The Definitive Crypto Glossary
As the new age of Blockchain dawns, so have plenty of words, phrases and acronyms crept into our prose! So far this year, we've witnessed the 'normies' gaining awareness and with some bloke called Collin added 'Crypto', 'Metaverse' and NFT to his very own dictionary, hopefully, this is will bring more inquisitive folk into the 'cryptoverse'! So here we have it, a definitive glossary which I hope will explain all of those new words as well as share a few nuggets of wisdom for the newcomers.
Pronounced 'Hoddle', HODL is an acronym for Hold On for Dear Life, which is something you had better prepare for considering the usual volatility of the crypto markets. To HODL can also be your best bet when investing since the longer your 'time in the market' the more chances you'll have of being in profit especially if you 'DCA'd in'. Don't worry DCA is explained next.
This means Dollar Cost Averaging which is a strategy for both entering and exiting a market. The theory is you spend a fixed dollar amount and a regular interval on a cryptocurrency for example You buy $25 worth of Bitcoin every week on a Friday. When the price is high, you will be buying less bitcoin and when the price of Bitcoin is low you will be buying more. This means that the average price of your bitcoin will be a long average which serves as a solid strategy particularly if you are in the market for the long term. This is referred to as DCA'ing IN to a position, and conversely, you should also DCA OUT of your position when you want to sell later on down the line to take profits. DCA strategy means that your buy and sell orders are not as likely to be affected by your emotions, primarily fear and greed.
A Relative Strength Index is a gauge of market sentiment and can be used to infer what stage a market is in, you can use it to sell before Euphoria ends and pick up assets when on discount during the market surrender phase. Technically an RSI value great than 70 is overbought and below 30 is oversold. Outside of these ranges, you may want to get in a position to have your assets liquid in anticipation to trade them. For example, avoid locking up or staking your coins if RSI is greater than 70 since you might want to take profits, and conversely move fiat onto exchanges should RSI drop below 30.
Recently added to the Collins Dictionary, an NFT is a Non-Fungible Token. It is essentially a token that represents an item, real-world or virtual for which is ownership secured and verified on a blockchain (more on this later). NFT's can be art, virtual properties such as land, in-game items, memes and even the 'Charlie Bit My Finger' YouTube Video, but can also represent real-world assets. Anyone can 'mint' a new NFT and sell it, meaning there's a lot of rubbish available to purchase, but also some exciting items too, of which we are yet to see this potential.
Fear, uncertainty and doubt - FUD refers to news that casts a negative light on Crypto Currencies, which are could be published in a bid to adversely affect the price of an asset. Whilst some FUD-filled articles or tweets are non-sense and can be disregarded others may well contain valid points, you should not allow FUD to emotionally affect your investment decisions, but take them with a pinch of salt and verify everything you read.
You should always be wary of confirmation bias, which is excluding news that doesn't fit your narrative and only reading good news to support your view on a particular asset. The same advice is also good when watching Main Stream Media.
A shared online and virtual space where you can meet, trade, play games and do other IRL (In Real Life) activities in virtual reality. It could play a substantial park in the future, but it will inevitably be a net harm to humans in my opinion and lead to a world of shut-ins.
There are various levels of explanations as to what a Blockchain is, from a layman's version to a more complex one. For this post, I think a layman's definition is sufficient. A blockchain is essentially a database that is typically public, decentralised (to varying amounts) and distributed.
An Alt-Coin with limited real-world use, questionable tokenomics, that's value can typically be derived in correlation to the frequency that Elon Musk tweet's about it.
The first of all the meme coins. If you are getting into crypto, buying meme coins can be fun but are probably not going to be a good asset to hold, unless you know when Elon Musk will tweet about them.
A little Japanese Dog that has inspired DogeCoin, Shiba-Inu Coin, and a multitude of others! It's a very, very long list!
A cryptocurrency other than Bitcoin ($BTC). Examples of which include Ethereum ($ETH), Solana ($SOL) and Cardano ($ADA)
An exchange is where you can buy and sell cryptocurrencies. You can hold your assets on an exchange whilst waiting to sell assets however it is not advisable to leave currencies on exchanges due to the possibility that the exchange is hacked and the assets of their customers being stolen. Unfortunately, this has happened many times to many different exchanges included MtGox, NiceHash and recently BitMart in December 2021. It is always best to store your keys offline on a hardware wallet away from the internet and away from hackers.
Not your keys, not your coins.
If you are new to crypto, I would strongly suggest you get started by using the Coinbase Exchange, as it is simple, multifunctional, historically secure, has a brilliant mobile wallet and to get started you can get $10 of Bitcoin for free with this link.
Know Your Customer is a requirement that governments and their regulators require of exchanges. This means that the exchange must verify the identity of their customers to make it more difficult to launder money, fund terrorism and for your to remain anonymous online (annoyingly), which flies in the face of one of the benefits of cryptocurrencies in the first place. Commonly, you will need to provide proof of name and address before you can use a platform fully.
Application Programming Interface is essentially a key that allows control over specified actions on an exchange, this can be used to permit third party applications. But why would you want to do that? The most common reason is to integrate trading bots which allow AI (Artificial Intelligence) to buy and sell as an asset that meets specified criteria. This can be useful if you do it right.
The KuCoin Exchange has integrated bots, meaning you can use trading bots to reduce your exposure to volatility, Dollar Cost Average in and out of positions, accumulate when the price has dipped, protect your portfolio from losses and do grid trading. Using KuCoin bots means you will not have to give any API keys to any third party which exposes your assets to risk, although, in theory, you set which permissions that particular API key allows permission to.
BTFD is an intelligent accumulation strategy when prices are favourable by the means of buying the F***ing Dip.
Thanks for reading my post, and I hope you found it either useful or at least not painful to read. A fair amount of time goes into research and writing these posts so I am always thrilled to see a like and comment. I plan to update this post periodically with more and more, and if there's any terminology you'd like explained or think that other's might benefit from then please feel free to leave me a comment below and I'll get on it!