Getting started with crypto trading can be challenging enough when introducing new terminologies such as rug/rug pull, gas, Satoshi Nakamoto, BUIDL, and much more. Coupled with thousands of new jargon words, not understanding trading language can significantly hinder a trader’s journey and profitability.

If you’re a newbie in the crypto market, chances are you’ve stumbled upon an article or forum post that includes these terms. This lingo is the first thing beginners traders need to know. Sequel to part 1 of these terms, we have created a list of other important crypto terminologies to help get you started in the market.If you’re a newbie in the crypto market, chances are you’ve stumbled upon an article or forum post that includes these terms. This lingo is the first thing beginners traders need to know. Sequel to part 1 of these terms, we have created a list of other important crypto terminologies to help get you started in the market.

While this list is not all-inclusive, it covers the 8 most common terms regularly used by crypto traders. Let’s jump in!

8 Common Crypto Terms Every Trader Should Know

1. Return on Investment (ROI)

Similar to the conventional meaning, return on investment (ROI) is a measure used to determine the efficiency or reliability of an investment. ROI aims to directly gauge the amount of Return on a particular investment relative to the initial expenditure. It also comes in handy to evaluate and compare the performance of different crypto assets.

ROI is usually calculated by; dividing the return by the investment costs. The result is given in percentage or ratio.

2. AML — Anti-Money Laundering

Anti-money laundering (AML) legislation is an initiative to prevent money laundering via cryptocurrency exchange platforms and various custodian services. Due to the risks attached to crypto transactions, several crypto institutions are now bound to adhere to AML legislation.

3. SAFU

The term SAFU which means secure asset fund for users, is an emergency insurance fund that was launched in July 2018 to safeguard users’ funds. Basically, “funds are SAFU” is a phrase originating from a post made by Bizonacci, a YouTube content creator, who produced a video named “Funds Are SAFU’’ in 2018. The video caption was a pun on an original phrase, “Funds are safe.”

The term was thrown around briefly after the platform suffered a major security breach in 2019 to protect users’ assets. CZ once tweeted this term during unscheduled maintenance, and has subsequently been using this phrase whenever he wants to reassure users of the safety of their funds.

The emergency insurance fund was valued at US$1 billion according to the opening price on January 29, 2022. The value of the fund is slated to fluctuate based on the market.

4. Know Your Customer (KYC)

This is the first step towards anti-money laundering (AML) due diligence. When a crypto institute onboards a new user, KYC procedures are immediately employed to identify and verify the user’s identity. This process usually involves:

Confirming user’s personal details such as IDs and sort

Gaining insight into the user’s activities and establishing their legality

Evaluate the probability of the user’s exposure to money laundering

5. Rug/Rug Pull

Another popular crypto term is rug or rug pull. It’s basically a destructive or malicious activity in the crypto scene where the crypto founding team, usually developers, dump a project and cart away users’ funds. Rug pulls are pretty common in the decentralized finance (DeFi) scene, including on decentralized exchanges (DEXs), and usually revolve around fake custom tokens listed on top blockchains like Ethereum.

6. Gas fees

Simply put, a gas fee is a blockchain transaction fee given to network validators for their services in securing the blockchain. Without the gas fees, users cannot earn any reward to stake and help safeguard the network. It is usually used in the Ethereum Blockchain and most Proof of Stake blockchain Networks.

7.Satoshi Nakamoto

A pseudonym for the individual or team behind the development of the first Bitcoin software — bringing the concept of cryptocurrency to the world in 2008. Satoshi stayed active in the development of Bitcoin via a discussion forum until he largely disappeared from the scene around 2010, and has remained anonymous since then. While Nakamoto was not the pioneer of the concept of cryptocurrency, he was the first to solve a basic issue that prevented its adoption.

8. BUIDL

Similar to the concept of HODL (hold on for dear life), BUIDL describes Bitcoin industry players who continue to grow despite the fluctuation of market prices. The basic notion is that strong believers in the crypto industry continue to develop the ecosystem regardless of any market conditions and downturns.

As such, these believers, called ‘BUIDLERS’ are constantly building useful blockchain-based products offering various services, including democratizing technology for people of all races, genders, and cultures.

Wrapping Up

Cryptocurrency trading can be daunting for beginners. As such, it is important to get familiar with these phrases, acronyms, and abbreviations that apply to different sectors of the industry. Read part one here.