Crypto Investment Must-Read: Learn What Digital Currency Is from Scratch and Master the Key to Choosing Coins

Looking to get into cryptocurrency investing but don’t know where to start? Many beginners get stuck at the first step—not knowing what digital currencies are or which coins to choose. Instead of blindly following the trend, it’s better to build a solid foundation first. This article will help you understand the essence of digital currencies and how to scientifically select suitable investment targets.

Before You Start, You Need to Know What Digital Currency Is

Digital Currency is an asset form that exists in the online world, used for storing value or serving as a medium of exchange. In the investment community, when we talk about digital currency, we actually refer to cryptocurrencies—innovative currencies based on cryptography and P2P technology, generated by computer programs, issued, and circulated on the internet.

Unlike traditional electronic money (like PayPal) managed by centralized institutions, cryptocurrencies are decentralized, with no single entity controlling them. This is why cryptocurrencies like Bitcoin and Ethereum attract the attention of investors worldwide.

According to the latest data, there are over 20,000 cryptocurrencies in circulation globally, with an average daily trading volume reaching hundreds of billions of dollars, and more than 300 million users worldwide. This market is rapidly maturing.

Digital Currencies Are Divided Into Two Main Camps

Centralized Digital Currencies: Issued by institutions or countries, such as Digital Renminbi, PayPal, etc. These currencies have a central authority and controlled transactions.

Decentralized Digital Currencies: Managed entirely by code rules, including Bitcoin, Ethereum, Ripple, etc. These are the “cryptocurrencies” that investors are most enthusiastic about.

This article focuses on the second category. Based on market capitalization, cryptocurrencies can be divided into three levels:

• Large-cap Coins: Top-ranked by market cap, relatively low risk, deep liquidity, best for beginners
• Mid-cap Coins: More volatile but with stronger growth potential
• Small-cap Coins: Poor liquidity, prone to skyrocketing / surge and crashes, high risk and high reward

Overview of Mainstream Cryptocurrencies

Below are the cryptocurrencies with the highest market caps (data updated to December 2025):

These are the most liquid and actively traded coins.

How Should Beginners Choose? Master a Core Principle

Prioritize large-cap coins and stay away from small coins.

Many beginners are greedy and want to chase “ten-bagger” coins, but often end up caught in pyramid schemes. Here are two “don’ts” to follow:

Don’t touch small-cap coins, especially those ranked beyond 100. These coins are highly volatile, and may go to zero at any time, risking your principal evaporating.

Don’t trust projects without whitepapers, with anonymous teams, or hype-driven concepts. Nine out of ten are scams designed to harvest retail investors.

So, which coins are worth paying close attention to?

1. Bitcoin (BTC)—The Most Stable Entry Choice

As the “gold standard” of cryptocurrencies, Bitcoin has natural advantages:

Low barrier to understanding. The concept is simple; no need to spend time researching complex technology. Anyone can understand it as “digital gold.”

Most liquid. Largest market cap, widest recognition, supported by almost all exchanges, easy to buy and sell at any time.

Institutional recognition. Major companies like Tesla, MicroStrategy have included Bitcoin in their balance sheets, providing credit endorsement.

High security. Based on PoW consensus mechanism and decentralized node network, it has never been hacked in history and is almost impossible to tamper with.

Hedge properties. During economic turmoil and fiat devaluation, Bitcoin is often regarded as a safe-haven asset.

For new investors entering the market, Bitcoin is the best choice.

2. Ethereum (ETH)—Combining Stability and Growth

Ethereum ranks second by market cap, current price around $2,940, with a circulating market cap of $355.24B. Why is it worth investing?

Strong ecosystem infrastructure. Most DeFi projects, NFTs, blockchain games are built on Ethereum, ensuring long-term demand.

Clear technological upgrades. Transition from PoW to PoS improves scalability and significantly reduces energy consumption, making it promising long-term.

Deep liquidity. Second only to Bitcoin, easy for beginners to get started.

For investors seeking a balance of stability and growth potential, Ethereum is a good allocation.

3. Ripple (XRP)—Has Clear Use Cases but Caution Needed

XRP focuses on cross-border payments for financial institutions, with extremely low transaction costs and fast speed (3-5 seconds). Some banks have adopted it. If future collaborations expand, its price could rise.

But note: XRP is relatively centralized, and the ongoing SEC lawsuit in the US has not been fully resolved. Price volatility is high. It’s recommended to hold only a small amount and avoid heavy positions.

4. Binance Coin (BNB)—Winner in Exchange Ecosystem

BNB current price is about $846.30, with a market cap of $116.57B. Why do many favor it?

Easy to buy. Supported by the world’s largest exchange, allowing fiat-to-crypto deposits directly.

Moderate price. Compared to Bitcoin’s tens of thousands of dollars, BNB is more accessible.

Highly practical. Not just an investment, but also a “pass” within the exchange ecosystem. Using BNB to pay trading fees grants discounts, saving a lot over time. Also, participate in new coin offerings and other benefits.

Manageable risk. The exchange platform’s coin has the best liquidity and is less likely to be abandoned.

Intrinsic mechanism support. The exchange buys back and burns BNB quarterly, reducing circulating supply, which may push prices higher in the long run.

Lower volatility. During bull markets, platform coins tend to perform relatively stably, suitable for beginners.

5. Stablecoins—Essential Practice Tools for Trading

USDC (about $1.00, market cap $76.58B) and USDT are stablecoins pegged 1:1 to the US dollar. Why should beginners start with stablecoins?

Zero volatility. Price remains stable, allowing you to focus on learning trading logic rather than being scared by market fluctuations.

Practice ground. Use stablecoins to familiarize yourself with transfers, buying/selling, withdrawals, and other operations before investing real money.

Hedging tool. During bear markets or crashes, quickly convert to stablecoins to protect your principal.

Fast cross-border transactions. Compared to bank transfers, USDC/USDT enable instant cross-border settlement with low fees.

Recommended to choose regulated stablecoins (USDC is more transparent than USDT), and avoid high-yield stablecoins issued by small platforms.

Four Major Advantages of Digital Currency You Need to Know

■ Transparent rules, no over-issuance

The issuance rules of cryptocurrencies are determined by code at the genesis block, and even developers cannot change them. This eliminates issues of over-issuance and arbitrary printing common in traditional currencies. Total supply is fixed, and rules are eternal.

■ Secure and transparent transactions

Blockchain consensus mechanisms ensure each transaction is confirmed by all participants before being recorded. Fully transparent and tamper-proof, with the lowest transaction costs.

■ More flexible circulation

Digital currencies can circulate freely among users, unrestricted by geography, and can be pegged or not pegged to fiat currency. You can even buy a house in Japan with Bitcoin.

■ Low transaction costs

Decentralized ledger technology removes intermediaries, with nodes directly processing transactions, maximizing cost reduction. Especially for cross-border transfers, fees are very low and speed is fast.

But You Also Need to Beware of These Risks

Natural deflationary currency

Cryptocurrencies have a fixed supply and will not increase with economic growth. While this scarcity protects value, it may also put pressure on economic expansion.

Extreme price volatility

Without a stable value anchor, any sudden event can trigger skyrocketing / surge or crashes. Investors face risks that are difficult to estimate and control.

Storage risks

Losing your private key or password means permanently losing your assets, with no way to recover. This can be catastrophic for users.

Summary: The Correct Approach to Investing in Digital Currency

Cryptocurrencies indeed represent the future of finance—faster, cheaper, more inclusive. But they are not tools for overnight wealth.

For beginners entering the market, do this:

1. Start with large-cap coins (Bitcoin, Ethereum)
2. Practice with stablecoins to learn trading logic
3. Diversify small amounts; avoid heavy concentration in a single coin
4. Keep learning regularly about project backgrounds and market cycles
5. Set stop-loss and take-profit points to manage risks instead of greed

The market will continuously attract new investors and technological innovations. But those who do their homework, control risks, and have patience will always be the ones to profit. What about you?