The Most Important Crypto Terms
Hodln, Fomo, and Fud: What sounds like a fantasy language from another planet is part of everyday language use in the crypto universe.
Even though interest in Bitcoin is growing, many believe the crypto world remains mysterious and incomprehensible. While more poorly imported terms like "currency" or "coin" cause fundamental discussions, but at least sound familiar, most people only understand stationary when it comes to terms like "Altcoins," "Hodln," "Fomo," or "Defi." Fatpigsignals explains some basic terms so that the next time you have a small talk with a crypto enthusiast, you can at least guess what the other person is talking about.
Altcoins are the alternative cryptocurrencies apart from Bitcoin. They are considered even riskier, as the price development is significantly more volatile than with Bitcoin, but at the same time promise greater profits in a short time. Even though some more prominent altcoins are in the process of emancipating themselves, their price is heavily dependent on Bitcoin. However, the wave-like price movements are sometimes delayed by a few weeks.
If Bitcoin crashes, the altcoins usually crash even more complex. If the Bitcoin value explodes, the altcoins also have a hard time because the money flows into the less risky largest cryptocurrency. If Bitcoin is stable and the sentiment is positive, the time has come for fat Altcoins profits. This is then referred to as "altcoin season."
Even people with little knowledge of English can guess what the term Shitcoin means. Usually, it refers to a cryptocurrency that doesn't even pretend to want to serve a particular purpose but was founded as a joke or satire. Dog references in the name ("Dogecoin", "Shiba Inu") are reasonable indications of this. The fact that these projects, more affectionately known as Memecoins, can have market capitalizations of $25 billion and more is causing some frustration in the crypto community.
Stablecoins should - as the name suggests - be one thing above all: stable. This usually refers to the correlation with a monetary currency, such as the U.S. dollar or the euro. The largest dollar stablecoins are Tether (USDT), the USD Coin (USDC), and the digital dollar equivalent on the crypto exchange Binance (BUSD). The price is linked to the price of the reference currency. For every crypto dollar, the issuing companies behind it should have real dollars on their side. So much for the theory.
The popular term Hodl or Hodln is not a technical term describing an elaborate technical process but arose from a typo. Bitcoin owner "GameKyuubi" posted a forum thread in 2013 calling for Bitcoin to be held ("Hold") and accidentally caused a misspelling. The term quickly became part of the crypto community's linguistic inventory, describing the strategy of giving cryptocurrencies the benefit of the doubt, especially when the price crashes, and considering them a long-term investment.
The two acronyms Fomo ("fear of missing out" - fear of missing out) and Fud ("fear, uncertainty and doubt" - fear, uncertainty, and doubt) do not originate from the crypto scene at all but are used particularly frequently there. While Fomo describes the social phenomenon of not being up to date or involved in a topic or development, the term Fud has been assigned to a marketing and PR strategy since the 1970s. It involves deliberately sowing doubt and disinformation to unsettle people or persuade them to make a political switch or buy a competing product.
Translated to crypto, this means: If the value of a coin skyrocket, many people imagine that they have to invest in it - precisely because they are afraid of ending up empty-handed or missing out on the profit rally. In practice, Fomo leads to the well-known phenomenon that people mindlessly invest in crypto when the prices have already risen significantly and sold in panic when the price has already crashed.
Fud tends to be used in the scene to describe negative reports circulated by influencers, media, and traditional financial institutions, big investors, and politicians. It is not uncommon for statements about the 700th ban on cryptocurrencies in China, or that Bitcoin is again declared dead, leading to interim price drops. The term is now used quite inflationary in the community to dismiss any criticism of crypto as Fud.
The so-called whales are those accounts that can powerfully move the price of Bitcoin, but also other crypto projects through individual transactions. Their behavior on crypto exchanges is closely monitored because it can determine whether a sustained downward price correction or an upward price rally is imminent.
The terms bear and bull come from stock market jargon. While bears strike down with their paw and thus push the market or the price development down, bulls pull up - at least, this is the standard explanation of how the animal reference is understood.
Derived from this, a medium- and longer-term downtrend is referred to as a bear market, while a growth phase is a bull market. The terms are not one-to-one translatable from the traditional stock market to crypto. The price development and periods in the crypto universe are much more violent and shorter. In general, however, crypto traders tend to bet on rising prices (bulls) and others who constantly flirt with the crash and therefore like to bet on falling prices (bears).
Religious war has been raging for some time in the crypto scene on which digital coin to bet on for the golden future. Some who have been around for several years and have seen the total crash of many altcoins after 2018 swear entirely by Bitcoin. They are considered Bitcoin maximalists and do not believe that any other cryptocurrency will succeed or be a good investment in the long run. As separate ecosystems of currencies (tokens) and applications have formed around projects like Ethereum, Bitcoin maximalists tend to be fewer.
Said, these are the terms that come into play when generating crypto units.
While, roughly speaking, mining requires computing power (and a lot of energy) to solve mathematical tasks and thus produce new coins, staking secures the underlying infrastructure and thus also validates new coins by making existing cryptocurrency available.
Defi, Farming, Lending
The term Defi is short for "Decentralized Finance" and summarizes concepts and processes familiar from the financial world but handled decentralized in the crypto universe. In highly simplified terms, crypto owners can provide liquidity for others and receive fixed "interest" ("farming") via the decentrally organized network or can also borrow ("lending") via the network.
The term NFT stands for "Non-Fungible Token." In practice, it is a unique, forgery-proof digital certificate that resides on a blockchain - a decentralized, public database. NFTs are currently in demand to reflect the value of digital artworks. In the future, they could also play an important role in gaming or virtual worlds, for example, to create digital objects that then actually "belong" to one user and only that user.
Anyone who wants to own crypto needs a so-called wallet. With the wallet, cryptocurrencies can be received, sent, and stored. They have a unique address through which transactions are processed and assigned. Wallets are created automatically on crypto exchanges. However, there are also apps and external hardware that allow you to create and manage them yourself.