Cryptocurrency is a hot topic right now. And it will only get hotter!

If you’re like most people, you’ve probably heard of Bitcoin but don’t know much about it. In this complete guide to cryptocurrency, we will discuss what it is, what every investor needs to know, and how you can get started!

So, first question to tackle…

What is Cryptocurrency?

Cryptocurrency is a digital or virtual currency that uses cryptography to secure its transactions and to control the creation of new units. Cryptocurrency is decentralized, meaning it is not subject to government or financial institution control.

Bitcoin was the first cryptocurrency ever created back in 2009. Since then, there has been a surge in different types of cryptocurrencies. Today there are thousands of cryptocurrencies in circulation, and more are created every day.

One thing that all cryptocurrencies have in common is that they all run on a technology called Blockchain.

What’s Cryptography?

Cryptography is the practice of secure communication in the presence of third parties. It is used in cryptocurrency to ensure that transactions are secure and to prevent fraud.

Cryptography uses complex mathematical algorithms and secret ‘keys’ to  encrypt and decrypt data.

What is a Blockchain?

A Blockchain is an open, distributed ledger that records transactions across many computers using cryptography to keep transactions safe and traceable.

Let’s break this down a bit…

Blockchains are Ledgers


Just like an accounting ledger book, a blockchain will record and store transactions. Each transaction will be referenced to the previous transaction, and as with any ledger you are able to trace back and see all transactions on the ledger.

With a blockchain (or a ledger) you can have a complete historic view of what has happened since its first transaction.

Blockchains are Open

This means that they are transparent and available for anyone to see. Any person or computer program has access to the entire code and to all transactions that ever occurred on the blockchain.


Traditional financial instruments have very little transparency. They are controlled by institutions (governments, exchanges, etc) that usually give very little information about what happens on the inside.

Making blockchains open is a way to ‘democratize’ them, giving every participant equal information and access.

Blockchains are Distributed or Decentralized

Blockchains are free of government and financial institution control, which is why they are referred to as ‘decentralized’. To ensure that validation can occur, blockchains use consensus as a form of verification.

There are different consensus methods depending on the specific blockchain, but basically any device with Internet connection can become a validator on the blockchain, and perform mathematical calculations to verify transactions and add information to the blockchain.

Once a transaction is verified a significant number of times, that transaction is considered valid and is added to the blockchain.

Blockchains are Encrypted

Blockchains are backed by complex, irreversible mathematical operations that make sure that the information stored is safe and impossible to alter. This is called encryption.

Having a strong and secure algorithm to process these transactions is what makes cryptocurrency possible.

Blockchains are made of Blocks

Ok, this sounds obvious, but bear with me on this one…

Each Block on a Blockchain contains a set of transactions that have been validated and are ready to be added to the chain. If we go back to the ledger idea, we can think of a block as a single page on the ledger.

This new block also contains information about the previous block. Again, imagine if the first line of each page of our ledger contained the closing balance of the previous page.

Blockchains are Chains

This reference to the previous block is what creates the Chain. Each block on the blockchain is linked to the previous and the next blocks, and whenever a new block is added, a new chain link is attached to the previous blockchain.

Why are Blockchains Important?

Blockchain is the technology that make Cryptocurrencies possible (and also many other functions, but we’ll dive into that some other time).

Up to now we have always had to trust some centralized entity (governments, banks, payment processors, etc) to control and keep tabs on any means of transacting in the economy. Governments control currencies, banks control transactions and accounts, credit card companies control where and how you can access your money, and so on.

With cryptocurrencies all this is gone. People can transact without the intervention of governments or banks. Information and value is no longer controlled by centralized entities, but instead is available for anyone to see and interact with.

Are Blockchains safe?

To put it shortly, yes, they’ve proven to be safe and resilient to attacks.

And this is thanks to several factors:

  • Consensus mechanism: before a block is verified and added to the chain, a large proportion of the validators or peers must check and approve it. This makes it extremely hard for one (or a few) rogue players to manipulate information.
  • The chain effect: since each new block is connected to the previous one, it’s practically impossible to manipulate a block that has already been added to the chain. To do so, the fraudulent node would have to change and create consensus not only on the block being modified, but also every block added since then.
  • The complexity of the encryption: processing these blocks require a lot of computing power, which have to be properly performed by hundreds or thousands of validators to get consensus before making changes to the blockchain.

Blockchains are highly secure and resilient to attacks because of their many features. And as of today, there are no known vulnerabilities or attacks reported on the main blockchains in use today.

Blockchains are for much more than just currency

Blockchains can be used for many things other than currency, just like a ledger!

Any information or contract that needs traceability, safe storage and transparency can be stored in a blockchain, and this way benefit of all the features of this technology.

Now that we have more insight on the technology behind it, let’s ask again…

What is Cryptocurrency? (again)

Cryptocurrency is a digital form of currency, built on cryptographic principles. Each coin or token has its own blockchain (or ledger), where the goal is to keep track of who owns how many cryptocurrencies.

It’s just like money! The only difference is that it’s completely digital, and doesn’t require any central entity (like banks or governments) to control it.

And it’s made possible thanks to the Blockchain technology, which provides a secure and traceable decentralized ledger system to keep track of everything.

Why do (Crypto)currencies have value?

Let’s go back a bit and start with why currencies have value, in general…

Most of our global economy today is based on fiat currencies. Fiat currencies are issued by a government and are not backed by any commodity, but rather by the faith that individuals and governments have that others will accept that currency (source: Investopedia).

The value of fiat currency is a function of their demand and supply. The U.S. dollar is considered valuable because the world’s biggest economy uses it and it dominates the flow of payments in international trade.

What about Cryptocurrencies, why do they have value?

Cryptocurrencies get their value mainly from their scarcity.

Cryptocurrencies have a finite supply. Even though new cryptocurrencies are being created every day, there is usually a limit to their issuance. And given its openness and transparency we can know beforehand exactly how many of a particular cryptocurrency will actually be issued.

This means that in theory, the value of these currencies will keep increasing as long as demand for them keeps rising and their supply remains limited or constant.

From this perspective, cryptocurrencies are similar to other commodities that have a finite supply, such as gold.

What’s the difference?

The main difference is that cryptocurrencies are digital and don’t require any physical storage or transportation. You can think of it as electronic gold!

As you can imagine, in today’s world this is extremely convenient!

How many cryptocurrencies are there?

Literally thousands! And everyday, new crypto coins are created!

So, let’s focus on the most popular ones today…

1) Bitcoin (BTC)

Bitcoin is by far the most popular cryptocurrency to date. It was the first ever created, and the one that started this entire revolution in 2009.

It is also by far, the most valuable crypto coin right now with a market capitalization of reaching close to 1 billion USD in late 2020.

Bitcoin has started to gain wider acceptance and is closer to become an everyday currency, used for everyday transactions. For example, El Salvador, a small South American country, adopted Bitcoin as legal tender alongside the U.S. dollar in September 2021.

The country is also investing heavily in Bitcoin, and has transferred part of their national reserves from the dollar to Bitcoin in order to reduce costs and increase efficiency.

Bitcoin runs on the Bitcoin Blockchain, which is designed exclusively for Bitcoin financial transactions.

Many call Bitcoin ‘digital gold’.

2) Ethereum (ETH)

Ethereum is the second most popular crypto coin by market capitalization and is also based on a decentralized system. To many, it’s like ‘digital oil’.

Ethereum’s blockchain was created to be able to run smart contracts, which are applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference (source:

The ability to use the Ethereum platform for smart contracts and decentralized applications makes it more flexible than Bitcoin. Ethereum can be used to create a lot of different crypto coins, which is why there are thousands of new cryptocurrencies created on the Ethereum Blockchain.

Ethereum has also gained wider acceptance in circumstances where regular everyday use transactions are needed, like online casinos or betting platforms (for example Betfair).

3) Tether (USDT)

Tether is a stable coin, meaning that its value is pegged to the U.S. dollar.

This makes it a very attractive option for investors because it eliminates price volatility and allows them to use Tether as a more stable currency to store their assets in.

Tether was created with the intention of being used as a digital replacement for regular fiat currencies, like the dollar, euro, yen and so on. It uses Ethereum’s Blockchain as its underlying technology.

This is possible because Tether at the end of the day is code. And, this code in the smart contract dictates that when the US dollar moves, Tether USDT moves. This allows Crypto investors to trade out of a coin quickly.

4) BNB

BNB is the native currency of the Binance Exchange, one of the largest cryptocurrency exchanges in the world.

It was created to incentivize people to use the Binance Exchange and has been doing very well in this regard.

BNB is a deflationary currency, meaning that its total supply decreases every year. This makes it more attractive for investors, who like to see the value of their assets increase over time.

5) Cardano (ADA)

Cardano is a relatively new cryptocurrency, having been launched in late 2017.

It is unique because it was created by a team of experts with a background in both cryptography and computer science.

Cardano’s goal is to become the “third generation” of cryptocurrencies, after Bitcoin and Ethereum.

This means that it wants to improve on the shortcomings of both Bitcoin and Ethereum. For example, it’s more efficient and secure than Bitcoin and Ethereum.

6) Solana (SOL)

Solana is a new blockchain that was launched in 2019.

The main goal of Solana is to be able to process over 50,000 transactions per second on its Blockchain. This makes it the fastest cryptocurrency by far, which can make it very attractive for investors and everyday users alike!

7+) All other Coins

There are thousands of cryptocurrencies available for anyone willing to invest.

There are meme coins, game coins, stable coins and so many more.

The best way to find out which one is worth investing in is by researching the cryptocurrency market, reading news articles and following other investors that you trust.

For example, if you like a project and think that it could change the way we do things, this could be a good bet to put your money in.

Just make sure to do your research, and never invest more than you can afford to lose!

How much money is there on cryptocurrencies?

One good measure to see how much ‘money’ is in something is to look at its Market Capitalization.

For cryptocurrencies, market cap is the total value of all coins that have been mined, and it’s calculated with the total number of coins multiplied by its value.

Here’s the top 10 cryptocurrencies by market cap (screenshot taken on Feb 16th 2022 from CoinGecko).


Leave a Comment

Your email address will not be published. Required fields are marked *