Cryptocurrency is a digital asset that exists entirely on the internet, operating solely on code. It is recorded in a blockchain database that anyone can check but no one can alter. Anyone can issue a coin; PEPE is a meme coin created by someone, but whether this type of cryptocurrency can become popular depends on whether anyone is interested. True cryptocurrencies like Bitcoin (BTC) are completely managed by code, decentralized, and cannot be shut down by anyone. Their prices behave like stocks; if someone buys, the price goes up, and if no one wants it, the price goes down. Ordinary people can participate through trading, holding, mining, etc.
Glossary
- Long position / Bullish: Betting that this coin will rise. Buying in, of course, hopes that the price of this coin can rise from low to high, so one can make money. For example, opening a long position on PEPE at an opening price of 0.01 USDT, if it rises to 0.02, then you earn; if it drops to 0.009, then you lose. A long position means 'buying up'.
- Short position / Bearish: Betting that the coin will fall. So first, sell it (this action is called 'opening a short'), and then buy it back later when the price drops (this action is called 'closing the position') to earn the price difference.
- Full position: Putting all the money in your account on the line, leaving no way out. For example, if you have 100 USDT in your account and you use all of it to open a 'long position', this is called 'full position long'; if you only use 10 USDT to bet, this is called 'partial position'.
- Fiat currency: Legal tender recognized by the government. For example, Renminbi (CNY), US Dollar (USD), Japanese Yen (JPY)...
Decentralization means everyone can manage it.
Many people misunderstand decentralization, thinking it means no one is in charge, but it is quite the opposite; everyone manages it together. In traditional banks, money exists on a central server, and the bank can freeze it or alter records at will. However, the blockchain ledger is replicated across thousands of computers worldwide; to tamper with a transaction, one must get approval from over half of the network, which is nearly impossible. This is also one of the reasons many view Bitcoin as digital gold; it has never gone down or been hacked since 2009.
Cryptocurrency = Technology x Belief x Story
Bitcoin is more about technology + belief. Technically it can only transfer money, but it is highly secure and never goes down. Belief-wise, because it is the first virtual currency, many people consider it digital gold, and the more people believe in it, the more valuable it becomes.
Ethereum (ETH) is a bit special; it allows for coding. On its blockchain, besides transferring money, it can run smart contracts, which are small programs or automatically executed scripts, and can also be understood as apps. For example, if A and B bet on whether PEPE will rise, and if it does, a certain amount of ETH will automatically be sent to A, with such a program in place, they do not need to find a third-party referee. Developers can build games, DeFi financial products (DeFi stands for decentralized finance, which does not rely on banks or any intermediaries), NFT markets (where digital images, audio, etc., are converted into unique numbers on the blockchain to become NFT products), etc., on ETH.
PEPE / DOGE coins are meme coins that became popular thanks to stories and memes, completely relying on community hype and meme culture. For example, PEPE originally was just a frog meme, but the joke turned into an asset. As long as it's lively and someone is willing to pay, it becomes valuable.
Virtual currency is a new way of money on the internet, generated by code. It relies on consensus; the more people believe in it, the more valuable it is. Understanding the underlying principles and not blindly following trends is extremely important for trading cryptocurrencies.
