If you are a newbie, the cryptocurrency trading space can be quite confusing with all the terms and abbreviations traders use. You must have heard terms like “ATH, HODL, and long position.” It is important to know what most of these terms mean because they could come in handy in the future.
This guide will highlight some important crypto terminology and explain what it means. It should give you a headstart if you want to delve into the industry.
Popular Crypto Terminologies and Abbreviations
This abbreviation is crypto slang. It actually refers to holding crypto assets for a longer period despite the volatile market. This slang encourages traders to hold their coins rather than sell impulsively and lose out. It is used when digital currencies drop dramatically.
Also, this slang can be interpreted as “hold on for dear life.” traders in social media and cryptocurrency forums often use this language to persuade others to keep their tokens for the long term.
One of the most important crypto terms you should learn is ATH. This term plays a large role in the market. ATH basically stands for “all-time high.”.
Another common term is the block. Most newbies who have no experience in crypto trading may not know this term. It is where all cryptocurrency transactions are stored. If you make a transaction using Bitcoin or any other cryptocurrency, the information on the transaction is stored in the block on a blockchain.
Long Position and Short Position
A long position is a trading term that signals that a trader is bullish and is expecting the price of the currency to increase. You will also encounter short position traders who will bet on the market being bearish.
In crypto futures trading there is a constant battle between the long and short positions for dominance. Each position is betting against the other to get the best outcome when the contract expires. A long position will be looking to buy crypto at an undervalued price point, whereas a short position will be looking to capitalise and sell over the market value.
This term is almost self-explanatory. Basically, it means not putting all your eggs in one basket. As a crypto trader, it is important to know what this term means because it can come in handy.
While Bitcoin is an attractive cryptocurrency to sink your funds into, other cryptocurrencies may yield more profits in the short and long term. This is where diversification comes in. you need to spread out your investments by trading different cryptocurrencies and not just Bitcoin.
Decentralized Finance (DeFi)
DeFi is a term for decentralized alternatives to centralized finance. It often includes money management, banking, payment processing, and insurance. The products and services in this field enable decentralized access to the exclusive industry.
Mining is important and you should know what it is all about. Some people earn money from mining; however, it is not an easy way to make money. Still, it is trendy. It requires the user to solve mathematical calculations to make money from mining cryptocurrency. You also need to know a lot about it before trying to mine cryptocurrency. Also, you need an advanced computer system to mine cryptocurrency since it is a way to create crypto.
Decentralized apps (dApps)
Decentralized apps are open-source applications that are built on the blockchain for real-world use. So far Ethereum is the mother of dApps because it was established to help developers create new apps on its blockchain.
All dApps have some similarities such as decentralization, open source, incentivized, and a protocol. The validators in dApps are often rewarded with cryptographic tokens while the community makes the decision on cryptographic algorithms to be adopted.
A dApp can also be as valuable as other products or companies. There are several ETH-based dApps that are worth millions of dollars today.