1. Basic characteristics of cryptocurrency trading
Trading hours: 7*24 hours, no market holidays throughout the year.
No price limits: Cryptocurrency trading has no price limits, while stocks have price limits.
Trading unit: 1 BTC = 100 million Satoshi (sat).
Real-time trading: T+0, while stocks are T+1 trading, meaning that if you buy stocks on the same day, you can only sell them on the next trading day. However, cryptocurrencies are T+0 trading, allowing same-day buying and selling.
No time limit for withdrawals and realization: Withdraw and realize funds anytime, with high liquidity.
2. Common professional terms in the cryptocurrency world
[Going long], also known as 'bullish', buyers believe the coin price will rise in the future, buy the coins, and sell at a high price after the price rises.
[Short selling], also known as 'bearish', is the opposite of bullish. Sellers believe the coin price will fall in the future, sell the coins they hold (or borrow coins from trading platforms), and wait for the price to drop before buying back at a lower price to profit.
[Mining] The process of using computers, mobile phones, and other devices to run computational programs to obtain digital currencies. Note: Mining can shorten the lifespan of devices.
[Missing the boat] When the market is bad, you buy. When the market rises, you hesitate. Perfectly missing out is called missing the boat.
[Washing] Washing refers to large financial groups, such as dealers or project parties, manipulating the market to create price fluctuations to scare hesitant investors, thus achieving the purpose of making huge profits.
[Accumulation] Accumulation usually goes through a wash sale, clearing out some investors, after which the dealer will take over the coins sold by these investors, increasing their holdings to control the market. (Generally, accumulation and similar operations occur at low prices.)
[Market control] Market control is simple. Individuals or institutions with significant funds can manipulate funds to control market fluctuations. The purpose is straightforward: to earn more money and attract more investors.
[Harvesting investors] Refers to some investors losing money and exiting while another group of newcomers enters, continuously being harvested like leeks. The dealer benefits the most.
Rebound/consolidation/pullback
The occasional price rebound of digital currencies in a general downward trend is called a rebound, with the rebound amplitude being less than the decline amplitude.
A pullback is the opposite, referring to a temporary drop in price during a general upward trend.
Consolidation refers to the overall price of the coins being relatively stable, with minor fluctuations, not showing erratic movements.
3. What public chains are there in the cryptocurrency world?
The so-called public chain refers to public blockchains where anyone can participate and is not controlled by any centralized organization or individual!
Examples of famous public chains on the market:
1. Bitcoin
Bitcoin is the first successful blockchain application and currently the highest market cap cryptocurrency. Its public chain is decentralized, allowing anyone to participate in trading and mining.
2. Ethereum
Ethereum is a smart contract platform that allows developers to build and deploy decentralized applications (DApps) on its public chain. The Ethereum public chain has high scalability and flexibility.
3. Binance Coin
Binance Coin is a cryptocurrency issued by the Binance Exchange, and its public chain is primarily used to support the Binance Exchange ecosystem and provide trading discounts.
4. What are L0, L1, and L2?
L0 refers to the underlying protocol of the blockchain.
The definition of L1 is the basic architecture of blockchains. Any independent public chain is L1, such as the commonly seen BTC, ETH, SOL, etc.
L2 is off-chain networks, systems, or technologies based on L1 used to improve scalability and transaction efficiency.
Representative projects on the ETH chain include OP, ZK projects.
L3 is the application layer, which is the user interface (UI) that consumers interact with.
5. What do private chains, side chains, and others mean besides public chains, and what is their relationship with public chains?
The so-called public chain refers to public blockchains where anyone can participate and is not controlled by any centralized organization or individual!
Private chain: A semi-decentralized system used only within organizations, fast, strong privacy, low transaction costs, and not easily attacked. Representative projects: Polygon, Matic.
Alliance chain: Semi-decentralized, with participants being pre-selected or directly identified.
Side chain: A blockchain parallel to the main chain. It helps the main chain conduct small fragmented transactions, with the advantage of being fast!
6. Famous tracks (sectors) in the cryptocurrency world
MEME track
It can be understood as a symbol that is worthless, imitates trends, is a network meme, and spreads cultural elements. Yes! It is even more 'air' than air coins, purely speculative!
AI track
SOL track
NFT track
7. What is the ecosystem in the cryptocurrency world? Famous examples of ecosystems.
The collection of various applications on the public chain constitutes an ecosystem.
Ethereum ecosystem
SOL ecosystem
8. How to analyze popular coins from several aspects to see if they have potential
Hardware:
1. Sector
2. Project prospects
3. Ecosystem closed loop
4. Circulation volume
5. Circulating market value: Market value calculation formula (Market value = Price of each virtual currency * Amount in circulation).
Software:
1. Look at the founder, first exclude those from the country.
2. Is it just a fantasy, selling dog meat under a sheep's head, punching ETH and kicking BTC?
3. If it has been falling for two or three years without ever rising, it is possible that the dealer has already run away.
9. Introduction to the primary market in the cryptocurrency world
The concept is very simple. Generally speaking, it is the market before the token goes live on exchanges, where you can lay out in advance and subscribe, of course, the price will be much lower than after going live on exchanges.
Wait for the token to go live and rise, then sell to make a profit. This is an early investment in the project, directly connecting with the project party through the community.
For example: You can only go to a physical store to buy clothes, while physical stores can go to factories for wholesale. The factory is the primary market, the physical store is the secondary market; however, you cannot go directly to the factory because your demand is too small, and they look down on your little money.
10. What is the process from the start of a primary project to its listing on an exchange?
1. Seed Round: The early stage of the project is primarily funded by the team and institutions to establish project startup funds. The seed round refers to the project party issuing a white paper before launching the project and using it to raise funds, with the purchase structure in the first round being very low.
2. Private placement round (PE Round): The project party provides early promotion to institutions, with large investment amounts and favorable prices.
Public Offering: The project is basically complete and currently undergoing testing on the testnet. At this time, the actual concepts and functions from the white paper can be presented to institutions and companies for purchase, and the price will definitely be higher than the first two rounds.
11. Professional terms in primary projects
Project party: The company or organization that issues digital currencies.
Private placement: Private placement is a financing method for cryptocurrency projects, selling the project’s virtual currency privately to specific investors to raise funds. Compared to public offerings, the number of private placement investors is smaller but usually more aligned with the project's investment standards and requirements.
Price drop: Refers to the price of virtual currency falling below the issue price.
ICO: Initial Coin Offering, similar to IPO in the stock market, where blockchain projects use their issued virtual currency to exchange for commonly used virtual currency in the market to raise funds.
12. How to choose primary projects
The simplest way is to look at the project team (team members), project financing, token supply, investment institutions, check their reputation, see what they do, where they operate, partners, and find professional project rating materials, which are important reference indicators.
Look at whether the project token can be listed on mainstream exchanges, such as Binance, OKX, etc., to roughly judge the quality of the project.
Lock-up mechanism
Tokens in the primary market have a 'lock-up mechanism.' This is set by the project party, usually involving a lock-up period of three months, six months, nine months, or a year, depending on the project, and the duration may vary.
Why lock up funds? To prevent excessive selling pressure from causing a collapse and to consider the safety of funds for early investors.
The primary market also carries risks, but the cost of trial and error is relatively small, while missing out on good projects can lead to significant losses. Diversified investment is best; it is advisable to avoid putting all your chips on one project. The principle of not putting all your eggs in one basket is well understood. If you catch a quality project, you can achieve a turnaround!
13. How to participate in primary projects
The primary market resources are relatively closed, making it difficult for ordinary retail investors to access primary channels. Unless there are institutional resources nearby for co-investing to obtain a quota or directly connecting with the project party for participation, both options have high costs. If you go to the project party with a few thousand or tens of thousands, do you think they will take you seriously?
Typically, large projects raise financing in rounds of 8 digits or more, with some going up to 10 digits, so many ordinary retail investors cannot access primary resources.
Then, it can only be through community participation, where the community connects with the project party or institutions to obtain quotas, and then appropriately open subscriptions to community members, allowing retail investors to participate with a lower threshold.
The primary market is not about chasing after low-quality tokens in centralized exchanges but rather about early-stage chips! Due to the closed nature of the primary market, many retail investors cannot access it. The secondary market does not lack the ability to buy spot or engage in contracts, ultimately leading to investors being severely affected by market conditions and their operations. The primary market effectively avoids this issue.
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