Blockchain, crypto, long, short, perpetuals, DEX — if these words mean nothing to you yet, start here. A plain-language primer on everything you need before your first trade.

Crypto & Trading Fundamentals: What You Need to Know Before You Start

If you've landed here, you're probably curious about crypto trading but not entirely sure where to start. Maybe you've seen people talk about going "long" or "short," heard the word "blockchain" a hundred times without a clear definition, or wondered how buying crypto actually works.

This article is your starting point. No jargon without explanation, no assumptions about what you already know. By the end, you'll have the vocabulary and the mental framework to understand everything that follows in this series.

What Is a Blockchain?

A blockchain is a digital ledger — a record of transactions — that isn't stored in one place. Instead, it's copied across thousands of computers around the world, and every participant can verify that the record is accurate.

Think of it like a shared spreadsheet that everyone can read, but no single person controls. When someone adds a new entry, the network checks that the entry is valid before it gets permanently recorded. Once it's recorded, it can't be altered or deleted.

Why does this matter? Because it removes the need for a trusted middleman. In traditional finance, your bank keeps your balance in their database. You trust them to get it right. On a blockchain, the record exists independently — it doesn't belong to any company or institution. That's what "decentralized" means in practice.

The two blockchains you'll hear about most are Bitcoin (the first, primarily used as a store of value) and Ethereum (which supports programmable applications — including trading platforms). But there are many others: Solana, Arbitrum, Base, and more. Each has trade-offs in speed, cost, and security.

What Is Cryptocurrency?

A cryptocurrency is a digital asset that lives on a blockchain. It can be sent, received, and traded without going through a bank or payment processor.

There are a few categories worth understanding:

Bitcoin (BTC) — The original cryptocurrency. Often compared to digital gold. People buy it primarily as a store of value or a long-term investment.

Ethereum (ETH) — The second largest. Ethereum is also a platform: developers build applications on top of it, including trading platforms, lending protocols, and more. ETH is used to pay for transactions on the Ethereum network.

Altcoins — Everything else. Thousands of projects with different purposes: infrastructure, gaming, privacy, artificial intelligence. Some are serious technological efforts, many are speculative.

Stablecoins (USDC, USDT) — These are designed to maintain a 1:1 value with the US dollar. They're the "cash" of the crypto world. When you trade, you're often trading against a stablecoin. If you sell ETH for USDC, you're converting a volatile asset into something stable. Stablecoins are essential — they're how you hold value in crypto without being exposed to price swings.

How Do You Buy Cryptocurrency?

The most common starting point is a centralized exchange — a company that acts as an intermediary between you and the crypto market. Think of it as the "bank" of the crypto world.

Here's how it typically works:

Create an account on a platform like Coinbase, Kraken, or Binance. This requires identity verification (KYC — Know Your Customer), similar to opening a bank account.
Deposit money from your bank account via wire transfer, card, or other payment methods.
Buy crypto — select the asset you want (BTC, ETH, USDC, etc.) and place an order.
Your crypto sits on the exchange — at this point, the exchange holds it for you, like a bank holds your savings.

This works. Millions of people use centralized exchanges every day. But there's an important nuance: when your crypto is on an exchange, you don't truly control it. The exchange does. They can freeze withdrawals, restrict your account, or — in extreme cases — go bankrupt and take your funds with them. This has happened before.

The alternative is to withdraw your crypto to a personal wallet — a piece of software (or hardware) that only you control. This is called self-custody. It's more responsibility, but it means no one else can touch your assets. We'll come back to this concept throughout the series.

What Is Trading?

At its simplest, trading means buying an asset at one price and selling it at another, hoping to profit from the difference.

If you buy 1 ETH at $2,000 and sell it at $2,500, you made $500. That's a trade. You bought something, its price went up, and you sold for a profit.

But crypto trading goes beyond just buying and holding. There are different ways to express a view on where the market is headed — and that's where the concepts of "long" and "short" come in.

Long vs Short: The Two Directions of Trading

Going Long

Going long means you buy an asset because you expect its price to go up. This is what most people think of as "normal" trading or investing.

You buy 1 ETH at $2,000
The price rises to $2,500
You sell → you made $500

Simple. You bought low, sold high.

Going Short

Going short means you're betting that the price will go down. This is less intuitive, but it's a fundamental concept in all financial markets — not just crypto.

You open a short position on ETH at $2,000
The price drops to $1,500
You close the position → you made $500

How is that possible? In practice, short selling involves borrowing an asset and selling it, then buying it back later at a lower price. In crypto, this is usually done through derivatives — financial instruments that let you bet on price movements without actually owning the underlying asset. You don't need to "borrow" ETH directly; the platform handles the mechanics.

Why Does Shorting Matter?

Because markets don't only go up. Having the ability to profit when prices fall — or to hedge an existing position — is a core part of any serious trading toolkit. Most of the strategies discussed in this series involve both long and short positions, often simultaneously.

What Are Perpetual Contracts?

When you buy ETH on a spot market, you own it. If the price goes up, you profit. If it goes down, you lose. Simple.

But what if you want to go short — or use leverage? That's where perpetual contracts come in. A "perp" is a derivative that lets you bet on the price of a cryptocurrency going up or down, without actually owning the asset. They're the primary instrument for leveraged crypto trading, and they come with their own mechanics — leverage, funding rates, liquidation — that are worth understanding before you use them.

We'll break all of that down in a dedicated article later in this series.

Centralized Exchanges vs Decentralized Exchanges

So far, we've talked about centralized exchanges — companies like Binance, Coinbase, or Kraken that hold your funds and process your trades. They work like a bank: convenient, familiar, but you're trusting them with your assets.

There's another model: decentralized exchanges (DEXs). On a DEX, you trade directly from your own wallet. No company holds your funds. No account to create. No one can freeze your assets.

This distinction matters more than it sounds — especially when you start running strategies that require positions across multiple platforms, or when you want full control over your capital. It's a topic that deserves its own article, which is exactly where we're going next.

What's Next?

You now have the foundation: blockchain, crypto, buying, trading, long and short, perpetual contracts, and the difference between centralized and decentralized exchanges.

The rest of this series builds on these concepts step by step — from understanding DEXs in depth, to perpetual contract mechanics, to a specific strategy called delta-neutral trading that uses everything discussed here.

Next in this series: What Is a DEX? Decentralized Exchanges Explained

This article is part of the ArchiNeutral Education Series. It's educational content — nothing here is financial advice.