// learn · Asset classes
Crypto, explained simply
Crypto is a new asset class with its own rules, not just "volatile stocks". Get the mental model right and the rest gets easier.
How it differs from stocks
- No company behind most of it. A share is ownership of a business with cash flows; many tokens are closer to a network's fuel or a bet on adoption. Value them differently.
- You can self-custody. "Not your keys, not your coins." You can hold assets yourself in a wallet, real freedom, and real responsibility (lose the keys, lose the coins).
- It never closes. 24/7 markets, higher volatility, thinner weekend liquidity. Moves that would take a stock a year can happen in a day.
Coins vs tokens
A coin is the native asset of its own blockchain (BTC, ETH). A token is built on top of an existing chain (most of what you see). Tokens are easy to create, which is why most new listings are risky. Always check the contract.
How to judge a token
Without earnings, the usual valuation tools do not apply. What remains is supply, demand and who controls both. These are the variables that separate a network from a lottery ticket.
| Variable | The question it answers | What should worry you |
|---|---|---|
| Fully diluted value vs market cap | How much supply is not yet circulating | FDV several times the market cap |
| Unlock schedule | When insiders and investors can sell | Large cliffs landing in the next few months |
| Allocation split | Who was given the supply at the start | Most of it to team and investors, little to users |
| Issuance vs fees burned | Whether supply grows or shrinks over time | Perpetual high issuance with no fee sink |
| Real usage: fees paid, active addresses | Whether anyone uses it for anything | Volume concentrated in speculation only |
| What the token entitles you to | Fee share, governance, or nothing | A token with no mechanism linking usage to value |
| Liquidity and exchange depth | Whether you can exit at your size | One venue, thin book, wide spread |
Market cap is price times circulating supply, so a low market cap on a token where 80% of supply unlocks later is a marketing number, not a valuation. Check the unlock schedule before the chart. Then check the contract itself, the mechanics are in our red-flags checklist.
Check a token in five minutes (practical)
Every variable above is free to look up. Here is exactly where, and what a red flag looks like on each tool:
- Supply & unlocks, on CoinGecko / CoinMarketCap. Compare circulating to fully diluted value, and check the token-unlock calendar (e.g. token.unlocks.app). Red flag: circulating under half of FDV with a big cliff in the next 60 days, that supply lands on your head.
- Holder concentration, on the explorer. Etherscan / Solscan / BscScan → the Holders tab. Red flag: the top 10 wallets hold most of the supply, a handful of sellers can crater it.
- Real usage, on DeFiLlama. Look at TVL, fees and revenue, and whether they are growing. Red flag: a big market cap with near-zero fees or TVL, price without a product.
- Liquidity & depth, on Binance or DexScreener. On a centralised pair, read the order book (buy vs sell walls) and 24h volume; for on-chain tokens, DexScreener shows pool liquidity. Red flag: one thin pool, wide spread, you can't exit at size.
- Leverage & sentiment, on Binance perpetuals. Check the funding rate. Red flag: a very high positive funding rate means longs are crowded and paying to stay in, fuel for a long squeeze down.
- Contract safety, before anything. Run the red-flags checklist: mint function, ownership renounced, honeypot check. One failure here and nothing else matters.
Starting without getting wrecked
- Use a reputable exchange to start; understand custody before self-custodying.
- Size tiny on anything new, new tokens can rug within hours.
- Learn the security basics first: our smart-contract safety guide points to the best free course.
Where to actually hold and trade: Binance for the deepest liquidity, KuCoin for smaller-cap coins listed earlier. See the full trade-offs (custody, jurisdiction, fees) on our tools page. Affiliate links, no extra cost to you.
Educational market information, not financial advice. Markets carry risk of loss, do your own research.