Before entering the crypto space, you need to understand that high risks coexist with high returns, so you must act cautiously.
I. Basic Knowledge of Digital Currency
Digital currency is a type of virtual currency issued and traded online based on cryptographic technology. Bitcoin is the pioneer of digital currency, with a fixed total supply of 21 million coins; decentralization is its core feature, with no central issuing agency, and transactions are secured and traceable through distributed ledgers and cryptographic technology. Ethereum is not only a digital currency but also a smart contract platform, allowing developers to create various applications based on it. Besides these two major players, there are thousands of other digital currencies in the crypto space, commonly referred to as altcoins. Some improve upon the shortcomings of Bitcoin or Ethereum, while others are entirely new concepts, but their quality varies widely.
II. Choosing a Trading Platform
Choosing the right trading platform is crucial. Leading platforms like Binance, Huobi, OKEx, etc., have a large user base, good trading depth, and relatively high asset security, with multiple encryptions and cold wallet storage for user assets. However, even so, there have been security incidents, so the platform's reputation and security measures should be examined closely. New platforms may offer enticing promotions, but the risks are also significant, and the risk of running away cannot be ignored. When registering, understand the trading pairs supported by the platform and the fee charging standards, as some platforms have different fee regulations for fiat trading and cryptocurrency trading, which can add up to a considerable expense over time.
III. Using Wallets
A wallet is a place to store digital currency, divided into hot wallets and cold wallets. Hot wallets are connected to the internet, easy to use, and suitable for frequent daily transactions, such as mobile wallet applications like imToken, which manage assets through mnemonic phrases. The mnemonic phrase is equivalent to the wallet password and must be kept safe; once leaked, assets can be stolen. Cold wallets are not connected to the internet, like the hardware wallet Ledger Nano S, which offers extremely high security and is suitable for long-term storage of large amounts of digital currency, as it stores private keys in hardware devices to avoid online attacks.
IV. Investment Strategies and Risk Control
Never invest all your funds in the crypto space; proper asset allocation is key. For example, invest only 5%-10% of your assets, even if you lose it all, it won't affect your life. Do not blindly chase highs and sell lows; conduct fundamental analysis to understand the project's technical strength, team background, market application prospects, etc. Set stop-loss and take-profit points; for example, decisively sell to stop losses when losses reach 10%, and cash out partially when profits reach 50%. At the same time, the crypto market trades 24 hours a day with extreme volatility, so do not let short-term fluctuations affect your mindset; maintain rational investment.