In the world of stocks and shares, we use specific language. We choose our phrases carefully. The world of crypto has now adopted that very same language. In order to assist in the education of future traders, I have put together this helpful guide. Now you will be able to speak fluent stockbroker. Use the tools wisely in the world of Crypto and don’t buy the shiny suit just yet.
“This stock/Coin is currently overvalued”: It’s doing well, and I don’t have any.
“There is great value to be had in the market/stock/coin at this time”: It’s tanked, absolutely radioactive, and I have loads.
“This Stock/Coin has the potential for high growth”: It can’t fall any further. It’s lower than a lizard drinking.
“This is a time for stock holders to reflect” : God only knows what this thing will do next.
“This is a time to hold your stock/coins” : This is a time to sell, and sell fast!
“A contract to Sell/Buy stock and/or coins” : A legally binding contract with a stockbroker/trader/exchange that everyone, other than the trader/exchange, is bound by.
“A gentleman’s agreement.” : An agreement that two parties believe, legally binds the other, held between two people, neither of whom is a gentleman.
Now, let’s move into a few handy definitions:
- CRYPTOCOIN: This is a magical item that promises growth, and is worth $33.75 until you buy it. It is then, instantly, worth $8.50.
- BOND: What you had with your spouse until you pawned his/her golf clubs to invest in the latest bright sparkly thing.
- BROKER: The person you trust to help you make major financial decisions. Please note the first five letters spell Broke.
- BEAR: What your trade account and wallet will be when you take a flyer on that hot tip the man in the bar gave you.
- BULL: What your broker uses to explain why all your investments tanked.
- MARGIN: Where you scribble the latest quotes when you’re supposed to be listening to your manager’s presentation.
- SHORT POSITION: A type of trade where, in theory, a person sells stocks he doesn’t actually own. Since this also only ever works in theory, a short position is what a person usually ends up being in (i.e. “The rent, sir? Hahaha, well, I’m a little short this month.”).
- COMMISSION: The only reliable way to make money. This is what your exchange charges.
The Complex Derivatives
Now all that’s left is to explain Complex Derivatives. That’s the single thing that caused the recession. Well, here goes.
Heidi owns a bar in Berlin. Sales are constant but poor. In order to increase sales, she decides to allow her loyal customers – mostly unemployed alcoholics – to drink now, but pay later. She keeps track of the drinks consumed on a big ledger (thereby de-facto granting the customers loans).
Word gets around and, as a result, increasing numbers of customers flood into Heidi’s bar.Taking advantage of her customers’ freedom from immediate payment constraints, Heidi decides to increase her prices for wine and beer, the most-consumed beverages. Her sales volume increases massively.
A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Heidi’s borrowing limit. He sees no reason for undue concern since he has the debts of the chronic alcoholics as full collateral.
At the bank’s corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items. One day, although the prices are still climbing, a risk manager (subsequently of course fired due to his negativity) of the bank decides that the time has come to demand payment of the debts, incurred by the drinkers, at Heidi’s bar. However, they declare that they cannot pay back the debts.
Heidi cannot fulfill her loan obligations and claims bankruptcy.
DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 90%. The suppliers of Heidi’s bar, having granted her generous payment due dates and having invested in the securities are faced with a new and unpleasant situation. Reality.
Her wine supplier also decides to declare bankruptcy, her beer supplier is taken over by a competitor. The bank, however, is saved by the Government, following dramatic round-the-clock negotiations by leaders from the governing political parties. The bar is finally bailed out.
The funds required for this purpose are obtained by a tax levied on the Nation’s non-drinkers.