I thought it could be interesting for new traders in the Cryptocurrency-world to read and use this blogpost as a small dictionary for known and uknown words related to trading with cryptocurrency.
I have only added words and names that I was wondering about at first.
BTC - Bitcoin
Let's start easy, BTC stands for Bitcoin, which all of you have probably heard of.
Bitcoin was the first cryptocurrency ever created, back in 2009.
This was the first currency that used peer-to-peer transaction, removing the middleman, making it easier and cheaper to transfer. Because of this new technology without a central repository or single administration, it's called the first decentralized currency.
ALTCOINS
The biggest coins on the marked at the moment are Bitcoin and Ether. But aside of the big ones, there are thousands of smaller coins. Some of them have been at the market for many years already without getting that much attention. Other has been there for a while, increasing its price over time, and are now coins that are profitable.
These coins are called altcoins. They have all based on different kind of technology. Some are wallets, some are competitors to older technologies, and some are the next big thing.
EXCHANGE
If you want to buy bitcoins or altcoins, you have to use an exchange. You can trade money for bitcoins or ethereum, or trade BTC and ETH for altcoins at the exchange.
WALLET
The exchange have the biggest risks for something happening with your funds, and you don't want to keep them there for a longer period. So after you have bought a coin of your choice, you put it in a wallet.
When you choose a wallet, you must figure out how secure you want it. A cold wallet locally on your computer are much safer than an online wallet on a website. If you want to take the absolute precautions, print it out on a paper and put it in a safe.
THE KEYs
Public and Privat keys are your unique address's for sending and receiving coins. It doesn't contain any personal information about you, but it still connects you to your money. With the public key, other people can transfer money to your. It's also the address you use to send you own funds from an exchange to a wallet, or other similar personal transactions.
The Private key are used to send money from your accounts. This key should not be shared with anyone, and must be kept safe at all times, just like your bank account or social security number.
In an transaction, you use your privat key to accept all details of the transaction on the blockchain. Its your personal signature.
If someone get the hold of your privat key, they can get direct access to it, and you can end up loosing your funds.
BLOCKCHAIN
To be able to create a decentralized banking system, the Blockchain was the solution. Its a digital, online ledger available for all users. It consist of one block for every transaction. In that block, all the information regarding the transaction are staying. This can't be changed and modified after it's finished.
Blockchain is the biggest revolution in the cryptocurrency-world, and the potential to use it in other things than money transactions are huge.
HODL
The legendary post on bitcointalk: https://bitcointalk.org/index.php?topic=375643.0 back in 2013, ended up being this MEME that we use today.
FOMO
Fear of missing out - People see a coin increasing in value, and Instead of doing their own research, wait for it to fall or waiting for the right time to get in, people just buy blindly based on the upgoing trend.
P&D
Pump and dump - Many people go together to buy the same coin, pushing the price up, and when it's high, they sell to take out their profit. This has nothing to do with research or the tech behind the coin, just pushing it to earn money.
Flash P&D
Flash Pump and dump are often based on small chat groups or community forums where the leaders tell the group to buy a specific coin at a specific time. The leader has already bought a bunch of cheap coins, so they sell to the rest of the group. The leaders take out incredibly high profit, but the rest of the group ends up with a coin they bought to an ridiculous high price, with a potential of a hugh loss.
ICO
Initial Coin Offering - crowdfunding for cryptos. A company want to develop a technology, and they create a coin they can sell. Sometimes the coin is a big part of the tech - a coin you'll use inside the app, or a coin to buy smart contract inside the network.
Other times the coin has no real value, it's just made to make profit. The company starts an ICO where they give out an amount of coins/tokens, in exchange for Bitcoin or Ether.
The token price is often much lower at the ICO than at the exchange afterwards. That makes the ICOs were profitable for traders. Lately the different ICOs have received an incredibly high amount of money for their coins, making it highly profitable for the companies too.
This opens up the posibility that some ICOs are scams, and are just after your money. Be aware.
RESEARCH
This is one of most important parts of trading. And the one that can do it is you. Before you decide to invest in a coin, you should find out as much as possible about this coin, what it's supposed to do, who is behind it. In this way, you will personally find out what you think will happen to this specific coin. Will it increase in value? Will it stop? Are there developers working on the tech? Is this a good investment for my money?
A big part of your research can definitely be reading other peoples thought on Reddit or Twitter, but it should not consist of only this kind of research.
PANIC
This is a fatal part of a traders mind, when the value of your portfolio is decreasing. If you didn't do your research properly, and you starts loosing faith in the coin. You can end up selling your coin in panic, often with a loss, instead of keeping it trough the dump and holding it for the long run.
Of course it some times can be a good strategy to sell one coin at a loss, in exchange for funds to buy a potentially good coin in stead. But this in not called PANIC, this is called STRATEGY, which are two different kinds of buying- and selling approach.
BEARISH and BULLISH TRENDs
Imagine a bear and a bull fighting. The bear is a tall animal fighting downwards again the bull.
On the other hand, the bull will be on the bottom, fighting upwards with its bull horns.
And this image is the basis of the Bear- and bullish trend-definition. If the marked are selling more than buying, the prices are going down, and it's called a bearing marked/trend.
If the marked are buying more that selling, the prices will rice, and we are in a bullish marked/trend.
Sometimes, you can hear people say "The bears/bulls are entering the market" - This means that traders that are selling, are referred to as bears, and opposite.
So this was me trying to describe some of the different words you will start hear about right after you've entered the cryptocurrency world. If the definitions are totally wrong, I hope that you let me know.
A lot of information regarding the points on this list, has been omitted, for reasons of simplicity.
I recommend reading more about these topics on wikipedia to get a better understanding.
Follow me on Twitter