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BTC, ETH and DeFi: Breaking down crypto's acronyms

·5-min read
Representation of Bitcoin seen with binary code displayed on a laptop screen.
The world of cryptocurrency and digital assets can get pretty overwhelming. (Source: Getty)

The world of crypto can seem alien for many Aussies, especially those who have never invested before.

With so many obscure terms floating around, from DeFi, to PoW and DApps, the market can get confusing.

To help first-time investors, here are some of the most common crypto acronyms to get clued up about so you won’t be the one at your summer BBQ out of the crypto loop.

It’s important to note that these acronyms are part of an endless list, so it’s important to do your research and understand the basic ins and outs of crypto before making any financial decisions.

Tickers and tokens

In the same way the stock market has abbreviations for companies - for example, on the NASDAQ, Tesla is TSLA - cryptocurrencies also have their own tickers:

BTC: This is the ticker for the world’s most popular and first cryptocurrency, Bitcoin. Bitcoin is a decentralised digital currency created in 2009, that allows for secure peer-to-peer transactions on the internet.

ETH: Similar to BTC, ETH is the ticker for Ethereum, the world’s second-biggest cryptoasset by market capitalisation. Ethereum is a blockchain platform with its own cryptocurrency, called Ether.

NFT: One of the hottest crypto instruments at the moment, which stands for non-fungible token. An NFT is a digital asset that is validated on a blockchain and represents real-world objects like art, music, in-game items and videos.

They can be minted, purchased and sold online with cryptocurrencies like ETH and SOL (Solana) and exist on an immutable ledger that proves authenticity, ownership and transaction history - as with most cryptoassets.

3D concept of non-fungible tokens (NFTs) in a blockchain.
NFTs - non-fungible tokens - have exploded in popularity and can be used to commodify digital creations, such as art, video game items, and music files. (Source: Getty)

Community slang

If you’ve ever joined a telegram group or a discord channel for a crypto project, here are a few common terms you’ll see thrown around:

FUD: An acronym for Fear, Uncertainty and Doubt, FUD is used by the community as a way to describe and dismiss negative information being shared about a project to reassure their fellow investors the token is solid. You may see it used during market dips, and sometimes paired with WAGMI, an acronym for “We’re all gonna make it”.

The most fierce crypto advocates might also lash out with a HFSP - “Have fun staying poor” - to crypto sceptics or naysayers. You might want to steer clear of these people and do your own research before taking any of their financial advice.

HODL: HODL is sometimes explained as an acronym standing for "hold on for dear life", or a misspelling of “HOLD”. Crypto HODLers pride themselves on not selling their cryptoassets, no matter what happens in the markets.

Blockchain jargon

If you’re reading a whitepaper or researching the tokenomics of a project, here are a few terms you may encounter:

DeFi: Short for “decentralised finance”, DeFi is an umbrella term for a variety of financial services on public blockchains, primarily Ethereum.

With DeFi, people can do most of the things that major banks support, including earning interest, borrowing, lending, buying insurance, trading derivatives and assets and much more.

In addition, DeFi is global, peer to peer, fast and generally doesn’t require paperwork or a third party to operate.

APY: If you’re using platforms like Coinspot to stake your cryptocurrencies and earn interest, you may see this term, which stands for Annual Percentage Yield. It’s the compounded amount of that currency you can earn over a year - similar to earning interest via a bank account.

PoW: Standing for Proof of Work, PoW is a consensus mechanism that secures many cryptocurrencies, including Bitcoin and Ethereum.

PoW blockchains are secured and verified by virtual miners around the world racing to be the first to solve a maths puzzle.

The winner gets to update the blockchain with the latest verified transactions and is rewarded by the network with a predetermined amount of crypto.

PoS: Known as Proof of Stake, PoS is a type of consensus mechanism used to validate cryptocurrency transactions.

With this system, owners of the cryptocurrency can stake their coins, which gives them the right to check new blocks of transactions and add them to the blockchain.

PoH: Another consensus mechanism, PoH stands for Proof of History and is an innovation that underpins the Solana Network. It is exactly what the name suggests - a proof of historical events.

DApps: Decentralised applications are digital applications of programs that exist and run on a blockchain or peer-to-peer (P2P) network of computers, instead of a single computer.

DApps are often built on the Ethereum network and can be developed for a variety of purposes including gaming, finance and social media.

DAO: A decentralised autonomous organisation is a software running on a blockchain that offers users a built-in model for the collective management of its code.

To become a member of DAO, users need to first join the DAO by buying its cryptocurrency. Holding a set minimum amount of the cryptoasset gives users the power to vote on proposals and updates.

Ray Brown is a market analyst at CoinSpot.

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