Recently, many people have asked me which cryptocurrencies exist and how to choose investments. Rather than being just a trendy topic, it feels like many people have been pulled in by market trends, but they only understand these things halfway. I think it’s necessary to talk about it, because investing in something without even knowing what it is can truly be quite dangerous.

Let’s start with the basics. The essence of cryptocurrency is actually a new form of money—most notably, Bitcoin. Many people will have questions at first: isn’t currency something only governments can issue? In fact, this understanding needs to be updated. When enough people recognize the value of something, reach a consensus, and are willing to use it for transactions, then it functions as money. In the crypto community, Bitcoin is exactly such an example. Although it hasn’t yet gained full social recognition and doesn’t have legal endorsement, it has already formed its own ecosystem.

Bitcoin’s way of operating is completely different from traditional banks. Banks are centralized ledgers, and all data is stored in the bank’s database. Bitcoin is decentralized and is jointly maintained by participants across the entire network. Simply put, when you transfer, that transaction is broadcast to the whole network. It is verified and recorded by many nodes, and finally written into the blockchain. There is no intermediary, and counterparties can trade directly. That’s why Bitcoin attracts so many people.

So how does “new Bitcoin” get created? Because someone needs to maintain this ledger, the network rewards the nodes that participate in record-keeping—miners—with newly created Bitcoin to incentivize them. This process requires a massive amount of computation, so mining consumes a lot of electricity.

After talking about Bitcoin, let’s look at the main choices in the cryptocurrency world. According to the latest market-cap rankings, Bitcoin is still number one, with a circulating market cap of about $152.4 billion. As the pioneer of the cryptocurrency world, Bitcoin has the biggest base of community support, and its acceptance is also increasing. The downside is slow transaction speed—about 10 minutes—and relatively high transaction fees.

Second is Ethereum, with a market cap of about $25.1 billion. Ethereum is not just a currency; it is also a platform. The best part is smart contract technology, which allows transactions to execute automatically—opening up many possibilities. Stocks, real estate, and any other assets can be traded on Ethereum, completely removing intermediaries. Transaction speed is also much faster, and transactions can be completed in just a few seconds.

Third is Tether, with a market cap of about $19 billion. This is a stablecoin whose value is pegged to the U.S. dollar, maintaining a 1:1 ratio. Its advantage is low volatility, and many people use it to hedge against cryptocurrency price risk. On exchanges, Tether is often used as a trading pair, which makes fund flows more convenient.

Fourth is Ripple, with a market cap of about $8.3 billion. Ripple focuses on international payments. It has fast transaction speeds, low fees, and cross-border transfers can be completed in a few seconds. Some financial institutions are already using its services.

Fifth is the platform token launched by a major exchange, with a market cap of about $89 billion. This coin was originally used as an exchange fee token, and now its use cases are becoming increasingly diverse, with its ecosystem also continuously expanding.

After understanding the main types of cryptocurrencies, what should you pay attention to when investing? First, choose quality projects: see whether the technology has innovation, how strong the team is, whether the application scenarios have prospects, and the level of investor recognition, and so on. Second, mindset is very important. Whether it’s for short-term or long-term, stay rational—don’t let yourself be misled by other people’s stories or your own fantasies. There are so many projects in the crypto space; there’s no need to get fixated on one or two.

You also need to focus on long-term odds and not worry too much about short-term price ups and downs. Use historical data analysis to estimate expected returns, then stick with it. The most critical thing is to do risk management and cut losses in a timely manner. If you can’t bring yourself to sell when prices fall, you might end up experiencing a crash. Remember one principle: protect your capital and fight to survive.

In the end, what choices there are in cryptocurrencies and how to invest are, to a large extent, questions of knowledge. If you don’t agree, don’t enter with a speculative mindset. If you do agree, then analyze rationally, do your homework, and control your risks. The market is always there, and opportunities always will come—there’s no need to rush.