Cryptocurrency, also known as crypto currency, is any form of currency that exists in digital or virtual form and uses cryptography to secure transactions. Cryptocurrencies do not have central issuance authority or regulation, and instead use a decentralized system to record transactions and issue new units.

What is Cryptocurrency?

Cryptocurrency is a digital payment system that does not rely on banks to verify transactions. It is a peer-to-peer system that allows anyone, anywhere, to send and receive payments. Instead of carrying and exchanging physical money in the real world, cryptocurrency payments only exist as digital records in online databases describing a particular transaction. When you transfer cryptocurrency funds, the transaction is recorded on the public ledger.

Cryptocurrency is stored in digital wallets.

Cryptocurrency is so named because it uses cryptography to verify transactions. This means that advanced cryptography is used to store and transfer cryptocurrency data between wallets and public ledgers. The purpose of encryption is to provide security and safety.

The first cryptocurrency was founded in 2009 and is today the most famous Bitcoin.

Much of the interest in cryptocurrencies comes from profit trading, where speculators sometimes drive prices up.

How do cryptocurrencies work?

Cryptocurrencies operate on a distributed public ledger called a blockchain, which is a record of all transactions updated and stored by the holders of the currency.

Cryptocurrency units are created through a process called mining, which uses computing power to solve the complex mathematical problem of creating coins. Users can also buy currencies from brokers and then store and spend them using cryptocurrency wallets.

If you own cryptocurrency, you don't own anything tangible. What you have is a key that allows you to move records or units of measure from one person to another without a trusted third party.

Bitcoin has been around since 2009, but applications of cryptocurrencies and blockchain technology are still showing up financially and more applications are expected in the future. Trades including bonds, stocks and other financial assets may eventually be traded using this technology.

Examples of cryptocurrencies

There are thousands of cryptocurrencies.


Founded in 2009, Bitcoin was the first cryptocurrency and is still the most popular cryptocurrency today. This currency was invented by Satoshi Nakamoto. These currencies are widely regarded as pseudonyms for individuals or groups whose exact identities are not known.


Developed in 2015, Ethereum is a blockchain platform that has its own cryptocurrency called Ether (ETH) or Ethereum. It is the second most used cryptocurrency after Bitcoin.


This currency is most similar to Bitcoin, but new innovations are developing more rapidly, including processes that allow for faster payments and more transactions.


Ripple is a distributed ledger system founded in 2012. Ripple can be used to track many types of transactions, not just cryptocurrencies. The company behind it has worked with various banks and financial institutions.

Cryptocurrencies other than Bitcoin are collectively referred to as "altcoins" to distinguish them from the originals.

How to Buy

Cryptocurrency safely.

There are usually three steps.

Step 1: Choose a platform

The first step is to decide which platform to use. Typically, you can choose between a traditional broker or a dedicated cryptocurrency exchange (Traditional Brokers). These are online brokers that offer a way to buy and sell cryptocurrencies as well as stocks, bonds and other financial assets such as ETFs. These platforms offer lower transaction costs but tend to have fewer cryptographic capabilities. There are many cryptocurrency exchanges to choose from, each offering different cryptocurrencies, wallet storage, interest-bearing account options, and more. Many exchanges charge fees based on assets.

When comparing different platforms, consider the cryptocurrencies they offer, the fees they charge, security features, storage and withdrawal options, and educational resources.

Step 2: Fund your account.

Once you have chosen the platform, the next step is to deposit funds into your account so you can start trading.

Depending on the platform, most cryptocurrency exchanges allow you to purchase cryptocurrencies with a debit or credit card using fiat currencies (i.e. government issued) such as US Dollars, British Pounds or Euros.

Buying cryptocurrency with a credit card is considered risky and not supported by some exchanges. Some credit card companies also do not accept cryptocurrency transactions.

This is because cryptocurrencies are highly volatile, so paying potentially high fees for credit card transactions on certain assets or risking debt is not recommended.

Some platforms also accept ACH and bank transfers. Accepted payment methods and the amount of time it takes to deposit or withdraw funds vary by platform. Similarly, the amount of time it takes to liquidate a deposit depends on the payment method.

Fees are an important factor to consider.

This includes potential deposit and withdrawal fees and transaction fees. Fees vary by payment method and platform and should be researched from the start.

Step 3: Placing Your Order

You can place an order through the website or mobile platform of your broker or exchange. If you want to buy cryptocurrency, simply select "Buy", select the order type, enter the amount of cryptocurrency you wish to buy and confirm your order. The same process applies to sales orders.

There are other ways to invest in cryptocurrencies. It includes payment services such as PayPal, Cash App, and Venmo that allow users to buy, sell or store cryptocurrencies. 

The best option for you will depend on your investment goals and risk appetite.

How to store cryptocurrency

Once you have purchased cryptocurrency, you need to store it safely to protect it from hacks or theft. Usually, cryptocurrency is stored in crypto wallets, which are physical devices or online software used to store the private keys to your cryptocurrencies securely.

Some exchanges offer wallet services, making it easy to store directly through their platform. However, not all exchanges or brokers automatically offer wallet services.

There are several wallet providers to choose from. The terms "hot wallet" and "cold wallet" are used.

Hot Wallet Vault: “Hot Wallet” refers to a cryptographic vault that uses online software to protect the private keys of your assets.

Cold Wallet Storage: Unlike hot wallets, cold wallets (also known as hardware wallets) rely on offline electronic devices to securely store private keys.

Cold wallets usually charge a fee, but hot wallets don't.

What can I buy with cryptocurrency?

When it was first launched, Bitcoin was conceived as a medium for everyday transactions that could buy everything from a cup of coffee to a computer and even high-value goods like real estate. This has yet to materialize and while the number of institutions accepting cryptocurrencies is growing, large-scale transactions involving cryptocurrencies are rare. However, e-commerce sites allow you to purchase a variety of products with cryptocurrency.

Here are some examples:

Technology and Ecommerce Sites:

Some companies that sell technology products, such as, AT&T and Microsoft, accept cryptocurrencies on their websites. E-commerce platform Overstock was one of the first sites to accept Bitcoin. We also accept Shopify, Rakuten, and Home Depot.


Some luxury stores accept cryptocurrency as a form of payment.

For example, online luxury retailer Bitdials offers Rolex, Patek Philippe, and other high-end watches in return for Bitcoin.


Some car dealers – from mass-market brands to high-end luxury dealers – already accept cryptocurrency as payment.


In April 2021, Swiss insurer AXA announced that it had begun accepting Bitcoin as a mode of payment for all its lines of insurance except life insurance (due to regulatory issues). Premier Shield Insurance, which sells home and auto insurance policies in the US, also accepts Bitcoin for premium payments.

If you want to spend cryptocurrency at a retailer that doesn’t accept it directly, you can use a cryptocurrency debit card, such as BitPay in the US.

Cryptocurrency fraud and cryptocurrency scams

Unfortunately, cryptocurrency crime is on the rise. Cryptocurrency scams include:

Fake websites: Bogus sites which feature fake testimonials and crypto jargon promising massive, guaranteed returns, provided you keep investing.

Virtual Ponzi schemes: Cryptocurrency criminals promote non-existent opportunities to invest in digital currencies and create the illusion of huge returns by paying off old investors with new investors’ money. One scam operation, BitClub Network, raised more than $700 million before its perpetrators were indicted in December 2019.

"Celebrity" endorsements: Scammers pose online as billionaires or well-known names who promise to multiply your investment in a virtual currency but instead steal what you send.

They may also use messaging apps or chat rooms to start rumours that a famous businessperson is backing a specific cryptocurrency. Once they have encouraged investors to buy and driven up the price, the scammers sell their stake, and the currency reduces in value.

Romance scams: The FBI warns of a trend in online dating scams, where tricksters persuade people they meet on dating apps or social media to invest or trade in virtual currencies. The FBI’s Internet Crime Complaint Centre fielded more than 1,800 reports of crypto-focused romance scams in the first seven months of 2021, with losses reaching $133 million.

Otherwise, fraudsters may pose as legitimate virtual currency traders or set up bogus exchanges to trick people into giving them money.

Another cryptocurrency scam involves fraudulent offers to sell individual retirement accounts for cryptocurrency. Then there are simple cryptocurrency hacks where criminals break into the digital wallets where people store their virtual currencies to steal them.

Are cryptocurrencies safe?

Cryptocurrencies are usually created using blockchain technology. Blockchain describes how transactions are recorded in “blocks” and timestamps.

This is a rather complex technological process, but the result is a digital ledger of cryptocurrency transactions that is difficult for hackers to crack.

Transactions also require a two-factor authentication process. For example, you may be prompted to enter your username and password to start trading. You may then be asked to enter a verification code sent by text message to your personal mobile phone.

Despite the existence of securities, this does not mean that cryptocurrencies cannot be hacked.

Several major hacks cost crypto startups dearly. Hackers hacked $534 million worth of Coincheck and $195 million worth of BitGrail, making them the two biggest cryptocurrency hacks of 2018.

Unlike currencies supported by the state, the value of virtual currency is entirely determined by supply and demand. This can lead to sharp fluctuations that will either bring significant gains to the investor or lead to significant losses. And investing in cryptocurrencies has far less regulatory protection than traditional financial instruments like stocks, bonds and mutual funds.

4 Tips for Investing Safely in Cryptocurrency

According to Consumer Reports, every investment carries risk, but some experts consider cryptocurrency to be one of the riskiest investment options. If you are considering investing in cryptocurrencies, these tips will help you make an informed choice.

Research Exchanges:

Learn about cryptocurrency exchanges before investing. We estimate that there are over 500 exchanges to choose from. Do your research, read reviews, and talk to more experienced investors before moving on.

Know how to store digital currency:

When you buy cryptocurrency, you need to store it. You can keep it on an exchange or digital wallet. There are different types of wallets, but each has its own benefits, technical requirements, and security. As with exchanges, you should explore storage options before investing.

Investment Diversification:

Diversification is the key to any good investment strategy, even when investing in cryptocurrencies.

For example, don't invest all your money in Bitcoin just because the name sounds familiar. There are thousands of options and it is best to spread your investments across multiple currencies.

Be prepared for volatility:

Cryptocurrency markets are very volatile, so be prepared for ups and downs. You can see sharp fluctuations in price. If your investment portfolio or mental health can't afford it, cryptocurrencies may not be the smartest choice for you.

Keep in mind that although Cryptocurrency is currently all the rage, it is still in its infancy and is considered highly speculative. Investing in anything new comes with challenges, so be prepared. If you plan to get involved, do your research from the start and invest conservatively.