even though they exist inside the bacteria cell cytoplasm
Plasma has several meanings in biology. Cytoplasm is a type of plasma.
A quick trip to Wikipedia tells us that the term plasmid was first used by Joshua Lederberg in Cell Genetics and Hereditary Symbiosis. It seems that he coined the term plasmid to reconcile the many terms used to describe extrachromosomal DNA, at the time.
These discussions have left a plethora of terms adrift: pangenes, bioblasts,
plasmagenes, plastogenes, chondriogenes, cytogenes and proviruses, which have lost
their original utility owing to the accretion of vague or contradictory connotations. At the risk of adding to this list, I propose plasmid as a generic term for any extrachromosomal hereditary determinant. The plasmid itself may be genetically simple or complex. On occasion, the nuclear reference of the general term gene will be emphasized as chromogene...