Cryptocurrency, Bitcoin terms and abbreviation explained
I believe you have heard the terms
- USDT and the rest of them
they are generally called cryptocurrency. Crypto is the short form for cryptocurrency.
Cryptocurrency, Bitcoin terms and abbreviations
The national currency issued by the government, Central banks, or federal reserve gets its value based on the security provided by the government.
Over the years, especially during the 2008 economic downturn, people have accused the Government of manipulating the economy to satisfy their political donors.
Cryptocurrency is a new spectrum created to take the above power away from the government. Cryptocurrency claims to offer a decentralised economic transaction and trade devoid of government control or managed by no one.
David Chaum first conceived the idea of Cryptocurrency in 1995. The first Cryptocurrency, Bitcoin, was implemented in the year 2009.
Bitcoin is the De-facto king or leader among all cryptocurrencies; it has significant dominance in the crypto market and is generally accepted as the US Dollar.
As of today, there are over 5,161 different types of coins and tokens, according to Coinmarketcap.
The article explains some confusing terms used in cryptocurrency or bitcoin transactions; we will discuss terms and abbreviations used regarding bitcoin or any other crypto asset.
We will also explain the difference between
- Coins and tokens
- Trading and Investing.
Below are some of the most popular terms and abbreviations used in cryptocurrency, bitcoin and trading.
Coinmarketcap.com is a website where you can see different types of cryptocurrency, starting from bitcoin to the lowest coin there.
The term Coinmarket is usually used in cryptocurrency when seeking information or market analysis.
You can browse through the website to get details of each coin or token; The platform allows you to do the necessary research before buying or trading any cryptocurrency.
Coinmarketcap gives users the following valuable information:
- The market capitalisation of the coin or token
- Previous price per unit coin or token over time
- Total supply of the coin or token in the market
- Uses and value of a particular coin
- Creators and Originators of the coin
You can read the difference between Coin and token here.
An altcoin is another cryptocurrency term used to describe other coins. Altcoins are any crypto coins or tokens not named Bitcoin.
The Cryptocurrency term Altcoin was derived from the word "Alternate", which means substitute.
Since Bitcoin launched in 2009, thousands of altcoins have emerged. Some coins are hot-garbage-ridden with a financial crime - more reason to use coinmarket to research any currency you wish to buy.
Examples of Altcoins are Ripple, Dogecoin, etc.
Don’t just buy any altcoin you hear especially those ones you buy from people like trumpcoin, zugacoin 😂😂 etc
Fiat currency is government-backed and not backed by any commodity (like gold). The Naira notes in your wallet; those US dollars you buy from banks are called fiat currencies.
The value of US dollars relies solely on collective faith in the institution of the United States government. If the US crumbles, so does your dollar fiat.
Just like the Nigerian economy is going down, so is Naira going down. People always say the dollar is rising; that may not be the case - simply put, Naira is going down.
The above description means that the cryptocurrency term "fiat" literally means the money you use for shopping or paying bills.
D. Stable Coin
Stable Coin is a popular cryptocurrency term. Stable coins are coins that are not affiliated with the volatility of the cryptoMarket. Stable coins don't usually change in value, more like a fiat.
Stable Coins aims to mirror the currency they are named after. Examples of stable Coins are
- USDT- US Dollar Tether
- BUSD - Binance USD
- TUSD - True USD
- USDC - USD coin, etc
In a real sense, the cryptocurrency term "Stable coin" is not a fiat but simulates a particular fiat like USD.
The upcoming terms may be a bit technical, hope you won't find them confusing? 🤪
The cryptocurrency abbreviation DYOR stands for Do Your Research. DYOR is a common phrase used by cryptocurrency enthusiasts. However, the acronym is not a piece of advice exclusive to the cryptocurrency ecosystem.
DYOR is used throughout the internet due to how fast and easy misinformation can spread.
When someone asks which coin to buy and keep, the best reply is DYOR. Funny enough, someone went to search DYOR in Binance 🤣
Another abbreviation used in the cryptocurrency world is HODL. Cryptocurrency investors developed the term "HODL".
HODL stands for "hold on for dear life." The acronym initially came from a misspelling of the word "hold."
Digital currencies can be highly volatile, so when they start experiencing significant price fluctuations, some market participants state that they should simply "HODL."
The best time to start hodling coins is from bitcoin halving; most coins will make 5x, 10x, 20x, 50x or even 100x within one year from the bitcoin halving date.
If you buy a coin at 1000$ during BTC halving and hodl it, if it rallies in the bull season to 20x your 1000$ will turn to 20,000$ 🤪
G. Satoshi Nakamoto
Satoshi Nakamoto is the individual, or group of individuals, credited with developing the world’s first cryptocurrency, Bitcoin. The founder of Bitcoin remains completely anonymous.
If you see the cryptocurrency term ‘satoshis’ thrown around, bear in mind that it refers to a fractional unit of Bitcoin. A satoshi is the smallest unit of a bitcoin, equivalent to 100 millionth of a bitcoin.
1 Satoshi is worth 0.00000001 BTC.
In common sense, the cryptocurrency term Satoshi is similar to the use of cents in the United States, where 100 cents equals 1 USD.
H. GAS Price
When you make a transaction on the blockchain, you have to pay a fee. That fee is described by using the cryptocurrency term gas price.
You can choose to pay higher fees for faster transaction speeds or lower fees for slower transaction fees.
So if you want to sell BTC from your blockchain and you want a faster transaction, it is advised you choose a priority fee 🤣 for quick confirmation and delivery of your coin to the receiving wallet.
The gas price is essentially similar to your usual bank fee charged by banks to process a transaction.
A typical example of a Gas fee In Cryptocurrency
ICO stands for Initial Coin Offering. ICO is a new method for projects and startups to secure funding. Pretty much anyone can participate in an ICO.
More importantly, it’s about finding the right fit for investors and founders. If you hear about a new ICO and founders are reputable people like CZ, Elon Musk etc. My guess is you will rush to be part of it
KYC is a compliance cryptocurrency term that stands for Know Your Customer. It will probably come up if you take a more mainstream approach to purchase crypto with fiat.
Almost all exchange and the centralised site will require KYC. In doing so, they will get to know about your identity to fish you out if you commit fraud with crypto easily.
Blockchain wallet, trust wallet, exodus wallet, are wallet that doesn't require KYC.
K. Private Key 🔑
Concerning security, the Cryptocurrency term Private Key comes into play.
Private Keys are the super-important string of numbers and letters you should never share with anyone.
If someone can access your private key, you can lose your funds in a matter of seconds. If you forget your login details and you lose your private keys, your funds are gone.
Pictorial description of a Private Key.
A whale is a cryptocurrency term used for people with the most valuable Bitcoin addresses.
They own thousands of BTC (not thousands of dollar worth of BTC ). There are about 2000 Bitcoin whale addresses, and only three own more than 100,000 BTC, according to BitcoinPlay.
When you think of Bitcoin whales, think of folks like Satoshi Nakamoto, Tim Draper, Barry Silbert and the Winklevoss twins. These folks have been advocating for Bitcoin since the early 2010s.
We use the cryptocurrency term Whale because their movements disturb the waters that smaller fish swim in; thus,theiry decision regarding Hodling or selling shakes the market.
"ATH" is a cryptocurrency abbreviation of "all-time high." This term can be pretty helpful to know for tracking the digital currency markets.
Crypto assets are so volatile, so keeping their ATH in mind can prove valuable. A digital currency could potentially hit several local highs before rising to a new all-time high
If a trader believes that an asset will rise in value, he or she is a "bull." When an investor has this optimistic expectation of an asset's future bull, this frame of mind is termed "bullish."
The group of people who believe that bitcoin, Dogecoin or any other crypocurrency will rise are said to be bullish.
"Bears" believe that an asset, for example, a digital currency, will decline in value.
When a trader thinks a cryptocurrency asset will depreciate, their sentiment surrounding the digital asset is described by the crypto term "bearish."
In many situations, traders will use this expectation by taking a short position on an asset, meaning that they will make a wager that will pay off should the crypto asset in question fall in value.
Some traders make profits by betting against the rise of a certain cryptocurrency.
P. Exchange Sites
Exchange Sites are 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 it.
Binance, Kukoin, Luno, LocalBitcoins are all examples of exchange markets. Clacified has tabulated the list of the top 10 trading/exchange site for cryptocurrency.
The cryptocurrency term "FOMO" stands for the phrase "fear of missing out." FOMO occurs when investors start buying up a particular asset based on their expectations to continue to rise in value.
Market participants can quickly flock to an asset like sheep should that asset experience sharp gains.
Getting caught up in FOMO can be dangerous. More specifically, buying up an asset because it has recently enjoyed some notable upside can cause one to fall victim to market manipulation.
Fear, uncertainty and doubt are noted using the cryptocurrency term "FUD." The idea behind this is those market participants may spread misleading or inaccurate information to cause an asset's price to decline.
A trader may want an asset's price to fall to either short it successfully or buy in at a lower price and increase their chance of generating again.
S. Market CAP
Market cap is short for market capitalisation, which is a cryptocurrency 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.
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!"
Newcomers are frequently described as "noobs" by industry insiders. If you are this person, you may want to sit back and observe before "jumping in with both feet."
Digital currencies are highly volatile, so those newer to these assets should consider their risky nature.
V. Pump and Dump
A "pump and dump" is a type of investment scheme where a market participant—or several—work together to inflate the price of an asset so they can sell it when its value is artificially high.
This practice may be particularly pervasive when it comes to digital currencies, as traders can quickly get together using Telegram groups to cause specific cryptocurrencies to rise sharply in value
The cryptocurrency term "rekt" is a crypto trader slang for "wrecked." It means that a trader lost substantial amounts of money.
You can buy crypto with one million dollars, and within a short while, it goes down to two hundred thousand dollars; we can say you are rekt 😂😂.
X. White Paper
The developers who create digital currencies sometimes provide white papers for these creative assets. These documents generally offer comprehensive information on the digital token or coin in question and its underlying technology.
The difference between Coins and Tokens
Coins are any cryptocurrency with a standalone, independent blockchain; examples are Bitcoin, Ethereum, XRP etc.
Tokens are cryptocurrencies that do not have their blockchain but live on another blockchain. As they live on another blockchain, they benefit from its technology.
Tokens are built on top of an already existing blockchain network; for example, Feg is a token built on the Ethereum network.
The difference between Trading and Investing
Both traders and investors seek to generate profits in the financial markets. Their methods to achieve this goal, however, are pretty different.
Generally, investors seek to generate a return over a more extended period – think years or even decades. Since investors have a more significant time horizon, their targeted returns for each investment tend to be more prominent.
Traders, on the other hand, try to take advantage of the market volatility. They enter positions more frequently and may seek smaller returns with each trade (since they often enter multiple trades).
Which one is better? Which one is more suitable for you? That’s for you to decide. You can start educating yourself about the markets from the crypto education website, The Money Mongers and learn by doing.
Over time, you will be able to determine which one suits your financial goals, personality, and trading profile.