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The crypto community has a lexicon of buzzwords and slang that can seem like a foreign language to the uninitiated. As digital assets crashed in 2022 and euphoria gave way to despondency, so did terminology. Here’s a guide to some new – and old – terms you should know.
This indication of an ongoing decline in crypto markets was used for the 2018 crash, which wiped out up to 88% of the market value of all crypto assets. It reappeared in 2022 as digital tokens crashed again, with Bitcoin falling 76% from its November 2021 peak to mid-November 2022.
● Cold Storage/Hot Wallet
Cautious crypto users keep their coins in so-called cold storages, typically on a hard drive that isn’t connected to the internet, making them harder for hackers to steal. Hot wallets are used to store funds online or on an exchange, ready for trading. When crypto exchange FTX filed for bankruptcy in November, it moved some customers’ digital assets to cold storage to protect accounts.
Decentralized finance platforms allow people to lend or borrow crypto assets, bet on changes in value, or trade them. Unlike crypto exchanges run by companies with offices and paid employees, DeFi typically works through automated contracts designed by users. The collapse of stablecoin TerraUSD and its cousin DeFi platform Anchor in May raised broader questions about whether some crypto products could be rogue schemes that lure investors with unsustainable returns.
Risk-taking crypto investors are putting their coins on yield farming platforms to make a profit. A typical strategy is to lend one token, borrow another, and earn another token. At one point, investors were earning triple-digit returns with such complex combinations. All the lending and borrowing of different tokens means that if one yield farming arrangement struggles and depositors start withdrawing money, several others could be taken along.
These are software platforms that connect crypto services that otherwise cannot communicate with each other. They allow users to move tokens from one blockchain to another. These links make it easy for crypto users to invest in a variety of different projects. They also make the ecosystem more connected – and more vulnerable when weaker entities get into trouble.
These crypto investors believe the original digital coin is the only one the world will ever need. They stand by that vision, dismissing concerns about volatility and huge energy consumption.
Some crypto tokens aim to peg their value to another asset to make them more stable than highly volatile currencies like bitcoin. Most stablecoin issuers say they maintain their stability by buying safe assets like US dollars. However, the largest stablecoin project, Tether, was fined by the US Commodity Futures Trading Commission in 2021 for misleading customers when it claimed the token’s value was “entirely backed by fiat assets.” Interest in another category, algorithmic stablecoins, fell when the supply and demand management system used by the TerraUSD token failed.
A non-fungible token confirms unique ownership of a digital asset. NFTs were most commonly used for digital art or collectibles such as video clips, memes, or items used in online games. At the height of crypto-mania in early 2022, NFT series like Bored Ape Yacht Club and CryptoPunks raked in millions of dollars, fueled by endorsements from celebrities like Paris Hilton and Snoop Dogg. By June, the prices of many NFT collections had plummeted.
A vision for a more decentralized world wide web based on crypto technology, shifting power from giant tech companies back to internet users. Proponents say the current model, known as Web 2.0, gives too much control to a handful of platforms that track our online activity and monetize information about advertising. Web 1.0 refers to the early days of the Internet when it was simply a way to remotely access static pages containing text and images.
Trading Slang for “Crypto Winter”
HODL: A meme that stems from a typo begging traders to “hop” their nerves through wild spins. Even today, the motto is “Hold on to your dear life”.
WAGMI: “We will all make it.” Used by crypto fans to show their support for one another or to inspire confidence in a project. You can guess what NGMI stands for.
Rekt: Short for “wrecked”, this term describes a large loss or liquidation caused by a bad investment or ill-advised trade.
Applying to McDonald’s: In times of crypto-asset declines, traders joke about working at the burger chain instead while bemoaning their wiped-out fortunes.
–With the support of Muyao Shen.
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