Here’s what You Need to Know about Crypto Jargon

Is anything more confusing than crypto jargon? You hear things like HODL, hot wallets, cold wallets, to the moon! and all sorts of “crypto slang” can be overwhelming when you first enter the space. You’re also likely to run across terms like “sh*t coin”, “rug pull”, and “pump and dump”. While these phrases may sound ridiculous, it’s important to learn the meaning behind them if you want to safely invest in the DeFi space. Here’s some key info you need to learn about common crypto scams.

Sh*t Coin: What is a sh*t coin? It’s a coin with little to no value or utility. It’s a coin with no purpose. It’s useless crypto. There are plenty of them in the DeFi space because anyone with a bit of time and money can create a soulless cryptocurrency that runs on open blockchains. It’s important to research any project you’re putting serious money into. Check their whitepaper, look at the roadmap, and make sure the coin has utility beyond having a cute mascot!

Rug Pull: A rug pull is an exit scam in crypto. When “the rug is pulled” or “a project is rugged”, developers pull all the liquidity they can out of the project, leaving investors “holding the bag” (aka holding a bag of worthless coins) When this happens, the coins/tokens are unable to be sold or traded, because the whole project has become illiquid. 

Pump and Dump: Originally a term for the stock market, Pump and Dumps have become common with alt-coins. This is a scam where the price of a coin is inflated by hype, then sold at the top by the very people hyping it. A large group of people will buy a coin that isn’t traded often, call attention to the rising price in the media and encourage others to buy. After the price is inflated to a certain point, the original group of people who started the scam will sell, or “dump” the coin all at once, causing its price to fall to the original low price. It’s important to watch for these scams, and do your own research on projects. 

While the DeFi scene is fun and exciting right now, the important thing to remember is the importance of doing your own research and investing only what you’re willing to lose. Bitcoin and Ethereum have been around for a while, and many of the longest-standing crypto projects are seen as safer investments than their smaller counterparts, however not all small crypto projects are scams. Always consider the friendly advice that if it seems too good to be true, it probably is.