There is a lot of jargon out there in crypto land and often it can be difficult to decipher.
Use this helpful list to make the most of the best crypto tips and dodge common cryptocurrency mistakes that could blow up your trading account.
Altcoin:
a portmanteau of “alternative” and “coin”, altcoin refers to any cryptocurrency other than the original one, bitcoin.
Cryptocurrency exchanges:
just like regular stock exchanges, the likes of Coinbase, Binance, Gemini and Bitstamp allow traders and investors to buy and sell — except that here they are trading cryptocurrencies. Unlike standard stock markets, cryptocurrency exchanges are online-only and are open 24 hours a day, seven days a week.
Limits:
most exchanges do not set limits or restrictions on the number of cryptocurrency trades their users can make in a day. On turbulent trading days, when cryptocurrency prices are moving up or down very quickly, some brokers may put a short-term halt on people depositing funds on their platforms.
Market cap:
the total value of a cryptocurrency. It’s calculated by multiplying the price of a cryptocurrency by the total number of its coins in circulation. It’s a useful measure for comparing the total value or size of different cryptocurrencies.
Shorting: “shorting” cryptocurrency means betting on the price going down rather than up.
Forks:
a cryptocurrency fork is a split in a blockchain where two separate blockchains are created. This is sometimes because of a disagreement between developers as to how the blockchain should be organised. In 2017, bitcoin forked into two separate blockchains: bitcoin and bitcoin cash.
ICO:
this is an initial coin offering where new cryptos are sold to investors for the first time. It’s similar to an initial public offering (IPO) in the stocks and shares world.
Margin trading:
when platforms talk about margin trading, they mean investors borrow money to increase their bet on a cryptocurrency. Be very careful, though, because margin trading can dramatically exacerbate losses if a trade doesn’t go your way.
Fiat:
a fiat currency is one that is backed by a sovereign government. For instance, sterling, US dollars or Indian rupees.
Cloud mining: people can “mine”, or create, cryptocurrencies to compete for rewards in the form of newly minted crypto. Cloud mining uses remote data centres with shared processing power, like the kind that powers Google software, to pool resources and cut the cost of mining.
Be extremely wary, as many cloud mining companies are just scams. An incredible amount of computing power is needed to mine the top cryptocurrencies. Anyone offering easy cloud-mining rewards is likely to be a charlatan.
Bull markets and bear markets: these are phrases borrowed from traditional stock markets. A bull market means traders are confident in the prospects for a particular investment, meaning they will keep buying and prices will keep rising – whereas in a bear market, traders are nervous and prices will generally fall.
Sell orders:
a sell order is an instruction given by traders to a platform to sell cryptocurrency that they own when the price hits a certain level. In traditional markets, this is referred to as a “stop loss”.
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