While the crypto industry is incredibly interesting and ever-changing, it is also highly complex. The huge amount of terminology one needs to learn to truly understand cryptocurrency can be overwhelming. While you don’t need to know everything about crypto, there are a few key acronyms tou should be aware of before investing.
HODL is an abbreviation of “hold on for dear life,” though some see it as a slightly tweaked version of the word “hold.” Either way, this acronym relates to a specific trading tactic. When you hold on for dear life, you resist selling your cryptocurrency, even when your chosen asset has suffered a big price dip or the market is in a poor state.
Price dips are commonplace in the crypto realm,but tan range from minimal to somewhat catastrophic. But in certain scenarios, “HODLing” is sthe best route as investors believe that the crypto in question will eventually recover. But the crypto industry is very unpredictable, so there’s no knowing if this tactic will pay off.
BTD, or “buy the dip,” is another tactic involving the purchase of assets while they’re experiencing a price dip. This term is also known as BTFD, or “buy the f*****g dip,” so either can work depending on your preference.
Like HODLing, BTD also relates to the idea that a given asset will recover from its price dip. So, when an investor buys an asset at a low price, they stand the chance of making a considerable profit if it does recover.
FUD stands for “fear, uncertainty, and doubt” and is a tactic used to instill worry within investors. People will often try to manipulate public perception of the crypto market or specific assets for the worse. These are also known as “FUDsters” and usually take to social media to spread negative and untrue information about cryptocurrency.
You may have heard of “FOMO” in your everyday life. It is an abbreviation of “fear of missing out.” In crypto terms, FOMO is the fear of missing a potentially huge investment opportunity. This can drive individuals to make sudden or unwise decisions under the pressure of not grasping a worthwhile investment.
FOMO is pretty common when an asset or project receives a lot of hype. Trends are common in crypto, and new coins become highly sought-after every week. So it’s no surprise that investors often worry about missing out on big profits.
DYOR, or “do your own research,” ties into FOMO. While it’s natural for investors to feel pressured to invest in a desirable asset, they must do their own research before pulling out their wallets. While something may seem like a wise investment choice because everyone else is investing, there may be hidden red flags and caveats that you should be aware of.
So, by doing your research, you’re making sure that you understand how an asset or project works and whether it is a wise investment choice.
BTC is the shortened version of Bitcoin, the world’s most valuable and popular cryptocurrency. Chances are you’ve heard of Bitcoin before. Even those who have no interest in crypto are often aware of it. Bitcoin has amassed millions of investors worldwide and a huge mining community. It is undoubtedly the most successful crypto of all time.
ETH is the shortened version of Ethereum or Ether. ETH is the native coin of the Ethereum blockchain and is currently the second-most popular cryptocurrency in the world. Its blockchain is hugely popular among DApp developers and NFT collectors.
Dogecoin, the well-known meme coin, also goes by “DOGE.” While this cryptocurrency began as a joke poking fun at Bitcoin, it has ironically gained a lot of popularity in the market and now stands as one of the market’s big players. The coin was also popularized by billionaire Elon Musk when Tesla began accepting the asset for payment.
Crypto Platform Acronyms
A DEX is a decentralized exchange. These exchanges are just that—decentralized—allowing for the non-custodial, peer-to-peer crypto trade between individuals. DEXs eliminate third parties and middlemen, such as banks and payment processors, allowing for a trustless system that prioritizes transparency. These platforms also use smart contracts to execute trades.
Most DEXs exist on the Ethereum blockchain, such as Uniswap and SushiSwap.
CEX is an acronym for “centralized exchange.” Centralized exchanges are among the most popular in the crypto industry and include Binance, Coinbase, and Kraken. CEXs are operated by private companies and use third parties and intermediaries. Some traders prefer centralized exchanges, while others lean towards decentralized exchanges.
ICOs are a key element of the crypto realm. An ICO, or initial coin offering, involves a project offering investors the chance to buy their native cryptocurrency to raise funds for development. If a project receives enough hype, it can raise huge amounts of money via ICOs. For example, Tezos, a popular blockchain network, raised over $220 million in its initial coin offering.
DeFi, or decentralized finance, is an increasingly popular industry that provides financial services for decentralized assets. The DeFi realm has massively diversified over the past few years, and now crypto holders can borrow, loan, trade, and stake assets. In short, DeFi is an umbrella term that spans the cryptocurrency market.
PoW stands for proof of work, the original cryptocurrency consensus mechanism used by Bitcoin, Litecoin, and Dogecoin. Proof of work uses miners to solve complex computational problems so that the network can be secured and new blocks can be added to the blockchain.
Mining can be very lucrative, as miners are paid for their work. This financial aspect has attracted hordes of eager individuals looking to earn rewards for contributing to blockchain security.
PoS stands for proof of stake and is another popular consensus mechanism that gained notoriety for its increased energy efficiency over proof of work. The proof of stake mechanism uses validators instead of miners. These validators verify transaction blocks and secure the network. As the name suggests, the proof of stake mechanism allows users to stake their cryptocurrency to receive rewards.
P2P stands for peer-to-peer. This is a very common term in crypto and refers to a network that can directly connect computers. These connected computers can then interact with each other and share resources. P2P networks are commonly used for file-sharing platforms but are also prevalent in crypto. Bitcoin, Ethereum, and many other assets use P2P networks, allowing users to conduct transactions directly with each other.
Crypto Can Be Confusing, So It Helps to Know the Basics
It’s completely natural to feel a little intimidated by the crypto market. After all, it differs drastically from typical financial markets, so there’s a lot to learn before becoming familiar with everything. But by starting with the acronyms above, you can familiarize yourself with this industry and further understand its inner workings.