Introduction
The first step for a beginner in the blockchain ecosystem is to find out where all the important conversations happen, including social media platforms and chat forums. Next, you should learn the terminology, and part of that is identifying the unique terms and phrases used by members of the community, what they mean and how to use them effectively. The last step is to dive right in and mingle with the masses. To get you started on your crypto journey, we have compiled a list of a few commonly used words and expressions, some of which only make sense when used in a crypto context, but some have been borrowed from the conventional investment world. The term HODL, which has been in use for a few years, is the article’s main point of emphasis. It may strike you as a misspelling, and you will be right, but within the blockchain space, that spelling is correct. HODLing is a cryptocurrency investment strategy not unique to crypto but rather a rehashed term made to appeal to the eccentric crypto community. Continue reading to learn more about how it came to be, why it is considered an investment strategy, and other words that you may want to be acquainted with if you wish to be a part of the community.
What does HODL mean?
HODLing is an investment strategy derived from the traditional financial world where it is referred to as buy and hold. An investor will acquire an asset to keep it over the long term. Value investors such as Warren Buffett use this strategy when investing whereby they identify undervalued companies, buy the stocks cheap and hold them for several years. The idea is that the value of the stocks would have risen considerably within this period. In contrast, other investors choose to time the market, which leads them to make short-term decisions or trades. Compared to buying and holding, market timing needs a lot more skills and expertise, meaning beginners have a disadvantage with this strategy as opposed to value investment. In crypto, the comparable strategy to value investment would be ‘HODLing,’ which works the same way. An investor identifies a project with great potential and invests in it for the medium to long term. As the project rises in popularity and utility, the value of the project’s token also rises. It is, however, more difficult to engage in market timing strategies in crypto where price volatility is high. HODLing is an easier and more rational method to take when investing in blockchain projects.
History of HODLing
The term ‘HODL’ has a rather interesting origin. In December 2013, a (self-admitted) intoxicated BitcoinTalk forum member with the pseudonym GameKyuubi wrote a post titled “I AM HODLING.” GameKyuubi was trying to communicate to the other forum members that he was frustrated trying to trade Bitcoin actively. At the time, the flagship cryptocurrency had lost 50% of its value in two weeks falling from a then all-time high of $1,120 to a low of $560 between December 4th and the 18th. GameKyuubi wrote his post on the 18th, attempting to communicate that he was changing tact to his Bitcoin investment. Instead of buying low to sell high, i.e., timing the market, he would start HODLing onto his currency and not selling. “In a zero-sum game such as this, traders can only take your money if you sell,” he wrote. Even though GameKyuubi was intoxicated, he knew he misspelled the title but opted not to change it. “I type d [sic] that title [sic] twice because I knew it was wrong the first time,’ he wrote. “Still wrong.” Members of the BitcoinTalk forum picked up on that error and started using the term HODL instead of HOLD to refer to the strategy of not selling your assets despite external pressure to sell as the price of the asset falls. Later, the community came up with a new meaning for the term HODL which was “Holding On (for) Dear Life.” The new definition helped illustrate the gist of HODLing to the masses. It takes a lot of emotional strength not to sell a plummeting asset, hoping that it will revert to greater heights.
Understanding the HODL Strategy
The HODL strategy has since its origin been used as a community anthem used whenever the price of a digital asset has been rallying. The idea is to discourage selling at the top, which could possibly trigger a reversal of the asset’s price. HODLing campaigns are also witnessed whenever the price of an asset starts falling. In such a situation, any more selling could lead to further price correction and the best action for the long-term investors is to discourage weak hands from letting go and thereby mitigating further losses. Outside the seasonal HODLing rallies to discourage selling, the buy and HODL strategy is very simple and easy to implement. There are just two steps to it:
Step 1 – Acquire cryptocurrency; Step 2 – Do not sell; Step 3 – Sell at the right time.
It is important to know when the right time is because this metric varies from one individual to another. The right time to sell will largely depend on the goals of investing. If these goals are achieved, the coin holder can sell at any price in the market; otherwise, they continue to HODL. Market conditions might also dictate when to sell. For instance, if the asset is in the middle of a bear market, there will be fewer buyers than there are sellers. For big investors, a falling market might not offer the right conditions to sell. They have to wait for buyers to come in to absorb their large orders. However, if the price is rising, it is much easier to sell. There are several ways to acquire crypto, including:
Buying; Mining; Accepting crypto as payment for goods and services; Accepting crypto donations; Participating in competitions and crypto giveaway promotions.
Cryptocurrencies are considered to be highly volatile assets, and it’s not unusual to see daily price changes of 20+% in either direction. Even Bitcoin, now a relatively stable cryptocurrency, still registers 10-20% moves in some days. Trying to beat the market by timing reversals is an expert’s game, and most newcomers to crypto are not experienced at doing that. HODLing thus becomes a safe play for such individuals and institutions looking for long-term gains rather than gaming the system. The strategy has proved right for the most part, as some of the larger assets have seen incremental value gains over a number of years. However, if an analyst could zoom into the monthly price action of most of these assets it would be evident that most experienced wild rides in short-term durations.
10 other crypto slang terms to know
Now that you understand what it means to HODL, let’s dive into some of the other popular crypto-related terms that are worth knowing in order to participate in conversations amongst fellow blockchain enthusiasts.
When Lambo/Mooning
The phrase ‘When Lambo’ was especially predominant during the ICO-mania of late 2017 and early 2018. It is a shortened version of the question ‘When can an investment in an asset appreciate enough to buy a Lamborghini?’ Lamborghini supercars have, for a long time, been used as status symbols by wealthy crypto investors, especially those that can attribute a bulk of their wealth to blockchain-related activities. Mooning is a related term to ‘When Lambo’ that also refers to stratospheric price rallies. If the price of an asset rises very fast, the community equates that rise to a ride on a rocket to the moon which gave rise to the phrase going to the moon or ‘mooning,’ for short.
FOMO
FOMO is an acronym representing the phrase the ‘Fear Of Missing Out.’ It is a psychological response whereby investors buy into an asset whose price is already on an upward trajectory because they fear that they might miss out on massive gains.
FUD
FUD is another acronym that stands for ‘Fear, Uncertainty, and Doubt.’ Part of the reason why cryptocurrency markets are so volatile is that they are vulnerable to public perceptions. Whenever there is negative press coverage, the value of the entire market will fall and the reverse is true. Sometimes, a section of the market may manipulate the media to print out false cryptocurrency news about a particular crypto project designed to elicit fear, uncertainty, and doubt in the minds of token holders for them to sell their assets. The manipulators will then scoop up these assets at lower prices. FUD propagation is a rather common occurrence in crypto, and one has to research the truth behind any assertion to ensure that they do not fall for it.
Rekt
Rekt is a crypto term derived from the word ‘wreck’ which means to destroy or severely damage. To be precise, it is derived from the past tense of that verb which is ‘wrecked.’ It refers to a situation when a crypto investor has encountered a massive loss by being on the wrong side of a trade. As we have mentioned before, cryptocurrencies are highly volatile assets, and there is a high chance that a trader can lose their investment quickly. The term is, however, used to describe huge losses, and even though ‘huge’ is considered a relative term, losing a lot of coins qualifies as being rekt.
Shill
To shill is another common term within the social media circles of crypto enthusiasts which means to selfishly promote a coin or token. Individuals who participate in shilling often have a stake in the asset, and by drumming up support for the project behind the asset, they are trying to build up buying pressure which could lead to a price gain. Shilling is frowned upon because it constitutes dishonesty and selfishness.
Whale
The term whale means a very large marine mammal that lives in the ocean. In crypto, the term is used to refer to individuals or institutions with an outsized investment in a particular asset. Since large is a relative term, a more acceptable definition of a whale is anyone whose singular actions are able to affect the price of an asset.
BTD/BTFD
These two terms are much more recent additions to the crypto lingo, and they too are acronyms of the phrases ‘Buy The Dip’ for BTD and ‘Buy The F***n Dip’ for BTFD. Just like HODL, BTD or BTFD is a term used to encourage more investment whenever an asset’s price corrects during a rally, i.e., it dips. The correction is interpreted as a chance to buy more with the expectation that the price will inevitably rebound to the previous high.
Bagholder
Bag holder is a negative term used to describe anyone in possession of a significant amount of coins or tokens whose value has fallen to a level that it is unprofitable to sell. The phrase makes more sense when used to refer to worthless coins or tokens – also called ‘shitcoins’ – that have little to no utility outside speculation.
Flippening
The term ‘flippening’ is used within the crypto circles to refer to a hypothetical moment in which the market capitalization of Ethereum surpasses that of Bitcoin. The latter is the oldest and largest cryptocurrency by network value and Ethereum’s market cap has trailed Bitcoin’s for several years. Over the last few years, the gap between the network valuations of the two leading blockchain assets has been dropping, leading some analysts to predict that Ethereum and Bitcoin might flip in ranking. Hence, the term flippening, which is an amalgamation of the words ‘flip’ and ‘happening.’
Pump and dump
Crypto pump and dump is an investment scheme in which instigators buy large positions in low-cap (market capitalization) coins or tokens before shilling these assets to other investors. The intention is to create an artificial price increase leading to a substantial profit. However, since they have outsized positions, they need to sell while everyone is buying, so they keep shilling the asset as they offload their positions and once they stop pushing it. Typically, the price of the asset comes crashing down as the latter buyers look to exit their positions. Low cap coins are ideal for pump and dump schemes since instigators do not need to make huge investments to achieve the desired price action.
Final thoughts
The cryptocurrency world is full of exciting and interesting eccentricities, including the lingo. Hopefully, by going through this article, you have familiarized yourself with some of the more common unique terminologies used within the blockchain space. There are several more words that we did not cover in this guide but we are sure you will run into as you interact with other community members. Be observant, keen, and keep an open mind when interacting with other enthusiasts in chat forums and on social media. It is the kind of mindset that will help you learn and contribute more positively to the community. [coinbase]
