To better understand the language of cryptocurrencies, you need to understand the words. Here is a guide on the Blockchain by Babbel and Bitpanda, to orient yourself in the Fintech universe.
Blockchain: the guide from Babbel and Bitpanda
Technology is radically transforming the finance sector with the introduction of new tools with great innovative potential. The term “Fintech” it was coined in the 90s to indicate the offer of technological financial services and today the mix between the digital and the economic world is constantly growing. To move consciously in such a delicate field it is essential to have the necessary skills.
In this sense, mastering the technical language is central to being able to understand the dynamics of the markets and the functioning of the tools. This is why the language experts of chat, a language learning company that offers live and app lessons, a language learning company that offers live and app lessons, and bitpanda, Europe’s leading platform for digital investments, have drawn up a guide on Blockchain, with the essential terms to know in order to navigate the world of fintech and cryptocurrencies.
“Technology continues to be present in our lives and now increasingly also in business and finance. This trend has also led to a new way of communicating and relating, which can be difficult for newbies to understand and master. But not only. Even for the most experienced people it can be difficult to keep up with the constant creation of neologisms. Knowing and understanding the new words and technical jargon is nevertheless essential to seize the professional and personal opportunities offered by the world of fintech “- comments Gianluca Pedrotti, editor of the Babbel language team.
Orlando Merone, Bitpanda Country Manager
“Spreading a greater financial culture is essential to pursue Bitpanda’s mission, which is to democratize the world of investments” – adds Orlando Merone, Bitpanda Country Manager – “Training is essential to increase basic skills and give people the opportunity to take control of their financial future”.
Beyond Bitcoin: the keywords of cryptocurrencies
One of the most common mistakes among Blockchain and crypto newbies is to confuse the universe of cryptocurrencies with Bitcoin (BTC), the main virtual currency created in 2008 by Satoshi Nakamoto. But there are many aspects to clarify, and we will do it in this guide:
- Blockchain or “block chain”: is the technology behind Bitcoin and other cryptocurrencies, including Ethereum. It is a digital database open to all, without intermediaries or central authority, structured as a chain of blocks. In each block, the transactions of the cryptocurrency that relies on that particular Blockchain are permanently recorded, so that they cannot be falsified, lost or canceled.
- Mining: means “to extract” and is the founding mechanism of the Bitcoin Blockchain, also used by other cryptocurrencies. It refers to the resolution of the algorithms necessary to authorize BTC transactions before adding them to the Blockchain. The name derives from the parallelism between BTC and gold, in which it is easy to read the similarity between the seekers of nuggets and the researcher of the solution to the algorithm. Those who solve the algorithms are called “miners” and are rewarded with a fraction of a new Bitcoin for each validated transaction. “Mining” is therefore the process that drives the issuance of new BTCs.
- DeFi: short for “decentralized finance”, “decentralized finance” is an experimental form of financial system that is not based on intermediaries such as brokers, exchanges or banks and instead uses “smart contracts” (literally “smart contracts”), or agreements automated systems that are automatically executed on a Blockchain upon the occurrence of predetermined events.
- Token e NFT: the word token could be considered synonymous with the French “jeton” or the Spanish “ficha” and indicates a digital asset that has been developed within a Blockchain. They are often used to assign a right, such as ownership of an asset or access to a service. If this right cannot be assigned to more than one person, they call each other NFT, acronym for “non-fungible token”, which in Italian means “non-replicable digital token”. Increasingly popular among Hollywood celebrities, NFTs are used to prove that they are the sole owners of a digital product. Some examples could be a GIF, a video, a tweet, or a work of art.
- Altcoin: an acronym that derives from the English words “alternative” or “alternative” and “coin” or “coin” and indicates any other cryptocurrency other than Bitcoin. A particular category of altcoins are the Memecoin, cryptocurrencies that base their value on the virality of the memes they refer to.
- Stablecoin: literally “stable currency”, they are digital assets that enjoy the guarantees and properties typical of cryptocurrencies, but whose price is stabilized with respect to a reference asset such as gold or the dollar.
A Guide to Blockchain: The Terms to Understand Market Sentiment
In the universe of cryptocurrencies and blockchains, there are many slang terms used to photograph market sentiment. These are expressions designed to indicate the general attitude of investors at a certain moment. Here is the guide to understand its meaning:
- Bull & Bear market: in English “bull” and “bear” mean respectively “bull” and “bear”. We speak of a “bull market” in the presence of positivity, rise and growth, it is the equivalent of a “bull market”. On the contrary, the expression “bear market” means negativity, decline and decline, indicating a “bear market”.
- FOMO: acronym for “Fear of Missing Out” which means “fear of being excluded”. It is the feeling of anxiety experienced by those who fear being deprived of something important. It is used when investors buy a certain cryptocurrency in large numbers fearing that they will miss the right moment in the event of a price increase.
- To the Moon: a phrase that describes a situation in which the market is optimistic about the direction of a particular cryptocurrency. Basically, it is believed that the price will rise so much that it reaches “the moon”.
- ALL: acronym for “Fear, Uncertainty and Doubt”. It describes the feeling of “fear, uncertainty and doubt” caused by the dissemination of misleading information about cryptocurrencies.
- Fear & Greed Index: in English “fear” means “fear”, while “greed” means “greed”. The index uses a scale from 0 to 100 and serves to understand what the mood of investors is on a global level; if they are “afraid” they will tend not to invest, while if they are “greedy” it means that they have faith in the market.
- Whale: in English it means “whale” and in the investment world it means someone with a large amount of capital. Whales often influence the markets by investing large amounts in a minor cryptocurrency to drive it up in value.
Some strategies to know
Not all virtual currency holders have the same operational approach. In fact, there are many tactics that can be applied in the world of digital investments. In this guide to the Blockchain we list some of them:
- BTD: the acronym for “Buy The Dip”, or “buy the drop”. It describes the counter-current attitude of those who, as markets go down and most investors panicked, buy cryptocurrencies. These, in practice, take advantage of the falling price.
- Hodl: term born from a typo and became the acronym of “hold on for dear life”, or “hold on to stay alive”. The correct word would be “hold”, to indicate the attitude of those who “keep” their virtual currencies even when the value drops, confident in a long-term appreciation.
- ICO: acronym for “Initial Coin Offering”, or “Initial Coin Offering”, is the fundraising process in which a company finances its business by issuing its own cryptocurrency offered to the first investors at a fixed price.
- Staking: translatable as “putting into play”, it consists in freezing a certain amount of a cryptocurrency to make it available to the system and validate new transactions, receiving rewards in exchange.
- Hedging: comes from the English word “hedge”, which means “hedge”. It is also used in the language of traditional finance. It consists in carrying out one or more operations aimed at reducing the risk associated with another investment, so as to “cover” any losses.