Which words are formed by using the first letter of each word in a phrase?
Acronyms are similar to abbreviations, in that they are a shorthand way of expressing an idea. Acronyms are typically formed by using the first letter of each word in a phrase to form a new word.
"Acronym" is a blanket term that can also encompass initialisms. An initialism is also a phrase indicated by abbreviating the first letter of each word in it, but it is unpronounceable as a unique word. Instead, initialisms are pronounced by saying each letter of the word individually. For example, the Federal Bureau of Investigation is shortened to FBI, but this is always pronounced by saying each letter separately.
The world of email, texting, and instant messaging has given rise to a whole series of acronyms and initialisms that allow texters to complete their messages more quickly. Nearly all are initialisms because they are pronounced letter by letter. Occasionally some are pronounced as words in conversation, though this is uncommon.