Little Fish Commission has been in the cryptocurrency circle for five years. Many people express interest but don't know where to start. Due to some special reasons, it is difficult to find information about the cryptocurrency circle online, which is why this article was written.
"The cryptocurrency circle" is full of opportunities, but beneath the so-called opportunities are many traps.
Compared to traditional finance, the allure of the cryptocurrency circle lies in: low barriers to entry, many opportunities, rapid changes, and different trading models.
Many people think of Bitcoin as a game of passing the parcel, while others see it as an opportunity. What do you think?
In May 2014, the price of Bitcoin was $500, and currently, in December 2024, the price of Bitcoin has soared to $108,000. It is undeniable that the price of Bitcoin has indeed risen, and some have achieved financial freedom through Bitcoin, such as Li Xiaolai and Guo Hongcai, among others.
Everyone should be clear that high returns always come with high risks. Blindly entering will only lead to losses. Before entering any market, you should have a certain understanding to see if it suits you before making a decision.
1. Preparation before entering the cryptocurrency circle
What is the cryptocurrency circle?
The cryptocurrency circle refers to the circle of cryptocurrencies such as Bitcoin, a community centered around digital currency. With the rise of Bitcoin, the cryptocurrency industry has gained increasing attention.
The cryptocurrency circle is actually a diverse field, including aspects such as cryptocurrency trading, investment, research, and technology development. This field has various characters and events, with countless stories and legends.
The cryptocurrency circle has unique characteristics, first being decentralization. The essence of cryptocurrencies is decentralization; there is no institution controlling currency issuance and trading, but rather blockchain technology ensures the security and transparency of transactions.
Secondly, the cryptocurrency circle is a globalized field. Due to the nature of digital currency, transactions can take place globally, allowing people to trade and cooperate across borders.
Additionally, the cryptocurrency circle is highly innovative. In this field, various new technologies and projects are constantly emerging, bringing revolutionary changes to the entire financial industry.
In the cryptocurrency circle, there are some hot topics that everyone is very concerned about. One of them is the price volatility of Bitcoin. As the first digital currency, its price fluctuations are widely followed and have sparked various speculations and discussions.
Another hot topic is the application of blockchain technology. Blockchain technology is the foundation of cryptocurrencies and is considered one of the core technologies of the future, thus attracting much attention.
The last hot topic is changes in policies and regulations. Due to the uniqueness of cryptocurrencies, countries are constantly adjusting their regulatory policies, which often become a focal point of discussion in the cryptocurrency circle.
Although the cryptocurrency circle is full of opportunities and potential, it also comes with various risks. The first is the risk of price volatility; the volatility of digital currency prices is significant, and investors need to have sufficient risk awareness.
Secondly, there are security issues. Due to the virtual nature of the cryptocurrency circle, network security is also an important consideration. Investors need to cautiously select trading platforms and storage methods.
Additionally, regulatory risks are a major issue in the cryptocurrency circle. Governments worldwide have varying attitudes towards cryptocurrencies, and investors need to pay attention to changes in relevant policies and regulations to avoid legal risks.
Common digital currencies
Bitcoin (Bitcoin), as the barometer of the cryptocurrency circle, is also how many people get to know the cryptocurrency circle; it is undoubtedly the king of digital currencies.
Ethereum (Ethereum) is the king of altcoins in the cryptocurrency circle, being the second-largest cryptocurrency by market value, with many other cryptocurrencies originating from its layer two network.
Dogecoin (Dogecoin), the king of the MEME section, gained excessive attention due to its exaggerated price increase; it even made the news in 2021. Those interested can take a look; Elon Musk is also a big advocate of Dogecoin.
Trading market
Divided into primary and secondary markets, the primary market is open for anyone to issue, and liquidity can be withdrawn at any time, including various junk coins, scam coins, etc.
The secondary market is exchange-based, commonly used exchanges being Binance (Binance) and OKX (OKX). All investment transactions are based on security guarantees; other exchanges are not recommended.
Risk management
Any investment comes with certain risks, but we need to understand where the risks come from. The aforementioned primary market has many coins that have run away, and many that cannot be sold after purchase.
In the secondary market exchanges, the biggest risk in spot trading is that the cryptocurrency may be delisted, while contract trading with high leverage and high-frequency trading can trigger liquidation mechanisms, which are crucial risk points in contract trading.
Security protection
Whether downloading or registering, always go through official channels and never download through links found in regular searches; phishing websites are everywhere.
Android: Link through official channels or installation packages.
Apple: Change the region ID in the App Store to download
Legal compliance
This is also a point that many people are very concerned about: is cryptocurrency trading legal and compliant? Currently, it is explicitly stated that virtual currency trading may involve illegal transactions.
Refers to the process of converting U to RMB, which may be involved. However, it can also avoid some risks to the maximum extent. Engaging in spot or contract trading does not constitute any violation.
For example, only engage in C2C trading on the exchange; do not trade privately!!! In Binance, there is a trusted merchant; choose one with a long registration time and high transaction volume for a certain level of security! Remember to take screenshots of each transaction record!
Emotional management
The cryptocurrency market has large fluctuations, which tests one's mentality. If the price rises a little, people buy, and if it falls a little, they sell, leading to gradual losses; many people's mental state can explode.
Contract trading is like a battlefield, where leverage amplifies human nature. You must remain rational!
Do not go all in with high leverage! Do not go all in with high leverage! Do not go all in with high leverage!
Maintain a clear mind and approach things rationally, and you will go further in the cryptocurrency circle, carving out your own path.
2. Essential tools for beginners
Basic tools
- Query information about various cryptocurrencies and exchange platforms. Due to the prevalence of negative news, all data is for reference only.
Exchanges - Binance (Binance), OKX (OKX), currently mainstream and functioning top exchanges in the cryptocurrency circle.
Information platform
Golden Finance - A globally leading financial data service platform that provides professional financial data services free of charge to blockchain entrepreneurs, financial investment institutions, research institutions, academic institutions, regulatory agencies, media, and other users. Through efficient and accurate comprehensive solutions, it assists blockchain in empowering the real economy.
Rhythm - A professional blockchain research institution and information platform, covering overseas blockchain news and domestic blockchain industry information. To meet the needs of various readers such as blockchain beginners, enthusiasts, practitioners, and investors, the content includes introductory articles on blockchain and digital currencies, reports on hot events, original research from Rhythm, in-depth analysis of industry phenomena, insights from well-known figures, and high-quality interviews, with content formats including text, audio, and video.
Jinji Data - View data on non-farm payrolls, CPI, and Federal Reserve interest rate hike timings, as these data affect the financial circle, including the cryptocurrency circle.
Advanced tools
K-line - TradingView (abbreviated as TV) is a professional-level charting tool, with a full range of indicators favored by many investors.
Data analysis - Coinglass integrates various data, historical funding rates, liquidation maps, liquidation indices, etc.
Wallet - TokenPocket (abbreviated as TP), IM, Little Fox (MetaMask), Trust, etc. Using a wallet requires certain professional knowledge before getting involved. Most thefts occur due to losses in wallets.
Educational platform
YouTube is the largest video search and sharing platform globally, containing many explanations about the cryptocurrency circle.
Bilibili also has many explanations about Bitcoin and other cryptocurrencies, which are worth referencing.
3. Basic text and graphic tutorials
Capital inflow and outflow
Click on funds at the bottom of the APP, select the top fund account, enter C2C, buying and selling are all in here. Newbies are advised to buy in the quick area, directly input the amount or quantity, select the payment method (WeChat, Alipay, and bank card) and the system will automatically match merchants; follow the relevant prompts to operate.
Note: When withdrawing funds, adjust to the custom area, select trusted merchants, and choose merchants with a long registration time and high transaction volume to minimize risks.
After completing C2C trading, you need to transfer funds to the spot account, then click the trading section at the bottom of the APP, select the top spot option to buy Bitcoin, and you can also purchase other cryptocurrencies!
Spot trading
Funds need to be transferred from the capital account to the spot account to trade, which makes this distinction very convenient.
Deposit and withdrawal
Depositing and withdrawing is different from C2C trading, as it involves converting held spot assets between different platforms or within a wallet.
Note: Depositing and withdrawing incurs fees. Before transferring in and out, check if you have the corresponding mainnet tokens as fees (transfers between exchanges will automatically convert to U as fees).
Taking the example of USDT conversion
In OK, click on funds at the bottom and select withdraw.
Search for the name of the cryptocurrency you want to withdraw.
Choose to withdraw digital currency (USDT)
Choose on-chain withdrawal (TRC20, also known as TRON)
At this point, open Binance.
In Binance, click on funds at the bottom, choose the top overview, and select recharge.
Search for the corresponding cryptocurrency name (USDT).
Select TRC20 for the network.
Copy the address correctly.
Return to OK, paste the Binance address, and select TRC20 for the withdrawal network.
Just wait for the email notification.
The above is the complete process for depositing and withdrawing. Transferring to other platforms or wallets follows similar procedures.
Key points to pay attention to: currency type, withdrawal network (mainnet), and address. These three must be verified carefully, especially since addresses are often long; it’s best to verify each one.
If you transfer incorrectly, the currency may be lost; it is recommended to transfer a small amount first to test.
Remember, always verify that the currencies, withdrawal network (mainnet), and addresses on both ends match; if you make a mistake, the funds may disappear. If it's your first operation, it’s advisable to try with the minimum transfer amount.
4. Pitfall avoidance guide
"Risk-free profit project"
"Here’s a guaranteed profit project, do you want to come and take a look?" Many people must have encountered this; it’s all nonsense! Where does a pie fall from the sky?
Airdrops, contracts
Recently, there is an airdrop activity that allows you to get something for free; you only need to stake a certain coin to receive the airdrop, and you need to click a link in the wallet, including smart contracts; these are all disguised wallet authorizations, and many people have had their coins stolen this way.
Phishing websites
There are many unknown links online that are very similar to official website names. Always double-check before clicking, and it’s best to verify through the official website if possible.
High leverage
Leverage is merely a tool to amplify the principal, and many people fantasize about using high leverage for higher returns; this is an illusion. The risk of liquidation far exceeds the potential profit you can obtain. Doubling requires a profit of 100%, while liquidation only requires a loss of 50% (for illustration only).
Blind investment
Seeing popular cryptocurrencies and rushing in without knowing that many are high-level cash outs preparing to exit. Always do your research before trading.
The above are some common questions about the cryptocurrency circle, hoping to help you who are new to the circle!
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