HODL On: Making Sense of Bitcoin Slang
Every industry has its own special jargon, words, acronyms and phrases that are easily understood by insiders but all but indecipherable to the rest of the world. And while all of those acronyms and pieces of jargon are difficult to understand, the world of Bitcoin just may take the cake.
If you hang out with Bitcoin fans and early adopters long enough, you will be left shaking your head, wondering what all those words mean and how you can ever understand them.
Is it any wonder, therefore, that so many newcomers to the cryptocurrency are at a loss, not only on how to invest but simply to understand how it all works? If you want to learn about the world of Bitcoin, understanding the jargon is a good place to start. Here are some of the key phrases, acronyms and idioms Bitcoin fans use, along with what they all mean.
If you failed to recognize the value of Bitcoin and other virtual forms of payment, you may be suffering from FOMO. FOMO, or Fear of Missing Out, is one of the most common complaints in the cryptocurrency world, and the reason why so many newcomers leaped in so eagerly when Bitcoin was hitting its all time, and so far unrepeated, highs. FOMO generally occurs when the price of Bitcoin experiences a significant jump. These jumps are typically associated and/or followed by increased mainstream media attention that brings in hoards of newcomers looking to strike rich. Newcomers and anxiety ridden veterans ignore the main rule of investing "buy low and sell high", and purchase coins at abnormally high prices expecting the upward price trend to continue.
Newcomers to this unique monetary world often conflate the terms cryptocurrency and Bitcoin, but there is an important distinction. There are literally thousands of cryptocurrencies in use today, and only one of them is called Bitcoin. All the rest are known by the collective term altcoin, which simply means a cryptocurrency that is not Bitcoin. Bitcoin dominates the cyptocurrency market with a market share of nearly 70% and a $172 Billion market cap. The nearest altcoin, Ethereum, sits at a market cap. of just $18 Billion or about 1/10 that of Bitcoin's.
The term HODL is one of the touchstones of cryptocurrency history, and one of the funniest. In cryptocurrency lore, this misspelling of the word hold started with a drunken posting on a message board. And while the poster was undoubtedly expressing a desire to hold on during a period of volatility, the misspelling took on a life of its own. Today, HODL means Hold On for Dear Life, something that long-term Bitcoin fans are all too familiar with.
The very origins of Bitcoin is the stuff of legend, and there has historically been a great deal of disagreement over the identity of its creator. The inventor of Bitcoin goes by the name of Satoshi Nakamoto, but many in the community feel that it's merely a pseudonym. So whenever various individuals attempted to lay claim to the bitcoin throne, while offering little to no proof, they quickly gained the moniker Faketoshi. As of today non of these individuals have been able to concretely prove their claim causing doubt among the Bitcoin community.
To the Moon
Sometimes its seems like the price of Bitcoin is headed into space, and many true believers feel this way. In fact, those true believers have adopted the term To the Moon to refer to this common idea. Specifically, To the Moon refers to a Bitcoin price explosion where Bitcoin's price sees exponential growth. The near vertical spike in price resembles the upward trajectory of a rocket, which in this case is going straight to the moon.
Just like holders of lottery tickets, Bitcoin investors dream of what they are going to do with all that cash. A good number of cryptocurrency true believers plan to drive off with their holdings in a brand new Lamborghini. This desire for high-priced Italian sports cars has created the term When Lambo, essentially when that stash of virtual currency is transformed into real horsepower.
If you want to understand the term Bitcoin Rollercoaster, all you need to do is look at a recent price chart. Whether you are looking at a single day, a week, a month or a longer period of time, that chart will be full of ups and downs. It takes a hardy investor to ride the Bitcoin Rollercoaster, and many have been scared onto the sidelines.
Some Bitcoin terms are more family friendly than others, and the term sh!tcoin is not suitable for young eyes. Despite the reassuring !, the meaning of this term is pretty clear - it refers to a cryptocurrency that is generally held in poor regard. And with thousands of cryptocurrencies on the market, there are plenty of sh!tcoins to watch out for. Some investors liken these low quality cryptocurrencies to penny stocks, a notoriously dodgy corner of the stock market world. For some in the Bitcoin community the term sh!tcoin is used to describe all altcoins. This gave way to the saying "there's Bitcoin and then there's sh!tcoin".
There is an enormous amount of cryptocurrency circulating in the world, but only a relatively small amount is worth serious cash. The holders of those huge piles of virtual coins are collectively known as whales, and their holdings are counted in the millions and billions. The identity of some of these whales is public, but others are complete unknowns. This has led to a great deal of speculation and argument, and trying to guess who the biggest whales are has become a kind of techno-sport. At times, major spikes or falls in Bitcoin's price has been attributed to whales buying or selling massive amounts of Bitcoins.
Not Your Keys Not Your Bitcoin
The decentralized nature of Bitcoin takes many newbies by surprise, and those surprises are not always pleasant ones. Since there is no central depository for Bitcoin information, "holding" the virtual currency is done through public and private encryption keys. Entrusting your private key to 3rd parties (exchange, mobile apps, etc) effectively entrusts them with your holdings. Millions of dollars in Bitcoin and other virtual currencies have been lost or stolen in this manner. Not Your Keys Not Your Bitcoin started as a movement to encourage users to move their Bitcoins to safer user controlled storage options:
Hot Wallet - Hot wallets are bitcoin storage options that require the exposure of your private keys via an online connection. Typically hot wallets are are constantly connected to the internet, allowing the users funds and private keys to be accessed from anywhere in the world. While this option does offer more convenience in terms of being able to access your funds, it also exposes you to various online threats.
Cold Storage (Wallet) - Cold wallets store the users private keys in a completely offline manner. This storage option is viewed as being the safest among the bitcoin community. Cold storage options range from simple paper wallets (pictured above) to even more secure options like the Trezor and Ledger hardware wallets.
Stock market investors may be familiar with the IPO, or initial public offering, but there is an analogue in the world of cryptocurrency. The ICO, or initial coin offering, is an alternative form of financing crypto startups have embraced, one that rewards early investors not with shares of stock but bits of virtual currency. It's highly advised that newcomers to the cryptocurrency world be wary of these ICOs as most ICO currencies have either failed or turned out to be scams.
To the uninitiated, Bitcoin mining may conjure visions of underground tunnels and miners equipped with lighted helmets and sturdy shovels, but mining means something different in this unique world. In the Bitcoin world, mining takes place above ground, with powerful computers solving complex mathematical problems. The successful solving of those complex equations entitles the virtual miners to a share of the cryptocurrency. Currently Bitcoin rewards roughly 12.5 Bitcoins to the miner that's first able to solve the problem.
.The world of cryptocurrency can be a confusing place, but knowing the jargon can make things a bit easier. Now that you know some of the terminology, you can impress your early adopter friends - or just feel more confident about this alternative form of investment.