In the crypto space, there is an entire ecosystem of abbreviations, phrases, and various words that some people may find confusing and overwhelming when they first get into crypto and NFTs. Understanding some of these key words and phrases can make a person’s journey into the crypto world a much easier task, especially if you start with some of the most used verbiage that can help you to better navigate the NFT and crypto space.
DeFi (Decentralized Finance)
DeFi — short for decentralized finance — is a new vision of banking and financial services that is based on peer-to-peer payments through blockchain technology.With blockchain technology, DeFi allows “trust-less” banking, sidestepping traditional financial middlemen such as banks or brokers. DeFi is based on secure distributed ledgers similar to those used by cryptocurrencies. The system removes the control banks and institutions have on money, financial products, and financial services. With DeFi, fees that banks and other financial companies charge for using their services are eliminated and you have control over your money by holding it in a secure digital wallet instead of keeping it in a bank. Anyone with an internet connection can use DeFi without needing approval from a financial institution.
NFT (Non-Fungible Token)
NFT means non-fungible tokens (NFTs), which are generally created using the same type of programming used for cryptocurrencies. An NFT can be a digital asset that represents real-world objects like art, music, in-game items and videos. “Tokenizing” these real-world tangible assets makes buying, selling, and trading them more efficient while reducing the probability of fraud. They are typically bought and sold online, frequently with a form of cryptocurrency or crypto token, and they are generally encoded with the same underlying software as many cryptos. In simple terms these cryptographic assets are based on blockchain technology. Physical currency and cryptocurrency are fungible, which means that they can be traded or exchanged for one another. The term NFT means that it can neither be replaced nor interchanged because it has unique properties.
HODL (Hold On for Dear Life)
Meaning “hold on for dear life,” HODL is a popular term among crypto investors. Although it looks like an odd way to spell “hold”, HODL is related to the traditional buy-and-hold investment strategy, as one way to cope with volatility in a financial market. Using HODL has several benefits that make it a good strategy for amateurs to trust cryptocurrency investment.
Blockchain
A blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). The goal of blockchain technology is to allow digital information to be recorded and distributed, but not edited. In this way, a blockchain is the foundation for immutable ledgers, or records of transactions that cannot be altered, deleted, or destroyed. Virtually anything of value can be tracked and traded on a blockchain network, which can reduce risk and cut costs for all involved. Blockchain technology was first outlined In 1991 by Stuart Haber and W. Scott Stornetta, two mathematicians who wanted to implement a more secure online system where document timestamps could not be tampered with.
FUD (Fear, Uncertainty, Doubt)
FUD, meaning Fear, Uncertainty and Doubt is used when people share negative information about cryptocurrencies, tokens, or any blockchain based project in an online community. The person sharing may be accused of spreading “FUD” or that people selling an asset are doing it out of FUD.
Stable Coin
A stablecoin is a cryptocurrency whose value is fixed to another asset, often currencies such as the U.S. dollar or the euro, though other assets are possible. This kind of crypto coin tracks the underlying asset, making its value stable over time, at least relative to the currency it’s pegged to.
ICO (Initial Coin Offering)
An ICO is a process or event in which a company or project attempts to raise capital by selling a new cryptocurrency token, which investors may purchase in the hope that the value of the token will increase, or to later exchange for services offered by that project or company.
Smart Contract
Smart contracts are programs stored on a blockchain that run when predetermined conditions are met. They are typically used to automate the execution of an agreement, update, or change within a blockchain based project so that all participants can be immediately certain of the outcome. Smart contract applications can include financial purposes like trading, investing, lending, and borrowing. They can also be used for applications in gaming, healthcare, and real estate; and they can even be used to configure entire corporate structures.
Altcoin
Altcoins are generally defined as all cryptocurrencies other than Bitcoin. However, some people consider altcoins to be all cryptocurrencies other than Bitcoin and Ethereum (ETH) because most cryptocurrencies are forked from one of the two. Some altcoins use different consensus mechanisms to validate transactions and open new blocks, or attempt to distinguish themselves from Bitcoin and Ethereum by providing new or additional capabilities or purposes. Most altcoins are designed and released by developers who have a different vision or use for their tokens or cryptocurrency.
GameFi
GameFi — a portmanteau of “game” and “finance” — involves blockchain games that offer economic incentives to play them, otherwise known as play-to-earn games. Typically, players can earn in-game rewards by completing tasks, battling other players or progressing through various game levels. For those unfamiliar with gaming, let us put it this way: GameFi is to the legacy gaming industry, what DeFi is to traditional finance. Essentially, GameFi aims to revolutionize the traditional gaming infrastructure by combining and integrating blockchain technology and decentralized finance.
There is a huge amount of specialized lingo, acronyms, and metaverse slang in the NFT space, and there is always some new phrase or word to learn. By no means is this an exclusive end all be all list, but, it can definitely be a good starting point for those who might need a cheat sheet. With the crypto, NFT, and metaverse worlds continuing to grow in popularity everyday, who knows what’s next on the list of need to know crypto lingo.
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