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17 Cryptocurrency Terms to Know Before You Invest

What crypto terms should I know before investing? Airdrop Aping Bearish or Bear Market Bollinger Bands Bullish or Bull Market...

By | 06/11/2022 2:19AM

17 Cryptocurrency Terms to Know Before You Invest

What crypto terms should I know before investing?

  1. Airdrop
  2. Aping
  3. Bearish or Bear Market
  4. Bollinger Bands
  5. Bullish or Bull Market
  6. Confirmation
  7. Crowdsale
  8. GameFiIDO
  9. Layer 1 and Layer 2
  10. Metaverse
  11. Play to earn (P2E)
  12. Pump and Dump
  13. Rug Pull
  14. Shitcoin
  15. Tokenomics
  16. Web3

Are you intrigued by the boundless opportunities of crypto? The world of crypto is a very complex and intimidating one for newcomers to enter — what with all the technical jargon that comes with it.

If you’re trying to get into crypto, then you may already know some basic terms. However, there’s still a whole list of them that’s mostly used for newer offers on the market. Reading up on these top crypto terms to know will help you start dabbling in crypto and may even help you spot a high-potential investment!

Note that the purpose of this post isn’t to be your investment guide — nor does it have an exhaustive list of all crypto terms and phrases.

Airdrop

An airdrop is a marketing event where a company “drops” cryptocurrency sums or NFTs directly into users’ wallets. This is usually done by blockchain services and given to users who have used their services in the past. It’s a popular way to promote a token or to reward users with governance tokens for a DAO.

Aping

“Aping” is when someone recklessly invests in a project — usually without doing any research — in hopes of a short-term project. This is dangerous, as there are many scams and dubious coins abound in the cryptoverse. Careful investors would be wise to avoid aping and do thorough research on any crypto project to ensure their money is well spent.

Bearish or Bear Market

Bearish or Bear Market

This is a kind of market trend. When investors say the market is “Bearish,” they predict that prices will fall. In a “Bear” market, it is recommended that investors sell tokens and wait for lower prices before investing again.

Bollinger Bands

One of the many kinds of technical analysis tools used to predict price patterns for tokens. This one measures market volatility by using three lines plotted at standard deviation levels above and below a centerline.

Bullish or Bull Market

The opposite of a Bear market. When investors say the market is “Bullish,” they expect token prices to rise in the future. Investors are more comfortable buying more tokens in a Bull Market because they believe higher returns are in store.

Confirmation

Confirmations are how many finalized transactions have been processed and validated onto a ledger since that particular network’s existence. Typically, any new cryptocurrency needs at least six confirmations before they are considered finalized.

Crowdsale

One of the several ways that crypto projects can raise money and gain investors. A crowdsale is like crowdfunding and is usually done before the project launches its token on a DEX. Taking part in a crowdsale often gives you unique bonuses and incentives compared to investors who come in later.

GameFi

GameFi

This is a fusion of game and finance — hence the name. GameFi refers to games built on the blockchain that offer financial incentives for users to invest and play them. To do this, GameFi projects like Imperium Empires use cryptocurrencies, non-fungible tokens (NFTs), and blockchain technology to create economic systems within their games.

IDO

Similar to an Initial Coin Offering (ICO), an IDO is an Initial Decentralized Offering. The difference between the two is that an IDO offers potential investors the chance to interact with the project before it goes live.

Layer 1 and Layer 2

Layer 1 and Layer 2 are terms you typically see in older crypto projects. These are blockchain solutions made to tackle any of the project’s problems or inefficiencies. A Layer 1 solution makes changes to the blockchain architecture itself, while a Layer 2 solution changes the architecture built on top of the blockchain.

Metaverse

A digital world built on blockchain technology, providing a virtual space that thousands of users can enter and experience at once. In a crypto metaverse, users can use blockchain-integrated functions, such as buying assets, trading NFTs, interacting with users, and so on. This is most common in large GameFi projects, such as Imperium Empires.

Play to earn (P2E)

A business model that most GameFi projects use. Simply put, this model requires players to play through levels or quests to potentially earn valuable in-game assets or cryptocurrency. The more you play, the more assets you can potentially collect. These can then be traded or sold for real money.

Pump and Dump

Pump and Dump

A manipulation tactic that many investors avoid at all costs. In a pump and dump operation, the price of a particular cryptocurrency is boosted based on false news or recommendations (pump) and then sold en masse by insiders at a higher price (dump). Many new investors get caught up in pump and dump schemes.

Rug Pull

One of the worst and most popular scams you can experience while investing in crypto. Rug pulls are when the creator of a cryptocurrency suddenly vanishes and pulls all the generated funds with them, essentially scamming their investors.

Rug pulls are most often done with altcoins with no utility or those based on memes — but it can happen to any new offer on the market, so be sure to DYOR.

Shitcoin

A shitcoin is a derogatory term for an altcoin that provides no utility — typically either a memecoin or an ineffective altcoin. Seasoned investors consider shitcoins to have little to no value and are likely to fail.

Tokenomics

The study on how the many variables in a crypto project can affect their economy. Tokenomics can include the dynamics within the economy, solutions to prevent inflation, and the measures that the project takes to ensure the sustainability and scalability of its cryptocurrency. If a project states its tokenomics in its FAQ or whitepaper, it’s a good indicator that they are planning its project for the long term.

Web3

Web3 is a term that many crypto enthusiasts use when talking about dApps and new projects. It refers to a new kind of internet built on the blockchain-integrated technology and utilities that crypto projects introduce. Web3 imagines an online, virtual space where you can use cryptocurrencies as a universal currency, and dApps in your everyday life.

Key Takeaway

Getting into cryptocurrency projects is confusing even when you know the basics — but having these top crypto terms to know in your lexicon should help you while you research potential investments.