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Updated: July 2022
Every industry has unique jargon, words, acronyms, and phrases that insiders easily understand but are indecipherable to the rest of the world. And while all those acronyms and pieces of jargon are challenging to understand, the world of Bitcoin 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 that so many newcomers to cryptocurrency are at a loss, not only on how to invest but to understand how it all works? Understanding the jargon is a good place to start if you want to learn about the world of Bitcoin. Here are some key phrases, acronyms, and idioms Bitcoin fans use, along with what they all mean.
If you fail to recognize the value of Bitcoin and other virtual payment forms, you may suffer from FOMO. FOMO, or Fear of Missing Out, is one of the most common complaints in the cryptocurrency world and 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 followed by increased mainstream media attention that brings hoards of newcomers looking to strike rich. Unfortunately, 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 cryptocurrency and Bitcoin, but there is an important distinction. There are 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.
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 undoubtedly expressed 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, which long-term Bitcoin fans are all too familiar with.
The very origins of Bitcoin are 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, none of these individuals have been able to prove their claim causing doubt in the Bitcoin community.
To the Moon
Sometimes it seems like the price of Bitcoin is headed into space, and many true believers feel this way. 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 will do with all that cash. Many 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 actual horsepower.
If you want to understand the term Bitcoin Rollercoaster, all you need to do is look at a Bitcoin price chart. Whether looking at a single day, a week, a month, or a more extended period, that chart will be full of ups and downs. Unfortunately, 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 "sh!tcoin" is definitely one that's unsuitable for young eyes. Despite the reassuring "!", the meaning of this term is pretty straightforward - it refers to a cryptocurrency 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'".
An enormous amount of cryptocurrency is circulating globally, but only a relatively small amount is worth serious cash. The holders of those vast piles of virtual coins are collectively known as whales, and their holdings are counted in the millions and billions. Some of these whales' identities are public, while others are entirely unknown. At times, significant price spikes or falls in Bitcoin have been attributed to whales buying or selling massive amounts of Bitcoins.
Not Your Keys, Not Your Bitcoin
The decentralized nature of Bitcoin surprises many newbies, and those surprises are not always pleasant. 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. Unfortunately, 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 exposing your private keys via an online connection. Typically hot wallets are constantly connected to the internet, allowing the user's funds and private keys to be accessed from anywhere in the world. Unfortunately, while this option offers more convenience in accessing your funds, it also exposes you to various online threats.
Cold Storage (Wallet) - Cold wallets store the user's private keys entirely offline. This storage option is viewed as being the safest in the bitcoin community. Cold storage options range from straightforward 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 analog 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. However, 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 Bitcoin, mining occurs above ground, with powerful computers solving complex mathematical problems. Solving those complex equations entitles the virtual miners to a share of the cryptocurrency. Currently, Bitcoin rewards roughly 12.5 Bitcoins to the first miner able to solve the problem.
Best summarized by the scene in the first Matrix, when Morpheus holds out a red and blue pill for Neo. Those who have been orange-pilled have seen the proverbial light in Bitcoin. They have fully immersed themselves in the Bitcoin ecosystem and are somewhat addicted to obtaining as much Bitcoin as possible.
The cryptocurrency world can be confusing, but knowing the jargon can make things a bit easier. Now that you know some of the terminologies, you can impress your early adopter friends - or just feel more confident about this new form of investment.