Even though Bitcoin, the world’s first successful cryptocurrency, came into existence in 2008, the technology has only really taken off in the last few years. It’s understandable, then, that a newcomer to the industry might find all the jargon used by commentators and speculators more confusing than enlightening.
Does that sound like you? Do you baulk at abbreviations such as De-Fi, NFT and IBC? Do the terms pump-and-dump, whale and HODL mean nothing to you? If so, fear not – we’ll run through the meanings of all of these and more below.
One of the first terms you’re likely to come across, blockchain is the system of recording transactions which underpins pretty much all cryptocurrencies today. It’s immutable and permanent, while being both transparent and anonymous, making it ideal for security.
The Inter-Blockchain Communication Protocol (IBC) is an open-source protocol which can be used by anyone to link transactions between different blockchain systems. For example, Cronos is the first network which is compatible with both the Ethereum and Cosmos blockchains.
Short for decentralized finance, De-Fi is the concept of wresting control away from major players (such as governments, banks and other financial institutions) and back into the hands of the individual. It’s the philosophy behind the cryptocurrency revolution.
Traditionally, cryptocurrencies functioned on a proof-of-work (PoW) concept, wherein enormous amounts of computing power would be used to solve a randomized mathematical problem, thus verifying a transaction in the process. The user who successful solved the problem would be rewarded with a “mined” cryptocurrency amount.
Although commonplace (and still in use by the biggest cryptocurrency, Bitcoin), PoW has been proven to be very energy intensive and thus not sustainable in the long run. As such, proof of stake (PoS) has supplanted it, wherein users will “stake” their own assets in order to verify a transaction.
Non-fungible tokens (NFTs) are digital assets which can be used to prove ownership of a particular piece of media, such as an image or video. Although NFTs first arrived on the scene around seven years ago, they experienced a massive boom in popularity in 2021.
Cryptocurrencies are inherently unstable currencies that, like all others, fluctuate in value depending on supply and demand. Since they are newer and more finite than fiat currencies, there are individuals who can single-handedly affect their worth by amassing or selling vast amounts of a currency. These people are known as whales.
This term refers to the underhand technique of artificially inflating the value of a cryptocurrency by buying significant amounts of it, publicizing it on social media or using other means to generate a buzz around it – then quickly selling off all assets once it rises in value, leading to a bottoming-out of the market.
An acronym for fear, uncertainty and doubt, FUD is widespread among those who have yet to dabble in cryptocurrency and, at times of market stress, can lead to massive troughs in value.
Famously inspired a misspelling of the word “hold”, this simply means resisting panic by holding onto your assets when a currency is experiencing difficulties.