When you are new to the crypto market, you will surely feel overwhelmed because there are so many new concepts and terms. Knowing the common terms will help your research and investment process go smoothly. Here are 10 terms that every investor needs to know.
HODL
HODL is a buzzword in crypto and is very well known. Newcomers think this is a misspelled word for “HOLD.” The term first appeared in a BitcoinTalk forum post in 2013 with the title: “I AM HODLING.” This mistake has since made its way into the crypto culture, the term HODL becoming a hold on for dear life.
HODL refers to holding investments despite falling prices. It is used by investors who have high faith in a specific cryptocurrency and intend to keep their investment for a long time. This strategy is similar to the buy-and-hold investment strategy in traditional markets.
FOMO – FUD
These are two common phenomena in the crypto space and represent two extremes.
FOMO means “Fear of Missing Out.” It describes the emotion investors feel when they rush to buy an asset out of fear of missing out on a profit opportunity. This is also an indication of the final stages of a bull market.
FUD is a strategy to discredit a company, project, or product by spreading misinformation. The purpose is to stoke fear to gain a competitive advantage or a tactical advantage to profit from the price drop caused by false news.
DeFi
This is a relatively new term in the crypto dictionary. DeFi means decentralized finance. DeFi’s goal is to enable deeper integration between blockchains and financial services. With DeFi, new services such as insurance, loans, or savings accounts can be provided without intermediaries through blockchains with smart contracts.
To date, DeFi is considered the most practical application of blockchain.
DApp
DApp is a decentralized application, also known as a decentralized application. Although new, it is a rapidly growing movement with more and more DApps springing up. However, finance is not the limit of DApps, as they have a lot of functions from technology, to art, to social networks,…
To be a DApp, the app needs:
- There are cryptographic tokens
- 100% open source, run automatically, and no intermediary controls the majority of tokens.
- Data and activity records must be stored encrypted in a decentralized blockchain.
- Generate tokens according to standard cryptographic algorithms (Example: Bitcoin uses Proof of Work algorithm)
Whitepaper
In the field of Cryptocurrencies, a whitepaper is a draft that describes a project in detail, helping investors have an overview and decide whether to invest in the project.
Typically, the content of a whitepaper includes:
- General information about the project
- Describe the potential market, competition, and highlights.
- Description of technology, working mechanism
- Plan to use mobilized capital
- The team of founders and project managers
- Project development roadmap
- ….
DYOR
An essential but not commonly used word: DYOR means “Do your own research.”
DYOR means that investors should research their investments on their own and not rely on others to do so. This term is usually placed at the beginning or end of articles as a disclaimer by the author for any actions users will take based on the information in the report.
Bull market (Bullish) – Bear market (Bearish)
Bull market (or Bullish) is a market that is in an uptrend, with a rapid increase in the price of coins/tokens more than the historical average. In particular, they increase for a long time in large volumes.
In contrast to the Bull market, the Bear market (or Bearish) indicates a downtrend. At this time, the price of coins/tokens will drop suddenly, continuously, and for a long time.
In Bull Market, the demand to buy will be greater than the demand to sell. On the contrary, in Bear Market, the need to sell will be greater than the demand to buy.
Forking
Forking occurs when there is a need to make changes to the cryptocurrency’s blockchain. Forking is about upgrading and updating software, fixing bugs found in older versions, and finding and creating an alternative blockchain version.
There are two types, soft forks, and rigid forks. The main difference is that the soft fork can be considered a “software upgrade,” with the new consensus rules being backward compatible with those on the previous blockchain version.
On the other hand, a hard fork sees a permanent split being done to the blockchain, and brand new consensus rules make the rules on previous versions of the blockchain invalid. Hard forks are used when changes could be more significant, such as the fork between Bitcoin and Bitcoin Cash, which separated Bitcoin Cash from the main Bitcoin blockchain in August 2017 and became its cryptocurrency.
Above are the top Cryptocurrency terms you need to know. In addition, there are many other exciting terms you need to dig into to understand the market better. Therefore, to understand and take advantage of the cryptocurrency ecosystem, you must actively learn, learn and directly participate in the market.
