Today I watched Zheng Haosheng's Twitter live with a group of people, it was very interesting.
Web3 is where resources are centralized, and Twitter is where information in the cryptocurrency circle is centralized.
Well, some things they say are worth listening to, while others are not applicable. Of course, luck is the most important factor in making money in the cryptocurrency circle, but if you want to improve your winning rate, you must have information.
"Information asymmetry" determines the winning rate.
So the most direct way to improve your winning rate is to understand the operating logic of the cryptocurrency circle and make judgments from the perspective of practitioners and investors.
1. What are the primary and secondary markets?#
In the cryptocurrency world, the primary and secondary markets are two important concepts. They have similarities to the primary and secondary markets in traditional financial markets, but they also have their own characteristics.
Primary Market: This is the market where cryptocurrencies or tokens are first issued. In this market, new blockchain projects directly sell tokens to the public or specific investors through Initial Coin Offerings (ICOs), Initial Exchange Offerings (IEOs), or other forms. The transactions in the primary market are directly from the project party to the investors, and this process is usually used to raise funds to support the project's development. For example, a new blockchain project may issue tokens in the primary market to raise funds from early supporters.
Secondary Market: Once tokens are issued in the primary market, they are usually listed on cryptocurrency exchanges and traded in the secondary market. The secondary market refers to the market where already issued crypto assets are bought and sold among investors. Here, the price of tokens is influenced by supply and demand, and investors can buy or sell tokens based on market conditions. The secondary market provides liquidity for tokens, allowing investors to enter or exit their investments.
The difference is that the primary market is the initial issuance and sale of tokens, usually only happening once, while the secondary market is where the trading of already issued tokens continues, providing market depth and liquidity. The transactions in the primary market create new assets, while the transactions in the secondary market involve the transfer of existing assets.
So the secondary market is actually exchanges like Binance, and the primary market is on-chain transactions?#
The distinction between the primary and secondary markets is not exactly the same as the distinction between on-chain transactions and exchanges. It is more about the stages and nature of token issuance and trading. Here are specific explanations of these two markets:
Primary Market: This is the market where tokens are first issued, and it is not necessarily limited to on-chain transactions. Primary market activities can take place on multiple platforms, including but not limited to on-chain platforms. For example, a blockchain project may sell tokens directly to early investors on its own website through Initial Coin Offerings (ICOs), or conduct sales on exchange platforms through Initial Exchange Offerings (IEOs). These sales activities may involve on-chain transactions (such as token allocation and transfer), but the key is that they represent the first external issuance of tokens.
Secondary Market: Refers to the market where already issued tokens are bought and sold among investors. This usually happens on various cryptocurrency exchanges such as Binance, Huobi, etc. In the secondary market, ownership of tokens is transferred from one investor to another. Most of these transactions take place on the platforms of exchanges, which can be on-chain or off-chain depending on the specific technical implementation of the exchange. The secondary market provides liquidity and pricing mechanisms for tokens, allowing investors to freely buy and sell tokens based on market supply and demand.
In summary, the primary market focuses on the initial issuance and fundraising of tokens, while the secondary market is where already issued tokens are traded and provides liquidity. Exchanges like Binance mainly belong to the secondary market, as they provide a platform for investors to trade already issued tokens. The activities in the primary market may involve various channels and forms, not limited to on-chain or specific platforms.
The primary market and the secondary market differ in that the primary market is fundraising, which means the official party to the investors, while the secondary market is investors to investors, right?#
Yes, your understanding is correct.
Primary Market: Indeed, it is mainly related to fundraising and involves direct transactions between the project party or official party and the investors. In the primary market, blockchain projects sell tokens or cryptocurrencies directly to investors through various forms such as Initial Coin Offerings (ICOs), Initial Exchange Offerings (IEOs), or private placements. This stage is usually to raise funds to support the development and operation of the project. Therefore, transactions in the primary market involve the initial issuance and sale of new assets, directly transferred from the project party to the investors.
Secondary Market: Refers to the market where already issued tokens or cryptocurrencies are bought and sold among investors. These transactions usually take place on cryptocurrency exchanges such as Binance, Coinbase, etc. In the secondary market, ownership of tokens is transferred from one investor to another. Most of these transactions occur on the platforms of exchanges, which can be on-chain or off-chain, depending on the specific technical implementation of the exchange. The secondary market provides liquidity, allowing investors to buy and sell tokens based on market conditions. The price in the secondary market is determined by market supply and demand.
In summary, the primary market focuses on the initial issuance and fundraising of tokens, while the secondary market is where already issued tokens are traded and provides liquidity. Exchanges (such as Binance) mainly belong to the secondary market, as they provide a platform for investors to trade already issued tokens. The activities in the primary market may involve various channels and forms, not limited to on-chain or specific platforms.
So the secondary market is like Binance, and the primary market is on-chain transactions?#
The distinction between the primary and secondary markets is not exactly equivalent to the distinction between on-chain transactions and exchanges. The primary market can involve on-chain transactions, but it is not limited to on-chain transactions. The primary market refers to the market where tokens are first issued, and it can take place on various platforms, including on-chain platforms or exchange platforms. For example, a blockchain project may sell tokens directly to early investors on its own website through Initial Coin Offerings (ICOs), or conduct sales on exchange platforms through Initial Exchange Offerings (IEOs). These activities may involve on-chain transactions, but the key point is that they represent the first external issuance of tokens.
The secondary market, on the other hand, refers to the market where already issued tokens are traded among investors. This usually takes place on cryptocurrency exchanges such as Binance, Huobi, etc. In the secondary market, tokens are bought and sold between investors. These transactions can be on-chain or off-chain, depending on the specific technical implementation of the exchange. The secondary market provides liquidity for tokens and allows investors to enter or exit their investments based on market conditions.
In summary, the primary market focuses on the initial issuance of tokens, which can involve on-chain or off-chain transactions, while the secondary market is where already issued tokens are traded, which can also involve on-chain or off-chain transactions depending on the exchange.