Why do they call him "Whitebeard"?
He doesn't even have a beard!
Edward Newgate's nickname in Japanese is Shirohige (shiro = white, hige = facial hair). Japanese does not distinguish between beard and moustache1. However, a literal translation White Facial Hair sounds a pretty poor nickname for one of the World's strongest pirates, and even sounds comedic. Whitemoustache isn't much better either. Whitebeard has a nice ring to it.
Also, fairy-tail's Lucy's nickname for the Celestial Spirit King is "hige-oyaji" (translated as moustache-man, in context), and he has only a moustache, which suggests that "hige" is used to refer to both moustache and beard in Japanese.
1: Google Translate says that "Beard" is "Agohige", and "Moustache" is "Kuchihige". However, they did not call him "Shirokuchihige" in the original, so the distinction seems to be not widely used.