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Crypto Terms Explained

Stop wondering what those complex NFT, Web3, and crypto terms mean. We’re here to break down crypto lingo in simple terms.

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NFT, WEB3 & CRYPTO TERMS DICTIONARY

Learn the Lingo – Learn Crypto Terms

Many complicated crypto terms are floating around out there. But we’re here to break it down. So, next time you hear NFT, Web3, or crypto lingo, you’ll know exactly what’s going on.

A

Crypto terms beginning with “A”.

ALPHA

Technically speaking, alpha is an investment’s ability to outperform the market. However, you may hear crypto influencers and other Web3 and NFT investors say something like – “I have some alpha for you”. What they mean by this is that they have some good intel. That is, they have exclusive information that others in the market are not aware of yet.

Good Web3, NFT, and crypto influencers spend endless hours researching and examining projects. This can help them find hidden gems and uncover valuable information. However, not all influencers are trustworthy. Before listening to a crypto influencer who says that he or she has reliable alpha, do your own research. At Daily Crypto Guide we never recommend investing in crypto, NFT, or other Web3 projects based on the word of anyone. Always do your own research – and never invest more than you are willing to lose.

ALTCOIN

Any cryptocurrency other than Bitcoin. For example, Ethereum, Cardano, XRP, Dogecoin, etc.

APE IN

The term “ape in” is a common saying used by crypto investors. Ape in means to throw your money into a coin. Often cryptocurrency holders ape into projects because they are worried they will miss out on massive gains if they don’t act quickly.

APY

APY stands for Annual Percentage Yield. This term is often used in finance. It refers to the annual interest that you will earn on your money. In the crypto world, APY often refers to the amount of interest you will earn each year when staking your crypto.

B

Discover all the crypto lingo beginning with “B”.

BEAR

A bear is a crypto investor who expects that the price of cryptocurrency will fall (in the short term, at least).

BEAR MARKET

A bear market is a period in which cryptocurrencies are stagnant or decreasing in value. Many crypto investors recognize that it’s during a bear market that millionaires are made. This is because, during a bear market, crypto coins and tokens can often be purchased for a fraction of their price. Hence, by buying crypto at low bear market prices, you can make more money when the bull market comes around.

BEAR TRAP

The term bear trap is often used to describe a situation in which crypto investors expect the price of a cryptocurrency to fall but it increases instead. As a result, any “bears” that chose to sell or short the asset (i.e. bet that the price would fall) will be blindsided by higher prices. Hence, a bear trap is a trap for bearish investors.

BULL

A bull is a crypto investor who believes the price of cryptocurrency is on an uptrend and will continue to increase.

BULL MARKET

A bull market is when cryptocurrencies are increasing in value. In fact, many cryptocurrencies reach new all-time highs during bull markets. Therefore, many crypto investors make great financial gains during this part of the crypto cycle.

BULL TRAP

A bull trap is a scenario in which crypto investors expect the price of a cryptocurrency to increase, but it falls instead. This situation is the exact opposite of a bear trap. In this case, any bullish investors who bought an asset expecting its price to increase will be blindsided by lower prices. Hence, a bull trap is a trap for bullish investors.

C

Crypto lingo that starts with “C”.

CBDC

CBDC stands for Central Bank Digital Currency. A CBDC is a digital form of a country’s fiat currency. Unlike decentralized cryptocurrencies, CBDCs are issued by a centralized authority (i.e. the central bank).

CRYPTO

Crypto is short for cryptocurrency. Cryptocurrency is virtual currency that can be used to purchase goods and services or as a store of value. The term cryptocurrency can be broken down into two parts:

1. Crypto – this refers to a process known as cryptography. Cryptography is used to secure crypto transactions.

2. Currency – a medium of exchange. Crypto is used as a medium of exchange and functions like traditional currencies, but with many more benefits.

Learn more about cryptocurrency and how it works here – What is Cryptocurrency?

D

Learn crypto terms that start with “D”.

DAO

DAO stands for Decentralized Autonomous Organization. A Decentralized Autonomous Organization is a corporation that is not directed by any individual or central authority. Instead, rules and decision-making processes are predetermined and encoded into the program (known as a smart contract) by developers. These preset rules are completely transparent and initiated automatically by the smart contract (hence, “smart”).

Certain decisions are also made using a democratic voting system. In other words, all the individuals who have invested in the DAO can vote on these decisions. Decisions are implemented automatically based on the outcome of the vote.

The goal of DAOs is to eliminate human error and corruption.

DAPPS

Dapps stands for Decentralized Applications. Decentralized Applications are similar to traditional apps. However, unlike normal apps, dapps run on blockchain technology. This means that no single company (e.g. Apple) has control over the distribution of dapps.

Dapps are open-source. This means that the app’s code is public. As a result, the code can be modified and shared. The information and records held by dapps are also transparent and available to the public.

DCA

DCA stands for Dollar-Cost Averaging. This refers to a popular investing strategy in which investors buy crypto consistently over time. Those who dollar-cost average into an investment make regular purchases, regardless of price. This strategy is often very effective, as it removes the emotional aspect of crypto investing.

It is extremely hard to time the very bottom of a cryptocurrency’s price (i.e. to enter at the perfect moment). Therefore, by purchasing crypto consistently over time, investors can get the best average price.

DCA Example: buying $100 of Bitcoin each week, regardless of price.

Keep in mind, crypto investors can also use the DCA strategy when selling cryptocurrency. This means selling small increments of crypto as the price increases. This helps investors make the most of their investment – without having to perfectly time the top. You may hear this referred to as “dollar-cost averaging out”.

DEFI

DeFi stands for Decentralized Finance. Decentralized Finance, or DeFi, allows individuals to complete financial transactions without a centralized organization like a bank or government. For example, people can borrow, lend and trade crypto without a centralized institution using DeFi.

The goal of DeFi is to eliminate the control that banks and other large institutions have over money and financial services.

DIAMOND HANDS

The crypto term “Diamond Hands” refers to someone who holds their crypto no matter what is happening in the market. Regardless of volatility, a person with diamond hands will not sell their crypto.

E

Crypto terms starting with “E”.

Stay tuned for “E” crypto terms.

 

F

Discover crypto lingo beginning with “F”.

FIAT

Fiat is government-issued money. In other words, fiat is the legal tender of a country. Examples of fiat money include the U.S. dollar (USD), Canadian Dollar (CAD), European Euro (EUR), Japanese Yen (JPY), British Pound (GBP), etc.

FUD

FUD stands for Fear, Uncertainty, and Doubt. Periods of FUD often occur when negative news and general fear rule the crypto market. Negative events in the crypto space commonly provoke FUD. However, in many cases, these events are exaggerated or even completely fabricated.

FUD often prevents people from participating in the NFT, Web3, and crypto markets because they are uncertain of what the future holds.

G

Cryptocurrency lingo beginning with “G”.

Stay tuned for “G” crypto terms.

 

H

Learn crypto terms that start with “H”.

HIGH-CAP

A high-cap (or large-cap) is a cryptocurrency with a market cap of more than $10 billion. Typically, large-cap cryptos are those in the top 10. Examples of high caps include Bitcoin and Ethereum. Although all cryptocurrency carries some risk, high-cap projects are considered to be relatively safe investments.

HODL

HODL stands for Hold On for Dear Life. This common crypto term describes the strategy of buying and holding cryptocurrency (even through the ups and downs of the market). The term was first introduced when someone (explaining that he would HOLD his Bitcoin) misspelled “hold”. Very quickly the term became a meme. Now, hodl is used widely throughout the crypto community, especially during times of extreme volatility.

I

Cryptocurrency terms starting with “I”.

ICO

ICO stands for Initial Coin Offering. An ICO is similar to an IPO (Initial Public Offering). However, ICOs are used to raise funds for new crypto projects.

Investors who take part in an ICO receive tokens before they are listed on any exchange. These tokens may offer utility related to the project or simply allow the investor to get in on the project early.

IDO

IDO stands for Initial DEX Offering. An IDO is similar to crowdfunding – but for crypto projects. When an IDO is used to raise funds for a new cryptocurrency project, the project’s coins or tokens are listed on a decentralized exchange (DEX).

The main difference between an IDO and an ICO is that with an IDO the project’s coins or tokens are listed on an exchange (i.e. a DEX). On the other hand, with an ICO, coins and tokens are sold before they are listed on any exchange.

J

Crypto terms that start with “J”.

Stay Tuned.

 

K

Discover lingo starting with “K”.

KYC

KYC stands for Know Your Customer. Crypto exchanges use this process to verify the identity of their users. KYC is also used by many financial institutions. The goal of this process is to help eliminate money laundering and other illegal activities. To complete KYC requirements, you’ll need to provide proof of your identity (i.e. usually with a photograph) and proof of address (e.g. by providing an image of your Driver’s License).

L

Crypto terms that start with “L”.

LOW-CAP

Low-cap (or small-cap) refers to a cryptocurrency with a low market capitalization. A low-cap crypto has a market cap of less than $1 billion. Typically, low-cap cryptocurrencies are still in early stages of development. As a result of their low market capitalization, low caps are the most susceptible to wild price swings due to market volatility.

M

Discover crypto lingo starting with “M”.

MID-CAP

A mid-cap crypto is a cryptocurrency with a market cap between $1 billion and $10 billion. Mid-cap cryptos are not as risky as low-caps. However, they are riskier than high-cap cryptocurrencies. That said, mid-caps often have more potential for growth than high caps. As a result, many people invest in mid-cap cryptocurrencies in an attempt to maximize their return on investment.

N

Learn crypto terms that begin with “N”.

NFT

NFT stands for Non-Fungible Token. A non-fungible token is a unique token that is unlike anything else.

To make this idea clearer, consider a single dollar vs a baseball trading card. You could swap your dollar with your friend’s dollar and there would be no difference. The two dollars are (essentially) the same. However, if you were to swap an extremely rare baseball card with your friend’s not-so-rare card, there could be an issue. These two cards are completely different and it’s unlikely you would want your friend’s card in exchange for your more valuable collectible. These basecall cards are non-fungible.

The idea behind NFTs is similar to baseball trading cards. An NFT can be traded or sold and no two are alike.

Some popular NFTs you may have heard about include Bored Ape Yacht Club, World of Women, and Azuki. These NFTs can sell for hundreds of thousands of dollars.

O

Crypto lingo starting with “O”.

STAY TUNED.

P

Learn crypto terms that begin with “P”.

PAPER HANDS

Crypto enthusiasts often use the term “paper hands” to describe someone who sells their crypto at the first sign of trouble in the market. You can think of someone with paper hands like a poker player who folds too easily.

People with paper hands are not comfortable with volatility. Therefore, they sell their crypto whenever they see the market going down. In most cases, investors with paper hands sell too early, resulting in unnecessary losses.

Q

Crypto lingo starting with “Q”.

STAY TUNED.

R

Crypto terms that begin with “R”.

STAY TUNED.

S

Crypto lingo beginning with “S”.

SHO

SHO stands for strong holder offering. Like an ICO or IDO, a SHO is used to raise funds for a new crypto project. However, unlike ICOs and IDOs, SHOs are limited to particular investors. In other words, to participate in a SHO, an investor must meet certain criteria. These investment criteria are set by the crypto project. In many cases, eligibility is determined by a potential investor’s current crypto holdings or recent on-chain activity (e.g. $5,000 in crypto transactions in the previous month).