Cryptocurrencies, in existence for more than a decade, are now being accepted as a legitimate asset class such as stocks, bonds, real estate, commodities and futures.
The definition of a cryptocurrency from Investopedia is “a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology — a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.” — and if you can grasp the entirety of that definition, I salute you.
Arguably, the most famous cryptocurrency is Bitcoin that over the past decade produced an average annualized return of 230%, more than 10 times higher than the second ranked asset class. The second ranked asset class is the Nasdaq 100 that returned 10% annually. No other asset class comes close to such returns as Bitcoin.
In July 2010, Bitcoin first started trading around $0.0008 to $0.08 per coin to a high of $67,010 per coin in April of this year. Yes, if you paid $.08 for one Bitcoin back in July 2010 over the course of the following 10 years your open profits at one time would have $67,010.
If you were quick enough, smart enough, lucky enough to have bought Bitcoin as low as $0.0008 each, your open profits would have been, well, you figure that one out.
Consider the following from Ascent.com, a Motley Fool website: “Bitcoin’s network came into existence in 2009 when the first block of Bitcoin was mined on Jan. 3. However, there was no monetary value or market for Bitcoin until at least 2010. In fact, in March 2010, an early adopter attempted to auction 10,000 Bitcoins for $50 total, but couldn’t find a buyer.
“The first real-world Bitcoin transaction occurred in May 2010, where 10,000 Bitcoins were used to pay for two pizzas, valuing each Bitcoin at a fraction of a cent. Today, the value of this amount of Bitcoin would be nearly $550 million.”
Of course, buying Bitcoin way back in 2010 and holding on for the 11-year ride, the entire bull run, would have taken some serious discipline. That is also assuming back then you had enough money to buy two pizzas, but suddenly decided you were not hungry and would rather sink that money into something called Bitcoin, a new and mysterious investor called a cryptocurrency.
And now that cryptocurrencies are mainstream, a bonafide asset class they have their own slang words. From CNBC.com and the research and writing of Ali Montag:
HODL: In early Bitcoin forums, someone posted a message that spelled the word “hold” wrong and readers interpreted it as an acronym “hold on for dear life.” Now, it’s become a meme of sorts, so that when the prices are highly volatile, Bitcoin buyers say “HODL.”
FUD: If someone tells you Bitcoin is a bubble, they just have FUD. This one is simple. FUD means “fear, uncertainty and doubt.” Bitcoin followers advise to HODL your coins despite the FUD of those outside the community.
Pump and Dump: Pump and dumpers are people who often say, “Hey, let’s all of us together pump this coin,” which means buy the coin, create the demand in the market, the coin will go up in value. Then, everyone “dumps” the coin and sells.
Bagholders: A bagholder, essentially, is a very unfortunate soul who at the end of the day — maybe from a pump and dump — who got “held with the bag,” which means they wanted to sell at a higher price, but the market moved too fast.
Mooning: If something is “mooning,” that means a coin’s price is experiencing a spike. (For personal reasons I shy from using that expression.)
And here are a few slang expressions commonly used by commodity traders and stock market investors:
FOMO: Fear of missing out.
SOL: Used often when trading futures and a well known expression utilized mostly by the older generation.
GMO: Yelled loudly by a client to his broker when the market is being cruel. It means, “Get Me Out!”
Buy Low, Sell High: Works perfectly if followed religiously. But avoid doing the very opposite because that never works.