The cryptocurrency market is buzzing as prices continue to hold in the green territory and investors keep hopes alive for a rerun of 2017 all-time high. As of Tuesday, morning bitcoin has been profitable for 96.5 percent of all days since 28 April 2013.
In Africa, thousands of new investors are flocking to buy bitcoin and other cryptocurrencies. Luno, one of Africa’s largest cryptocurrency exchanges with over 4 million users across 40 countries, says it has seen a 79 percent growth in new signups to bitcoin for the first time since March. In Nigeria, the exchange rate crisis is pushing businesses and even Bureau De Change (BDC) operators to adopt bitcoin as a means to pay for goods and services outside the country and make remittances.
Nigeria also has the largest number of bitcoin wallet downloads in the world as of August 2019. According to Bitcoin.com, of the 18,613 wallets downloaded globally between 16 and 10 August, about 3,473 were from Nigeria. The US had about 2,802 fewer wallets downloaded followed by India which had about 1,420 downloads.
As a new investor in the market, it is possible to get confused with the many new words and jargon that used to describe different aspects of the market. With the help of Marius Reitz, General Manager for Africa at Luno, we bring you some of the crypto-related you are bound to encounter in your journey in the cryptocurrency market.
HODL
This is actually a misspelling of the word ‘hold’ and it means to buy and hold (not sell) your cryptocurrency. The term is believed to have originated in 2013 when a post to the bitcointalk forum went viral. The price of bitcoin had surged from under $15 in January 2013 to a high of over $1,100 at the beginning of December 2013. In the 24 hours to 10:00am, December 18 – possibly in response to reports of a Chinese crackdown – the price of bitcoin fee 39 percent, for $716 to $438. 3 minutes later, a bitcoin investor made the now-famous “I’m HODLING” post.
FOMO
This refers to Fear of Missing Out. It is used in the crypto world when people see a coin doing very well and they are worried they may be missing out on an investment opportunity.
FUD
‘Fear, Uncertainty, and Doubt’ is used to describe the bad news that sees to take hold when critics of crypto start talking. Reitz notes that although FUD could appear negative, it often becomes a boon for traders when the dips come around as they can buy crypto cheaper. Olaleye Awe, a crypto trader once told BusinessDay that he makes all his crypto purchases during dips.
ATH
One of the most anticipated ones in the crypto market, All-Time High refers to the highest historical price of a specific cryptocurrency. For example, the all-time high of 2017 when the price of bitcoin rose to $20,000.
Whale
Whale refers to a large cryptocurrency investor with a substantial amount of capital. Often, a movement from whales sends a wild ripple in the small coins’ market.
Blockchain
This is the mothership of all cryptocurrency. The blockchain is a decentralised network that records transactions, much like a traditional ledger. These transactions can be any movement of currency, goods, or secure data.
Pump and dump
This is the recurring cycle of spikes in price which are then followed by a huge price crash. Traders who pump buy large volumes and when other investors buy more, they dump or sell their coins at a higher price.
Fiat
Fiat is conventional or government-issued money (the Nigerian naira).
Mining
Mining refers to the committing of computer hardware to process transactions on a blockchain (Bitcoin or otherwise). Miners do this to receive mining rewards paid in Bitcoin.
Halving
The Bitcoin halving is a recurring event built into its protocol which halves the number of Bitcoins awarded to miners. The most recent halving occurred on 11 May 2020.
Wallet
A wallet is a software with which you send and receive cryptocurrency. Remember, the coins are stored on the blockchain. The wallet contains the private keys that authorise the owner to send these coins to another wallet.
Exchange
An exchange is an online trading platform where you can exchange one cryptocurrency for another cryptocurrency or for fiat currency.
Bull run
This describes a period when prices rise in the cryptocurrency market.
Bear run
Bear run – the opposite of a bull run – is a period when prices drop in the cryptocurrency market.
Altcoins
An altcoin is any cryptocurrency other than Bitcoin. These newer coins are called ‘alternative coins’ or ‘altcoins’ as they are alternatives to Bitcoin.
Stablecoins
Stablecoins are cryptocurrencies that are pegged to more stable assets such as fiat currencies (US dollars, Japanese yen, etc.) to reduce price volatility.
Central Bank Digital Currencies (CBDCs)
CBDCs are cryptocurrencies that are created or backed by a country’s central bank. It is expected that most countries will digitise their national currencies in the future. For instance, the South African Reserve Bank is investigating the possibility of a digital currency backed by the rand.
– Businessday.