# Learning Cryptocurrency from Scratch: Eight Key Points Every Beginner Must Understand

Getting started in the crypto world may seem complicated, but it’s really just like learning any new field — you need to build a correct understanding first. More and more people are entering this market, but few truly understand it systematically. Today, we’ll build a complete foundational knowledge system to help you get started quickly.

Prepare Yourself Mentally for Entering the Crypto Space

The crypto world is full of opportunities but also risks. Before deciding to participate, the most important thing isn’t how to make money, but whether you can handle losing money.

Ethereum founder Vitalik Buterin gave the most practical advice: Don’t invest any money you can’t afford to lose. This should be the first lesson for beginners. Specifically, don’t borrow money, take out loans, mortgage your house, or max out your credit cards to invest, especially in high-risk contracts.

Crypto isn’t a shortcut to quick wealth; it’s more like a long-term test of mental resilience. Those who are anxious about gains and losses or chase after quick profits are most likely to suffer big losses here. Build your mental strength and use spare money to pay tuition — that’s the first step into the crypto world.

Understand the Basic Tools of Crypto: Exchanges and Stablecoins

To start trading in crypto, you need to understand two basic tools.

What is an exchange?

An exchange is a platform for trading digital currencies, similar to stock exchanges. There are large and small exchanges; top-ranked mainstream exchanges have many users and high security, providing a better trading experience. Smaller, lower-ranked exchanges can also be used but carry higher risks.

What is the stablecoin USDT?

In crypto trading, we need an “intermediary” to exchange value — that’s the stablecoin, most commonly USDT, also called Tether.

USDT was launched by Tether and is a digital token pegged to the US dollar, with 1 USDT nearly equal to 1 USD. Think of it as digital cash in the virtual world. Unlike highly volatile cryptocurrencies, USDT maintains a stable value, making it the most common trading pair on exchanges.

Here’s how the actual trading process works:

If you want to buy coins, first use RMB to buy USDT, then use USDT to exchange for your desired cryptocurrency. If you want to sell coins, do the reverse: convert your coins into USDT, then exchange USDT back to RMB. This process is called “coin-to-coin trading.”

Master Basic Crypto Trading Terms

When you enter the crypto space, you’ll hear many technical terms. Understanding these is key to reading the market correctly.

Position-related terms: Imagine you have 100,000 RMB, with 50,000 RMB used to buy cryptocurrencies and 50,000 RMB in cash. Your “position” is 50%. “Full position” means all your funds are invested in coins. “Reducing position” means selling some coins and keeping some cash. “No position” means selling everything back to cash. “Heavy position” or “overweight” means more coins than cash; “light position” means more cash than coins.

Stop profit and stop loss: “Stop profit” is selling once a certain profit level is reached to lock in gains. “Stop loss” is selling when losses reach a certain point to prevent further losses. Both are crucial for risk control.

Market trend terms: “Bull market” is when prices keep rising and market sentiment is optimistic. “Bear market” is when prices keep falling and sentiment is pessimistic. “Rebound” is a short-term rise during a downtrend. “Consolidation” is a period of relatively stable prices with small fluctuations. “Gradual decline” (阴跌) is slow downward movement; “sharp drop” (跳水) is rapid and large decline.

Trading operation terms: “Opening a position” means starting to buy coins. “Adding to position” is buying more in stages. “Long” or “going long” means betting on price increase; “short” or “going short” means betting on decline. “Being trapped” refers to buying in and then the price drops, making it hard to sell without loss. “Liquidation” or “getting out of the trap” means the price recovers, turning losses into profits. “Cutting losses” is selling at a loss. “Missing the boat” is selling before a price rise, missing profit opportunities.

Other terms include “overbought” and “oversold,” indicating market extremes likely to reverse. “Trap” and “bait” are tactics used by experienced traders to manipulate or lure others.

Understand Different Types of Trading: Spot vs. Contract

Crypto trading mainly involves two types, with very different difficulty and risk levels.

Spot trading is the most basic:

You directly buy Bitcoin, Ethereum, etc., with USDT and hold or sell them. This is coin-to-coin trading. Your profit depends solely on the coin’s price rising. If prices keep falling, you’re stuck.

Contract trading is more advanced:

Contracts are essentially futures. Unlike spot trading, you don’t own the actual coins but trade contracts based on their price movements. The advantage? Leverage allows you to amplify gains.

How does it work? Suppose you think BTC will fall. In spot trading, you’re powerless. But in contract trading, you can deposit a margin (say 1%) to short sell. This means with 1 BTC of capital, you can borrow 100 BTC — 100x leverage.

You sell the 100 BTC immediately, waiting for the price to drop. If BTC falls from $35,000 to $34,000, you buy back 100 BTC and return it to the platform. Your profit is ($35,000 - $34,000) × 100 = $100,000. With the same price drop, spot traders earn nothing, but contracts give you 100 times the return.

But contracts are also the riskiest: A crucial warning: beginners should never trade contracts! Never! Never! Never!

Contracts seem like the fastest way to get rich, but “fast” often means rapid liquidation and bankruptcy. Many newbies are attracted by the 100x profit potential and lose everything within hours. Leverage is a double-edged sword — it can magnify gains but also losses. Only after gaining sufficient experience and risk awareness should you consider trading contracts.

Recognize Mainstream Cryptocurrencies

There are thousands of cryptocurrencies. How do you evaluate their investment value?

What are mainstream coins?

The definition varies. Some say only Bitcoin and Ethereum are truly mainstream. others consider the top ten by market cap as mainstream. Some believe coins listed on top exchanges are mainstream.

Generally, high market cap coins have high market recognition, good liquidity, and lower risk. Lower-ranked coins often lack recognition, have poor liquidity, and carry higher risks.

How to check rankings?

Platforms like Nonsoh can show market cap rankings. Bitcoin is always #1, Ethereum is #2. By checking these rankings, you can quickly identify which coins are mainstream.

For beginners, it’s recommended to start with top projects like Bitcoin and Ethereum, gain market experience, then consider other coins.

Essential Risk Awareness for Crypto Beginners

Crypto differs from traditional investments in that it trades 24/7 without limits on daily price movements. Profits can be huge, but so are risks.

Crypto volatility far exceeds stocks, funds, or real estate. A negative news event can cause prices to plummet instantly. Your account could turn from profit to huge loss within minutes. For contract traders, liquidation can happen in an instant.

Crypto isn’t a “get rich quick” place; it’s a “get bankrupt overnight” high-risk market. Before participating, ask yourself: Can I afford to lose this money? Do I have enough market knowledge? Is my mental resilience strong enough?

If the answer isn’t a firm “yes,” you should refrain from participating or start by observing and learning.

Three Essential Conditions to Enter Crypto

Once you decide to participate, you need three basic conditions.

First: an Android phone.

Most crypto trading is done on mobile. Android devices are more stable and convenient; some iOS apps have certificate issues. A good device ensures you can trade anytime, anywhere.

Second: spare funds.

This is the most critical. Spare funds mean money you won’t need in the short term — even if lost, it won’t affect your life. Never use living expenses, tuition, or mortgage payments for trading; this will ruin your mindset and lead to bad decisions.

Third: a good mindset.

Crypto is highly volatile. Those prone to emotional swings or driven by greed are most likely to fail. Patience, calmness, and rationality are essential to navigate the market successfully.

Summary: The Right Mindset for Crypto Beginners

Getting started in crypto isn’t hard; anyone can open an account and trade. But true success isn’t about how fast you make money — it’s about how long you can survive. In crypto, those who stick around longer often earn more than those chasing quick riches.

Crypto isn’t only about trading coins; there are many ways to profit. Whatever path you choose, remember: never invest more than you can afford to lose, and always respect the risks.

Returns are always proportional to input. We hope every new crypto entrant can gain something in this market.