stop loss order” at $30, so that if the price of your cryptocurrency were to drop below $30, it would automatically be sold and you thus preserve part of your earnings. Pretty cool, uh ?
The concept of “volatility” is very present in the cryptocurrency market. Note that we are obviously also talking about volatility in traditional finance. To put it simply, let's say that volatility is the magnitude of changes in the price of a financial asset. In other words, it is its ability to increase or decrease in a very short period of time. This notion of volatility is ubiquitous in cryptocurrencies because most do not yet have a large market capitalization, so even small events can have a strong influence on the price. The parallel to understand is that of the ocean. Here’s a quick explanation: If you are a large cruise ship (an asset with a large market cap) small waves in the ocean aren't going to have much of an impact on you and your sailing peacefully, they won't affect you much. On the other hand, if you are a canoe (an asset with a very restricted capitalization), even small wavelets will affect you and might destabilize you. This is an example why Bitcoin has often been criticized for its high volatility. Indeed, BTC prices were close to $20,000 at the end of 2017 and a few weeks later only worth $6,000. But Bitcoin has balanced its volatility over time and is now less volatile than it was a few years or months ago. It becomes more mature and stable as its capitalization solidifies through the injection of capital.
HODL is hands down one of the most popular typos in the crypto world! Whether you visit English or other language-speaking sites, you are bound to come across this term at one point or another. Here is the meaning and origin of this famous "crypto lingo". When the price of a currency is falling, we have two options: either sell or hold onto it in the hope that the price will eventually rise again soon. Now let's take a trip down memory lane, back to December 18, 2013, to the popular 10:03 am discussion board, where a certain GameKyuubi posts a message titled "I AM HODLING", thus revealing a magnificent spelling error since he should have written "I AM HOLDING". In his post, GameKyuubi explains that he keeps his Bitcoins even if the price is falling dramatically. "Why do I keep my Bitcoins? I will tell you why. Because I am a bad trader and I know that I am a bad trader! ". The message is somewhat disjointed, there are a lot of insults and too many capital letters, it must be said that GameKyuubi is drinking strong alcohol. “Yes I drank whiskey. Besides, on the bottle it is written whisky ”. Still, this post which should have been a forum publication among thousands of others and be forgotten a few hours later, but instead had a very singular fate. This HODLING spelling appealed to other members of the crypto community who started picking it up when they held a down coin. Gradually, HODL has become a popular term in the crypto sphere. We don't know if GameKyuubi has kept his bitcoins up to this day, but if so, time and the market have proved him right and he has certainly made plenty of money to buy himself another bottle of whiskey… or Whisky.
Bullish / Bearish
You will see, the crypto sphere is full of living creatures, and I am not talking about traders here, but real animals. Indeed, we certainly come across shark-traders in certain murky waters, but we are also face to face with bears and bulls on a daily basis. Let me explain this thought to you. In crypto, we use the terms “bearish” and “bullish”. These are two widely used words as they are used to describe the state of the market. If it shows an uptrend, we will speak of a bullish trend or a Bull Market. In the opposite case, we will evoke a bearish trend and a Bear Market. It is funny to see that these two opposing tendencies are characterized by these two animals: the bull and the bear. It is therefore no coincidence that the Wall Street Bull is found near the New York Stock Exchange, a magnificent bronze sculpture by artist Arturo Di Modica.
Another crypto acronym to know about ... OTC, which is short for “Over The Counter”. This term largely used term refers to a transaction that is concluded directly between the seller and the buyer. Some platforms offer an OTC service, such as the regulated Canadian exchange named Bitbuy. Once registered, users can fund their account with $25,000 and get Bitcoin or ETH the very same day through a professional trader.
One last acronym to sum up this article? We warned you, the crypto sphere is filled with numerous acronyms and meanings. FUD isn’t short for an expression, but an acronym that compiles three concepts: Fear, Uncertainty, and Doubt. Someone who will generate FUD - also known as a “FUDster” - is someone who intentionally spreads bad or fake news with the intention of driving down the price of a specific cryptocurrency. A perfect example of FUD was the media release in September 2017 of Jamie Dimon, the boss of JPMorgan bank who said "Bitcoin is a scam and it will eventually implode." Obviously this quote has been echoed hundreds of times in all media, successful FUD mission for Jamie Dimon. Ironically, JP Morgan increasingly recognizes the potential of Bitcoin. It's also called a jacket flip.