Crypto terms every beginner should know

The world of crypto can often feel like you’re having to learn a new language. And it can be sometimes exhausting to have to keep up with all the technological lingo that comes with every emerging technology. But with just knowing a few basic terms, the world of crypto can suddenly open up and make it a lot less intimidating, and you’ll be surprised how interesting and fresh this new digital space can be. 

Crafting and learning new words are not alien to Filipinos after all given our many colorful and funny new terms that arrive with every viral trend. That’s why it shouldn’t be a challenge for Pinoy crypto users and traders to learn basic crypto terminology either.

Here’s just a few must-know terms for anyone venturing into the crypto space:

An altcoin, short for “alternative coin”, is a collective term that refers to any kind of cryptocurrency that isn’t Bitcoin. There are thousands of altcoins out there in the market, offering alternative investment options other than Bitcoin and other traditional assets.  

Bitcoin is the very first cryptocurrency ever developed, and which gave to the world the concept of a decentralized financial system. Bitcoin isn’t issued by any organization or government, and owes its legitimacy only through its global community of users transacting with it through the blockchain. 

A “bull” or “bear” market describes the general movement of assets in a market over an extended period of time. A bull market is one wherein assets have shown a pattern of upward growth while a bear market is one which shows a pattern of decline. The bull market is inspired by the upward surge of a bull’s horns while a bear market is inspired by the downward swipe of a bear’s claws.

A blockchain is a network of “blocks” which contain data concerning transactions, asset ownership, and smart contracts. Blocks are “chained” or linked to one another using encryption and which is what makes blockchains super-secure as more and more blocks are added to the network ledger. Attempting to hack or alter any block will result in invalidating the whole chain. 

“Buying the dip” is a phrase which refers to buying certain assets after a significant drop in value. The idea behind buying the dip for investors is that they are acquiring the assets at a cheaper price with the potential for greater yield in the future. 

Similar to “cash-in” and “cash-out” which are commonly used to refer to depositing and withdrawing money from e-wallets and online banking platforms, “crypto-in” and “crypto-out” simply means depositing and withdrawing cryptocurrencies to and from a crypto exchange. 

A crypto winter is characterized as the “cooling off” of the crypto market with generally lower trading volumes and market prices. This is also commonly referred to as a prolonged bear market. 

Decentralization is the core idea behind blockchain technology, and simply means that a network is not under the control of any single person or entity. In a blockchain, data is managed and stored across the entire network instead of in a single location. More often as well, it is the community of users who make the decisions and steer its direction, making it more secure and equal for everyone who uses it. 

Diamond hands and paper hands are slang terms used to describe the risk appetite and investment behaviors of traders. A person with diamond hands is one who sticks to their investment strategies despite certain fluctuations in the market. A person with paper hands is one who is easily influenced by market movements and would sell off assets at the first sign of trouble. 

Ethereum is the second largest cryptocurrency next only to Bitcoin, and which was the first to develop smart contracts, allowing for blockchains to be used not only for payments, but also for decentralized applications, blockchain games, 

Fiat is a term used to refer to any government-issued currency. Cryptocurrencies are often traded against the US dollar since it is the most dominant fiat currency. Other exchanges however, like PDAX, allow for trades to be made against local fiat, such as the Philippine peso. 

FOMO is an acronym for “fear of missing out” and refers to the buying hype surrounding a token at certain times. FOMO events tend to drive the price of a cryptocurrency higher, as traders rush to buy the asset for fear of missing out on a profit. 

FUD stands for “fear, uncertainty, and doubt” and describes the spread of a negative outlook for a particular token or asset. FUD can happen when assets are performing poorly in the market, or can also be a tactic made by bad actors to manipulate market prices. 

In the same way that a car needs gas to run, in the crypto world, “gas” refers to the processing fee needed to execute a transaction on a blockchain, and is usually paid for using the network’s own token. Sending crypto from one wallet to another for instance, will require a small gas fee for it to be processed by the network’s validators. 

HODL in crypto lore, originated from a misspelling of ”hold” and can be traced to a post in an internet forum in 2013 which has since then become a mainstay online meme. “To hodl” or to be a “hodler” is an investing strategy which simply means to hold on to one’s crypto assets indefinitely no matter what the price movements are in the market. Later on, HODL was also attributed as standing for “hold on for dear life.”

Market cap or market capitalization refers to the value calculated by multiplying the current price of a certain cryptocurrency by the number of coins that are in circulation. Market cap represents a certain asset’s current valuation, and is one of the first things one should consider and learn about when going into trading. 

Mining is the process of “minting” or creating new tokens by participating in verifying transactions in a blockchain. To keep the network decentralized, “miners” compete with each other in solving complex mathematical puzzles and in return, get rewarded with newly minted coins for lending out their processing power to the network. Anyone in the world with enough computer hardware and a fast internet connection can become a miner and earn cryptocurrency. Blockchains that utilize mining are also called “Proof-of-Work” (PoW) networks to refer to the mining protocol.  

The metaverse is an up-and-coming technology that envisions a virtual world as an extended space for aspects of our day-to-day lives such as going to work, socializing, watching movies and sporting events, or exploring fantastic environments. Since such a digital world will require sophisticated systems to secure users’ identities and ownership of virtual assets, the metaverse will inevitably be built on blockchain technology.  

Road trip? Broom broom? Nope, in crypto, going “to the moon” is when a certain cryptocurrency shows signs of trending upward rapidly on the market. Saying that a token is “mooning” is also often used. 

An NFT or “non-fungible token” is a kind of digital asset that is coded in a particular way that makes it unique from any other NFT. To be “fungible” after all, means that one thing can be traded or replaced by another of its kind (for example: one Bitcoin is exactly the same in value as another Bitcoin). Being non-fungible, NFTs are thus useful for representing unique items such as artworks, game items, legal or personal documents, and more.   

A node simply refers to any computer that is connected to the blockchain for the purpose of validating transactions. Nodes are the engines that keep the network running, and the more nodes there are, the more decentralized a blockchain is. Bitcoin and Ethereum have hundreds and thousands of nodes across the world at any given time, processing and validating transactions.  

Crypto literature will often mention up-and-coming “projects” which can simply refer to any emerging token, blockchain, platform, or decentralized application (dApp) that is built on a blockchain. 

Peer-to-peer or “P2P” refers to direct transactions between two individuals without the need of an intermediary or third party. For instance, blockchains allow assets to be transferred directly from one user to another without going through a middleman like a bank.

In trading, pumping is a sudden rise in the price of an asset. When large quantities of a certain coin are being bought in a short span of time, it drives the demand and price of the token upward very quickly. 

Rekt is a term which was borrowed from the gaming community and is a play on the word wrecked. In crypto, to be rekt means that an investor has found themselves in a state of financial ruin as a result of bad trades or poor investment strategies.

The most intriguing trivia behind cryptocurrencies is that up to now, nobody knows the true identity of the person or persons behind the pseudonym “Satoshi Nakomoto” –the developer of Bitcoin and author of its whitepaper. There are many theories and claims about who Satoshi is, but none have been proven so far, nor does anyone know where the 1 million Bitcoin tokens under his ownership are now.  

Wherever Bitcoin is accepted as payment for ordinary purchases, users often converse in “satoshis” or “sats”, wherein 1 satoshi is equal to 0.00000001 BTC.

To “shill” a token means to aggressively market it with the purpose of driving up its value on the market. This is usually done through ad placements on websites, banners, and through influencers in social media and chat rooms. 

Staking is simply locking away a certain amount of crypto assets for the purpose of yielding passive income over an extended period of time. Staking can be done to help secure a blockchain network or through various decentralized finance (DeFi) platforms who may make use of these staked assets to fund other projects to net a profit for the original stakers. Blockchains that are secured by staking are also called “Proof-of-Stake” (PoS) networks. 

Tokenomics is the study of the economic movement and characteristics of a particular cryptocurrency. It largely has to do with the supply-and-demand characteristics of a particular crypto and how these factor into a coin’s value.

A validator is an independent computer node that is responsible for storing, processing, and authenticating data in a blockchain network. Anyone with enough hardware and processing power can participate as a validator for a blockchain and earn passive income. 

A wallet is where cryptocurrency users “store” their cryptocurrencies. But unlike a physical wallet which keeps your cash, a crypto wallet is where you keep your public and private keys to access your data on the blockchain. Wallets can be browser-based wallets which are also called “hot” wallets since they’re always connected to the internet for convenience, or “cold” hardware wallets which you can disconnect for extra security.  

Anyone old enough will remember Web 1.0 as a time when the Internet was made up mostly of websites that were mostly “read only”. Web 2.0 saw the rise of social media and user-generated content. Web 3.0 on the other hand, is being positioned as the Internet’s next iteration, which will be more decentralized using blockchain technology, giving control of data back to the users, instead of being in the hands of mega-entities such as Google or Facebook.  

A whale in the crypto community describes a certain individual or entity that holds a very significant amount of cryptocurrency. Because of the volume of assets that they hold, whales are in the position to affect the whole market whenever they buy or sell large quantities of tokens. In fact, the practice of monitoring crypto wallets associated with whales is called “whale watching”. 

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DISCLAIMER: The statements in this article do not constitute financial advice. PDAX does not guarantee the technical and financial integrity of the digital asset and its ecosystem. Any and all trading involving the digital asset is subject to the user’s risk and discretion and must be done after adequate and in-depth research and analysis.