Bitcoin terms – how to understand a crypto investor!
Getting involved with Bitcoin – get ready!
Have you ever felt overwhelmed when you go somewhere and on every step you hear something new? If you are planning to get involved with Bitcoin get ready for a lot of new terms. Expect to learn not only crypto terms when you get involved with Bitcoin but also a lot of basic economic terms. As this industry’s purpose is big and not just a game as many people see it. Bitcoin has the potential to build up a new monetary system someday. So expect to be introduced to a lot of new terms.
My first experience when I entered this industry was overwhelming. People used basic terms right and left and me as a newbie, felt like I was in a maze. Guess what you do after that – you start searching and reading, stumbling for a long period of time with stuff that you don’t know. This is the most exciting period when you get involved when you start learning new stuff constantly.
Building up the knowledge with Bitcoin and economic terms
Keep in mind that you will gradually build quite the knowledge thanks to this wild space. And if you plan to search for work in this industry you will definitely need to know at least the basic stuff. The most likely one to encounter first is hodl – which comes from a misspelled hold. I am sure that you already came up with its meaning. to hold the asset and not sell it. Those terms are the funny ones like to the moon – when prices are rising and/or expect to go up.
Now let’s go to the more serious ones, which are truly needed so you can express your self better. Terms like FIAT, gold standard, spoofing, wash trading, money laundering, leverage, etc… Basic terms that are mandatory if you want to become serious about investing and trading overall. You need to understand the exchanges and manipulations that may occur, nefarious activities terms and understand bad behavior practices on exchanges and markets overall. Don’t worry, it is not so complicated as it sounds, it just comes down to understanding them. If you are interested in the crypto industry you will learn everything with ease.
What is FIAT?
It is a government-issued currency not backed by gold or silver or any other type of commodity. Its value is taken from basic supply/demand and the stability of the government issuing it. The currencies in the modern days are not backed by gold or silver, so after 1971, we dropped the gold standard. After that money became just a paper, of course, most of the money at this time is digital. Don’t be confused with crypto, digital money is just the FIAT currency put on the computer basically. FIAT money holds value because the government maintains it or two parties that are dealing with it agree on its value.
What is the Gold standard?
A monetary system where the currency is directly backed by gold. Countries agreed that the paper money was to be exchanged for a set amount of gold. So you could go into the bank to give the paper money and in return, they give you gold. This happens with a set price from the government of the gold towards the representative currency. Now we are no longer using the gold standard and you cannot redeem gold for your FIAT currency.
Build up your knowledge, become better!
After those two we should go to some terms used on exchanges like Binance/KuCoin/Bitmex etc.. for bad behavior. You will find on the web a lot of articles even for banks that have done bad things and knowing those terms will be in favor. You need to understand what is money laundering as it is one of the most common terms mentioned everywhere, especially for some banks – money laundering.
What is Money Laundering?
Generating large amounts of money through criminal activity – drug trafficking, terrorist funding, etc… making it appear to originate from legitimate activities. Money made by criminal activities are considered dirty, therefore people launder it to make it look clean. Thus you have people making two crimes at once, with the first making the money through nefarious activities and second – through laundering them. Even with all the AML (Anti-Money Laundering) rules put in place, money laundering itself is a very common crime overall.
What is AML – Anti-Money Laundering?
AML is a set of laws, procedures, and regulations intended to prevent the look of dirty money (money obtained through illegal activities) to look as they came from a legitimate source. Even though AML laws are used in a limited, their use is far-reaching.
It is important that we educate new investors on those terms and create awareness on what is right and wrong. As we don’t want to see Bitcoin and other cryptocurrencies used in nefarious activities. Of course, we all know that this will happen and there is nothing to stop it. As Bitcoin is neutral it can be used for everything just like cash at the moment, as the cash is the ultimate peer-to-peer system providing privacy transactions.
The next term is connected with nefarious activity on exchanges – wash trading. It is one of the terms that you will find used very often for Bitcoin exchanges.
What is Wash trading?
Buying or selling an asset/security or crypto on exchanges for the sole purpose of making the market seem liquid and active. Sometimes the wash trading is done between a trader and a broker who is working with each other. Or you can find people, retail investors doing the same practice being both the seller and the buyer. This practice is illegal in many places and especially the US.
The next term is an activity very common in the crypto industry as the market is smaller and easier to drive it with the news – Stock Basher.
What is Stock Basher?
A person involved in illegal market manipulation, relying on news and misinformation to drive the price down. False news, misinformation, spread fear to investors leading them to sell. Thus leading to an undervalued stock/crypto as usually their purpose is to buy it cheaper. Illicit behavior relying on lies and fear.
There are people who also want not only to buy cheaper using Stock bashing but also after that they want to pump the price so they can dump on investor FOMOing back on higher prices resulting in Pump and Dumps – PnD.
What is PnD – Pump and Dump?
People intending to get the price of a stock or crypto to higher levels through false, misleading or exaggerated news. People who do this usually have already bought the stock/crypto, and sell (dump on other investors) when they succeed to build up hype and pump the prices. Participating in such activity is illegal and may lead to high fines to the user or the group doing PnD.
What is Spoofing?
When a bad actor trying to obtain someone else’s personal information usually by pretending to be a legitimate business, close person, or sometimes even pretend to be you. Why would they want your personal information? So they can access accounts on different exchanges with your phone, email, etc.. This way they will try to withdraw (steal) funds if you have available on exchanges or execute another activity with bad intention.
Those are most of the basic terms that you should know. This way you know and understand what is going on in the market. And in order to be able to provide better protection and security for yourself.
The website that we used for reference is Investopedia. I recommend that you visit it and use it in the future for additional education on economic and Bitcoin terms. The more we know and understand the better can be our reaction to different scenarios. Thus providing better security and privacy, protecting ourselves at the same time from bad actors and illicit behavior.
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