Chapter 2: Cryptocurrencies

What is a Cryptocurrency?

Interesting Fact:

Did you know that there are thousands of cryptocurrencies out there and the number keeps growing?

easy

10 minutes

In this section, I’m going to tell you what is a cryptocurrency!

The world of cryptocurrencies and blockchain technology, as a whole, is full of complicated concepts and ideas. To top that off, there seem to be new concepts being introduced to the general public, every other day or so! This can, for a fact, make it difficult for newbies to enter the industry.

Even the most difficult concepts can become approachable and understandable, if you have your fundamentals straight, though! And that is exactly what I’m here to help you with - by explaining crypto topics in a fun and beginner-friendly manner! In crypto, all fundamentals start out with figuring out what is a cryptocurrency.

In this section, we’re going to talk about cryptocurrencies. I’ll tell you what they are, what’s the purposes behind them, and we’ll also talk about how they are different from traditional, global currencies.

Without further ado, let’s get to it!

What is a Cryptocurrency: For Beginners (Animated Explainer)

Video Explainer

Video Explainer: What is a Cryptocurrency?

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What is a Cryptocurrency?

So, how can the concept of cryptocurrencies be explained in a beginner-friendly way?

The simplest possible answer to that question is that cryptocurrencies are digital money that’s based on blockchain technology. For the sake of keeping this section on topic, I won’t get into the details of what blockchains are - there's a whole separate section about that in our Crypto 101 Handbook.

What is a cryptocurrency: Cryptography.

The term “crypto” is a shortened version of “cryptography”. If you’d like to learn what is cryptography, it’s honestly also a huge topic, in of its own - to put it short, though, it’s a form of solving and cracking difficult codes. So, the term “cryptocurrency” could be viewed as “digital, coded money”, in a very specific sense!

At the time of writing this cryptocurrency explanation, there are currently around 20,000 different crypto assets out there, on the market. Not all of them are successful, though - it is estimated that around 1/5th of all cryptocurrencies have failed. That’s a huge number!

Since examples are what I do best, allow me to give you one, in order to explain cryptocurrency, and to illustrate how crypto money is different from fiat money - in other words, our traditional, global currencies that we use, every single day (USD, EUR, and so on).

What is a cryptocurrency: Fiat money.

Imagine that you and your friend both decided to shop for concert tickets, online. A globally-huge pop star is coming to your city, and so, the tickets are hot - everyone’s trying to get their hands on them!

Both you and your friend keep refreshing the ticket vendor’s webpage, waiting for those tickets to become available to be purchased. As soon as they go live, both of you rush to enter your details, too - every moment counts, after all!

In just a few minutes, your friend already has their tickets in the email, while you’re still struggling to enter your credit card details on the page. Once you’ve finally managed to do so, you are faced with an error - the bank is undergoing maintenance, and credit card payments won’t be completed until that’s done, sometime tomorrow.

The end result? Your friend will go to the concert, while you’re going to have to find a different event… And wait for your credit card to start working again!

Now, then - why was your friend able to complete their purchase? Whelp, you’ve guessed it - they were paying in crypto.

Cryptocurrencies VS Traditional Money

Now, keeping that example in mind, I want to continue this “what is cryptocurrency for dummies” explanation by exploring some of the main differences between cryptocurrencies and traditional money & payment systems. This will hopefully help you get a better understanding of why crypto has become as popular as it is - well, at least part of the reason.

The key differences between crypto and fiat money lie in governance, privacy, transparency, transaction speeds, and transaction costs.

Governance

First things first - governance. This is something that is really at the core of crypto technology, and is one of the main reasons why cryptocurrencies came to be, in general! Ever since the creation of Bitcoin in 2009, cryptocurrencies have always prided themselves on being decentralized (with a few exceptions).

What is a cryptocurrency: Governance.

Decentralization essentially means that there is no single, central governing authority behind the cryptocurrency. With traditional money, you have governments and central banks watching over their currencies - for example, in the United States, the FED (or, the Federal Reserve System) is responsible for managing things such as inflation, and how much new money flows into the economy, every year.

With crypto, there’s no FED, and no other single governing party that would influence how a particular cryptocurrency will act. Instead, this is something that is decided by the market, itself - in other words, the holders of the cryptocurrency are responsible for what happens with it.

So, here’s another example. Think about the aforementioned Bitcoin, the biggest and most well-known cryptocurrency on the market. Every single aspect surrounding this crypto asset is decided by the community behind it. While the anonymous individual or a group of people (known as Satoshi Nakamoto) had created Bitcoin, after that was done, the rest was left with the community behind the asset. In other words, if you wanted to make some changes to Bitcoin, you would need to get the larger part of the community behind it!

Privacy and Transparency

This leads us to the next two points that I want to emphasize - privacy and transparency.

What is a cryptocurrency: Privacy and transparency.

With traditional currencies, both of those things are pretty limited. Sure, you can go to the shop, and buy some bread with cash - no one will really know that it’s YOU who bought that bread, since there’s no credit card statement, and the transaction happened in cash.

That being said, that cash that you paid DID come from somewhere, didn’t it? Perhaps you’ve just withdrawn it from the ATM machine on the other side of the road? Or maybe you’ve borrowed it from a friend, or a colleague?

My point here is simple - no matter where you get your money from, it’s always tracked and logged by the government. If you DO manage to receive money from somewhere that the government doesn’t see, you are obligated to inform the relevant tax authorities in your country, in the form of a tax return filing, at the end of the year, or at any other designated point in time.

A quick sidenote - if, at the time you're reading this, tax season is around the corner, make sure to check out our dedicated section on how to avoid or minimize crypto taxes - legally, of course!

Now, as you figure out what are cryptocurrencies, you’ll notice that things are a bit different with this form of payment. The more you look into it, the more intricate and complicated it will appear to be - for that reason, we’re not going to look into the various exceptions, but let’s instead talk about the broader rules of the cryptocurrency industry.

So, with crypto, all of the transactions that you perform are going to be public. If it’s something that you weren’t aware of, it can sound scary. Do not fret, though - while your transaction WILL be public, no one will know that it’s YOU who is performing them. Each transaction is encrypted, and unless you go out and tell the whole world your personal cryptocurrency wallet address, no one will know.

What is a cryptocurrency: Crypto wallet address.

This is exactly how cryptocurrencies allow you to retain your privacy, while also being transparent assets themselves, too! Since you can trade cryptocurrencies anonymously, you don’t need to worry about someone snooping around your transactions - on top of that, since all of those transactions are public, transparency is easy to prove, as well!

Now, look - I do have to mention that you WILL probably need to report your transactions, and any potential income, to the relevant tax authorities in your country or region. Of course, each situation is different, and depends on crypto regulations in your area, but that’s just something that should be kept in mind!

Transaction Speed & Cost

The last big area where cryptocurrencies are quite different from traditional currencies has to do with the speed and cost of your transactions. Once again, allow me to illustrate this with an example.

What is a cryptocurrency: Transaction speed & cost.

Imagine that you want to purchase a new pair of pants. You go online, and find an eShop that sells exactly what you’re looking for. The pants cost $30 - that’s a bargain, you say! Even the shipping is free, too!

That being said, as you make the purchase, you see that you were actually charged $35, instead of $30. Looking into it, you eventually learn that the shop is located on the other side of the world, and since that region falls into some sort of a different economic zone, there are extra charges from your bank, in order to perform that transaction.

Naturally, in reality, things are quite a bit more complicated than that, - still, though, the example illustrates my point, nonetheless!

Transactions that involve traditional currencies - or traditional payment gateways, for that matter - can get quite costly. It all depends on a variety of factors, but, once again - the point remains the same, either way!

On top of that, such transactions can also take a lot of time to be processed, as well. While we’re used to credit or debit card payments being processed almost immediately, oftentimes, the same cannot be said about wire and bank transfers, in general. If you perform a bank transfer at night, your transaction might not be processed until the next day! And this is only if you’re sending money to someone in the same region that you’re located in, too!

What is a cryptocurrency: Transaction processing time.

Understanding what are cryptocurrencies, things are very different, in both regards. When it comes to transaction costs, depending on the cryptocurrency that you might be transacting with, the fees could be as low as a fraction of a penny! Imagine sending a few thousand dollars to your family, on the other side of the world, and not even paying a cent for that transaction.

Could it get any better? Yes, it can - if that transaction was processed and completed in a matter of seconds. Once again, this is completely possible with cryptocurrency technology!

To wrap everything up, let me just say this - apart from everything I just talked about, there are multiple other benefits associated with cryptocurrencies, and the blockchain technology behind them!

cryptocurrencies seem to be all around us - we trade crypto, transact in crypto, send it to our friends and relatives, buy and sell goods and services for crypto, and can even borrow and lend it out, too!<\/p>\n<p>As we perform all of those processes, though, do you ever think about what’s going on in the background? I’ll let you in on a little secret - <strong>there’s a lot of stuff happening, with every single transaction!<\/strong> So, then - let’s figure out how cryptocurrencies ACTUALLY work!<\/p>\n<p>In this section, we’re going to dive deep into the question of how does cryptocurrency work. Specifically, we’ll explore what makes cryptocurrencies unique, what happens during a transaction, and why these questions are something you should even care about, in the first place.<\/p>\n<p><em>So, let’s get to it!<\/em><\/p>\n<h2>What Makes Cryptocurrencies Unique?<\/h2>\n<p>In order to really get a grasp on what is cryptocurrency and how does it work, you need to first understand the underlying technology that crypto is built upon - <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">blockchains. This is, evidently, something that I’ve explored thoroughly in <a href=https://www.bitdegree.org/"//crypto//learn//what-is-blockchain/">a separate section<\/strong><\/a>. If you still haven’t read it, do so - it will help you get a better understanding of what we’re talking about today!<\/p>\n<p>That being said, for the context of this section, we’ll focus on one of the key functions of blockchain technology - <strong>automated and immutable bookkeeping.<\/strong><\/p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: What makes cryptocurrencies unique?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_01.o.jpg/" alt=\"How does cryptocurrency work: What makes cryptocurrencies unique?\" width=\"1000\" height=\"673\" \/><\/strong><\/p>\n<p>You see, <strong>a blockchain is simply a huge digital database.<\/strong> You can think about it as multiple boxes, being connected by a single chronological chain. Each box holds information about the transactions that you perform, and the chain helps with keeping everything organized and, well… Chronological!<\/p>\n<p>This is the very first thing that makes cryptocurrencies unique - the fact that each cryptocurrency is based on a blockchain, and that all transactions that involve cryptocurrencies are recorded on the said blockchain, too. For a visual example, you can imagine it as a bank - every money transfer and credit card transaction that you make is recorded by your bank!<\/p>\n<p>Now, admittedly, cryptocurrencies and crypto transactions are widely considered to be an improvement over traditional banking institutions, and default money transferring methods. One of the biggest reasons why that’s the case is just that - transparent and immutable bookkeeping.<\/p>\n<p><strong>Traditional banks can run into a wide array of troubles<\/strong>, when it comes to managing the personal information of their customers. Data breaches, power outages, and good, old-fashioned human error are just a few things that can go wrong! With blockchains generally being completely transparent and <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-decentralization/">decentralized, all of these aforementioned issues are, admittedly, non-threatening.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: Traditional banking problems.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_02.o.jpg/" alt=\"How does cryptocurrency work: Traditional banking problems.\" width=\"1000\" height=\"763\" \/><\/p>\n<p><strong>Then, there’s the anonymity aspect, too.<\/strong> With your traditional banking institutions, anonymity is out of the question - you have to identify yourself, be transparent about where your money is coming from, who you’re sending your money to, and so on. So, if you have a friend named Tim, and want to send him some money, you’ll need to tell the bank WHY you’re sending your money to Tim, as well as make sure that Tim isn’t a suspicious individual who would be involved in some shady business.<\/p>\n<p>Now, sure, that’s an exaggeration, but you get the idea - with traditional banks, everything is pretty strict, in this regard. With crypto, though, it’s somewhat the opposite - <strong>the same blockchain technology behind cryptocurrencies aims to preserve your anonymity!<\/strong><\/p>\n<p>Specifically, this is done with the help of <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-wallet/">cryptocurrency wallets<\/strong><\/a>. Each wallet has a unique code associated with it - it’s called a “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-address/">public wallet address<\/strong><\/a>”. When you transact with crypto, while all of the information is stored on the blockchain and is public for everyone to see, all that anyone will see is your wallet address sending an X amount of cryptocurrency to Tim’s wallet address.<\/p>\n<p>In other words, no one will know that it’s YOU sending the crypto to TIM.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: Public wallet address.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_03.o.jpg/" alt=\"How does cryptocurrency work: Public wallet address.\" width=\"1000\" height=\"1088\" \/><\/p>\n<p>One last point that I’d like to stress, when it comes to cryptocurrencies and how they work, is the fact that <strong>there are multiple different crypto projects, as well as blockchains out there.<\/strong> Each of these crypto projects have their own, special functions, and many of them have very unique working models, too.<\/p>\n<p>That is to say - in this section, we’re focusing on the general aspects of how does crypto work, from the perspective of cryptocurrency transactions.<\/p>\n<p>That’s the general gist of things, as far as the unique features of crypto technology are concerned. As you might expect, there’s a lot more to cover, in this regard, but as I’ve mentioned earlier, it’s something for a different section, altogether. So, if you’re not familiar with any of the concepts that we’ve discussed, up to this point in the section, <strong>check out other sections on our Crypto 101 Handbook<\/strong> - it covers each and every single of those topics, in-depth!<\/p>\n<h2>What Happens During a Crypto Transaction?<\/h2>\n<p>Now that you’re familiar with the unique features of cryptocurrencies, in general, it’s time to check out how does crypto work, transaction-wise - specifically, <strong>what happens when you perform a cryptocurrency transaction. <\/strong>For consistency’s sake, let’s stick to the same example I gave earlier - you sending some crypto to Tim.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: What happens during a crypto transaction?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_04.o.jpg/" alt=\"How does cryptocurrency work: What happens during a crypto transaction?\" width=\"1000\" height=\"497\" \/><\/p>\n<p>Also, let’s say that you’ve decided to send <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin to Tim - evidently, this would work the same with most other cryptocurrencies out there, but Bitcoin is probably still the simplest example.<\/p>\n<p>So, in order to perform this transaction, you will need to have a cryptocurrency wallet, with BTC inside of it. Most wallets work the same - <strong>you enter the receiver wallet address, the amount of crypto that you’d like to send, and pass a few confirmations.<\/strong><\/p>\n<p>Now, as soon as you send that BTC, your transaction will be submitted to the network. In the case of Bitcoin, it will need to be verified, in order to be confirmed. This is the core security measure that’s employed by blockchain technology - it’s called a “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-consensus/">consensus algorithm<\/strong><\/a>”, and it helps keep the cryptocurrency network secure and fraud-resistant.<\/p>\n<p>It’s a really intimidating-sounding term, but what it boils down to is <strong>a method of how the blockchain confirms the validity of a transaction.<\/strong> Different blockchains use different methods, and with Bitcoin, the consensus algorithm is called “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-proof-of-work-pow/">Proof-of-Work”./n
Have you ever heard the term “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-miner/">cryptocurrency miner<\/strong><\/a>”? Well, this is what Proof-of-Work refers to - miners are people who employ their computers (or other special devices) to earn cryptocurrency for them! <strong>Miners earn crypto for confirming transactions happening on the blockchain<\/strong> - such as your transaction, where you send Tim your Bitcoin.<\/p>\n<p>As you might imagine, this is an entire, huge topic, in of its own! For now, though, just keep in mind what I said earlier - when you perform the transaction, it’s placed in a queue, on the blockchain, and awaits confirmation. Now, if your transaction is legitimate, it will receive all of the required confirmations, and the Bitcoin that you’ve sent will reach Tim’s wallet in no time.<\/p>\n<p>On the flip side, if you decide to “trick the system”, and try to perform some sort of a hacker-like faulty transaction, it will get denied, pretty fast - <strong>that’s the magic of consensus algorithms and blockchain security!<\/strong><\/p>\n<p>You should be aware of this entire process if you’re looking at how does investing in cryptocurrency work, as well. As you purchase crypto, or perform any other transactions, many of those processes will be happening in the background!<\/p>\n<p>All of that being said, that’s essentially how crypto transactions work! Mind you, as we’ve established earlier, each cryptocurrency is going to have this process look a bit different from the other. Especially nowadays, with so many new blockchain projects constantly springing up, all around. The premise, though, will remain the same, either way!<\/p>\n<h2>Why Should You Know How Cryptocurrencies Work?<\/h2>\n<p>So, then - now that you have a general idea of how cryptocurrencies work, it’s also worth addressing the “why” - specifically, <strong>why it’s important to know this<\/strong>, in the first place!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: Why should you know how cryptocurrencies work?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_05.o.jpg/" alt=\"How does cryptocurrency work: Why should you know how cryptocurrencies work?\" width=\"1000\" height=\"585\" \/><\/p>\n<p>Naturally, since you’re reading this, you do probably already have some reasons of your own. However, the point that I want to emphasize is that EVERYONE should learn about crypto - how it works, what happens during transactions, and so on.<\/p>\n<p>The biggest reason for why that’s the case is pretty simple, actually - <strong>with crypto becoming as popular as it is, it’s being integrated into our everyday lives! <\/strong>While the integrations are still very slow, I urge you to think about it - the simplest example would be major payment gateways, such as PayPal and Visa starting to accept and perform cryptocurrency transfers.<\/p>\n<p>Following that, if you understand how cryptocurrencies work, <strong>you will also have a much better chance of protecting yourself from potential scams and hacking attempts. <\/strong>No malicious individual or organization will be able to come in and trick you, since you will already understand the differences between a normal cryptocurrency transaction, and some shady dealing happening in the background.<\/p>\n<p>Lastly, learning about how cryptocurrencies work is also one of the very first steps that you can take when it comes to studying the crypto world, as a whole! Cryptocurrencies, and the blockchain technology behind them, are some of the core, essential elements that make up the entire industry.<\/p>\n<p>This is very true if you want to look into how does the crypto market work, or even how does investing in cryptocurrency work, as well! When you understand the technology behind crypto, and what happens during transactions, you’ll be much better-equipped to start your investment journey!<\/p>\n<p>All that you need to do in order to understand the importance of crypto tech is <strong>take a look at <a href=https://www.bitdegree.org/"//crypto//learn//what-is-defi/">DeFi, or decentralized finance.<\/strong> It’s a new-and-emerging form of finance, and one that already houses some huge investors, and incredible amounts of money. Well, no matter if it’s a cryptocurrency lending platform, a gambling game based on blockchain technology, or some sort of a wallet project, everything essentially boils down to the very fundamentals of how cryptocurrencies work!<\/p>","definition":"Did you know that cryptocurrencies and crypto transactions are considered to be an improvement over traditional banking institutions and conventional money transfer methods?","status":"published","meta_title":"How does Cryptocurrency Work? A Thorough Explanation","meta_description":"Trying to find an answer to the question \"how does cryptocurrency work?\" You'll find a thorough and beginner-friendly explanation here!","meta_keywords":"how does cryptocurrency work, how does crypto work, what is cryptocurrency and how does it work, how does cryptocurrency work for dummies, what makes a cryptocurrency valuable, how does investing in cryptocurrency work, how does the crypto market work","modified_content":"<p>In this section, I’m going to tell you how does cryptocurrency work!<\/p>\n<p>Nowadays, <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-cryptocurrency/">cryptocurrencies seem to be all around us - we trade crypto, transact in crypto, send it to our friends and relatives, buy and sell goods and services for crypto, and can even borrow and lend it out, too!<\/p>\n<p>As we perform all of those processes, though, do you ever think about what’s going on in the background? I’ll let you in on a little secret - <strong>there’s a lot of stuff happening, with every single transaction!<\/strong> So, then - let’s figure out how cryptocurrencies ACTUALLY work!<\/p>\n<p>In this section, we’re going to dive deep into the question of how does cryptocurrency work. Specifically, we’ll explore what makes cryptocurrencies unique, what happens during a transaction, and why these questions are something you should even care about, in the first place.<\/p>\n<p><em>So, let’s get to it!<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"How Does Cryptocurrency Work? (Explained with Animation)\"\n title=\"How Does Cryptocurrency Work? (Explained with Animation)\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: How Does Cryptocurrency Work?<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"How Does Cryptocurrency Work?\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"rAtJ7Lw90KA\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">How Does Cryptocurrency Work? 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(Explained with Animation)\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>What Makes Cryptocurrencies Unique?<\/h2>\n<p>In order to really get a grasp on what is cryptocurrency and how does it work, you need to first understand the underlying technology that crypto is built upon - <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">blockchains. This is, evidently, something that I’ve explored thoroughly in <a href=https://www.bitdegree.org/"//crypto//learn//what-is-blockchain/">a separate section<\/strong><\/a>. If you still haven’t read it, do so - it will help you get a better understanding of what we’re talking about today!<\/p>\n<p>That being said, for the context of this section, we’ll focus on one of the key functions of blockchain technology - <strong>automated and immutable bookkeeping.<\/strong><\/p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: What makes cryptocurrencies unique?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_01.o.jpg/" alt=\"How does cryptocurrency work: What makes cryptocurrencies unique?\" width=\"1000\" height=\"673\" \/><\/strong><\/p>\n<p>You see, <strong>a blockchain is simply a huge digital database.<\/strong> You can think about it as multiple boxes, being connected by a single chronological chain. Each box holds information about the transactions that you perform, and the chain helps with keeping everything organized and, well… Chronological!<\/p>\n<p>This is the very first thing that makes cryptocurrencies unique - the fact that each cryptocurrency is based on a blockchain, and that all transactions that involve cryptocurrencies are recorded on the said blockchain, too. For a visual example, you can imagine it as a bank - every money transfer and credit card transaction that you make is recorded by your bank!<\/p>\n<p>Now, admittedly, cryptocurrencies and crypto transactions are widely considered to be an improvement over traditional banking institutions, and default money transferring methods. One of the biggest reasons why that’s the case is just that - transparent and immutable bookkeeping.<\/p>\n<p><strong>Traditional banks can run into a wide array of troubles<\/strong>, when it comes to managing the personal information of their customers. Data breaches, power outages, and good, old-fashioned human error are just a few things that can go wrong! With blockchains generally being completely transparent and <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-decentralization/">decentralized, all of these aforementioned issues are, admittedly, non-threatening.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: Traditional banking problems.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_02.o.jpg/" alt=\"How does cryptocurrency work: Traditional banking problems.\" width=\"1000\" height=\"763\" \/><\/p>\n<p><strong>Then, there’s the anonymity aspect, too.<\/strong> With your traditional banking institutions, anonymity is out of the question - you have to identify yourself, be transparent about where your money is coming from, who you’re sending your money to, and so on. So, if you have a friend named Tim, and want to send him some money, you’ll need to tell the bank WHY you’re sending your money to Tim, as well as make sure that Tim isn’t a suspicious individual who would be involved in some shady business.<\/p>\n<p>Now, sure, that’s an exaggeration, but you get the idea - with traditional banks, everything is pretty strict, in this regard. With crypto, though, it’s somewhat the opposite - <strong>the same blockchain technology behind cryptocurrencies aims to preserve your anonymity!<\/strong><\/p>\n<p>Specifically, this is done with the help of <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-wallet/">cryptocurrency wallets<\/strong><\/a>. Each wallet has a unique code associated with it - it’s called a “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-address/">public wallet address<\/strong><\/a>”. When you transact with crypto, while all of the information is stored on the blockchain and is public for everyone to see, all that anyone will see is your wallet address sending an X amount of cryptocurrency to Tim’s wallet address.<\/p>\n<p>In other words, no one will know that it’s YOU sending the crypto to TIM.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: Public wallet address.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_03.o.jpg/" alt=\"How does cryptocurrency work: Public wallet address.\" width=\"1000\" height=\"1088\" \/><\/p>\n<p>One last point that I’d like to stress, when it comes to cryptocurrencies and how they work, is the fact that <strong>there are multiple different crypto projects, as well as blockchains out there.<\/strong> Each of these crypto projects have their own, special functions, and many of them have very unique working models, too.<\/p>\n<p>That is to say - in this section, we’re focusing on the general aspects of how does crypto work, from the perspective of cryptocurrency transactions.<\/p>\n<p>That’s the general gist of things, as far as the unique features of crypto technology are concerned. As you might expect, there’s a lot more to cover, in this regard, but as I’ve mentioned earlier, it’s something for a different section, altogether. So, if you’re not familiar with any of the concepts that we’ve discussed, up to this point in the section, <strong>check out other sections on our Crypto 101 Handbook<\/strong> - it covers each and every single of those topics, in-depth!<\/p>\n<h2>What Happens During a Crypto Transaction?<\/h2>\n<p>Now that you’re familiar with the unique features of cryptocurrencies, in general, it’s time to check out how does crypto work, transaction-wise - specifically, <strong>what happens when you perform a cryptocurrency transaction. <\/strong>For consistency’s sake, let’s stick to the same example I gave earlier - you sending some crypto to Tim.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: What happens during a crypto transaction?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_04.o.jpg/" alt=\"How does cryptocurrency work: What happens during a crypto transaction?\" width=\"1000\" height=\"497\" \/><\/p>\n<p>Also, let’s say that you’ve decided to send <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin to Tim - evidently, this would work the same with most other cryptocurrencies out there, but Bitcoin is probably still the simplest example.<\/p>\n<p>So, in order to perform this transaction, you will need to have a cryptocurrency wallet, with BTC inside of it. Most wallets work the same - <strong>you enter the receiver wallet address, the amount of crypto that you’d like to send, and pass a few confirmations.<\/strong><\/p>\n<p>Now, as soon as you send that BTC, your transaction will be submitted to the network. In the case of Bitcoin, it will need to be verified, in order to be confirmed. This is the core security measure that’s employed by blockchain technology - it’s called a “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-consensus/">consensus algorithm<\/strong><\/a>”, and it helps keep the cryptocurrency network secure and fraud-resistant.<\/p>\n<p>It’s a really intimidating-sounding term, but what it boils down to is <strong>a method of how the blockchain confirms the validity of a transaction.<\/strong> Different blockchains use different methods, and with Bitcoin, the consensus algorithm is called “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-proof-of-work-pow/">Proof-of-Work”./n
Have you ever heard the term “<a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-miner/">cryptocurrency miner<\/strong><\/a>”? Well, this is what Proof-of-Work refers to - miners are people who employ their computers (or other special devices) to earn cryptocurrency for them! <strong>Miners earn crypto for confirming transactions happening on the blockchain<\/strong> - such as your transaction, where you send Tim your Bitcoin.<\/p>\n<p>As you might imagine, this is an entire, huge topic, in of its own! For now, though, just keep in mind what I said earlier - when you perform the transaction, it’s placed in a queue, on the blockchain, and awaits confirmation. Now, if your transaction is legitimate, it will receive all of the required confirmations, and the Bitcoin that you’ve sent will reach Tim’s wallet in no time.<\/p>\n<p>On the flip side, if you decide to “trick the system”, and try to perform some sort of a hacker-like faulty transaction, it will get denied, pretty fast - <strong>that’s the magic of consensus algorithms and blockchain security!<\/strong><\/p>\n<p>You should be aware of this entire process if you’re looking at how does investing in cryptocurrency work, as well. As you purchase crypto, or perform any other transactions, many of those processes will be happening in the background!<\/p>\n<p>All of that being said, that’s essentially how crypto transactions work! Mind you, as we’ve established earlier, each cryptocurrency is going to have this process look a bit different from the other. Especially nowadays, with so many new blockchain projects constantly springing up, all around. The premise, though, will remain the same, either way!<\/p>\n<h2>Why Should You Know How Cryptocurrencies Work?<\/h2>\n<p>So, then - now that you have a general idea of how cryptocurrencies work, it’s also worth addressing the “why” - specifically, <strong>why it’s important to know this<\/strong>, in the first place!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"How does cryptocurrency work: Why should you know how cryptocurrencies work?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//how_does_cryptocurrency_work_05.o.jpg/" alt=\"How does cryptocurrency work: Why should you know how cryptocurrencies work?\" width=\"1000\" height=\"585\" \/><\/p>\n<p>Naturally, since you’re reading this, you do probably already have some reasons of your own. However, the point that I want to emphasize is that EVERYONE should learn about crypto - how it works, what happens during transactions, and so on.<\/p>\n<p>The biggest reason for why that’s the case is pretty simple, actually - <strong>with crypto becoming as popular as it is, it’s being integrated into our everyday lives! <\/strong>While the integrations are still very slow, I urge you to think about it - the simplest example would be major payment gateways, such as PayPal and Visa starting to accept and perform cryptocurrency transfers.<\/p>\n<p>Following that, if you understand how cryptocurrencies work, <strong>you will also have a much better chance of protecting yourself from potential scams and hacking attempts. <\/strong>No malicious individual or organization will be able to come in and trick you, since you will already understand the differences between a normal cryptocurrency transaction, and some shady dealing happening in the background.<\/p>\n<p>Lastly, learning about how cryptocurrencies work is also one of the very first steps that you can take when it comes to studying the crypto world, as a whole! Cryptocurrencies, and the blockchain technology behind them, are some of the core, essential elements that make up the entire industry.<\/p>\n<p>This is very true if you want to look into how does the crypto market work, or even how does investing in cryptocurrency work, as well! When you understand the technology behind crypto, and what happens during transactions, you’ll be much better-equipped to start your investment journey!<\/p>\n<p>All that you need to do in order to understand the importance of crypto tech is <strong>take a look at <a href=https://www.bitdegree.org/"//crypto//learn//what-is-defi/">DeFi, or decentralized finance.<\/strong> It’s a new-and-emerging form of finance, and one that already houses some huge investors, and incredible amounts of money. Well, no matter if it’s a cryptocurrency lending platform, a gambling game based on blockchain technology, or some sort of a wallet project, everything essentially boils down to the very fundamentals of how cryptocurrencies work!<\/p>","youtube_video":{"id":35,"channel_id":1,"sort":61,"video_title":"How Does Cryptocurrency Work? (Explained with Animation)","description":"How does cryptocurrency work?\n\nThese days, transacting with cryptocurrencies has become a pretty common practice. Whether it be trading, sending crypto to friends, or even participating in DeFi activities, oftentimes, we don\u2019t really think about what\u2019s happening in the background.\n\nIn this video, I aim to address just that! I\u2019ll tell you how does cryptocurrency work, from the perspective of what happens when you perform a cryptocurrency transaction. I\u2019ll also talk about what makes cryptocurrenies unique, and explore some reasons why all of this should matter to you, in the first place!\n\nDo you know some examples of a unique crypto working model? If so, do share them in the comments down below!\n\nVideo Time Table:\n\n0:00 Introduction to How Does Cryptocurrency Work\n0:58 What Makes Cryptocurrencies Unique?\n4:24 What Happens During a Crypto Transaction?\n6:49 Why Should You Know How Cryptocurrencies Work?\n8:39 Wrap-up: How Does Cryptocurrency Work?\n\nMore Related Videos:\n\n? What is a Cryptocurrency?\nhttps:\/\/www.youtube.com\/watch?v=eVLUrZtKhBk\n? What is Blockchain?\nhttps:\/\/www.youtube.com\/watch?v=O2-XxMo5PFs\n? Blockchain Transaction Easily Explained\nhttps:\/\/www.youtube.com\/watch?v=h1zkHIBFiS4\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#HowDoesCryptocurrencyWork #HowDoesCryptoWork #WhatisCryptocurrencyandHowDoesitWork","video_id":"rAtJ7Lw90KA","duration":549,"view_count":664,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/how-does-cryptocurrency-work-explained-with-animation.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2022-08-31T15:21:42.000000Z","created_at":"2022-08-31T23:00:02.000000Z","updated_at":"2024-01-09T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}}}" :prev-section="{"id":28,"chapter_id":1,"order":6,"featured_image_id":3059,"youtube_video_id":29,"author_id":1,"created_at":"2022-07-07T05:38:40.000000Z","updated_at":"2023-12-22T11:52:52.000000Z","slug":"types-of-blockchains","title":"Different Types of Blockchains: What to Look Out For?","content":"<p>In this section, I’m going to tell you about the different types of <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">blockchains out there!<\/p>\n<p>Imagine that you have a line of 10 very different cars. Some of them are station wagons, some are pickup trucks - some are brand new and modern, while others barely even start. Now, while all of these objects are cars, and are able to take you from point A to point B, their characteristics are very different from one another, nonetheless.<\/p>\n<p>The exact same logic can be applied to blockchains, too! There’s a huge variety of blockchains within the industry today, and all of them appear to offer their own, unique approach to solving some sort of a problem. <strong>Which blockchain projects can be trusted, though, and which of them are better to be avoided?<\/strong><\/p>\n<p>In this section, we’re going to take a look at some of the most important points to note, when analyzing different types of blockchains and blockchain-powered projects. We’ll talk about the most important features that all reliable blockchains should possess, and how you can spot potential scams, too!<\/p>\n<p><em>Without further ado, let’s get to it!<\/em><\/p>\n<h2>Public VS Private Blockchains<\/h2>\n<p>The very first thing that you should know about blockchains, when you want to analyze them, is that <strong>there are two main types of blockchains out there<\/strong> - <strong><a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-public-blockchain/">public, and <strong><a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-private-blockchain/">private ones.<\/p>\n<p>Think about it like this - imagine that you love gaming, specifically, online games that you can play with your friends. Games such as RuneScape, or World of Warcraft.<\/p>\n<p>Both of these games can be played on their main, public servers - these servers are accessible to everyone, and have some established rules and guidelines about how you interact with the digital world around you.<\/p>\n<p>However, it’s no secret that both games have private servers, as well. These servers are owned by some sort of a private individual, and are usually altered, quite a bit - better monster loot drop rates, more damage, rare items are made less rare, and so on. You get the idea.<\/p>\n<p>While the example isn’t exactly spot-on (since both versions of the games are owned by private individuals or companies), it should still give you a pretty good idea of how private and public blockchains differ!<\/p>\n<p><strong>Public blockchains are the norm<\/strong> - generally speaking, they are transparent, completely decentralized, run by public <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-node/">nodes, and do not belong to any single authority (company, individual, organization, etc.). As opposed to that, private blockchains DO belong to a single governing entity, are governed by private nodes, and are <strong>usually very use case-specific<\/strong> - meaning, they are used for a very specific purpose, and thus, aren’t always available to the public.<\/p>\n<p>All of that is to say that, in this section, we’re going to be focusing on the most common and popular type of blockchains - public ones. The absolute majority of all of the main cryptocurrency projects are built on these blockchains, and you’ll encounter them far more often than private ones.<\/p>\n<h2>Security - The Name of the Game<\/h2>\n<p>Now that we’ve established that much, we can move on to the points that you need to look at when analyzing types of blockchain projects. And, as far as these criteria go, you’ll find security to be at the very top of the list.<\/p>\n<p>Now, if you know anything about crypto, this shouldn’t come as a surprise to you, whatsoever! After all, as I always say - <strong>if the project lacks security features, it’s not even worth looking into, in the first place!<\/strong><\/p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Types of blockchains: An example with a car.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//best_types_of_blockchains_01.o.jpg/" alt=\"Types of blockchains: An example with a car.\" width=\"1000\" height=\"364\" \/><\/strong><\/p>\n<p>Let’s take a look at another example with cars. Imagine that you’re looking to buy a new, modern and beautiful car - one that has a huge array of fancy features, top-tier handling on the road, and is very comfortable to drive, in general. The car is actually very affordable, as well! There’s just one issue - there is no way to lock it, at all.<\/p>\n<p>So, while you CAN buy this car, and enjoy all of the perks that it has to offer, every single day, you’ll risk it being stolen, since all that the thieves would need to do is open the door - that’s it! This factor alone would probably make you think twice about buying a car like this!<\/p>\n<p>Blockchains are the exact same. <strong>You should always make sure that the technology behind the blockchain is modern, secure, and bulletproof, at least theoretically. <\/strong>Read up about the project on the forums, check what the core developers have to say, talk to your peers, and take a look at all of the projects that are built on this blockchain - all of this should give you a pretty good idea, as far as security is concerned!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Types of blockchains: The ways you can check if the technology behind the blockchain is modern and secure.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//best_types_of_blockchains_02.o.jpg/" alt=\"Types of blockchains: The ways you can check if the technology behind the blockchain is modern and secure.\" width=\"1000\" height=\"515\" \/><\/p>\n<h2>Flesh Out Your Goals<\/h2>\n<p>The second big thing that you really need to figure out when trying to find the best blockchains is <strong>what exactly it is that you’re interested in<\/strong>, in the first place.<\/p>\n<p><em>Sound weird? Well, allow me to explain!<\/em><\/p>\n<p>Certain blockchains are very user- and newbie-friendly. Meaning, they are very simple to navigate through, use, and invest in. Take <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin, as an example - the blockchain doesn’t have any innate functionality, and is mainly used for investment purposes.<\/p>\n<p>On the other hand, you have blockchains such as <strong>Polkadot<\/strong> - it’s a super-complex network that’s oriented at supporting other blockchain projects, and allowing different blockchain networks to “communicate” with one another. Now, that’s some high-end, developer-related subject matter!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Types of blockchains: Polkadot.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//best_types_of_blockchains_03.o.jpg/" alt=\"Types of blockchains: Polkadot.\" width=\"1000\" height=\"437\" \/><\/p>\n<p>If the latter sounds more like your cup of tea, then I highly recommend reading a <a href=https://www.bitdegree.org/"//crypto//learn//what-is-polkadot-in-crypto/">dedicated section about Polkadot<\/strong><\/a>, to get a better understanding of what this network is all about. That being said, my point still stands - once you understand WHY it is that you’re researching different blockchain platforms, you’ll be able to narrow your search, significantly.<\/p>\n<p>Speaking of which, this ties in perfectly with another element of your research, too.<\/p>\n<h2>DYOR on The Use Cases of the Blockchain<\/h2>\n<p>Once you have all of your goals set and clear, the third step is to <strong>find a blockchain that would allow you to manifest those goals into reality! <\/strong>Allow me to illustrate what I mean with an example.<\/p>\n<p>So, imagine that your significant other sent you to a grocery store to do some shopping. Now, if your goal was to buy some milk and bread, but you, for some reason, decide to go shopping in a clothing store, instead of a grocery shop, chances are that you won’t find any milk or bread there!<\/p>\n<p>The same is true with different types of blockchains, as well. So, for example, <strong>Ethereum is the main blockchain that different <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-are-decentralized-applications-dapps/">dApps are built on<\/strong>, while, as we’ve talked about earlier, <strong>Bitcoin is a “dumb” blockchain<\/strong> - it has <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-defi/">no DeFi functionality<\/strong><\/a>, and people buy Bitcoin simply because they see it as digital gold, and believe that it will rise in price, over time.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Types of blockchains: Ethereum VS Bitcoin.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//best_types_of_blockchains_04.o.jpg/" alt=\"Types of blockchains: Ethereum VS Bitcoin.\" width=\"1000\" height=\"285\" \/><\/p>\n<p>If you’re unfamiliar with <a href=https://www.bitdegree.org/"//crypto//learn//what-are-dapps-in-crypto/">dApps and <a href=https://www.bitdegree.org/"//crypto//learn//what-is-defi/">DeFi, in general, check out the sections dedicated to these topics in the BitDegree Crypto 101 Handbook! That said, though, the point here remains the same - since different blockchain networks will have different use cases, you really need to do your own research on what your blockchain of choice is best for, and then see if it fits the goals that you’ve fleshed out, earlier.<\/p>\n<h2>Does the Blockchain Have a Strong Community Behind it?<\/h2>\n<p>The fourth aspect that you need to consider when researching the best blockchain networks is <strong>whether or not the network has an avid and passionate community<\/strong>, and just how easy it is to navigate it.<\/p>\n<p>My favorite way to look at it is this: imagine that you’re an entry-level investor, and are not interested in any high-tier projects, or advanced blockchain functionality. Instead, you’re simply looking to invest in a network that has some great perspectives, and is attracting users with some unique features.<\/p>\n<p>Imagine that, in a situation like this, you encounter two blockchains - one that’s super-popular and well-established, and another that no one has even yet heard about, and that has very limited functionality.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Types of blockchains: Does the Blockchain Have a Strong Community Behind It?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//best_types_of_blockchains_05.o.jpg/" alt=\"Types of blockchains: Does the Blockchain Have a Strong Community Behind It?\" width=\"1000\" height=\"556\" \/><\/p>\n<p><strong>With the well-established blockchain<\/strong>, you are able to access multiple different projects, figure out what are the different types of tokens, and then trade them in a simple manner, since they are supported on multiple <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-exchange/">exchanges. Besides, you can get all of your questions answered since the community forums are alive and well.<\/p>\n<p><strong>With the less-known blockchain<\/strong>, the situation is different. Everything’s sort of “up in the air”, there aren’t really any big-name projects being developed on it, and if you want to trade tokens, you’d need to use some sort of a complex, advanced swapping tool that’s only available within their ecosystem.<\/p>\n<p>In a situation like this, it’s quite obvious that the well-known blockchain is the safer and easier pick! That being said, this does transition perfectly into my next point.<\/p>\n<h2>Avoiding Scams<\/h2>\n<p>So, up to this point, we’ve talked about the different aspects that you should look into when analyzing different types of blockchain protocols and networks. For step No. 5, you should also be able to look into and understand <strong>what a potentially-shady blockchain looks like<\/strong>, and learn to avoid it!<\/p>\n<p>Evidently, oftentimes, this isn’t a simple thing to do<em>. <\/em>But, there are some tell-tale signs to look out for. Many of these signs are actually the same as when analyzing cryptocurrency-powered projects, too!<\/p>\n<p><strong>For starters, you need to look into who created the blockchain network.<\/strong> Are the founders anonymous? If not, are they well-known and respected within the industry? Answers to these questions can really help you discard a big chunk of shady blockchain networks from your list!<\/p>\n<p><strong>Then, the fundamentals. <\/strong>Is the blockchain secure? Do the developers behind it apply all of the best-practices? What is the purpose behind the project - is there one, in general?<\/p>\n<p>After you figure all of that out, you’ll be able to move to some of the <strong>more-specific questions<\/strong> - project funding, roadmap, whitepaper, and so on. At the end of the day, follow your gut feeling - if something <em>*feels*<\/em> off, then it’s often better to stay safe and avoid the project.<\/p>\n<h2>Wrapping Up<\/h2>\n<p>In this section, we’ve covered some of the most important points that you need to look at when searching for and analyzing the best blockchain networks. You should now also be able to differentiate between great blockchains, as well as those that should be avoided, if you want to keep your funds safe!<\/p>","definition":"Did you know that there are at least a thousand different blockchains, which can be divided into four different categories?","status":"published","meta_title":"Different Types of Blockchains: Which One is the Best?","meta_description":"If you're having trouble deciding which blockchain, out of dozens available, you should pick, discover all the answers you need here!","meta_keywords":"types of blockchains, types of blockchain, different types of blockchain, blockchain types, types of blockchain platforms, types of blockchain protocols, types of node in blockchain, what are the different types of tokens in blockchain, different types of blockchain technology","modified_content":"<p>In this section, I’m going to tell you about the different types of <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">blockchains out there!<\/p>\n<p>Imagine that you have a line of 10 very different cars. Some of them are station wagons, some are pickup trucks - some are brand new and modern, while others barely even start. Now, while all of these objects are cars, and are able to take you from point A to point B, their characteristics are very different from one another, nonetheless.<\/p>\n<p>The exact same logic can be applied to blockchains, too! There’s a huge variety of blockchains within the industry today, and all of them appear to offer their own, unique approach to solving some sort of a problem. <strong>Which blockchain projects can be trusted, though, and which of them are better to be avoided?<\/strong><\/p>\n<p>In this section, we’re going to take a look at some of the most important points to note, when analyzing different types of blockchains and blockchain-powered projects. We’ll talk about the most important features that all reliable blockchains should possess, and how you can spot potential scams, too!<\/p>\n<p><em>Without further ado, let’s get to it!<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"Best Types of Blockchains Revealed (5 Animated Rules)\"\n title=\"Best Types of Blockchains Revealed (5 Animated Rules)\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: Different Types of Blockchains: What to Look Out For?<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"Different Types of Blockchains: What to Look Out For?\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"sCp9U3vr9RI\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">Best Types of Blockchains Revealed (5 Animated Rules)<\/p>\n <img data-srcset=\"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/best-types-of-blockchains-revealed-5-animated-rules.jpg?tr=w-420 500w,\n https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/best-types-of-blockchains-revealed-5-animated-rules.jpg?tr=w-760 1000w\"\n alt=\"Best Types of Blockchains Revealed (5 Animated Rules)\"\n title=\"Best Types of Blockchains Revealed (5 Animated Rules)\"\n class=\"p-0 lazyload\">\n <img class=\"play-button lazyload\" data-target=\"#video-modal\"\n data-src=\"https:\/\/assets.bitdegree.org\/crypto\/assets\/video-button.png?tr=w-85\"\n alt=\"Best Types of Blockchains Revealed (5 Animated Rules)\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>Public VS Private Blockchains<\/h2>\n<p>The very first thing that you should know about blockchains, when you want to analyze them, is that <strong>there are two main types of blockchains out there<\/strong> - <strong><a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-public-blockchain/">public, and <strong><a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-private-blockchain/">private ones.<\/p>\n<p>Think about it like this - imagine that you love gaming, specifically, online games that you can play with your friends. Games such as RuneScape, or World of Warcraft.<\/p>\n<p>Both of these games can be played on their main, public servers - these servers are accessible to everyone, and have some established rules and guidelines about how you interact with the digital world around you.<\/p>\n<p>However, it’s no secret that both games have private servers, as well. These servers are owned by some sort of a private individual, and are usually altered, quite a bit - better monster loot drop rates, more damage, rare items are made less rare, and so on. You get the idea.<\/p>\n<p>While the example isn’t exactly spot-on (since both versions of the games are owned by private individuals or companies), it should still give you a pretty good idea of how private and public blockchains differ!<\/p>\n<p><strong>Public blockchains are the norm<\/strong> - generally speaking, they are transparent, completely decentralized, run by public <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-node/">nodes, and do not belong to any single authority (company, individual, organization, etc.). As opposed to that, private blockchains DO belong to a single governing entity, are governed by private nodes, and are <strong>usually very use case-specific<\/strong> - meaning, they are used for a very specific purpose, and thus, aren’t always available to the public.<\/p>\n<p>All of that is to say that, in this section, we’re going to be focusing on the most common and popular type of blockchains - public ones. The absolute majority of all of the main cryptocurrency projects are built on these blockchains, and you’ll encounter them far more often than private ones.<\/p>\n<h2>Security - The Name of the Game<\/h2>\n<p>Now that we’ve established that much, we can move on to the points that you need to look at when analyzing types of blockchain projects. And, as far as these criteria go, you’ll find security to be at the very top of the list.<\/p>\n<p>Now, if you know anything about crypto, this shouldn’t come as a surprise to you, whatsoever! After all, as I always say - <strong>if the project lacks security features, it’s not even worth looking into, in the first place!<\/strong><\/p>\n<p><strong><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Types of blockchains: An example with a car.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//best_types_of_blockchains_01.o.jpg/" alt=\"Types of blockchains: An example with a car.\" width=\"1000\" height=\"364\" \/><\/strong><\/p>\n<p>Let’s take a look at another example with cars. Imagine that you’re looking to buy a new, modern and beautiful car - one that has a huge array of fancy features, top-tier handling on the road, and is very comfortable to drive, in general. The car is actually very affordable, as well! There’s just one issue - there is no way to lock it, at all.<\/p>\n<p>So, while you CAN buy this car, and enjoy all of the perks that it has to offer, every single day, you’ll risk it being stolen, since all that the thieves would need to do is open the door - that’s it! This factor alone would probably make you think twice about buying a car like this!<\/p>\n<p>Blockchains are the exact same. <strong>You should always make sure that the technology behind the blockchain is modern, secure, and bulletproof, at least theoretically. <\/strong>Read up about the project on the forums, check what the core developers have to say, talk to your peers, and take a look at all of the projects that are built on this blockchain - all of this should give you a pretty good idea, as far as security is concerned!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Types of blockchains: The ways you can check if the technology behind the blockchain is modern and secure.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//best_types_of_blockchains_02.o.jpg/" alt=\"Types of blockchains: The ways you can check if the technology behind the blockchain is modern and secure.\" width=\"1000\" height=\"515\" \/><\/p>\n<h2>Flesh Out Your Goals<\/h2>\n<p>The second big thing that you really need to figure out when trying to find the best blockchains is <strong>what exactly it is that you’re interested in<\/strong>, in the first place.<\/p>\n<p><em>Sound weird? Well, allow me to explain!<\/em><\/p>\n<p>Certain blockchains are very user- and newbie-friendly. Meaning, they are very simple to navigate through, use, and invest in. Take <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin, as an example - the blockchain doesn’t have any innate functionality, and is mainly used for investment purposes.<\/p>\n<p>On the other hand, you have blockchains such as <strong>Polkadot<\/strong> - it’s a super-complex network that’s oriented at supporting other blockchain projects, and allowing different blockchain networks to “communicate” with one another. Now, that’s some high-end, developer-related subject matter!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Types of blockchains: Polkadot.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//best_types_of_blockchains_03.o.jpg/" alt=\"Types of blockchains: Polkadot.\" width=\"1000\" height=\"437\" \/><\/p>\n<p>If the latter sounds more like your cup of tea, then I highly recommend reading a <a href=https://www.bitdegree.org/"//crypto//learn//what-is-polkadot-in-crypto/">dedicated section about Polkadot<\/strong><\/a>, to get a better understanding of what this network is all about. That being said, my point still stands - once you understand WHY it is that you’re researching different blockchain platforms, you’ll be able to narrow your search, significantly.<\/p>\n<p>Speaking of which, this ties in perfectly with another element of your research, too.<\/p>\n<h2>DYOR on The Use Cases of the Blockchain<\/h2>\n<p>Once you have all of your goals set and clear, the third step is to <strong>find a blockchain that would allow you to manifest those goals into reality! <\/strong>Allow me to illustrate what I mean with an example.<\/p>\n<p>So, imagine that your significant other sent you to a grocery store to do some shopping. Now, if your goal was to buy some milk and bread, but you, for some reason, decide to go shopping in a clothing store, instead of a grocery shop, chances are that you won’t find any milk or bread there!<\/p>\n<p>The same is true with different types of blockchains, as well. So, for example, <strong>Ethereum is the main blockchain that different <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-are-decentralized-applications-dapps/">dApps are built on<\/strong>, while, as we’ve talked about earlier, <strong>Bitcoin is a “dumb” blockchain<\/strong> - it has <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-defi/">no DeFi functionality<\/strong><\/a>, and people buy Bitcoin simply because they see it as digital gold, and believe that it will rise in price, over time.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Types of blockchains: Ethereum VS Bitcoin.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//best_types_of_blockchains_04.o.jpg/" alt=\"Types of blockchains: Ethereum VS Bitcoin.\" width=\"1000\" height=\"285\" \/><\/p>\n<p>If you’re unfamiliar with <a href=https://www.bitdegree.org/"//crypto//learn//what-are-dapps-in-crypto/">dApps and <a href=https://www.bitdegree.org/"//crypto//learn//what-is-defi/">DeFi, in general, check out the sections dedicated to these topics in the BitDegree Crypto 101 Handbook! That said, though, the point here remains the same - since different blockchain networks will have different use cases, you really need to do your own research on what your blockchain of choice is best for, and then see if it fits the goals that you’ve fleshed out, earlier.<\/p>\n<h2>Does the Blockchain Have a Strong Community Behind it?<\/h2>\n<p>The fourth aspect that you need to consider when researching the best blockchain networks is <strong>whether or not the network has an avid and passionate community<\/strong>, and just how easy it is to navigate it.<\/p>\n<p>My favorite way to look at it is this: imagine that you’re an entry-level investor, and are not interested in any high-tier projects, or advanced blockchain functionality. Instead, you’re simply looking to invest in a network that has some great perspectives, and is attracting users with some unique features.<\/p>\n<p>Imagine that, in a situation like this, you encounter two blockchains - one that’s super-popular and well-established, and another that no one has even yet heard about, and that has very limited functionality.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"Types of blockchains: Does the Blockchain Have a Strong Community Behind It?\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//best_types_of_blockchains_05.o.jpg/" alt=\"Types of blockchains: Does the Blockchain Have a Strong Community Behind It?\" width=\"1000\" height=\"556\" \/><\/p>\n<p><strong>With the well-established blockchain<\/strong>, you are able to access multiple different projects, figure out what are the different types of tokens, and then trade them in a simple manner, since they are supported on multiple <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-exchange/">exchanges. Besides, you can get all of your questions answered since the community forums are alive and well.<\/p>\n<p><strong>With the less-known blockchain<\/strong>, the situation is different. Everything’s sort of “up in the air”, there aren’t really any big-name projects being developed on it, and if you want to trade tokens, you’d need to use some sort of a complex, advanced swapping tool that’s only available within their ecosystem.<\/p>\n<p>In a situation like this, it’s quite obvious that the well-known blockchain is the safer and easier pick! That being said, this does transition perfectly into my next point.<\/p>\n<h2>Avoiding Scams<\/h2>\n<p>So, up to this point, we’ve talked about the different aspects that you should look into when analyzing different types of blockchain protocols and networks. For step No. 5, you should also be able to look into and understand <strong>what a potentially-shady blockchain looks like<\/strong>, and learn to avoid it!<\/p>\n<p>Evidently, oftentimes, this isn’t a simple thing to do<em>. <\/em>But, there are some tell-tale signs to look out for. Many of these signs are actually the same as when analyzing cryptocurrency-powered projects, too!<\/p>\n<p><strong>For starters, you need to look into who created the blockchain network.<\/strong> Are the founders anonymous? If not, are they well-known and respected within the industry? Answers to these questions can really help you discard a big chunk of shady blockchain networks from your list!<\/p>\n<p><strong>Then, the fundamentals. <\/strong>Is the blockchain secure? Do the developers behind it apply all of the best-practices? What is the purpose behind the project - is there one, in general?<\/p>\n<p>After you figure all of that out, you’ll be able to move to some of the <strong>more-specific questions<\/strong> - project funding, roadmap, whitepaper, and so on. At the end of the day, follow your gut feeling - if something <em>*feels*<\/em> off, then it’s often better to stay safe and avoid the project.<\/p>\n<h2>Wrapping Up<\/h2>\n<p>In this section, we’ve covered some of the most important points that you need to look at when searching for and analyzing the best blockchain networks. You should now also be able to differentiate between great blockchains, as well as those that should be avoided, if you want to keep your funds safe!<\/p>","youtube_video":{"id":29,"channel_id":1,"sort":67,"video_title":"Best Types of Blockchains Revealed (5 Animated Rules)","description":"Best Types of Blockchains Revealed (5 Animated Rules)\n\nPicking and choosing from different types of blockchains can prove to be a rather difficult task, especially if you\u2019re new to the industry. There\u2019s a huge number of different blockchain types out there, all serving some specific purpose or use case.\n\nIn this video, I\u2019ll tell you all about the most important aspects to look into, when researching different types of blockchains. You will also learn how to avoid potential scams, and what are some of the most common red flags to watch out for. \n\nDo you know an awesome & unique blockchain network? Do share your findings, in the comment section below!\n\nVideo Time Table:\n\n0:00 Introduction to Best Types of Blockchains\n1:06 Public Vs Private Networks\n2:40 How to Find the Best Types of Blockchains: Security\n3:50 How to Find the Best Types of Blockchains: Set Your Goals \n4:48 How to Find the Best Types of Blockchains: Do Your Own Research\n5:46 How to Find the Best Types of Blockchains: Community Behind it\n7:03 How to Find the Best Types of Blockchains: Avoid Scams\n7:57 Wrap-up: Best Types of Blockchains Revealed\n\nMore Related Videos:\n? What is Blockchain? https:\/\/www.youtube.com\/watch?v=O2-XxMo5PFs\n? What is a Smart Contract? https:\/\/www.youtube.com\/watch?v=0VCMtKx9AxU\n? What is a Rug Pull in Crypto? https:\/\/www.youtube.com\/watch?v=pgTVuCsUcKw\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#TypesofBlockchains #TypesofBlockchain #BlockchainTypes","video_id":"sCp9U3vr9RI","duration":504,"view_count":428,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/best-types-of-blockchains-revealed-5-animated-rules.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2022-07-05T14:57:56.000000Z","created_at":"2022-07-05T23:00:02.000000Z","updated_at":"2024-01-09T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}}}" :model="{"id":33,"chapter_id":2,"order":1,"featured_image_id":3064,"youtube_video_id":34,"author_id":1,"created_at":"2022-08-10T07:50:28.000000Z","updated_at":"2023-12-21T14:30:04.000000Z","slug":"what-is-a-cryptocurrency","title":"What is a Cryptocurrency?","content":"<p>In this section, I’m going to tell you what is a cryptocurrency!<\/p>\n<p>The world of <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-cryptocurrency/">cryptocurrencies and <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">blockchain technology<\/strong><\/a>, as a whole, is full of complicated concepts and ideas. To top that off, there seem to be new concepts being introduced to the general public, every other day or so! This can, for a fact, make it difficult for newbies to enter the industry.<\/p>\n<p>Even the most difficult concepts can become approachable and understandable, if you have your fundamentals straight, though! And that is exactly what I’m here to help you with - by explaining crypto topics in a fun and beginner-friendly manner! In crypto, all fundamentals start out with figuring out what is a cryptocurrency.<\/p>\n<p><strong>In this section, we’re going to talk about cryptocurrencies.<\/strong> I’ll tell you what they are, what’s the purposes behind them, and we’ll also talk about how they are different from traditional, global currencies.<\/p>\n<p><em>Without further ado, let’s get to it!<\/em><\/p>\n<h2>What is a Cryptocurrency?<\/h2>\n<p>So, how can the concept of cryptocurrencies be explained in a beginner-friendly way?<\/p>\n<p>The simplest possible answer to that question is that <strong>cryptocurrencies are digital money that’s based on blockchain technology. <\/strong>For the sake of keeping this section on topic, I won’t get into the details of what blockchains are - there's <a href=https://www.bitdegree.org/"//crypto//learn//what-is-blockchain/">a whole separate section<\/strong><\/a> about that in our Crypto 101 Handbook.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is a cryptocurrency: Cryptography.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_cryptocurrency_01.o.png/" alt=\"What is a cryptocurrency: Cryptography.\" width=\"1000\" height=\"228\" \/><\/p>\n<p><strong>The term “crypto” is a shortened version of “cryptography”. <\/strong>If you’d like to learn what is <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-cryptography/">cryptography, it’s honestly also a huge topic, in of its own - to put it short, though, it’s a form of solving and cracking difficult codes. So, the term “cryptocurrency” could be viewed as “digital, coded money”, in a very specific sense!<\/p>\n<p>At the time of writing this cryptocurrency explanation, there are currently around 20,000 different crypto assets out there, on the market. Not all of them are successful, though - it is estimated that around 1\/5th of all cryptocurrencies have failed. <em>That’s a huge number!<\/em><\/p>\n<p>Since examples are what I do best, allow me to give you one, in order to explain cryptocurrency, and to illustrate how crypto money is different from <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-fiat/">fiat money<\/strong><\/a> - in other words, our traditional, global currencies that we use, every single day (USD, EUR, and so on).<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is a cryptocurrency: Fiat money.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_cryptocurrency_02.o.jpg/" alt=\"What is a cryptocurrency: Fiat money.\" width=\"1000\" height=\"346\" \/><\/p>\n<p>Imagine that you and your friend both decided to shop for concert tickets, online. A globally-huge pop star is coming to your city, and so, the tickets are hot - everyone’s trying to get their hands on them!<\/p>\n<p>Both you and your friend keep refreshing the ticket vendor’s webpage, waiting for those tickets to become available to be purchased. As soon as they go live, both of you rush to enter your details, too - <strong>every moment counts, after all!<\/strong><\/p>\n<p>In just a few minutes, your friend already has their tickets in the email, while you’re still struggling to enter your credit card details on the page. Once you’ve finally managed to do so, you are faced with an error - the bank is undergoing maintenance, and credit card payments won’t be completed until that’s done, sometime tomorrow.<\/p>\n<p>The end result? Your friend will go to the concert, while you’re going to have to find a different event… And wait for your credit card to start working again!<\/p>\n<p>Now, then - why was your friend able to complete their purchase? <strong>Whelp, you’ve guessed it - they were paying in crypto.<\/strong><\/p>\n<h2>Cryptocurrencies VS Traditional Money<\/h2>\n<p>Now, keeping that example in mind, I want to continue this “what is cryptocurrency for dummies” explanation by exploring some of the main differences between cryptocurrencies and traditional money & payment systems. This will hopefully help you get a better understanding of why crypto has become as popular as it is - well, at least part of the reason.<\/p>\n<p>The key differences between crypto and fiat money lie in <strong>governance, privacy, transparency, transaction speeds, and transaction costs.<\/strong><\/p>\n<h3>Governance<\/h3>\n<p>First things first - <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-governance/">governance. This is something that is really at the core of crypto technology, and is one of the main reasons why cryptocurrencies came to be, in general! Ever since the creation of <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin in 2009, cryptocurrencies have always prided themselves on being <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-decentralization/">decentralized (with a few exceptions).<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is a cryptocurrency: Governance.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_cryptocurrency_03.o.jpg/" alt=\"What is a cryptocurrency: Governance.\" width=\"1000\" height=\"535\" \/><\/p>\n<p>Decentralization essentially means that <strong>there is no single, central governing authority behind the cryptocurrency.<\/strong> With traditional money, you have governments and central banks watching over their currencies - for example, in the United States, the FED (or, the Federal Reserve System) is responsible for managing things such as <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-inflation/">inflation, and how much new money flows into the economy, every year.<\/p>\n<p>With crypto, there’s no FED, and no other single governing party that would influence how a particular cryptocurrency will act. Instead, this is something that is decided by the market, itself - in other words, <strong>the holders of the cryptocurrency are responsible for what happens with it.<\/strong><\/p>\n<p>So, here’s another example. Think about the aforementioned Bitcoin, the biggest and most well-known cryptocurrency on the market. Every single aspect surrounding this crypto asset is decided by the community behind it. While the anonymous individual or a group of people (known as <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//who-is-satoshi-nakamoto/">Satoshi Nakamoto<\/strong><\/a>) had created Bitcoin, after that was done, the rest was left with the community behind the asset. <strong>In other words, if you wanted to make some changes to Bitcoin, you would need to get the larger part of the community behind it!<\/strong><\/p>\n<h3>Privacy and Transparency<\/h3>\n<p>This leads us to the next two points that I want to emphasize - <strong>privacy and transparency.<\/strong><\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is a cryptocurrency: Privacy and transparency.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_cryptocurrency_04-62f36932ea36a.o.jpg/" alt=\"What is a cryptocurrency: Privacy and transparency.\" width=\"1000\" height=\"241\" \/><\/p>\n<p>With traditional currencies, both of those things are pretty limited. Sure, you can go to the shop, and buy some bread with cash - no one will really know that it’s YOU who bought that bread, since there’s no credit card statement, and the transaction happened in cash.<\/p>\n<p>That being said, that cash that you paid DID come from somewhere, didn’t it? Perhaps you’ve just withdrawn it from the ATM machine on the other side of the road? Or maybe you’ve borrowed it from a friend, or a colleague?<\/p>\n<p>My point here is simple - <strong>no matter where you get your money from, it’s always tracked and logged by the government.<\/strong> If you DO manage to receive money from somewhere that the government doesn’t see, you are obligated to inform the relevant tax authorities in your country, in the form of a tax return filing, at the end of the year, or at any other designated point in time.<\/p>\n<p>A quick sidenote - if, at the time you're reading this, <strong>tax season <\/strong>is around the corner, make sure to check out our <a href=https://www.bitdegree.org/"//crypto//learn//how-to-avoid-crypto-taxes/">dedicated section<\/strong><\/a> on how to avoid or minimize crypto taxes - legally, of course!<\/p>\n<p>Now, as you figure out what are cryptocurrencies, you’ll notice that things are a bit different with this form of payment. The more you look into it, the more intricate and complicated it will appear to be - for that reason, we’re not going to look into the various exceptions, but let’s instead talk about the broader rules of the cryptocurrency industry.<\/p>\n<p><strong>So, with crypto, all of the transactions that you perform are going to be public.<\/strong> If it’s something that you weren’t aware of, it can sound scary.<em> <\/em>Do not fret, though - while your transaction WILL be public, no one will know that it’s YOU who is performing them. Each transaction is encrypted, and unless you go out and tell the whole world your personal <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-address/">cryptocurrency wallet address<\/strong><\/a>, no one will know.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is a cryptocurrency: Crypto wallet address.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_cryptocurrency_05.o.jpg/" alt=\"What is a cryptocurrency: Crypto wallet address.\" width=\"1000\" height=\"498\" \/><\/p>\n<p>This is exactly how cryptocurrencies allow you to retain your privacy, while also being transparent assets themselves, too! Since you can trade cryptocurrencies anonymously, you don’t need to worry about someone snooping around your transactions - on top of that, since all of those transactions are public, transparency is easy to prove, as well!<\/p>\n<p>Now, look - I do have to mention that <strong>you WILL probably need to report your transactions, and any potential income, to the relevant tax authorities in your country or region. <\/strong>Of course, each situation is different, and depends on crypto regulations in your area, but that’s just something that should be kept in mind!<\/p>\n<h3>Transaction Speed & Cost<\/h3>\n<p>The last big area where cryptocurrencies are quite different from traditional currencies has to do with <strong>the speed and cost of your transactions.<\/strong> Once again, allow me to illustrate this with an example.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is a cryptocurrency: Transaction speed & cost.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_cryptocurrency_06.o.png/" alt=\"What is a cryptocurrency: Transaction speed & cost.\" width=\"1000\" height=\"851\" \/><\/p>\n<p>Imagine that you want to purchase a new pair of pants. You go online, and find an eShop that sells exactly what you’re looking for. The pants cost $30 - that’s a bargain, you say! Even the shipping is free, too!<\/p>\n<p>That being said, as you make the purchase, you see that you were actually charged $35, instead of $30. Looking into it, you eventually learn that the shop is located on the other side of the world, and since that region falls into some sort of a different economic zone, there are extra charges from your bank, in order to perform that transaction.<\/p>\n<p>Naturally, in reality, things are quite a bit more complicated than that, - still, though, the example illustrates my point, nonetheless!<\/p>\n<p><strong>Transactions that involve traditional currencies - or traditional payment gateways, for that matter - can get quite costly.<\/strong> It all depends on a variety of factors, but, once again - the point remains the same, either way!<\/p>\n<p>On top of that, such transactions can also take a lot of time to be processed, as well. While we’re used to credit or debit card payments being processed almost immediately, oftentimes, the same cannot be said about wire and bank transfers, in general. <strong>If you perform a bank transfer at night, your transaction might not be processed until the next day!<\/strong> And this is only if you’re sending money to someone in the same region that you’re located in, too!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is a cryptocurrency: Transaction processing time.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_cryptocurrency_07.o.jpg/" alt=\"What is a cryptocurrency: Transaction processing time.\" width=\"1000\" height=\"977\" \/><\/p>\n<p>Understanding what are cryptocurrencies, things are very different, in both regards. <strong>When it comes to transaction costs, depending on the cryptocurrency that you might be transacting with, the fees could be as low as a fraction of a penny! <\/strong>Imagine sending a few thousand dollars to your family, on the other side of the world, and not even paying a cent for that transaction.<\/p>\n<p><em>Could it get any better?<\/em> Yes, it can - if that transaction was processed and completed in a matter of seconds. Once again, this is completely possible with cryptocurrency technology!<\/p>\n<p>To wrap everything up, let me just say this - apart from everything I just talked about, there are multiple other benefits associated with cryptocurrencies, and the blockchain technology behind them!<\/p>","definition":"Did you know that there are thousands of cryptocurrencies out there and the number keeps growing?","status":"published","meta_title":"What is a Cryptocurrency: A Begginer-Friendly Explanation","meta_description":"Searching for a simple yet thorough answer to the question \"what is a cryptocurrency?\" Find the most beginner-friendly explanation here!","meta_keywords":"what is a cryptocurrency, cryptocurrency for beginners, what is cryptocurrency, what is crypto, what is crypto currency, crypto meaning, cryptocurrency meaning, cryptocurrency for dummies, what is cryptocurrency for dummies, what is cryptography, what are cryptocurrencies, explain cryptocurrency, what is cryptocurrency used for, what is a crypto coin, what is crypto money, how many crypto millionaires are there, who created cryptocurrency, what does cryptocurrency mean, how do you use cryptocurrency, where does cryptocurrency come from, how many cryptocurrencies have failed, how many cryptocurrency are there, why use cryptocurrency, is cryptocurrency worth it, whose currency is worth the most, what is crypto investment","modified_content":"<p>In this section, I’m going to tell you what is a cryptocurrency!<\/p>\n<p>The world of <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-cryptocurrency/">cryptocurrencies and <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-blockchain/">blockchain technology<\/strong><\/a>, as a whole, is full of complicated concepts and ideas. To top that off, there seem to be new concepts being introduced to the general public, every other day or so! This can, for a fact, make it difficult for newbies to enter the industry.<\/p>\n<p>Even the most difficult concepts can become approachable and understandable, if you have your fundamentals straight, though! And that is exactly what I’m here to help you with - by explaining crypto topics in a fun and beginner-friendly manner! In crypto, all fundamentals start out with figuring out what is a cryptocurrency.<\/p>\n<p><strong>In this section, we’re going to talk about cryptocurrencies.<\/strong> I’ll tell you what they are, what’s the purposes behind them, and we’ll also talk about how they are different from traditional, global currencies.<\/p>\n<p><em>Without further ado, let’s get to it!<\/em><\/p>\n<div class=\"container\">\n <div class=\"row justify-content-center\">\n <div class=\"col-md-10 suggested-comparisons pb-3 mb-4\">\n <div class=\"d-flex flex-row\">\n <div class=\"text-center\">\n <div class=\"img-block-yt\">\n <img src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//images//compare-crypto-exchanges.gif/"/n alt=\"What is a Cryptocurrency: For Beginners (Animated Explainer)\"\n title=\"What is a Cryptocurrency: For Beginners (Animated Explainer)\" class=\"border-0\">\n <p>Video Explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"col-xs-10 col-sm-10 col-md-10 text-left py-3 yt-info\">\n <h4 class=\"mb-1\">Video Explainer: What is a Cryptocurrency?<\/h4>\n <p class=\"py-1 mb-0 youtube-video-subtitle\">Reading is not your thing? Watch the \"What is a Cryptocurrency?\" video explainer<\/p>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div class=\"col-12 col-md-11 px-3\">\n <div class=\"wrapper mb-0\">\n <div class=\"position-relative youtube mb-4 bg-transparent p-0 video-modal-popup\" data-toggle=\"modal\"\n data-target=\"#video-modal\" data-id=\"eVLUrZtKhBk\" data-title=\"CryptoFinallyExplained\">\n <div class=\"video-gradient-top\"><\/div>\n <p class=\"text-left dyk-video-title\">What is a Cryptocurrency: For Beginners (Animated Explainer)<\/p>\n <img data-srcset=\"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/what-is-a-cryptocurrency-for-beginners-animated-explainer.jpg?tr=w-420 500w,\n https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/what-is-a-cryptocurrency-for-beginners-animated-explainer.jpg?tr=w-760 1000w\"\n alt=\"What is a Cryptocurrency: For Beginners (Animated Explainer)\"\n title=\"What is a Cryptocurrency: For Beginners (Animated Explainer)\"\n class=\"p-0 lazyload\">\n <img class=\"play-button lazyload\" data-target=\"#video-modal\"\n data-src=\"https:\/\/assets.bitdegree.org\/crypto\/assets\/video-button.png?tr=w-85\"\n alt=\"What is a Cryptocurrency: For Beginners (Animated Explainer)\">\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <div class=\"row justify-content-center text-center\">\n <div>\n <a href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n class=\"btn yt-promo mb-2\" target=\"_blank\" rel=\"nofollow noopener noindex\">\n <div class=\"row justify-content-center align-items-center mx-0 text-center\">\n <div class=\"col-4 col-md-4\">\n <i class=\"fab fa-youtube yt-dyk-btn\"><\/i>\n <\/div>\n <div class=\"col-8 col-md-8 text-center yt-promo-text\">\n <h4 class=\"m-0 text-white\">SUBSCRIBE<\/h4>\n <span>ON YOUTUBE<\/span>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n<div class=\"modal fade\" id=\"video-modal\" tabindex=\"-1\" role=\"dialog\">\n <div class=\"modal-dialog modal-dialog-centered modal-lg\" role=\"document\">\n <div class=\"modal-content\">\n <div class=\"modal-body p-0\">\n <button type=\"button\" class=\"video-modal-close close\" data-dismiss=\"modal\" aria-label=\"Close\">\n <i aria-hidden=\"true\" class=\"fas fa-times\"><\/i>\n <\/button>\n <div id=\"iframe\"><\/div>\n <\/div>\n <a class=\"text-decoration-none\"\n href=https://www.bitdegree.org/"https:////www.youtube.com//c//CryptoFinallyExplained?sub_confirmation=1\%22\n rel=\"nofollow noopener noindex\" target=\"_blank\">\n <div class=\"modal-footer p-0 d-block bg-white\">\n <div class=\"row justify-content-center m-0\">\n <div class=\"col-3 col-md-4 col-lg-2 p-0\">\n <img class=\"w-100 h-100\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//assets//crypto-subscribe.jpg/" alt=\"Subscribe\">\n <\/div>\n <div class=\"col-9 col-md-8 col-lg-2 px-0 d-flex\">\n <div class=\"modal-subscribe w-100\">\n <p class=\"m-0 mt-1 mr-3\">SUBSCRIBE<br>\n <span class=\"m-0\">ON YOUTUBE<\/span>\n <\/p>\n <\/div>\n <\/div>\n <div class=\"col-12 col-md-12 col-lg-8 p-0 text-center d-flex justify-content-center align-items-center\">\n <div class=\"modal-subscribe-text\">\n <h4 class=\"m-0\">Understand crypto with ease<\/h4>\n <span>New explainer videos every week!<\/span>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/a>\n <\/div>\n <\/div>\n<\/div>\n<h2>What is a Cryptocurrency?<\/h2>\n<p>So, how can the concept of cryptocurrencies be explained in a beginner-friendly way?<\/p>\n<p>The simplest possible answer to that question is that <strong>cryptocurrencies are digital money that’s based on blockchain technology. <\/strong>For the sake of keeping this section on topic, I won’t get into the details of what blockchains are - there's <a href=https://www.bitdegree.org/"//crypto//learn//what-is-blockchain/">a whole separate section<\/strong><\/a> about that in our Crypto 101 Handbook.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is a cryptocurrency: Cryptography.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_cryptocurrency_01.o.png/" alt=\"What is a cryptocurrency: Cryptography.\" width=\"1000\" height=\"228\" \/><\/p>\n<p><strong>The term “crypto” is a shortened version of “cryptography”. <\/strong>If you’d like to learn what is <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-cryptography/">cryptography, it’s honestly also a huge topic, in of its own - to put it short, though, it’s a form of solving and cracking difficult codes. So, the term “cryptocurrency” could be viewed as “digital, coded money”, in a very specific sense!<\/p>\n<p>At the time of writing this cryptocurrency explanation, there are currently around 20,000 different crypto assets out there, on the market. Not all of them are successful, though - it is estimated that around 1\/5th of all cryptocurrencies have failed. <em>That’s a huge number!<\/em><\/p>\n<p>Since examples are what I do best, allow me to give you one, in order to explain cryptocurrency, and to illustrate how crypto money is different from <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-fiat/">fiat money<\/strong><\/a> - in other words, our traditional, global currencies that we use, every single day (USD, EUR, and so on).<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is a cryptocurrency: Fiat money.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_cryptocurrency_02.o.jpg/" alt=\"What is a cryptocurrency: Fiat money.\" width=\"1000\" height=\"346\" \/><\/p>\n<p>Imagine that you and your friend both decided to shop for concert tickets, online. A globally-huge pop star is coming to your city, and so, the tickets are hot - everyone’s trying to get their hands on them!<\/p>\n<p>Both you and your friend keep refreshing the ticket vendor’s webpage, waiting for those tickets to become available to be purchased. As soon as they go live, both of you rush to enter your details, too - <strong>every moment counts, after all!<\/strong><\/p>\n<p>In just a few minutes, your friend already has their tickets in the email, while you’re still struggling to enter your credit card details on the page. Once you’ve finally managed to do so, you are faced with an error - the bank is undergoing maintenance, and credit card payments won’t be completed until that’s done, sometime tomorrow.<\/p>\n<p>The end result? Your friend will go to the concert, while you’re going to have to find a different event… And wait for your credit card to start working again!<\/p>\n<p>Now, then - why was your friend able to complete their purchase? <strong>Whelp, you’ve guessed it - they were paying in crypto.<\/strong><\/p>\n<h2>Cryptocurrencies VS Traditional Money<\/h2>\n<p>Now, keeping that example in mind, I want to continue this “what is cryptocurrency for dummies” explanation by exploring some of the main differences between cryptocurrencies and traditional money & payment systems. This will hopefully help you get a better understanding of why crypto has become as popular as it is - well, at least part of the reason.<\/p>\n<p>The key differences between crypto and fiat money lie in <strong>governance, privacy, transparency, transaction speeds, and transaction costs.<\/strong><\/p>\n<h3>Governance<\/h3>\n<p>First things first - <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-governance/">governance. This is something that is really at the core of crypto technology, and is one of the main reasons why cryptocurrencies came to be, in general! Ever since the creation of <a href=https://www.bitdegree.org/"https:////www.bitdegree.org//crypto//buy-bitcoin-btc/">Bitcoin in 2009, cryptocurrencies have always prided themselves on being <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-decentralization/">decentralized (with a few exceptions).<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is a cryptocurrency: Governance.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_cryptocurrency_03.o.jpg/" alt=\"What is a cryptocurrency: Governance.\" width=\"1000\" height=\"535\" \/><\/p>\n<p>Decentralization essentially means that <strong>there is no single, central governing authority behind the cryptocurrency.<\/strong> With traditional money, you have governments and central banks watching over their currencies - for example, in the United States, the FED (or, the Federal Reserve System) is responsible for managing things such as <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-inflation/">inflation, and how much new money flows into the economy, every year.<\/p>\n<p>With crypto, there’s no FED, and no other single governing party that would influence how a particular cryptocurrency will act. Instead, this is something that is decided by the market, itself - in other words, <strong>the holders of the cryptocurrency are responsible for what happens with it.<\/strong><\/p>\n<p>So, here’s another example. Think about the aforementioned Bitcoin, the biggest and most well-known cryptocurrency on the market. Every single aspect surrounding this crypto asset is decided by the community behind it. While the anonymous individual or a group of people (known as <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//who-is-satoshi-nakamoto/">Satoshi Nakamoto<\/strong><\/a>) had created Bitcoin, after that was done, the rest was left with the community behind the asset. <strong>In other words, if you wanted to make some changes to Bitcoin, you would need to get the larger part of the community behind it!<\/strong><\/p>\n<h3>Privacy and Transparency<\/h3>\n<p>This leads us to the next two points that I want to emphasize - <strong>privacy and transparency.<\/strong><\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is a cryptocurrency: Privacy and transparency.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_cryptocurrency_04-62f36932ea36a.o.jpg/" alt=\"What is a cryptocurrency: Privacy and transparency.\" width=\"1000\" height=\"241\" \/><\/p>\n<p>With traditional currencies, both of those things are pretty limited. Sure, you can go to the shop, and buy some bread with cash - no one will really know that it’s YOU who bought that bread, since there’s no credit card statement, and the transaction happened in cash.<\/p>\n<p>That being said, that cash that you paid DID come from somewhere, didn’t it? Perhaps you’ve just withdrawn it from the ATM machine on the other side of the road? Or maybe you’ve borrowed it from a friend, or a colleague?<\/p>\n<p>My point here is simple - <strong>no matter where you get your money from, it’s always tracked and logged by the government.<\/strong> If you DO manage to receive money from somewhere that the government doesn’t see, you are obligated to inform the relevant tax authorities in your country, in the form of a tax return filing, at the end of the year, or at any other designated point in time.<\/p>\n<p>A quick sidenote - if, at the time you're reading this, <strong>tax season <\/strong>is around the corner, make sure to check out our <a href=https://www.bitdegree.org/"//crypto//learn//how-to-avoid-crypto-taxes/">dedicated section<\/strong><\/a> on how to avoid or minimize crypto taxes - legally, of course!<\/p>\n<p>Now, as you figure out what are cryptocurrencies, you’ll notice that things are a bit different with this form of payment. The more you look into it, the more intricate and complicated it will appear to be - for that reason, we’re not going to look into the various exceptions, but let’s instead talk about the broader rules of the cryptocurrency industry.<\/p>\n<p><strong>So, with crypto, all of the transactions that you perform are going to be public.<\/strong> If it’s something that you weren’t aware of, it can sound scary.<em> <\/em>Do not fret, though - while your transaction WILL be public, no one will know that it’s YOU who is performing them. Each transaction is encrypted, and unless you go out and tell the whole world your personal <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-address/">cryptocurrency wallet address<\/strong><\/a>, no one will know.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is a cryptocurrency: Crypto wallet address.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_cryptocurrency_05.o.jpg/" alt=\"What is a cryptocurrency: Crypto wallet address.\" width=\"1000\" height=\"498\" \/><\/p>\n<p>This is exactly how cryptocurrencies allow you to retain your privacy, while also being transparent assets themselves, too! Since you can trade cryptocurrencies anonymously, you don’t need to worry about someone snooping around your transactions - on top of that, since all of those transactions are public, transparency is easy to prove, as well!<\/p>\n<p>Now, look - I do have to mention that <strong>you WILL probably need to report your transactions, and any potential income, to the relevant tax authorities in your country or region. <\/strong>Of course, each situation is different, and depends on crypto regulations in your area, but that’s just something that should be kept in mind!<\/p>\n<h3>Transaction Speed & Cost<\/h3>\n<p>The last big area where cryptocurrencies are quite different from traditional currencies has to do with <strong>the speed and cost of your transactions.<\/strong> Once again, allow me to illustrate this with an example.<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is a cryptocurrency: Transaction speed & cost.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_cryptocurrency_06.o.png/" alt=\"What is a cryptocurrency: Transaction speed & cost.\" width=\"1000\" height=\"851\" \/><\/p>\n<p>Imagine that you want to purchase a new pair of pants. You go online, and find an eShop that sells exactly what you’re looking for. The pants cost $30 - that’s a bargain, you say! Even the shipping is free, too!<\/p>\n<p>That being said, as you make the purchase, you see that you were actually charged $35, instead of $30. Looking into it, you eventually learn that the shop is located on the other side of the world, and since that region falls into some sort of a different economic zone, there are extra charges from your bank, in order to perform that transaction.<\/p>\n<p>Naturally, in reality, things are quite a bit more complicated than that, - still, though, the example illustrates my point, nonetheless!<\/p>\n<p><strong>Transactions that involve traditional currencies - or traditional payment gateways, for that matter - can get quite costly.<\/strong> It all depends on a variety of factors, but, once again - the point remains the same, either way!<\/p>\n<p>On top of that, such transactions can also take a lot of time to be processed, as well. While we’re used to credit or debit card payments being processed almost immediately, oftentimes, the same cannot be said about wire and bank transfers, in general. <strong>If you perform a bank transfer at night, your transaction might not be processed until the next day!<\/strong> And this is only if you’re sending money to someone in the same region that you’re located in, too!<\/p>\n<p><img style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"What is a cryptocurrency: Transaction processing time.\" src=https://www.bitdegree.org/"https:////assets.bitdegree.org//crypto//storage//media//what_is_cryptocurrency_07.o.jpg/" alt=\"What is a cryptocurrency: Transaction processing time.\" width=\"1000\" height=\"977\" \/><\/p>\n<p>Understanding what are cryptocurrencies, things are very different, in both regards. <strong>When it comes to transaction costs, depending on the cryptocurrency that you might be transacting with, the fees could be as low as a fraction of a penny! <\/strong>Imagine sending a few thousand dollars to your family, on the other side of the world, and not even paying a cent for that transaction.<\/p>\n<p><em>Could it get any better?<\/em> Yes, it can - if that transaction was processed and completed in a matter of seconds. Once again, this is completely possible with cryptocurrency technology!<\/p>\n<p>To wrap everything up, let me just say this - apart from everything I just talked about, there are multiple other benefits associated with cryptocurrencies, and the blockchain technology behind them!<\/p>","youtube_video":{"id":34,"channel_id":1,"sort":62,"video_title":"What is a Cryptocurrency: For Beginners (Animated Explainer)","description":"Wondering what is a cryptocurrency?\n\nCryptocurrencies are something that we see and come across, every single day, whether it be by buying, selling, and trading them, or simply reading about them online. However, at the end of the day, when you boil it down, do you really know what is a cryptocurrency?\n\nThat is exactly the question that I aim to answer in this video! I will tell you both what cryptocurrencies are, as well as how they are different from (and, oftentimes - superior to) traditional, fiat money.\n\nAre you looking to get into cryptocurrencies? If so, which ones are you a fan of? Let me know, in the comment section below!\n\nVideo Time Table:\n\n0:00 Introduction to What is a Cryptocurrency\n0:58 What is a Cryptocurrency Explained\n2:58 Cryptocurrencies vs Traditional Money\n8:41 Wrapping up: What is a Cryptocurrency?\n\nMore Related Videos:\n\n? Crypto Token VS Coin\nhttps:\/\/www.youtube.com\/watch?v=kNAC7CXFOTw\n? What is Blockchain?\nhttps:\/\/www.youtube.com\/watch?v=O2-XxMo5PFs\n? What is a Smart Contract?\nhttps:\/\/www.youtube.com\/watch?v=0VCMtKx9AxU\n? What is Cardano in Crypto?\nhttps:\/\/www.youtube.com\/watch?v=bn6Vxt_RTbI\n\nGet Quick Crypto Tips on Twitter - Follow:\nhttps:\/\/twitter.com\/crypto_xplained\n\n#WhatisaCryptocurrency #CryptocurrencyForBeginners #WhatisCrypto","video_id":"eVLUrZtKhBk","duration":546,"view_count":661,"thumbnail_url":"https:\/\/assets.bitdegree.org\/youtube\/crypto-finally-explained\/what-is-a-cryptocurrency-for-beginners-animated-explainer.jpg","thumbnail_width":1280,"thumbnail_height":720,"published_at":"2022-08-17T15:16:36.000000Z","created_at":"2022-08-17T23:00:02.000000Z","updated_at":"2024-01-09T23:00:04.000000Z","channel":{"id":1,"title":"CryptoFinallyExplained","channel_id":"UCOryUY0yxC08eJtK23mNgiA","main_playlist_id":"UUOryUY0yxC08eJtK23mNgiA"}},"featured_image":{"id":3064,"uuid":"afcb81f6-c56e-4ee0-855d-28e1a21023b5","name":"what-is-cryptocurrency-featured-image.o.jpg","url":"https:\/\/assets.bitdegree.org\/crypto\/storage\/media\/what-is-cryptocurrency-featured-image.o.jpg","path":"crypto\/storage\/media\/what-is-cryptocurrency-featured-image.o.jpg","mime_type":"image\/jpeg","disk":"digitalOceanSpaces","size":92258,"width":768,"height":478,"custom_properties":null,"created_at":"2023-06-19T06:58:36.000000Z","updated_at":"2023-06-19T06:58:36.000000Z"}}" :chapter-list="[{"id":1,"title":"Blockchain","slug":"blockchain","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-blockchain.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/blockchain-101.jpg","rating":100,"sections":[{"chapter_id":1,"order":1,"slug":"what-is-blockchain","title":"What is the Blockchain?","status":"published","modified_content":null},{"chapter_id":1,"order":2,"slug":"decentralized-blockchain","title":"Anonymous & Decentralized Blockchains: The Cornerstone of Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":3,"slug":"blockchain-transaction","title":"What is a Blockchain Transaction in Crypto?","status":"published","modified_content":null},{"chapter_id":1,"order":4,"slug":"crypto-fees","title":"The Different Types of Crypto Fees Explained","status":"published","modified_content":null},{"chapter_id":1,"order":5,"slug":"what-is-bridging-in-crypto","title":"The Key Notion Behind the Concept of Bridging in Crypto","status":"published","modified_content":null},{"chapter_id":1,"order":6,"slug":"types-of-blockchains","title":"Different Types of Blockchains: What to Look Out For?","status":"published","modified_content":null}]},{"id":2,"title":"Cryptocurrencies","slug":"cryptocurrencies","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-cryptocurrencies.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/cryptocurrencies-101.jpg","rating":100,"sections":[{"chapter_id":2,"order":1,"slug":"what-is-a-cryptocurrency","title":"What is a Cryptocurrency?","status":"published","modified_content":null},{"chapter_id":2,"order":2,"slug":"how-does-cryptocurrency-work","title":"How Does Cryptocurrency Work?","status":"published","modified_content":null},{"chapter_id":2,"order":3,"slug":"is-cryptocurrency-a-good-investment","title":"Is Cryptocurrency a Good Investment? The Pros & Cons","status":"published","modified_content":null},{"chapter_id":2,"order":4,"slug":"coin-vs-token","title":"Coin VS Token: How Do They Differ?","status":"published","modified_content":null},{"chapter_id":2,"order":5,"slug":"what-are-stablecoins","title":"What are Stablecoins, Altcoins & Wrapped Coins?","status":"published","modified_content":null},{"chapter_id":2,"order":6,"slug":"what-is-a-bitcoin","title":"Bitcoin: the Pioneer of the Crypto World","status":"published","modified_content":null},{"chapter_id":2,"order":7,"slug":"what-is-ethereum","title":"The Ultimate Blockchain for dApp Creation: Ethereum","status":"published","modified_content":null},{"chapter_id":2,"order":8,"slug":"what-is-cardano-in-crypto","title":"What is Cardano and What is It Used For?","status":"published","modified_content":null},{"chapter_id":2,"order":9,"slug":"what-is-shiba-inu-coin","title":"Shiba Inu: the Dogecoin Killer","status":"published","modified_content":null},{"chapter_id":2,"order":10,"slug":"what-is-solana-in-crypto","title":"Is Solana an Improved Version of Ethereum?","status":"published","modified_content":null},{"chapter_id":2,"order":11,"slug":"what-is-polkadot-in-crypto","title":"The Bridge Between Blockchains: Polkadot","status":"published","modified_content":null},{"chapter_id":2,"order":12,"slug":"what-is-polygon-in-crypto","title":"Polygon: the Essential Scaling Solution for Ethereum","status":"published","modified_content":null},{"chapter_id":2,"order":13,"slug":"what-is-luna-crypto","title":"The Bumpy Road of Terra (LUNA)","status":"published","modified_content":null},{"chapter_id":2,"order":14,"slug":"what-is-fantom-crypto","title":"Is Fantom (FTM) Yet Another Ethereum Killer?","status":"published","modified_content":null},{"chapter_id":2,"order":15,"slug":"what-is-aave-crypto","title":"Aave: Crypto Lending Trailblazer","status":"published","modified_content":null},{"chapter_id":2,"order":16,"slug":"what-is-algorand-crypto","title":"Did Algorand Truly Solve the Blockchain Trilemma?","status":"published","modified_content":null},{"chapter_id":2,"order":17,"slug":"what-is-olympus-dao","title":"Does Olympus DAO Have Anything to Do With Mythology?","status":"published","modified_content":null},{"chapter_id":2,"order":18,"slug":"what-is-avax","title":"Is Avalanche Network (AVAX) Rightfully Called the Future of DeFi?","status":"published","modified_content":null},{"chapter_id":2,"order":19,"slug":"what-is-monero-coin","title":"Monero: Where Cryptocurrency Meets Cryptography","status":"published","modified_content":null},{"chapter_id":2,"order":20,"slug":"what-is-ripple-xrp","title":"Is Ripple \"it\" When it Comes to Cross-Border Transactions?","status":"published","modified_content":null},{"chapter_id":2,"order":21,"slug":"practical-use-of-cryptocurrencies","title":"The Practical Use of Crypto","status":"published","modified_content":null}]},{"id":3,"title":"Crypto Exchanges","slug":"crypto-exchanges","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-exchanges.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-exchanges-101.jpg","rating":80,"sections":[{"chapter_id":3,"order":1,"slug":"how-do-cryptocurrency-exchanges-work","title":"How do Cryptocurrency Exchanges Work?","status":"published","modified_content":null},{"chapter_id":3,"order":2,"slug":"dex-vs-cex","title":"DEX VS CEX: Two Sides of the Crypto Exchange Industry","status":"published","modified_content":null},{"chapter_id":3,"order":3,"slug":"crypto-day-trading","title":"Crypto Day Trading: The Difference Between Buying, Trading, and Swapping","status":"published","modified_content":null},{"chapter_id":3,"order":4,"slug":"kyc-crypto","title":"KYC & AML: The Key to Complying With Legal Industry Standards","status":"published","modified_content":null},{"chapter_id":3,"order":5,"slug":"how-to-buy-crypto","title":"From Fiat to Crypto: How to Buy Crypto for the First Time","status":"published","modified_content":null},{"chapter_id":3,"order":6,"slug":"fiat-to-crypto","title":"Taking Profits: Turning Crypto Into Fiat","status":"published","modified_content":null},{"chapter_id":3,"order":7,"slug":"how-to-use-crypto","title":"You\u2019ve Got Crypto: What Can You Do With It?","status":"published","modified_content":null}]},{"id":4,"title":"Crypto Wallets","slug":"crypto-wallets","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-wallets.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-wallets-101.jpg","rating":80,"sections":[{"chapter_id":4,"order":1,"slug":"what-is-a-crypto-wallet","title":"What is a Crypto Wallet?","status":"published","modified_content":null},{"chapter_id":4,"order":2,"slug":"hot-wallet-vs-cold-wallet","title":"Hot Wallet VS Cold Wallet: Which One to Pick?","status":"published","modified_content":null},{"chapter_id":4,"order":3,"slug":"non-custodial-wallet","title":"What are Non-Custodial Crypto Wallets?","status":"published","modified_content":null},{"chapter_id":4,"order":4,"slug":"what-is-metamask","title":"Metamask: The Leading Non-Custodial Wallet","status":"published","modified_content":null},{"chapter_id":4,"order":37,"slug":"how-safe-is-cryptocurrency","title":"The Key Crypto Wallet Safety Practices: How Safe Can Crypto Be?","status":"published","modified_content":null}]},{"id":5,"title":"NFTs","slug":"nfts","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-nfts.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/nfts-101.jpg","rating":100,"sections":[{"chapter_id":5,"order":2,"slug":"how-to-trade-nfts","title":"NFT Trading: The Ins and Outs","status":"published","modified_content":null},{"chapter_id":5,"order":3,"slug":"buying-nft","title":"Tips and Tricks of Choosing the Right NFTs","status":"published","modified_content":null},{"chapter_id":5,"order":4,"slug":"how-to-store-nft","title":"How to Store NFTs: Best Practices","status":"published","modified_content":null},{"chapter_id":5,"order":5,"slug":"how-to-create-an-nft","title":"How to Create Your Own NFTs?","status":"published","modified_content":null},{"chapter_id":5,"order":6,"slug":"how-to-make-passive-money-with-nft","title":"Making Passive Money with NFTs","status":"published","modified_content":null}]},{"id":6,"title":"dApps & Defi","slug":"dapps-and-defi","updated":true,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-dapps.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/dapps-defi-101.jpg","rating":80,"sections":[{"chapter_id":6,"order":1,"slug":"what-are-nfts","title":"What are Non-Fungible Tokens (NFTs)?","status":"published","modified_content":null},{"chapter_id":6,"order":1,"slug":"what-is-defi","title":"What is Decentralized Finance (DeFi)?","status":"published","modified_content":null},{"chapter_id":6,"order":2,"slug":"what-is-defi-2-0","title":"DeFi 2.0: The New Version of Decentralized Finance","status":"published","modified_content":null},{"chapter_id":6,"order":3,"slug":"what-are-dapps-in-crypto","title":"What Are dApps and How Do They Work?","status":"published","modified_content":null},{"chapter_id":6,"order":4,"slug":"defi-dapps","title":"Picking the Right dApps: Dos and Don'ts","status":"published","modified_content":null},{"chapter_id":6,"order":5,"slug":"what-is-web-3-0","title":"Web 3.0: The Future of the Internet","status":"published","modified_content":null},{"chapter_id":6,"order":6,"slug":"what-are-smart-contracts","title":"What is the Core Purpose of Smart Contracts?","status":"published","modified_content":null},{"chapter_id":6,"order":7,"slug":"what-is-a-dao-in-crypto","title":"The Notion of a Decentralized Autonomous Ogranization (DAO)","status":"published","modified_content":null},{"chapter_id":6,"order":8,"slug":"what-is-staking-in-crypto","title":"What is the Goal of Staking Crypto Assets?","status":"published","modified_content":null},{"chapter_id":6,"order":9,"slug":"what-is-liquidity-pool-in-crypto","title":"What is a Liquidity Pool and How Does It Work?","status":"published","modified_content":null},{"chapter_id":6,"order":10,"slug":"what-is-automated-market-maker","title":"Automated Market Maker: the Cornerstone of the Decentralized Crypto Exchange Industry","status":"published","modified_content":null},{"chapter_id":6,"order":11,"slug":"what-is-yield-farming-in-crypto","title":"The Main Yield Farming Techniques","status":"published","modified_content":null},{"chapter_id":6,"order":12,"slug":"what-is-an-oracle-in-crypto","title":"Crypto Oracles: The Link Between Blockchain and Outside World Data","status":"published","modified_content":null},{"chapter_id":6,"order":13,"slug":"crypto-gambling","title":"The Peculiarities of Decentralized Crypto Gambling","status":"published","modified_content":null},{"chapter_id":6,"order":14,"slug":"what-is-the-metaverse","title":"Metaverse: A New Perception of Reality","status":"published","modified_content":null}]},{"id":7,"title":"Trading & Investing","slug":"trading-and-investing","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-trading.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-trading-101.jpg","rating":80,"sections":[{"chapter_id":7,"order":1,"slug":"where-to-trade-crypto","title":"Where Can You Trade Cryptocurrencies?","status":"published","modified_content":null},{"chapter_id":7,"order":2,"slug":"how-to-invest-in-crypto","title":"Investing in Crypto: What Investing Options Do You Have?","status":"published","modified_content":null},{"chapter_id":7,"order":3,"slug":"ico-vs-ido","title":"ICO vs IDO vs IEO: Which One is the One?","status":"published","modified_content":null},{"chapter_id":7,"order":4,"slug":"what-is-an-airdrop","title":"What are Crypto Airdrops and How to Get Them?","status":"published","modified_content":null},{"chapter_id":7,"order":5,"slug":"how-to-get-free-crypto","title":"How to Get Free Crypto Assets?","status":"published","modified_content":null},{"chapter_id":7,"order":6,"slug":"how-to-arbitrage-crypto","title":"What is Crypto Arbitrage: The Main Principles","status":"published","modified_content":null},{"chapter_id":7,"order":7,"slug":"what-is-a-perpetual-contract","title":"Perpetual Contracts: Futures Contracts Without an Expiration Date","status":"published","modified_content":null},{"chapter_id":7,"order":8,"slug":"what-is-fud","title":"What is FUD: How to Use It to Your Advantage While Investing in Crypto?","status":"published","modified_content":null},{"chapter_id":7,"order":9,"slug":"investing-in-cryptocurrency","title":"Investing in Cryptocurrency: How to Manage Your Risks?","status":"published","modified_content":null},{"chapter_id":7,"order":10,"slug":"what-is-a-rug-pull-in-crypto","title":"What is a Rug Pull in Crypto?","status":"published","modified_content":null},{"chapter_id":7,"order":11,"slug":"how-to-avoid-rug-pulls-in-crypto","title":"How to Spot and Avoid Rug Pulls?","status":"published","modified_content":null},{"chapter_id":7,"order":12,"slug":"how-to-avoid-crypto-taxes","title":"The Key Legal Techniques of Avoiding Crypto Taxes","status":"published","modified_content":null}]},{"id":8,"title":"Crypto Analysis","slug":"crypto-analysis","updated":null,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-analysis.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-analysis-101.jpg","rating":100,"sections":[{"chapter_id":8,"order":1,"slug":"what-is-bullish-and-bearish","title":"Bearish and Bullish Markets: Do They Matter?","status":"published","modified_content":null},{"chapter_id":8,"order":2,"slug":"best-technical-analysis-indicators-for-crypto","title":"5 Best Crypto Technical Analysis Indicators You Must Know About","status":"published","modified_content":null},{"chapter_id":8,"order":3,"slug":"what-is-candlesticks","title":"Technical Analysis: What are Candlesticks, Trendlines, and Patterns?","status":"published","modified_content":null},{"chapter_id":8,"order":4,"slug":"how-to-track-new-crypto-coins","title":"Crypto Tracking: How to Track Your Favorite Coins & Tokens?","status":"published","modified_content":null},{"chapter_id":8,"order":5,"slug":"how-to-research-crypto","title":"Crypto Research Fundamentals & Social Signals: Your Daily Trading Strategy","status":"published","modified_content":null},{"chapter_id":8,"order":46,"slug":"portfolio-diversification-definition","title":"Portfolio Diversification: The Whats, the Whys, and the Hows","status":"published","modified_content":null}]},{"id":9,"title":"Mining","slug":"mining","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/learn-crypto-mining.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-mining-101.jpg","rating":80,"sections":[{"chapter_id":9,"order":1,"slug":"what-is-crypto-mining","title":"Crypto Mining: What It is and How Does It Work?","status":"published","modified_content":null},{"chapter_id":9,"order":2,"slug":"what-is-a-mining-pool","title":"Mining Pools: Is Collective Mining Better Than Solo Mining?","status":"published","modified_content":null},{"chapter_id":9,"order":3,"slug":"what-is-staking-crypto","title":"An Advanced Look into What is Staking Crypto","status":"published","modified_content":null},{"chapter_id":9,"order":4,"slug":"what-is-proof-of-stake-vs-proof-of-work","title":"Proof-of-Work VS Proof-of-Stake: The Differences That Matter","status":"published","modified_content":null},{"chapter_id":9,"order":5,"slug":"what-is-crypto-mining-rig","title":"Crypto Mining Rig: What It is and How to Build One?","status":"published","modified_content":null}]},{"id":10,"title":"Crypto Terms","updated":false,"chapter":"crypto\/assets\/crypto-book\/chapters\/crypto-101-glossary.jpg","chapter_simple":"crypto\/assets\/crypto-book\/chapters-simple\/crypto-glossary-101.jpg","rating":100,"sections":["A","B","C","D","E","F","G","H","I","J","K","L","M","N","O","P","Q","R","S","T","U","V","W","X","Y","Z"]}]" current-chapter="cryptocurrencies" current-section="what-is-a-cryptocurrency">

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