The crypto industry has a unique vocabulary to express concepts and clearly communicate. And since most communication occurs online, many words and phrases become acronyms to minimize typing and stay under Twitter's character limit. As a result, newcomers may find it challenging to decipher what phrases like, "it's NGMI but I'm a HODLr," mean.
Let's look at some of the most common crypto acronyms and terms that every crypto enthusiast should know.
The crypto industry has a unique vocabulary that's often abbreviated, making it hard for newcomers to understand.
#1. Hold on for Dear Life (HODL)
HODL was originally a misspelling of "hold" in a Bitcointalk post, but the community quickly adopted it to mean "hold on for dear life" in the context of cryptocurrency volatility. Many long-term HODLrs ignore the large price swings and hold Bitcoin and other cryptocurrencies over the short term, believing they will continue to appreciate over the long term.
#2. Making It (NGMI & WAGMI)
The terms NGMI and WAGMI stand for "not going to make it" and "we're all going to make it," respectively. The acronyms are most common in the non-fungible token (NFT) world in Twitter and Discord groups, where traders and investors speculate on the potential for various projects and weigh in on their odds of success.
#3. Initial Coin Offering (ICO)
Initial coin offerings, or ICOs, are the most common funding mechanism for cryptocurrency projects. Unlike an initial public offering (IPO) of a stock, ICO investors receive ERC-20 coins that don't necessarily have any equity or inherent utility. But like the value of a stock, a token's value depends on supply versus demand at any given point in time.
#4. Non-Fungible Token (NFT)
Non-fungible tokens, or NFTs, are tokens that contain unique data stored on a blockchain. While most cryptocurrencies are fungible, meaning every token is identical, NFTs can represent unique items, such as art or music. They can also represent in-game items, metaverse identities, or even be used in real-world transactions, like real estate deals.
#5. Play-to-Earn (P2E)
Play-to-earn, or P2E, is a gaming business model that rewards players with ownership of in-game assets. For example, Axie Infinity enables players to earn Smooth Love Potions (SLPs) that they can sell or use to breed and sell NFT characters, called Axies. In some cases, P2E players can make a living playing a game or earn life-changing sums.
#6. Layer 2 Blockchain (L2)
Layer 2, or L2, is a collective term to describe blockchain scaling solutions that lower fees, maintain security, and expand use cases. The most common L2 approach is a roll-up, where a secondary blockchain processes transactions, batches them into groups, and then anchors them onto the L1 blockchain (e.g., Ethereum or Bitcoin).
#7. Crypto Twitter (CT)
Most crypto communication happens on Twitter and Discord. On Twitter, the crypto ecosystem is often referred to as "Crypto Twitter" – or CT. The community consists of enthusiasts, developers, investors, companies, and influencers that speculate, collaborate, and share news using hashtags like #ct and #crypto throughout the day.
#8. Good Morning (GM)
GM is a standard greeting in crypto communities meaning "good morning." In addition to being a friendly greeting, GM has become a cultural expression that suggests something along the lines of WAGMI (we're all going to make it). GM'ing is a uniquely crypto expression on Twitter and is a great way to introduce yourself to a community.
#9. Decentralized Autonomous Organization (DAO)
Decentralized autonomous organizations, or DAOs, are internet-native organizations collectively owned and managed by their members. They have built-in treasuries that nobody can access without group approval. And decisions are made through a proposal and voting process to ensure that everyone in the organization has a voice.
#10. GAS & GWEI
GWEI combines the words "giga" and "wei" and represents a denomination of the ether cryptocurrency. There are one billion GWEI to one ether in the same way as there are 100 cents to one dollar. Since Ethereum gas fees are (usually) minimal, most platforms express them in GWEI rather than ether fractions to improve clarity.
#11. Decentralized Finance (DeFi)
Decentralized finance, or DeFi, refers to the infrastructure, processes, and technologies supporting crypto-based financial transactions. For example, DeFi protocols may enable borrowing or lending, decentralized trading on exchanges (DEXs), or liquidity pools (LPs). Many traders and investors use DeFi to generate an income from their crypto holdings.
#12. Liquidity Provider (LP)
Liquidity providers, or LPs, provide liquidity to DeFi exchanges and other platforms in exchange for fee income. For instance, a token swap protocol may use a liquidity pool to ensure they can always make conversions. In most cases, liquidity pools compensate LPs by giving them a percentage of each transaction fee based on their total contribution amount.
#13. Venture Capital (VC)
Many crypto projects raise capital from venture capitalists, or VCs. These firms sit between angel investors (e.g., family and friends) and institutional investors (e.g., public stocks). They provide capital to support the development of the project in exchange for an equity stake in the underlying business. And they typically invest over long time horizons.
#14. Buy the Dip (BTD)
The idea of mean reversion is common across all types of investing – including cryptocurrencies. When an asset deviates from its average price or trend, many traders and investors bet that it will eventually return. Buy the dip, or BTD, is the concept of purchasing assets that experience a fall, hoping that they will eventually revert back to their average ranges.
#15. Proof-of-Stake (POS)
Proof-of-stake, or POS, is a new consensus mechanism that's replacing proof-of-work on many blockchains. Most notably, Ethereum 2.0 is adopting a POS consensus mechanism to improve performance, reduce gas fees, and eliminate its negative environmental impacts. Rather than mining with computation, users stake crypto to validate transactions.
The Bottom Line
The crypto industry has a large and expanding vocabulary to cover topics ranging from blockchain processes to trader sentiment. While we have discussed some of the most common words and acronyms, our list is just scratching the surface, especially if you dive deeper into either the technical or financial sides of the industry.
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