What is crypto?
Cryptocurrencies are digital currencies where the “crypto” in the name comes from the fact that these currencies are secured by cryptography. They exist on a public ledger, which is known as a blockchain. These two characteristics make them extremely difficult to counterfeit.
There are many cryptocurrencies, and their values are changing all the time. The two best-known cryptos are Bitcoin and Ether. Like traditional (or fiat) currency, cryptocurrencies can be used to buy, send, exchange, invest, trade, hold, lend, and borrow. But because they’re decentralized and digital, they can do much more than traditional currencies, unlocking tremendous opportunities that simply weren’t possible before.
One of the most important functions of cryptocurrencies is fueling blockchains. A blockchain is a connected network of nodes run by computers, and in exchange for running those nodes, those computers (or, more specifically, the people who own them) get rewarded with cryptocurrency. Not to worry: those not interested in running a node can also buy cryptocurrency at an exchange.
Cryptocurrencies are decentralized, meaning they’re not controlled by any single government or central authority, and they operate outside the traditional financial system. This means nobody can freeze or take away your assets, making cryptocurrencies a good option for people to store value.
Crypto assets can also be used with decentralized apps (known as dapps) built on blockchains. There are already plenty of dapps out there unlocking new tools and revolutionizing existing ones. Think of emerging spaces like decentralized finance (DeFi) and digital collectibles (NFTs). Exciting topics for another day.
For now, just know that cryptocurrencies are the digital currencies you use to transact on blockchains.