The following 15 points will help novices understand the cryptocurrency circle in seconds
Glossary of terms you must know when entering the cryptocurrency world (a must-read for newbies) Glossary of terms in the cryptocurrency world, which can be read by those who are just getting started.
1. What is legal tender? Legal tender is legal tender, which is issued by the state and the government and is only guaranteed by the government's credit, such as RMB, USD, etc.
2. What does Token mean? Token is usually translated as "password". Token is one of the important concepts in the blockchain. It is more widely known as "token", but in the eyes of professional "chain circle" people, it is more accurately translated as "password", which represents a kind of equity proof on the blockchain, not currency. In the traditional value system, only things that can be recorded in the ledger can be exchanged for value and circulated. Therefore, bookkeeping is the basis for generating wealth. However, in the real world, most things cannot be quantified, and the things that can be accounted for are extremely limited. But "Token" can. The magic of this thing is that Token can record physical assets and virtual digital assets in a digital way.
3. What does airdrop mean? Airdrop is a very popular marketing method in the cryptocurrency space. To provide potential investors and cryptocurrency enthusiasts with information about tokens, token teams frequently distribute unknown tokens to the accounts of participants in the crypto space, with the quantity proportional to their existing tokens. To receive more airdrops, one must purchase more tokens, making this an effective marketing strategy.
4. What are candies? Various cryptocurrencies that are issued for free to users during their ICO stage, representing a promotional effort by the project issuer to generate hype.
5. What does breaking issue mean? The issue refers to the issuance price of a cryptocurrency, and breaking issue means that a certain cryptocurrency has fallen below its issuance price.
6. What does private placement mean? It is a way to invest in cryptocurrency projects and the best way for cryptocurrency project founders to raise funds for platform operations. Private placement is the opposite of public offering, meaning it raises funds privately, selling stocks (cryptocurrencies) to a small group of qualified investors without using the public market to gain funding.
7. What does ICO mean? Initial Coin Offering, derived from the stock market's Initial Public Offering (IPO) concept, is a financing activity where blockchain projects exchange their own issued virtual currency for commonly used virtual currencies in the market.
8. What trading platforms are currently available in the crypto space? Binance, okex, poloniex, Bittrex, Bitfinex, Kraken, Huobi pro, gate, etc. 1. Basic characteristics of virtual currency trading: (1) Trading time: 7*24 hours, no market closure throughout the year. (2) No price limits: Virtual currency trading has no price limits, unlike stocks which have price limits, for example: on May 28, Bitcoin rose more than 20% in a single day. (3) Trading unit: The minimum buy is 0.0001 BTC (about 0.6 yuan), with no minimum purchase limit like stocks (100 shares). (4) Anytime trading: It is T+0; stocks are T+1 trading, meaning that when you buy stocks, you can only sell them on the next trading day. However, virtual currencies are T+0 trading, allowing same-day buying and selling. (5) No time limits for withdrawals and cashing out: High liquidity for cashing out anytime.
9. Wallet concept Simply put, it is equivalent to a personal bank card. If you are not comfortable storing virtual currency on trading platforms, you can store it in your personal wallet. There are various types of wallets, some correspond to single currencies, such as wallets that can only store EOS, and others can store multiple types of currencies, such as imToken and TokenPocket (abbreviated as TP wallet), the latter being more widely used.
10. Bullish / Bearish Various types of news that are favorable for stimulating price increases are called bullish. Conversely, all types of news that lead to price declines are referred to as bearish, such as hacks on trading platforms that steal cryptocurrency or adverse government regulations.
11. Public chain / Private chain / Alliance chain A public chain allows anyone to participate in transactions and have their transactions effectively confirmed. Currently, most blockchain systems belong to public chains, such as Bitcoin and Ethereum. Public chains are suitable for applications where the public participates in maintenance, such as mutual insurance. A private chain refers to a blockchain where writing permissions are only available to a specific organization or individual. Reading permissions may be made public or restricted to any degree. Developing enterprise-level applications based on private chains helps businesses achieve on-chain operations, and the immutability of on-chain information enhances corporate public trust and boosts investor confidence. An alliance chain refers to a blockchain whose consensus mechanism is jointly controlled by several institutions. The credit mechanism among these institutions is maintained collectively. The legality of all transactions needs to be confirmed by the majority or all institutions before being written into the blockchain as valid block records. Imagine in the financial industry, where several socially credible financial institutions form a blockchain alliance, each institution operates a mining node, representing all participants to exercise consensus rights and maintain the normal growth and operation of the blockchain.
12. Rebound / Consolidation / Correction In the overall downtrend of cryptocurrency prices, occasional price recoveries are called rebounds, with the recovery magnitude being less than the decline magnitude. A correction is the opposite; it refers to a temporary drop in prices during an overall upward trend. Consolidation means the entire coin price remains relatively stable, with small fluctuations without erratic movements. 1. Arbitrage refers to transferring the same coin from a trading platform with a lower price to one with a higher price, profiting from the price difference.
13. Leverage Leverage trading, as the name suggests, is using a small amount of capital to conduct investments several times larger than the original capital, hoping to gain a multiple return relative to the volatility of the investment object or suffer losses, somewhat akin to gambling.
14. Basic principles of virtual currency transactions
(1) Market order trading: Transactions are executed at the current market price, which can ensure that investors' buy and sell orders are filled in a timely manner to some extent. However, at the same time, investors cannot predict the transaction price before placing a market order, which poses a certain degree of uncertainty. Generally speaking, the more volatile the market, the greater the risk of price uncertainty in market orders.
(2) Limit order trading: Investors can set a buy price below the market price or a sell price above the market price. When the market price fluctuates to the set price, the transaction occurs. When the set price significantly deviates from the market price, it may result in an inability to execute the order.
(3) Basic principles of transactions: 'Price priority, time priority' principle. A higher buying price is prioritized over a lower buying price for execution, while a lower selling price is prioritized over a higher selling price for execution. When the commission prices are the same, the earlier placed order is prioritized over the later ones.
15. Common professional terms explained during trading
【Turnover rate】 Refers to the frequency at which a certain coin is bought and sold in the market over a certain period, and is one of the main indicators for assessing the liquidity of a coin.
【Market order trading】 refers to buying and selling at the current price. Market orders have priority in trading; if you complete the trading quickly, you can use a market order.
【Limit order trading】 refers to buying or selling at a specified price, also known as delegated trading or order trading.
【Arbitrage】 is a trading technique used by traders. The specific method involves opening accounts at multiple exchanges simultaneously and quoting trades between various exchanges in a tug-of-war manner to manipulate the coin price.
【Wash trading】 is a tactic used by traders to manipulate coin prices by deliberately lowering prices. The specific practice involves first inflating the price and then taking profits. During this time, the major players often intentionally place large sell orders to press down prices, forcing low-price buyers to sell their digital currencies to relieve upward pressure, making it easier to inflate prices.
【Market support】 When prices are low and the coin lacks popularity, large holders purchase the coin in bulk to prevent further price declines.
【Bull market】 Refers to a market trend where prices are generally rising, with a sustained upward trend and optimistic outlook. (In the crypto space, this is mainly driven by the rise in BTC leading other major coins and altcoins.)
【Bear market】 Opposite to a bull market, it refers to a market trend of continuous decline, with market sentiment showing low enthusiasm and sustained downward movement. (What you are currently experiencing is a bear market. During this phase, the most important thing is to survive. Then comes further action, such as holding coins or bottom-fishing.)
【Monkey market】 I believe many people do not understand this; it exists in the stock market. Why is it called a monkey market? Monkeys like to jump around, corresponding to our market's ups and downs. During the monkey market phase, it is challenging to grasp the market. (Today, mainstream coins may rise, and tomorrow they may fall, or some altcoins may rise while others crash.)
【Main upward wave】 Derived from wave theory, it refers to the longest-lasting wave during a market uptrend. This is a common market trend during a bull market; catching the main upward wave can lead to significant profits. Conversely, the opposite market trend is sometimes called the 'main downward wave'.
【Bearish decline】 The overall market shows a downward trend, but the trend often sees a rise for two days followed by a drop on one day, always giving people hope but ultimately leading to disappointment.
【Waterfall】 Refers to a sudden significant drop in market prices, with several large bearish candlesticks appearing in a short time, resembling a waterfall, causing pain and heartache for viewers. Some also refer to it as 'diving'.
【Blowout】 The market is influenced by bearish factors and remains low for a long time. During this period, the market behaves very depressingly, but once bearish factors are exhausted or removed, the market will experience explosive growth.
【Wash trading】 Large capital groups, such as traders or project teams, manipulate the market with funds to create fluctuating trends, scaring out indecisive weak hands to achieve profit.
【Accumulating chips】 Typically done through wash trading to scare out weak hands, and then the major players will take over the coins sold by weak hands, increasing their chips to achieve market control (usually done at low prices).
【Market control】 Simply put, if I have a lot of money (the proportion of coins I hold in circulation is large), I can easily influence the market's rise and fall with a few moves. The goal is very simple: to make more money and trap more investors. 【Cutting leeks】 refers to a situation where some traders lose money and exit, while new traders enter, like leeks being cut repeatedly. The happiest are the traders.
【Fakeout】 Traders use candlestick charts to create upward or downward trends, prompting us to buy or sell to achieve their goal of cutting leeks.
【Bullish】 Also known as favorable news. Mainly refers to good news that is expected to stimulate price increases. In most people's eyes, bullish news always leads to price increases, but this is not necessarily the case; bullish and bearish news do not correlate perfectly with market trends but have a certain influence that can stimulate market movements.
【Bearish】 Also refers to news that negatively affects the market. However, there is also a saying in the market: 'When bearish news is exhausted, it becomes bullish.'
【Luring bulls】 The coin price has been consolidating for a long time, with a high likelihood of decline. Most bears have sold their virtual currencies, and suddenly the bears raise the price, luring bulls into thinking the price will rise, leading to widespread buying, only for the bears to suppress the price and trap the bulls. 【Luring bears】 After the bulls buy virtual currencies, the price is deliberately suppressed, causing bears to think the price will fall, leading them to sell, thus falling into the bulls' trap.
【Position】 This is straightforward; it refers to the ratio of your account funds to the funds spent on purchasing coins.
【All-in】 The account funds are entirely converted into coins. What you often refer to as 'going all-in' or 'doubling down' is all-in.
【Averaging down】 For example, if you hold BTC and then BTC drops, you buy some more BTC to lower your average cost.
【Increasing positions】 If you hold BTC and are optimistic about BTC's development, you buy more BTC during its upward trend. 【Building a position】 Also known as opening a position. It refers to buying a certain amount of a coin with your account funds.
【Reducing positions】 Expecting risks in the future market, selling part of the coins held.
【Lockup】 Those who do futures leverage should know. It's simple; if you do EOS futures leverage, you buy a long position of 10,000 and then also open a short position of 10,000. Think carefully about your position. 【Empty position】 No longer trading, just watching. In the crypto world, this can be understood as having only USDT in the account, with no other coins. 【Light position】 The funds used to buy coins account for a very small proportion of the total funds. 【Heavy position】 The funds used to buy coins account for a large proportion of the total funds. 【Half position】 The funds used to buy coins account for half of the total funds. 【Clear position】 No longer participating, selling all coins, preparing to observe with an empty position.
【Taking profit】 After achieving a certain gain, selling all virtual currencies to secure profits.
【Stop-loss】 After incurring a certain level of loss, selling the virtual currencies held to prevent further losses. 【Sideways】 The market fluctuations are small, with increases and decreases oscillating around a certain range.
【Rebound】 The coin price, during a downtrend, receives support from technical aspects or capital intervention, causing the market to shift from falling to rising.
【Reversal】 The coin price drops to the bottom, unable to fall further, and shifts from a downward to an upward trend. Commonly seen types include 'V-shaped reversal'. A rebound is the basis for a reversal, and the magnitude of the reversal far exceeds that of the rebound. 【Arbitrage】 is a simple understanding of taking advantage of price differences between platforms to earn profits. Arbitrage requires attention to the speed of coin transfer; sometimes the speed may affect your earnings.
【Over-the-counter trading】 Many platforms also call it fiat trading. The platform acts as a guarantor, allowing merchants or individuals to directly trade with RMB, buying or selling mainstream coins or USDT in their possession. The trading is similar to a certain platform (you know which one). 【Cutting losses】 is more politely referred to as 'liquidation'. Some of you often do this: selling even when the price drops, fearing it will drop even more.
【Stuck】 You bought coins, and they dropped; you couldn't bear to sell. Congratulations, this is called being stuck.
【Unwinding】 You bought coins, they dropped, and you felt sad. After a period, they rise again, and you are unwound, feeling happy.
【Missing out】 When the market is bad, you buy. When the market rises, you observe. A perfect miss is called missing out.
【Roller coaster】 When the coin you bought rises, you feel ecstatic and boast to friends, but after a few days, it drops back down. You feel like you are on a roller coaster, just a brief thrill, and then nothing more.
【HODL】 You are optimistic about the future development of this coin and wish to achieve financial freedom through tenfold, hundredfold, or thousandfold returns, so you buy a large amount of this coin and hold it.
【Going long】 Also known as 'bullish', buyers believe the coin price will rise in the future, buying coins and selling them at a high price after the price increases.
【Short selling】 Also known as 'bearish', opposite to going long. Sellers believe the coin price will fall in the future, selling coins they hold (or borrowing coins to sell on trading platforms), and then buying back at a lower price to profit.
【Mining】 The process of using computers, phones, and other devices to run computational programs to obtain digital currency. Note: Mining may shorten the lifespan of the equipment.
【ICO】 Initial Coin Offering, derived from the stock market's Initial Public Offering (IPO) concept, is a financing activity where blockchain projects exchange their own issued virtual currency for commonly used virtual currencies in the market.
【Private placement round】 Private placement refers to fundraising targeted at specific groups rather than the general public, which is what public offerings refer to, like banks selling funds; private placements target specific individuals to raise funds without public advertising.
In the current volatile market changes, blindly going solo will never bring opportunities. If you haven't benefited from this bull market, I advise you to quickly pay attention to the emperor.
God's car, eat the market's meat!!!