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Terminology ep. 2

Now that you have a brief idea of why bitcoin, or cryptocurrency in general, was created you will need to know some basic terms to be able to understand and communicate in the industry. Some of these terms are used in the regular stock market and by traders.

  • Bagholder: A person who holds a particular crypto which decreases in value until it is worthless. Example, you buy $1000 USD worth of Dogecoin ($doge) expecting it to climb in value. Instead the price drops, and continues to drop. You continue to hold these coins fully expecting it to rise thus either breaking even or making a small profit. These are bags, they are weighing down your portfolio. Its best to get rid of these once the price drops below a certain level.

  • Bear/Bearish: Negative sentiment or downward price movement.

  • Bear Trap: A literal trap where a general upward price trend reverses downwards momentarily and will continue its upwards motion. This is used often by large traders. The idea is to trick people into selling off, or tripping automatic sell orders reducing the price so it can then be picked up at a cheaper price.

  • BTD: Buy The Dip. An indication to buy a coin when it has substantially decreased in price. Example the price of Bitcoin ($btc) is trading at $1000usd and suddenly drops to $700usd. You would quickly buy more with the idea that the price will ultimately rise quickly thus making a quick profit on the drop.

  • Bull/Bullish: Positive sentiment or upward price movement

  • Bull Trap: A literal trap where a general decreasing price movement reverses upwards momentarily and will continue its downwards motion. This is used often by large traders. The idea is to trick people into buying more, or tripping automatic buy orders increasing the price.

  • Dead Cat Bounce: A temporary recovery in prices after a huge decrease.

  • Dump/Dumping: Selling away your coins. When this happens in a large capacity it causes a downward price movement due to the increased selling pressure.

  • DYOR: Do your own research. You will hear this a lot. Basically take everything people say with a grain of salt. Crypto is very volatile and very new. Not everyone or everything will be right or wrong.

  • Faucet: Website that rewards you with small amounts of crypto for the completion of a specific task.

  • FA: Fundamental Analysis.

  • FOMO: Fear Of Missing Out. This is a mistake where a coin is going up in price and you get the feeling it’s going to go higher. This may or may not be the case. A lot of people that are sitting on the side watching will usually jump in do to FOMO.

  • Fork: Splitting of the Blockchain. This happens when the project developers have different ideas about how it should proceed. This is usually not a good thing as it causes uncertainty and confusion. Also people must decide to stay on the current chain or risk going to the new one. Bitcoin has had a few forks, main ones being BitcoinSV ($BSV), BitcoinCash ($BCH) and Bitcoin Core($BTC) . Each claim to be sticking to the true vision by Satoshi Nakomotos Whitepaper.

  • FUD: Fear, Uncertainty & Doubt. This happens in a time when there is fear in the market over something. usually the response is over exaggerated.

  • HODL: Act of holding on to your coins no matter what, resisting the urge to sell.

  • Long: A positive view on the coin. With this you purchase the coin with all expectations are for it to rise and value before you sell. You take the long position.

  • MCAP: Market capitalization, this is an indicator of its market size. You get this by multiplying its market price and the total available supply in the market.

  • Mining: Mining is done by work performed by specialized computers.The role of miners is to secure the network and to process all of the Bitcoin transactions. Miners achieve this by solving a very complex computational problem that fluctuate in difficulty. This allows them to chain together blocks of transactions. For completing this hard tasks by utilizing their own hardware, power and time they are awarded with newly-created Bitcoins and the transaction fees within each block.

  • Moon: Expected upward movement (burst) of price, towards the moon

  • Node: A computer system that is connected to the Bitcoin network. These systems have the responsibility of mining new coins by solving the cryptographic problems as well as storing and running the blockchain history for assuring consensus on all transactions.

  • Listening node: is any other device that can connect to the bitcoin network. These devices have the ability to download the entire ledger but do not compete in the node network as they hold no voting rights in consensus due to the fact they do not mine.

  • Pump: Upward price movement

  • Pump & Dump: Price manipulation. Large holders increase the price by flooding the market, this causes FOMO. Once the price reaches a certain level the large holders sell off making profit on all those that bought in at the higher price.

  • Shitcoin: A coin with no potential value.

  • Short: Selling coins on margin expecting the price to plunge thus making profit on thprice difference from what you borrowed and what you bought. For example, you borrow 3 $btc at $1000usd, the price then drops to $700usd and you buy back the 3 Bitcoin and return to the exchange. You would have made a profit of $300usd.

  • TA: Technical Analysis, or the analysis of prices based on historical price movements. You need to be careful when listening to people giving TA. The crypto market is very volatile and extremely unpredictable. Even in a mature market such as stock TA is very inaccurate. Combine that with the uncertainty of the crypto market and inexperience of those involved TA is mostly a guessing game at best.

  • Rekt: A slang for “wrecked”. When something really bad happens, usually during a trade.

  • RSI: Relative Strength Index, a popular trading indicator used in technical analysis.

  • Whale: Someone who owns a huge number of coins or tokens that can influence the prices. Since the market is young and not as spread out as regualr stock it is easy for some to have a large quantity of coins. These whales then use that to manipulate the market causing FOMO, dumps etc. This is why listening to TA is so skeptical. You never know what a whale will do and when.