10 basic knowledge points that newcomers to the crypto world must know.

There are more and more people paying attention to cryptocurrency trading, and many newcomers still do not know where to start. Today, I will share some basic knowledge about the crypto world with these newcomers.

1. What is cryptocurrency trading?

Trading cryptocurrencies means buying at a low price, selling at a high price, earning the difference, and thus making a profit.

2. What is an exchange?

An exchange is a platform for trading digital currencies where you can trade cryptocurrencies and engage in contract trading.

3. What risks are associated with trading cryptocurrencies?

In terms of investment in cryptocurrencies, the most prudent advice is not to invest any money that you cannot afford to lose. Once again, I remind all newcomers to act within their means, and it is advisable not to borrow money.

4. Is trading cryptocurrencies legal?

So far, there has been no law or regulation stating that trading cryptocurrencies is illegal!

Document 924 clearly states that trading virtual currencies is not illegal and does not constitute a crime.


5. What is USDT?

An exchange is a place for trading Bitcoin and other digital currencies.

Trading digital currencies requires a type of intermediary coin, also known as stablecoins or USDT. This is also our most commonly used fiat currency, USDT, known as Tether, which is a virtual currency pegged to the US dollar and is backed by foreign exchange reserves. You can simply understand it as US dollars.

6. What are mainstream digital currencies?

Mainstream coins are valuable coins, meaning those with relatively high market capitalizations. Bitcoin is the leader, and Ethereum is second.

7. What risks should one be aware of when trading digital currencies?

When buying, if the payment account provided by the merchant is involved in fraud, making a payment will trigger fraud alerts. At this point, the fraud prevention officer will call you or come to your location to verify the situation, educate you about fraud prevention, and freeze all your bank cards for about a month.

If you encounter such a situation, do not be afraid. You have not done anything wrong. The officer is concerned that you might be deceived and will not harm you.

When withdrawing funds, the most important point is that you cannot receive black money. Once you receive black money, your bank card will be frozen, and you will need to unfreeze your card in advance and return the funds related to fraud.

In this situation, do not rush to return the money. Seek professional help and try to apply for good faith income. Aim to return as little as possible or not at all.

8. Why do you receive dirty money?

Many fraudsters now use the purchase of digital currencies to launder money.

One method is when fraudsters collaborate with coin merchants. You sell coins, and the merchant directly provides your account number to the fraud group. The fraud group instructs the victim to transfer money to you, and when the victim reports it, you are considered a direct source of black money.

Another method involves legitimate coin merchants. They sell coins and receive direct black money. When you buy coins from them and transfer them to you, it becomes second-hand black money. You can refer to Ning Jie’s article (Why does my card get frozen when trading on the exchange?) for detailed logic.

9. How can you safely withdraw money?

First, use a U card. If it's for small withdrawals, you can apply for a U card, which can be used for daily living expenses.

Second, find an off-exchange merchant who can provide compensation for frozen cards without reason. The source of funds must be non-crypto e-commerce funds, only accepting payments without selling. Such transactions are fundamentally safer.

10. Do you have to pay taxes on the money earned from trading cryptocurrencies?

Virtual currency trading is not illegal, but it is also not protected by law. Profits and losses are at your own risk, so there is no concept of paying taxes.