What are cryptocurrencies and how to trade safely: A beginner's guide for 2025

The Meaning of Cryptocurrency Coins You Need to Understand

Cryptocurrency (Cryptocurrency or Digital Currency) is an asset that exists solely in digital form, utilizing advanced encryption technology to secure transactions and asset management. Unlike the Thai Baht, US Dollar, or other fiat currencies that require central bank control, cryptocurrencies operate on a peer-to-peer basis, especially through a decentralized public ledger called blockchain.

This system allows users to transfer funds directly between each other without the need for banks or central institutions. Bitcoin (Bitcoin) was the first cryptocurrency and remains one of the most well-known. Currently, there are over a thousand different cryptocurrencies, each with unique features and uses.

Blockchain and Security of Cryptocurrency Coins

The security of cryptocurrency systems comes from two technologies: Blockchain and Encryption.

Blockchain is a distributed database stored across multiple machines called “nodes.” Each node maintains the same transaction records. When someone makes a transfer:

1. The transaction data is broadcast to the network.
2. Nodes verify whether the transaction is valid.
3. Once confirmed by multiple nodes, the transaction is recorded on the blockchain.
4. After that, the transaction cannot be altered or deleted.

Encryption in science is a mathematical technology used to ensure that only the owner of the cryptocurrency can use or transfer funds.

Advantages of Cryptocurrencies That Give Them Value

Decentralization and Independence

No central authority controls cryptocurrencies, giving users freedom and independence from banks.

Security and Irreversibility

Once a transaction is confirmed, it cannot be modified or reversed, helping to prevent fraud and double spending.

Transparency and Trustworthiness

Blockchain is a public ledger; anyone can verify transactions, which builds trust in the system.

Privacy

Users can conduct transactions without revealing their real identities, only requiring a public key.

Low Fees and High Speed

Cross-border transfers using cryptocurrencies have much lower fees than traditional banking systems.

Accessibility

Anyone with an internet connection can use cryptocurrencies without needing a bank account.

Different Types of Cryptocurrencies and Classifications

Currently, several main cryptocurrencies include:

• Bitcoin (Bitcoin) – The first and most valuable coin
• Ethereum (Ethereum) – Second to Bitcoin, supports smart contracts
• Ripple (Ripple) – Focused on cross-border payments
• Bitcoin Cash (Bitcoin Cash) – A variant of Bitcoin
• Dogecoin (Dogecoin) – A humorous cryptocurrency
• Litecoin (Litecoin) – Faster than Bitcoin
• Polkadot (Polkadot) – Multi-layer system
• Solana (Solana) – High speed
• Cardano (Cardano) – Focused on security and efficiency

Cryptocurrencies can be categorized into several types:

Bitcoin-type Coins: Use the same technology as Bitcoin but with improvements, such as Litecoin.

Ethereum Coins: Support smart contracts and decentralized applications.

Privacy Coins: Designed to protect privacy, such as Monero and Dash.

Stablecoins: Tied to real-world currencies, e.g., USDT (USDT).

Community Coins: Created and managed by communities, such as Dogecoin.

Using Cryptocurrencies in Daily Life

• Payments: Increasingly, companies and merchants accept cryptocurrencies as payment.
• Cross-border Transfers: Send money abroad faster and cheaper.
• Investments: Hold cryptocurrencies for long-term returns.
• Speculation: Buy and sell to profit from price volatility.
• Decentralized Applications: Drive new software and services.
• Smart Contracts: Automatically execute agreements without trust.

Risks to Know Before Investing in Cryptocurrencies

High Volatility

Cryptocurrency prices can change rapidly, hundreds or thousands of dollars within hours, due to the small market size and market sentiment.

Risks from Control

The market lacks strict regulation; large traders may manipulate prices, benefiting themselves at the expense of other investors.

Security Risks

Although systems are designed to be secure, there is still a risk of hacking and theft if storage is not properly managed.

Legal and Regulatory Risks

Laws regarding cryptocurrencies remain unclear in many countries and can change at any time, potentially affecting coin values.

Technical Risks

Cryptocurrency technology is still relatively new and may have bugs or vulnerabilities.

Misunderstanding Risks

New investors often do not understand how cryptocurrencies work, investing based on trends or others’ advice, which can lead to losses.

How to Trade Cryptocurrencies for Beginners

Method 1: Buy Actual Cryptocurrencies

You can purchase cryptocurrencies through digital exchanges, meaning you own the actual coins stored in a digital wallet, waiting for the price to rise to make a profit.

Advantages:

• Actual ownership
• No risk of leverage-related losses

Disadvantages:

• Need to securely store coins to prevent hacking
• Must wait a long time (several months or years) for returns
• During bear markets (market downturns), returns may not materialize

Method 2: Trade CFDs

CFD (Contract for Difference) is a contract to speculate on price differences without owning the actual coins.

How it works:

• Open an account with a broker
• Predict whether the price will go up or down
• Open a long (Long) or short (Short) position
• When the price moves as predicted, you profit

Advantages:

• Can profit in both rising and falling markets
• Use leverage to amplify gains (but also increase losses)
• No need to securely store coins
• Simple process

Disadvantages:

• High risk, especially when using leverage
• Can lose money quickly

⚠️ Example of CFD Trading:

Suppose Bitcoin is priced at $30,000, and you expect it to rise:

• Open a buy position of 0.1 lot with 1:10 leverage
• Margin required = 30,000 × 0.1 ÷ 10 = $300
• Price rises to $36,000
• Profit = ###36,000 - 30,000( × 0.1 = $600
• Return rate = 600 ÷ 300 = 200%

⚠️ Warning: Leverage is a double-edged sword; if the price drops instead of rising, you will lose money just as quickly.

) Tips for Choosing Cryptocurrencies to Trade

For beginners, choose coins with high trading volume, such as:

• Bitcoin ###BTC(
• Ethereum )ETH(
• Ripple )XRP(
• Litecoin )LTC(
• Bitcoin Cash )BCH(
• Dogecoin )DOGE(
• Solana )SOL(
• Polkadot )DOT(
• Avalanche )AVAX(
• Polygon )MATIC(

These coins have mature markets, less volatility, and longer trading histories, meaning there are enough buyers and sellers.

Tips for Safe Cryptocurrency Investment

) 1. Do your research before investing Read technical documents, study team and project backgrounds, analyze price trends, and follow latest news.

2. Choose reputable platforms

Use only well-known brokers or exchanges with strict security measures and clear licensing.

3. Enable two-factor authentication ###2FA(

This helps protect your account from hacking.

) 4. Learn about wallets If you own coins, decide where to store them: hardware wallets ###like Ledger( are more secure, but software wallets )like MetaMask( are more convenient.

) 5. Diversify your portfolio Don’t invest all your money in one coin; diversify across multiple coins.

6. Set stop-loss points

Predefine acceptable loss levels to prevent excessive losses.

7. Only invest what you can afford to lose

Invest only what you have and can lose, as the risks in cryptocurrencies are very high.

8. Manage emotions

Cryptocurrency markets are highly volatile; avoid making decisions based on feelings or others’ opinions. Stick to your plan.

9. Follow news and trends

Stay updated on legal changes, project news, and market trends.

10. Practice before trading live

If possible, practice trading with virtual money or small amounts first.

Summary

What is cryptocurrency? and How to trade cryptocurrencies remain key topics in 2025 for those interested in investment and digital finance. Blockchain, decentralization, and encryption technologies are creating a new, secure, and transparent financial system.

However, the risks are real and must be well understood. The key is education, planning, and careful risk management.

Whether you choose to buy coins normally or trade CFDs, the most important thing is to make informed decisions and not invest money you cannot afford to lose, as good returns often come with high risks.