Crypto 101: A Friendly Guide to Cryptocurrency and Blockchain

What is cryptocurrency?

Cryptocurrency is digital money secured by cryptography. It runs on a technology called blockchain, a shared ledger maintained by many computers. Most often it exists as a digital balance on a network rather than a physical coin. It operates without a central bank or single administrator, relying instead on rules enforced by code and community consensus.

The building blocks

Blockchains record transactions in blocks that are linked chronologically. Consensus mechanisms (like proof of work or proof of stake) help maintain integrity and deter bad data. You own crypto by controlling a private key, which proves you have the right to spend the corresponding public address.

Owning and moving crypto

You store crypto in a digital wallet, which can be software-based (on a phone or computer) or hardware-based (a dedicated device). Sending crypto means signing the transaction with your private key and broadcasting it to the network for validation. A successful transaction adds to the blockchain permanently.

Common terms to know

Blockchain

A shared, tamper-evident ledger of all transactions. Each block contains a set of transactions and a reference to the previous block.

Wallet and address

A wallet holds your keys; an address is a public identifier you can share to receive funds.

Keys and security

A private key is secret and gives you control over funds. Losing it can mean losing access permanently.

Token vs. coin

A coin runs natively on a blockchain; a token is built on another blockchain.

Smart contracts

Self-executing rules that run when conditions are met, enabling more complex interactions than simple payments.

Real-world uses and limits

Uses

Payments, international remittances, and programmable agreements are common use cases. Some projects aim to enable fast, low-cost transfers across borders.

Limits and risks

Prices can be highly volatile. Exchanges can be hacked, and there are scams targeting beginners. Regulatory approaches vary by country and can change quickly.

Staying safe

Security basics

Use strong, unique passwords, enable two-factor authentication, back up keys securely, and consider hardware wallets for large holdings.

Common scams

Beware phishing emails, fake websites, and impersonation scams. Never share private keys or seed phrases.

The big picture

Regulation and future trends

Many countries are exploring rules for exchanges, custody, and consumer protections. The technology continues to evolve, with potential impact on finance, governance, and data security.