The past year has been eventful in the crypto-verse. Bitcoin hit a new all-time high, El Salvador recognized cryptocurrency as a legal tender, and countless new coins were made available on the market. The world is changing, and crypto is to blame. With more and more people taking their shot at cryptocurrency, everyday language has had to adapt, and the use of crypto buzzwords is at an ATH (or all-time high). The following is a list of popular words you should know to help you get through 2022.
This commonly used term in the world of cryptocurrency originates from a misspelling of the word ‘hold’ in the title of a trader’s post on the BitcoinTalk forum in December 2013. Inspired by the author’s dedication to hold onto his bitcoins despite recent news of a crash in their value, ‘HODL’ is now widely used as an acronym for “Hold On For Dear Life.” This meaning now serves as a long-term strategy for generally new traders to hold on to their bitcoin and other cryptocurrencies regardless of sudden changes in the market. This motto will typically be seen during a bear market where prices decrease, and traders still refuse to sell their coins.
Another acronym you will likely come across is ‘FUD’, which stands for “Fear, uncertainty, and doubt.” This expression refers to the spreading of negative and often false information about a cryptocurrency with the intention of creating cynicism around it and decreasing its value. Fittingly, people accused of causing fear, uncertainty, and doubt-inducing thoughts about crypto are called FUDsters. However, this term is also largely associated with any public antagonist or critic of bitcoin and other cryptocurrencies.
Dollar Cost Averaging, also known as the constant dollar plan, is a strategy used by investors to minimize the effect of volatility on the total amount paid for an investment, reducing their risk exposure. Following this method, an investor would periodically allocate a fixed amount of money towards a cryptocurrency regardless of changes in its price overtime. This removes the tedious work of timing the crypto market and prevents facing significant losses from making a large investment in a cryptocurrency at its peak price. For a more detailed explanation of DCA, you can visit this article in our resources page.
To be added to a blockchain, blocks must perfectly match a certain set of rules, or protocol. When the current software protocol is modified to a new version, it is called a fork. Forks generally occur when the collective users decide to upgrade the current system because of a perceived issue. However, this change fundamentally alters the way that the software determines the validity of a block.
The two types of forks are known as soft forks and hard forks. Soft forks are backward-compatible, meaning that the old nodes can continue to add new blocks to the same blockchain, following the updated set of rules. Although, because the rules have changed, older blocks that followed the previous protocol become invalid.
Hard forks are the result of more exhaustive changes to a cryptocurrency’s code, splitting the blockchain into two incompatible ones. The new blockchain with the changed set of rules can become a different version of the original cryptocurrency. For example, bitcoin cash is the result of a hard fork to bitcoin’s blockchain in 2017.
With a version of Kevin McCoy’s “Quantum” selling for an astounding $1.4 million in November 2021, ‘NFT’ is becoming an increasingly popular crypto buzzword. Short for “Non-fungible token”, they are one-of-a-kind digital units stored on a blockchain that represent proof of ownership of an original asset. Although they are commonly perceived as digital artwork, NFTs can take many forms, ranging from music to digital real estate. What makes NFTs, so desirable is their non-fungibility, meaning that they are unique and cannot be exchanged or traded for other identical units, like with cryptocurrencies. Our Ultimate NFT Guide is a great resource for understanding NFTs and how they are used.
Decentralized finance, or DeFi, is an increasingly popular financial technology that is used to complete transactions with cryptocurrency on a public distributed ledger, such as the Ethereum blockchain. DeFi gives users access to a variety of financial services such as trading and loans without involving third parties to facilitate the transaction. This reduces the number of fees that centralized financial institutions like banks or brokerages would otherwise collect from each transaction and allows funds to be transferred much quicker, and without restriction. A notable benefit of DeFi is that it puts users in control of their financial assets, giving them access to their funds by simply connecting to the internet.
Although the exact timeline isn’t yet clear, Web 3.0 is on its way to becoming the next generation of the Internet. Inspired by blockchain technology and the use of decentralized networks, the Internet is evolving to become more open, trustless, and permissionless. The transition towards Web 3.0 will see the rise of peer-to-peer networks, substituting the need for third parties to facilitate interactions and exchanges. It will also see an increased use of AI to improve the speed, accuracy, relevancy of data being presented to end-users. In short, Web 3.0 is expected to solve some important shortcomings of the Internet as we know it today.
Dogecoin and Shiba Inu are just two examples of well-known meme coins; a type of cryptocurrency inspired by an Internet meme made popular through social media. The year 2021 ended with more than 250 meme coins available on the market. Many of them are created as a joke and are not expected to hold a great amount of value. Nevertheless, they have the potential to draw the attention of media influencers and many investors, which can increase their value. One significant thing to keep in mind when considering investing in meme coins is that they are generally not essential to supporting other technologies and lack the scarcity of other cryptocurrencies.
Used as slang within the crypto community, WAGMI (sometimes written as GMI) stands for “We’re All Going to Make It”/ “Going to Make It.” This phrase is used as a friendly show of support to a prediction about a cryptocurrency or NFT’s future success. It is used to strengthen the bond between like minded people in crypto space and encourage them to stay optimistic about market trends.
The opposite of WAGMI is NGMI, which stands for “Not Going to Make It.” This phrase is used after having made a poor decision or in response to negative opinions, recommendations, and choices about a trade or investment by other members of the community.
Inspired by Bitcoin’s impressive peak in 2017, the term “mooning” is now a popular way of describing a cryptocurrency that has reached its highest value to date. This commonly used buzzword can also be said as the phrase “To the moon” to describe a period where the price of a cryptocurrency is increasing more than 100% from a previous value.
Bull and bear market are words used to describe trends in market prices. During a bull market, investors are optimistic about the return on their investments because trends indicate that the state of the economy is advantageous for reaping profits. This term is known to be thrown around when the value of a cryptocurrency has increased by at least 20% from its lowest price. A bear market is the opposite of a bull market, and it used in reference to negative trends in the market, raising concern about the outcome of an investment. More specifically, this term is reserved for periods where a price has declined at least 20% from the most recent peak. Because of this drastic decline in value, it is not advised to sell or trade cryptocurrencies during this time.
This final acronym means “Do your own research” and it highlights the importance of making informed decisions about investments and trades instead of relying on the advice of others. Cryptocurrencies are highly volatile in price, and there have been many attempts at swaying the market by spreading FUD to support certain goals. If you are newly starting to take an interest in cryptocurrency, DYOR might be the single most important piece of advice to jumpstart this new journey.