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Ladyboy is the (not so literal) English translation for Kathoey, which is a Thai term that is very close to being the equivalent of a transgender woman, but it can also encapsulate effeminate gay men.

It is unclear what is the exact origin of the word. Kathoeys have been around forever in Thailand, the phenomenon is nothing new. The most plausible origin dates from when Thailand became a huge tourist spot. The US military, during the Vietnam War, used to spend their free time on the beaches of Thailand, looking for alcohol and women. And obviously the "kathoeys" couldn't be left unnoticed. And so the need for an English term arose, simple because it is more convenient.

Note: The term ladyboy is not appreciated by everyone. Although Thais and most of Asians are fine with it, it is perceived derogatory in the western world. Thanks to the internet and other media the term is usually associated with porn and/or prostitution as "ladyboy porn" tends to be popular amongst western men. The term "ladyboy" is nothing official and is actually politically incorrect. Are ladyboys more "lady" or more "boy"? Transgender women is the accepted, official and politically correct term. But "ladyboy" is commonly used in Asia as an everyday word. After all, the term originated in Thailand to facilitate communication with westerners, thus Asians are fine with it.