“You keep using that word. I do not think it means what you think it means.”
—Inigo Montoya, The Princess Bride
Crypto Vocab 101
I got my first job out of college with a floor broker on the Frankfurt Stock Exchange despite speaking pretty lousy German.
It got good fast, though. Trading in a foreign language might be the best way to learn it: When every mistake costs money, you only make every mistake once.
That was a long (long, long) time ago, and I’ve forgotten most of my German in the interim. But not the trading lingo. You could drop me onto the floor of the Frankfurt stock exchange right now and I’d do just fine. With money constantly on the line, that language of trading got burned into my brain. It had to because, when agreeing a trade, the precise meaning of every word matters: It’s imperative that everyone agrees on exactly what’s been agreed.
It’s admittedly less imperative these days, with trading now entirely screen-based. But we should still all be able to agree on some basics. If nothing else, it’ll help make people take us seriously — we don’t want TradFi people laughing at us.
So let’s straighten a few things out.
You’d think we could at least agree on the pronunciation of crypto’s signature word, HODL. But there remains some debate as to whether it’s hah-dl or hoe-dl. There shouldn’t be — it’s not a gardening tool: hah-dl is correct. (If you disagree, I’ll refer you to the highest possible authority: South Park.)
The abbreviation of traditional finance is an easy one, but some of us are still getting it wrong: It’s not hard, people. Just say it like it’s spelled: trad-fi, not trade-fi.
The best investment vehicle of all-time is Berk-sure Hathaway, not Berk-shire Hathaway. We’re talking about Warren Buffet in Omaha here, not Bilbo Baggins in his Bag End shire.
Crypto is built largely on seigniorage (the ability to issue its own currency) for which there are two acceptable pronunciations. There’s an Americanized version — senior-ij — and a closer-to-the-original-French version — sane-yore-ij. I’m sticking with senior-ij, because, you know, if you’re planning a vacation in the capital of France, you don’t fake an accent and say you’re on your way to Pah-ree, do you? You’re going to Paris. Same applies here.
Crypto is always trying to reinvent the wheel, but there’s no reason to reinvent trading terminology. It’s been around for centuries. It works. Don’t mess with it.
People have, for example, been buying and accumulating stocks for time immemorial. What they have never, ever done, however, is longing stocks. So don’t tell me you’re longing bitcoin. You might be longing for your soulmate, but you’re buying bitcoin. (Unless you think bitcoin is your soulmate, in which case, OK, fine.)
When you do buy bitcoin, you are lifting an offer. And when it’s time to sell, you hit a bid. This is admittedly confusing because you “make an offer” to buy a house. So when houses are NFTs, we can revisit this one. But in the meantime, stop saying you are “hitting offers.” That’s not a thing.
I know the horse has bolted on this one because “bags” is fully in the crypto lexicon now, but, just for the record, I’m going to shut the barn door anyway: “Bags” comes from “bag holder,” with the implication you are underwater. Now that we are deep in a bear market, pretty much everyone is a bag holder, because we are all underwater on the crypto we bought at higher prices — those are our “bags.” If you were clever enough to buy crypto at the lows a couple of weeks ago, those are not your bags. Those are your longs. Or your book. Or the reason you’re better at crypto than I am.
Crypto native terminology:
Flippening: At the start of the year, there was talk that both YFI and ETH could someday “flippen” bitcoin. Neither now looks likely to ever happen, but both were never going to happen. YFI might have passed BTC in price and ETH might have passed BTC in market capitalization, but those are two different things. We have to decide which is which. Prices are meaningless, so “flippening” should reference market cap only. ETH might someday flippen BTC, but YFI never will.
Stabled: When you’ve converted all your crypto into stablecoins, you are “stabled.” Like being “flat” or “risk-off” in TradFi.
Floor price: The cheapest price you can buy an NFT of a particular collection is the floor price — emphasis on buy. This is NOT the price you can sell at (especially now), but people keep using it that way. Wishful thinking in a bear market, I guess.
WAGMI: Can we just retire this one? We’re not all going to make it. Sorry.
Ether vs. Ethereum: Ether is the digital asset you buy and Ethereum is the network that it lives on. That seems basic to me, but I see this one mixed up so much — even by OG crypto natives — that I’m starting to doubt myself.
Bridge: This one is a misnomer because crypto bridges are the opposite of real-world bridges. It’s more like putting your money in a bottle and floating it across a river — there’s a chance someone else is going to grab it before it gets to the other side.
Staking: This core crypto concept gets used with two entirely different meanings: 1) risking collateral to secure a blockchain and 2) receiving emissions as a reward for not selling. This is a substantive difference that causes a lot of confusion, so let’s clear this up right now: Fees earned should be called a “staking yield” and emissions received should be called a “staking reward.” Agreed? Good.
Ponzinomics: As with Justice Potter Stewart’s 1964 concurring opinion in Jacobellis v. Ohio, this is a know-it-when-you-see-it kind of thing: 15,000% APYs are ponzinomics; cryptos collateralized by uncollateralized cryptos are ponzinomics. What they are not is Ponzis.
Ponzis: When money from new investors is paid to existing investors to give the false impression that a return is being earned. Crypto is transparent — it’s impossible to pretend a return is being made when it’s just new coins being issued. And no one really tries. Read the docs, people. You’ll see it’s just good, honest ponzinomics.
If you think I’m being unnecessarily persnickety with all of this, I’ll refer you to the first section of the recent Lummis-Gillibrand bill: “One of the most pressing issues in the digital asset space is the lack of common definitions.”
In trading and investing, it’s imperative we have common definitions so everyone can agree on who’s traded what with whom at what price.
You say potato, I say potahto, but let’s not call the whole thing off.