Friends who just entered the crypto space might get dizzy from all kinds of jargon. Today, I’ll organize some common concepts and explain what the crypto world is, along with its various ways to play.

Let’s start with the most basic. Fiat currency is money issued by the government, such as RMB, USD, and so on, backed only by government credit. The concept of Token is a bit more complicated. Many translate it as “token,” but in the professional blockchain community, a more accurate term is “digital asset” or “proof of rights.” Simply put, a Token represents a form of ownership or rights on the blockchain, not just currency. Its magic lies in being able to record both physical and virtual assets digitally, which is impossible in traditional finance.

In the crypto world, you will often hear the terms “airdrop” and “candy.” An airdrop is a marketing method used by project teams, where they distribute free tokens to community participants, usually proportional to the tokens you hold. Candy is similar—it’s digital currency distributed for free to users during the ICO phase, serving as a hype and promotional tool.

Regarding trading, “breakout” is a very important concept—it means a certain coin’s price falls below its issuance price. Private placement is a common way for project teams to raise funds. Compared to public fundraising from the general public, private placement targets specific qualified investors. Funding rounds like private placement, angel round, and ICO represent different stages of a project’s financing.

When it comes to trading platforms, there are many options—from large exchanges to various small platforms. There are several unique features of virtual currency trading: first, 24/7 trading, no closing hours; second, no daily price limit restrictions—by 2024, Bitcoin’s single-day increase even exceeded 20%; third, the minimum purchase can be as small as 0.0001 BTC; fourth, T+0 trading, meaning you can buy and sell on the same day, unlike stocks which require waiting until the next trading day; finally, withdrawal and cashing out are unrestricted in time, so you can operate anytime.

If you don’t want to keep your coins on an exchange, you can use a wallet. A wallet is like your personal bank card—some wallets can only store one type of coin, while others support multiple, like imToken, which supports various cryptocurrencies and is more convenient to use. Depositing means transferring coins into an exchange; withdrawing means transferring out. The time it takes varies and has no fixed pattern.

Positions, long, and short are very important concepts. Simply put, those who buy contracts are called longs, expecting prices to rise; those who sell contracts are called shorts, expecting prices to fall. Good news refers to information that can stimulate the coin’s price to go up, while bad news is the opposite.

Public chains, private chains, and consortium chains are the three main types of blockchains. Public chains like Bitcoin and Ethereum allow anyone to participate; private chains have restricted write permissions and are used for enterprise applications; consortium chains are controlled by multiple organizations and are common in the financial industry.

Market trends have many descriptions. Rebound refers to a short-term rise during a decline; correction is a short-term dip during an uptrend; consolidation means the price is relatively stable. “Arbitrage” is simple—using price differences across platforms to make money. Leverage trading involves using small amounts of capital to make multiple times the investment, which is very risky—kind of like gambling.

There are two basic ways to trade: market order, which executes at the current market price and guarantees execution but with uncertain price; and limit order, where you set your own price, and the trade only executes when the market reaches that price. Trades follow the principles of “price priority and time priority.”

Market manipulators have many tricks. “Wash trading” involves opening accounts on multiple platforms to manipulate prices through quote trading; “shakeout” is pushing prices up then dumping to scare retail investors; “price support” involves big players buying to prevent a price drop. Turnover rate reflects how frequently a coin is traded within a certain period and is an important indicator of liquidity.

A bull market is a generally rising, optimistic trend; a bear market is the opposite, with prices continuously falling. A “monkey market” is quite special—like monkeys jumping around—prices fluctuate wildly, making it hard to grasp. The “main upward wave” is the biggest surge in a bull market, and catching it can lead to big profits. “Bearish decline” is a downward trend with occasional hope, “waterfall” is a sudden plunge, and “moonshot” refers to a long-term low period followed by explosive growth.

Terms like “absorbing the chips,” “controlling the market,” and “cutting the leeks” carry a teasing tone. “Absorbing the chips” means the market maker scares retail investors out through shakeouts and then takes over; “controlling the market” means the market maker holds a large amount of coins and can influence the trend at will; “cutting the leeks” is when the market maker makes retail investors lose money through various tricks. “Fake signals” involve using candlestick patterns to create false signals to induce buying or selling.

Position management is very important. “Full position” means all your funds are in coins; “averaging down” involves buying more when prices fall to lower your average cost; “adding positions” is continuing to buy if you’re optimistic about the future; “initial position” is the first purchase; “reducing position” is selling part of your holdings when you sense risk; “empty position” means holding no coins, only USDT. “Light position,” “heavy position,” and “half position” represent different investment proportions. “Clearing position” means selling everything and preparing to stay on the sidelines.

Take profit and stop loss are methods to protect yourself. Take profit is selling after reaching a certain profit level to lock in gains; stop loss is selling after a certain loss to prevent further damage. “Sideways market” means the price fluctuates within a narrow range. Rebound is a recovery during a decline; reversal is a bottoming out and turning upward; V-shaped reversal is very common.

When arbitraging, pay attention to the speed of token transfers—sometimes slow transfers mean missed opportunities. Over-the-counter (OTC) trading involves platform escrow, where you buy or sell mainstream coins or USDT directly with RMB, similar to online shopping.

“Cutting losses” (liquidation) means selling even when prices fall, out of fear of further declines. “Being trapped” refers to buying and then seeing the price drop, unwilling to sell, thus being stuck. “Breaking even” is when the price recovers enough to cover your costs or make a profit. “Missing the boat” means buying during a bad market and then watching the market rise without participating. “Roller coaster” describes coins you bought that rose happily but then fell back, like a roller coaster ride.

HODLing refers to long-term holding of a coin you believe in, buying in large quantities and holding for potential tenfold or hundredfold gains. “Going long” means buying expecting prices to rise; “going short” means selling expecting prices to fall. Mining involves using computers, phones, or other devices to run calculations and earn digital currency, but it can accelerate device wear and tear.

In terms of financing rounds, ICO is a fundraising method originating from stock IPOs, where projects issue their own virtual currency in exchange for market-traded virtual currency. Private placements target specific groups and cannot be publicly advertised. Angel rounds involve early-stage investments by individual investors in startups, with high risk but potentially high returns.

That’s a summary of what the crypto world is and its basic operational logic. The crypto space indeed offers opportunities, but it’s also full of risks. Beginners must first understand these concepts clearly before deciding how to participate.