As in every industry, the cryptocurrency world also has its own specific terminology that is largely unknown to those outside it. Because the crypto market is becoming more and more popular, and the number of people who use exchange services to buy, sell and store cryptocurrencies is getting bigger each day, here’s an article that will be helpful to anyone who wants to get acquainted with this jargon.
So, let’s break down the most commonly used terms in the digital currency market:
When a cryptocurrency company awards users by putting digital tokens into their wallets free of charge, it is called an airdrop. This is a typical procedure undertaken by blockchain startups, in order to foster the growth of their crypto projects. Airdrops can also be carried out by wallet providers and crypto exchange services.
Simply put, an altcoin (short for alternative coin) is the term that refers to any cryptocurrency other than bitcoin. Some people argue whether the ethereum is also altcoin or not.
Anyone who bought a cryptocurrency when its price was high, but didn’t manage to sell it when the price dropped is considered a bag holder. Bagholders are the people who hold coins that lost their value.
Traders who enter the market by buying, because they expect that the prices will increase.
Traders who enter the market by selling, because they expect that the prices will drop.
Short for “Do Your Own Research.” There are two most important rules when investing in a new project — Rule №1: Do your own research! Rule №2: Do your own research!
Short for the “fear of missing out.” When green becomes a color that dominates the charts, which means that the value of the cryptocurrency started to grow, a large number of people begin to buy it, stimulated by emotions rather than an adequate evaluation. They are afraid that they won’t be able to buy at such low prices again.
Influential people from the crypto world, investors, digital currency traders, as well as those who don’t directly participate in the cryptomarket, often speculate about the future of bitcoin or altcoins driven by their own interests. This causes the so-called FUD, or fear, uncertainty and doubt, which can be an important factor for the price of different cryptocurrencies.
A “fork” happens when the blockchain network of a cryptocurrency splits into two branches. This happens as a result of implementing new algorithms into the blockchain’s code. For example, in 2017 a group of developers implemented a change into the bitcoin’s code, which resulted in splitting the cryptocurrency in two and creation of Bitcoin Cash.
The term that was coined by misspelling the word “hold” by a member of the Bitcointalk forum. He was drunk by own admission when he was sincerely stating his belief in Bitcoin. It caused it to become a meme in the cryptocurrency circles. Today, someone who holds his/her coins for long periods of time and doesn’t sell is called a “hodler”.
Abbreviation of Initial Coin Offering. ICOs are somewhat similar to the initial public offerings at the stock market. Startup companies from different industries use blockchain technology to realize their projects by issuing crypto tokens for their financial supporters.
As we’ve already said, crypto enthusiasts are often driven by emotions, and investors are driven by their own interests. Mooning refers to the rapid growth of cryptocurrencies; when traders get excited about it, they have the habit of saying that their coin is mooning. Of course, this term is frequently used by those engaged in coin shilling.
Stands for “Proof of work”, and it’s the algorithm used to achieve consensus between the computers involved in the blockchain. Proof of work is actually a piece of data which is energy and time consuming to produce, and which satisfies the requirements of other parties to verify it. This algorithm is currently used by bitcoin, ethereum and other altcoins, but there are also other algorithms that will be explained in our future articles.
Pump and Dump
This is when a cryptocurrency gets a huge spike in price, followed by a great drop. Traders often “pump” by purchasing huge volumes of coins. When they want to cause FOMO by the less skilled investors, they sell or “dump,” and earn a profit thanks to selling the coins at the better price.
When traders who bought the coin or people involved in ICOs publicly spread the word about it, hoping to raise the interest in the particular coin and cause a higher price of it. As you can imagine, there’s a lot of shilling in the cryptocurrency world.
All coins and tokens are regarded as cryptocurrencies. Tokens are actually built on top of another cryptocurrency blockchain, which is a much easier process that doesn’t require creating the new blockchain from the scratch. Tokens are created and distributed to the public through an above mentioned ICOs (blockchain crowd fundings).
Whales are the people who own huge amounts of cryptocurrency. They sometimes have the power to cause the raises and drops in cryptocurrency value, simply by buying or selling a large portion of their stake.
That’s it for this occasion! Follow our blog as we’ll continue to write about useful things that will help you to efficiently enter the world of digital currencies.