Are you new to crypto? Are people constantly telling you to HODL and you can’t figure out what language it is they are speaking or have you found yourself floating when you join crypto conversations in platforms like Twitter Spaces? You are a Noob.
Here is a guide to some of the more commonly used terms in this exciting world that you should know about.
In digital currency, an address is basically a destination where a user sends and receives digital currency. In a way, it is similar to a bank account. These addresses usually include a long series of letters and numbers.
Alpha is basically new information.
An altcoin is a digital currency other than bitcoin.
In crypto, arbitrage refers to taking advantage of the price difference between two different exchanges. If bitcoin is selling for Sh108,950 on one exchange and Sh119,000 on another, a trader can buy the digital currency on the first exchange and sell it on the second for a modest profit. I have covered Arbitrage in-depth here
“ATH” is an abbreviation of “all-time high.” This term is quite helpful to know for tracking the digital currency markets because assets are very volatile. In the long run, keeping their ATH in mind can prove valuable.
If you trade forex or stocks you can skip this one. Generally “Bears” believe that a cryptocurrency will decline in value. For instance, if you think bitcoin will depreciate, you’re a bear and your sentiment surrounding the digital asset is “bearish.”
In 2010, this is early crypto days, Laszlo Hanyecz used 10,000 bitcoin to buy a pizza to demonstrate that you can buy something with crypto, an amount that today would be $593,565,000 Hanyecz is known as the first person to use #BTC in a commercial transaction.
A lot of digital currencies make use of blocks, which contain transactions that have been confirmed and then combined together.
The blockchain, which is a distributed ledger system, consists of a series of blocks. These blocks contain verified transactions. The blockchain was designed to be not only decentralized but also immutable, meaning that entries could not be erased once placed on this distributed ledger. The idea of the blockchain was first introduced when the bitcoin white paper was released in late 2008.
This is the opposite of a bear, If you believe Bitcoin will rise in value, you are a “bull.” Your optimistic expectation is described as “bullish.”
A cryptocurrency is merely a currency that relies on cryptography. Bitcoin, for example, leverages cryptography in order to verify transactions.
Cryptography is basically the process of encoding and decoding information so that would-be observers are unable to understand the information being sent.
DeFi stands for decentralized finance, an umbrella term for a variety of financial applications in cryptocurrency or blockchain geared toward disrupting financial intermediaries.
DeFi draws inspiration from blockchain, the technology behind the digital currency bitcoin, which allows several entities to hold a copy of a history of transactions, meaning it isn’t controlled by a single, central source
A distributed ledger is a system of recording information that is simply distributed, or spread across, many different devices. The blockchain, for example, is a distributed ledger that was originally created to keep track of all bitcoin transactions.
This is the act of revealing identifying information about someone online, such as their real name, home address, workplace, phone, financial, and other personal information, which could, in turn, be used for real-life crime!
This stands for cash.
Escrow refers to a third-party holding financial resources on the behalf of other parties. For example, during P2P transactions on Binance, Binance holds funds in escrow when the other entities involved in a transaction may not trust each other to prevent scams.
Fiat currencies are currencies that have value because they are minted by a central bank. Fiat means “by decree,” and these currencies have value because some central authority has decreed that they have a monetary value. Examples of fiat currencies include the Kenyans Shilling or the US Dollar.
Exchanges are basically just marketplaces where traders can make digital currency transactions. If a person wants to buy bitcoin, going to exchange is the fastest way to accomplish this objective. There are many of these floating around.
The term “FOMO” stands for the phrase “fear of missing out.” This occurs when investors start buying up a particular asset based on their expectations that it will rise in value. Market participants can easily flock to an asset should that asset experience sharp gains.
Getting caught up in FOMO can be dangerous.
Fear, uncertainty, and doubt can be summed up using the term “FUD.” The idea behind this is that whales may spread misleading or inaccurate information in order to cause an asset’s price to decline. A trader may want an asset’s price to fall so they can either short it successfully or buy in at a lower price and increase their chance of generating a gain.
Real-time cost of transactions bases on supply and demand, like credit card fees charged to vendors
Cryptocurrency investors developed the term “HODL,” which stands for “hold on for dear life.” The acronym originally came from a misspelling of the word “hold.
Digital currencies can be highly volatile, so when they start experiencing significant price fluctuations, don’t sell, simply “HODL”.
Initial Coin Offering
An initial coin offering (ICO) represents the first time that an organization offers digital tokens to the public in an effort to raise money. Companies frequently hold these offerings so they can finance projects.
These digital token sales are similar to initial public offerings (IPOs), where companies sell more traditional assets such as stocks and bonds in order to raise funds.
KYC stands for “know your customer.” Many jurisdictions have KYC regulations, which have come to affect startups holding ICOs. These regulations require companies holding these digital token sales to verify the identity of their investors hence KYC verifications.
if you’re a bull, going long, also known as taking a long position, means making a wager that an asset will rise in value. If a trader purchases a digital currency like bitcoin, for example, they are making a bet that the cryptocurrency will appreciate hence they are longing.
Simply buying digital currency is taking a long position.
Market cap is short for market capitalization, which is a term for total market value. The market cap of bitcoin, for example, is the number of BTC outstanding multiplied by the digital currency’s price.
Mining is the process of creating new units of digital currency. For example, the bitcoin network releases new bitcoins every time a block is mined. In this instance, mining involves confirming transactions and combining them into blocks.
This verification requires hardware and electricity, and miners are rewarded with digital tokens for contributing these needed resources.
The mining incentive is the reward that miners get for confirming transactions and mining them into blocks. Verifying the transactions of the bitcoin network, for example, requires specialized hardware and substantial electricity, so miners are compensated with a mining incentive.
Initially, bitcoin’s mining incentive was 50 BTC, but as of February 2021, miners gain 6.25 bitcoin for every new block mined
When a digital currency moons, that means it rises sharply in value. For example, a crypto trader could talk about how an altcoin is going “to the moon!”
POW is an acronym for “proof of work,” which is a system of proving that a digital currency’s transactions have been verified. Many digital currencies, including bitcoin, use POW.
POS stands for “proof of stake,” which is another method of confirming transactions. The digital currencies that use this approach to verification frequently provide all their digital tokens upfront, and miners are selected based on how many units they have (their stake). In these cases, users who confirm transactions, sometimes referred to as “forgers,” receive transaction fees for their contributions.
A private key is a piece of information—presented as a string of numbers and letters—that an investor can use to access their digital currency.
A public key is an address where an investor can receive digital currencies. This public key, like the private key, is a combination of numbers and letters.
Pump and Dump
A “pump and dump” is a type of investment scheme where market participants work together to inflate the price of an asset so they can sell it when its value is artificially high.
The term “rekt” is crypto trader slang for “wrecked.” Basically, it means that a trader lost substantial amounts of money.
ROI is short for “return on investment.”
A Rug pull is a scam. Do you think BitClout is a Rug pull?
Satoshi Nakamoto is the pseudonym for the creator of bitcoin.
Shorting is the opposite of longing an asset, also known as taking a short position, which means making a bet that the asset will fall in value.
A digital token is a unit of a digital currency, such as a bitcoin
A Wallet is defined as software that interacts with the blockchain and lets users receive and send their digital money. Blockchain wallets don’t actually store the money, instead, they lock away access. The only way to get access to the money is by providing some type of password. Typically those passwords are called a “key” and they are a long string of letters and numbers.
The term “whale” is used to describe a trader who makes sizable bets. This term is a good one to know because market participants with the ability to execute very large transactions can potentially manipulate the market—or “make waves in the ocean.”
The developers who create digital currencies usually provide white papers for these innovative assets. These documents generally offer comprehensive information on the digital token in question, as well as its underlying technology.
For example, the bitcoin white paper provided information on a “peer-to-peer electronic cash system. Investors who are considering taking part in ICOs can benefit greatly from reviewing any available white papers on the subject.