People can’t start talking about cryptocurrencies.

And when you get involved with a crypto fanatic, they usually get over-excited and spill out the entire mini-dictionary of cryptocurrency slang.

Yes, cryptocurrencies are not only poised to change the entire monetary system, the community has even developed its own language.

So what are some of the crypto buzzwords you need to know about?

Here, we made a list with a few of the crucial cryptocurrency slang terms – and furnish you with some useful advice that, we hope, will help you work the markets successfully.

HODL: Hold On For Dear Life

Hit the crypto-forums and social media networks and the most common cryptocurrency slang you will see is HODL.

The term actually came about from a misspelling by a Bitcoin investor but was later adopted as a backronym meaning: Hold On for Dear Life.

The story behind HODL begins after the first major Bitcoin crash in 2013. A forum contributor with the username GameKyuubi, titled his post “I am Hodling” before pointing out he had typed in the word twice and misspelt it both times…

…on the second occasion, he couldn’t be bothered to change it – presumably because he was too depressed after losing a fortune on Bitcoin. And maybe because his girlfriend was getting drunk in a bar.

Whether it was the fact the author pointed out his error, or whether they crypto-community embraced HODL because of the antics of the author’s girlfriend is unclear, but the misspelling was adopted by the community regardless.

The deeper meaning of the expression means that investors have faith in the coins they’ve invested in.

It shows the grit and determination of the cryptocurrency community in the face of adversity from governments and banks that serially criticise digital currencies. And investors are well within their rights to believe the money they have invested in cryptocurrencies will return significant profits.

We live in the digital age. One day, in the not-too-distant future, we will pay for goods and services with digital currencies.

I’m going to stick my neck out here and make a prediction. Every nation on the planet is in debt because banks loan out money they don’t have. According to the Institute of International Finance, the global debt is at an all-time high of US$233 trillion.

Companies create the most debt followed by governments and (US$63bn) and financial institutions (US$58). The debt is unpayable. When borrowers start defaulting on those loans, the credit ceiling will crash.

Once that happens, every bank on the planet will be bankrupt. The irony is that banking laws give financial institutions the right to be bailed out by taking money from the accounts of shareholders. In other words, creditors that hold funds in unsecured bank debts – like many pension funds do!

Once the credit ceiling caves in, fiat currencies will be worthless. Governments will then say, we can’t let this happen again and hail the blockchain as the solution to stabilise financial markets.

I can’t see the debt ceiling holding beyond 2020. Nations are already gearing up to become “cashless societies”. Cryptocurrency is the logical solution. Of course, the values of digital coins will rise.

So, HODL.

However, by applying the HODL philosophy with some cryptocurrencies, investors risk becoming bagholders.

Bagholders

A bagholder is a term used for investors that hold onto falling stocks. There are a couple of reasons why this might happen.

The most common type of bagholders are investors that do not watch the markets and are unaware shares in a company have deteriorated.

The second type of bagholder is investors that refuse to sell shares in the hope they will recover. This often occurs when investors have put money in firms or stocks they believe will do well and don’t want to be proven wrong.

The underlying cause that creates bagholders is the ‘disposition effect’; people are more intent on sticking with shares that are not performing yet sell shares that are making money because they have already guaranteed a profit.

Investor psychology dictates that people will hold on to failing share in the hope of making a profit even when they continue to make a loss.

On the other hand, investors are quick to sell shares that make a profit, even when the shares continue to make money.

Whale

Whilst the cryptocurrency market is an exciting prospect for investors, it’s also a very dangerous game to play. Naysayers in the media and politics argue investing in cryptocurrencies is a dangerous game to play because the market is unregulated.

But it is not the lack of regulations that make the cryptocurrency market a gamble.

All financial asset investment is a racket because of the players that sit in the shadows manipulating the markets.

In the financial industry, these dangerous players are known as “whales” – the biggest mammal in the ocean.

A “Whale” is a term that has been borrowed from the investment sector to refer to moneymen with huge accounts they can use to manipulate markets. In other words, whales are groups that create scams in stock markets.

The scheme is typically orchestrated by a small group of rich men that form an inner circle.

They decide which stocks – or cryptocurrency – they are going to make from and agree to sell their shares at the same time. The sudden drop in value causes other investors – known as small fish – to start panic-selling.

As the market collapses, more investors sell their coins – mostly at a loss. The whales then rebuy the coins at a low price.

This is not new a tactic in the financial sector.

As a matter of fact, it was a whale scheme that enabled the Rothschild family to earn their fortune and take control of the modern financial markets.

History records that in 1815, after Napoleon’s army fell to the Duke of Wellington at the battle of Waterloo, Nathaniel Mayer Rothschild circulated the rumour that the French had won.

When the news of Wellington’s defeat reached investors in London, there was a mass sale of shares. Rothschild then purchased the shares at a low price. When the truth about Wellington’s victory was revealed, investors bought back their shares and the Rothschild family made a fortune.

This story has since been refuted and labelled as a smear campaign orchestrated by an imaginative anti-semite that authored a pamphlet spreading the rumours. Yet it has taken over 200 years for these claims to prove inaccurate.

Allegedly inaccurate.

Meanwhile, it is believed the Rothschild’s have amassed a fortune of over $500 trillion – 80% of the world’s wealth. However, they only declare to own more than $200bn worth of assets so don’t feature on the Forbes list of wealthiest families.

Back to Whales.

To avoid your money being swallowed up by unscrupulous moneymen, it’s useful to know how to detect a whale.

FUD: Fear, Uncertainty and Doubt

FUD is another borrowed term meaning Fear, uncertainty and doubt.

Essentially, the term is used describe investors that panic sell shares because they do not trust a potential situation.

The term was created by IBM that used FUD as a tactic to create uncertainty about rival products in the minds of consumers. The aim was to persuade customers to buy IBM products that already had a good reputation rather than taking the risk of buying cheaper products from unknown brands.

In essence, FUD is a competitive weapon to spread disinformation.

One of the ways we have seen FUD used in the mainstream media is to dissuade investors from buying Bitcoin in favour of government-authorised stocks available in “regulated” markets.

As the cryptocurrency market hots up over the next few years, expect to see more FUD’s proliferated through various forums and media outlets.

The likelihood is that FUD tactics will be used by cryptocurrency firms to promote their own ICO’s and slur rivals. FUD content typically involves fear-mongering or pointing out the weaknesses or flaws of certain products.

However, they can be confused with honest appraisals.

Reviewers, for example, are obligated to present a reasoned argument and point out the strengths and weaknesses of cryptocurrencies.

There can also be bias on cryptocurrency forums whereby commentators praise their coins and put down others.

These are not necessarily FUD’s, but the views of arrogant investors attempting to justify their choice of investment. We live in a crazy world where egos are bigger than the bets.

Essentially, you have to make a judgement call. The old adage of “don’t believe everything you read” is a philosophy to live by when investing in cryptocurrencies.

Pro tip: rather than reading opinion pieces, follow companies in the FinTech space and see which technologies are being adopted.

For example, Ripple is being trialled by banks, Amazon has created a website with a focus on Ethereum and payment gateway Stripe is looking the Lightning blockchain that powers Litecoin.

And other cryptocurrencies will emerge.

ATH: All-Time High

ATH simply means All-Time High and is used as an abbreviation by writers to describe when a certain cryptocurrency or the entire market traded at its highest price.

For example, Bitcoin hit an ATH of $19,783.21 in December 2017. Ethereum hit an ATH of $1,432.88 on January 13, 2018.

The entire cryptocurrency market hit an all-time high of $835.69 billion in early January but lost more than $550bn in a month following an influx of governments establishing regulations on the cryptocurrency market.

Eek! We are confident the market will recover once cryptocurrencies become mainstream.

Pump and Dump

According to a Business Insider investigation, pump and dump schemes are rife in the cryptocurrency markets.

The scams essentially work by artificially inflating the price of small cryptocurrencies that are cheap then selling them when the value rises.

Pump and dump schemes are a way to make large profits quickly at the expense of others.

The principle is simple. Pump and dump schemes involve two groups; the inner circle and the outer circle.

The circles are also layered with the organisers in the centre passing information through members in an inner circle and proliferating this information to the outer circle.

This inner circle then proliferate information to an outer rim that influences unsuspecting traders.

The first group is the unscrupulous orchestrators that purchase digital currencies that have a low value. The core members call the shots on which coin will be the target of the pump and dump and on which exchange.

This core group buy the coins early for a low price, usually several days or more in advance so their involvement cannot be easily traced.

This information is then passed on to the inner circle that pay for the information. Members of the individual in the inner circle then inform other members of the inner circle which coin and exchange the next pump and dump will target and when.

The thrust of activity of a pump and dump scheme only lasts a matter of minutes.

Members of the inner circle use fake names to endorse the coins on forums. By creating a buzz around certain coins to get people interested, the second group of people join in and “pump” up the price to make the endorsement appear legitimate.

This second group are usually traders. It is quite possible that this group do not know what they are actually involved in. They are following tips from “insiders” and blindly invest their client’s money.

As more traders buy into the pumped coin, the value naturally increases in the normal way – and pretty quickly.

Once the value hits a pre-determined target, the first group dump their holdings and make quick profits at the expense of investors that used traders in the outer rim.

According to Business Insider, and explained in some detail by Bitfalls, Pump and dump schemes are also organised and proliferated on secret investor forums.

The idea is to make a quick buck, but the only real winners are the organisers that control the scheme. Some other members of the groups may come out a winner, but you have to be quick and understand what is happening.

Overall

Now you know the meaning behind HODL, FUD and ATH, the cryptocurrency slang terms and the scams to watch out for, you should be able to have a better understanding of the market and make informed investment decisions.

Make sure to watch out for other new terms that will definitely be mooning through the crypto space pretty quickly!

Read more about the Cryptocurrency Market Predictions For 2018.