For those new to topics like Bitcoin, Altcoin, and related information, understanding technical terms is essential. Spend some time reading the article below to equip yourself with a “terminology toolkit” for the Crypto market!
Cryptocurrency (Digital Currency)
Cryptocurrency is a type of encrypted money created to replace fiat currency.
Encrypted money circulates on the Internet, facilitating transactions and trading on Crypto exchanges.
Crypto Exchange
A crypto exchange is a platform where organizations or individuals can participate in investing, trading, buying/selling various coins via a website interface.
Bitcoin (BTC)
Bitcoin is the most famous pioneering cryptocurrency today. Its origin remains controversial, but most agree it was created to replace fiat money and bring significant economic changes, launched in 2009 by Satoshi Nakamoto.
Blockchain
Blockchain is an encrypted data system operating on a network of linked blockchains maintained collectively by all users. Therefore, recorded transaction data blocks cannot be altered or updated without consensus from these users.
Digital Wallet (Wallet)
A digital wallet is an online account allowing users to store digital assets.
Private Key
A private key is an advanced encryption method used to protect users’ crypto assets from theft or unauthorized updates.
Public Key
A public key (wallet address) is an encrypted code allowing users to receive cryptocurrencies after making a transaction.
KYC (Know Your Customer)
KYC is a identity verification method commonly used on exchanges during account registration to manage potential risks and prevent illegal activities.
Hold Coin
Hold Coin refers to long-term investment strategies in Cryptos, ranging from several months to years.
Investors choosing to hold coins should select those with high potential for long-term growth and make smart, timely selling decisions.
Trade Coin
Trade Coin refers to short-term trading (swing trading). Traders applying this method buy at low prices and sell after price increases to a certain level. This approach requires skills like using indicators, chart analysis, and some market knowledge.
Dump and Pump
“Dump” (selling off) and “Pump” (bumping up) are illegal activities in the Crypto market. These tactics are used by fraudsters to manipulate cryptocurrency prices for personal profit.
Currently, effective measures to prevent these actions are lacking.
FOMO
FOMO (Fear of Missing Out) is a psychological phenomenon common among investors, causing anxiety and dread of missing valuable opportunities. It hampers rational decision-making and can negatively impact profit outcomes.
FUD
FUD (Fear, Uncertainty, Doubt) is a psychological state of fear and skepticism. In the crypto market, it refers to propaganda tactics using false information from whales to influence investors’ perceptions, especially when they’re unsteady or inconsistent, leading to panic selling and market instability.
2FA
2FA (Two-Factor Authentication) is a security process involving two layers of verification. To enable 2FA, you need an app like Google Authenticator or Authy.
Smart Contract
Smart Contract is a protocol on a computer that digitally verifies or automates negotiations and execution of contract terms reliably without intermediaries.
ICO
ICO (Initial Coin Offering) is a legitimate fundraising method where project owners solicit Crypto investments from investors.
Tokens are issued by the project’s founders; upon success, tokens are released, sold, and exchanged for other currencies like BTC, ETH, etc.
IOE
IOE (Initial Exchange Offering) is a method of fundraising by offering tokens via Crypto exchanges, enabling investors to pick promising projects and reducing research time.
STO
STO (Security Token Offering) is a fundraising method through the issuance of Security Tokens, which are legally compliant investment contracts.
The value of Security Tokens increases over time, allowing investors to sell at profit based on market fluctuation.
Token
A Token is an encrypted electronic signature represented by codes on specialized devices, used in ICOs.
Typically, tokens are created on the basis of specific cryptocurrencies.
Utility Token
Utility Tokens provide access to services or products of projects during ICO fundraising and are not regulated by securities laws. Their value correlates with the project’s development.
Security Token
Security Tokens are investment contracts that comply with securities regulations.
Their value appreciates over time, enabling investors to profit by selling at favorable moments.
Income-Generating Methods in Crypto Markets
MLM
MLM (Multi Level Marketing) is a multi-tiered crypto investment scheme, often associated with Ponzi schemes. These are mainly fraudulent, and investors should be cautious to avoid losses.
HYIP
HYIP (High Yield Investment Programs) are high-profit investment models similar to Ponzi schemes, promising high returns by using funds from new investors to pay old ones, but usually collapse eventually.
Fundraising via ICO/IOE/STO
These fundraising methods involve issuing tokens during project launches; after issuance, tokens are tradable and exchanged for other cryptocurrencies.
Hold and Trade
Hold and Trade are the two main investment strategies in the crypto market, encompassing long-term and short-term investments depending on coin type and market trend.
Crypto Market Basic Knowledge
CoinMarketCap
CoinMarketCap is a platform providing information about coins and tokens, with projects rigorously vetted for quality, aiding investors in researching new projects.
As shown, BTC accounts for 66.5% of the total market capitalization.
Other Altcoins may have their own blockchain networks or tokens. For example, ETH has a blockchain that allows other projects to build on the Ethereum chain with its ERC-20 tokens. When these tokens migrate to a separate chain, they are called Mainnet, and these projects are often highly regarded by investors.
Top coins refer to the most traded, bought/sold/held coins with the highest market caps.
Investors can look up information on top coins for holding or trading investments.
Difference between coin and exchange
Coins are digital currencies used in transactions.
Exchanges are platforms where cryptocurrency trading occurs, and some may list their own coins for ecosystem development, trading volume increase, transaction cost reduction, and added features for investors.
Categories of Crypto Exchanges
Crypto exchanges are mainly classified into two types:
Decentralized (DEX) — Decentralizad exchange
Centralized (CEX) — Centralized Exchange
Types of Coins
Bitcoin (BTC)
BTC is known as the diamond of the cryptocurrency world, an unbacked coin. Its price movements influence other coins; when BTC volume drops, market cap tends to shift toward Altcoins or exit the market entirely.
Tether (USDT)
Tether is an early coin, available for purchase with VND or on international exchanges (preferably with good price and liquidity).
Typically, investors withdraw profits from international exchanges to domestic exchanges to cash out in fiat currency.
Crypto Market Capitalization Categories
Top Coins
Coins with a market cap over 1 billion USD are listed on CoinMarketCap.
This group usually has a long history, high liquidity, trading volume, and security. They are available on most exchanges, facilitating easier trading and holding.
Potential Coins
Coins with a market cap over 100 million USD. They tend to have unstable rankings and may be pumped to rise to Top Coin status.
Most of these coins are not yet listed on CoinMarketCap but have high growth potential due to backing from large economic entities.
Junk Coins
Small market cap (
Super Junk Coins
Extremely low market cap, not yet listed on exchanges, but some could breakthrough if listed.
Advice:
- Investors with substantial capital should consider the first two groups for lower risk, though returns are also lower.
- Others with smaller capital may consider higher-risk groups for potentially higher gains.
Coin Classification by Use Case
Coins are mainly divided into two groups:
Platform Coins
Includes coins such as Ethereum, IOTA, ONT, Qtum,…
These coins serve as transaction media and platform foundations for blockchain development, including Smart Contract, Dapp, etc. Their purpose often requires time to validate.
Currency Coins
Intended for transaction replacement of fiat money, e.g., Bitcoin, Bitcoin Cash, Ripple, Dash.
The characteristic of these coins is that they are inflation-proof with a fixed supply.
Basic Skills for Analyzing Coins
To analyze coins, consider the following criteria:
- Purpose of project creation
- Background of the advisory team (check Telegram groups of the project)
- Project launch, development, and market presence
- Project source code information
- Feasibility of the development roadmap
- Transparency, safety, and reliability of the project
Registering for Crypto Exchanges
Follow the registration guidance of each exchange and prepare email plus identification documents such as ID, Citizen ID, or passport for security verification and KYC identity confirmation.
Join the exchange’s social media groups like Facebook or Telegram to stay updated and get assistance if needed.
Before deciding to invest, research parameters like liquidity, volume, security features, etc.
Guide for Beginners to Cryptotrading
After choosing an exchange (international or Vietnamese) and successful account registration, you can start with a small capital following these steps:
- Deposit money into your Vietnamese exchange account and buy cryptocurrency (usually BTC)
- Transfer the purchased cryptocurrency to a reputable international exchange to buy your desired coin.
- If selling for VND, convert to USDT first, then withdraw to your Vietnamese account or Black Market, but be cautious with black market transactions.
Beginners’ Reminders
- Never disclose your password or account information to anyone to avoid scams, hackers, etc.
- Don’t invest all your funds in one project; diversify to reduce risks and increase chances of profit. Allocate about 50% into BTC, rest into other Altcoins.
- Secure your account with a strong, hard-to-guess password.
- Carefully analyze and research crypto projects before investing.
- Participate and interact with information-sharing groups.
- Avoid following FUD.
Conclusion
This is a comprehensive guide for enhanced Bitcoin investment and trading for beginners, packed with essential information. Hope it helps you. Wishing you success in the Crypto market!
