Introduction to Cryptocurrency (Crypto 101)

June 26, 2025

Understanding the Basics

What Is Crypto?

Cryptocurrency, often referred to as crypto, is a digital or virtual currency that uses cryptography for security. Unlike traditional currencies, it operates independently of central banks and governments. This decentralisation is a key feature that sets cryptocurrency apart.

How does it work?

While cryptocurrency might seem abstract, it’s grounded in technology. Think of it as a digital asset, recorded on a public ledger called a blockchain. This blockchain is a decentralised network of computers, making it incredibly secure and transparent.

When you own cryptocurrency, you own a digital record on this blockchain. This record is verified and secured by complex cryptographic algorithms. While it might not be a physical object like gold, it represents a real asset with value.

To store your cryptocurrency, you use a digital wallet. This wallet doesn’t actually hold the cryptocurrency itself; it stores the keys to access it on the blockchain. Similar to a physical wallet holding keys to your house, a digital wallet holds the keys to your cryptocurrency.

Just like gold, cryptocurrency can be bought, sold, and traded. Its value fluctuates based on market demand and supply. However, unlike physical assets, cryptocurrency offers the advantage of instant, borderless transactions.

A Brief History

The concept of digital currencies has been explored for decades, but it wasn’t until the introduction of Bitcoin in 2009 that the idea truly took off. Bitcoin, the first decentralised cryptocurrency, revolutionised the financial world by introducing a peer-to-peer payment system that operates independently of traditional banking institutions.

Since Bitcoin’s inception, a multitude of other cryptocurrencies, often referred to as altcoins, have emerged. These altcoins offer various functionalities and unique features, expanding the possibilities of blockchain technology.

As cryptocurrency continues to evolve, it’s clear that it has the potential to reshape industries and redefine the future of finance.

Types of Cryptocurrencies

Bitcoin

Bitcoin (BTC) is often referred to as the “King of Crypto”, being the first and currently the most valuable coin in terms of market capitalisation. BTC has remained the reserve currency in the crypto space due to its continued dominance in market cap, media attention and liquidity for transferring between other alternative cryptos. Its supply is constrained to only 21 million units and the remaining BTC which hasn’t been minted yet can only be created through a complex, laborious and expensive “mining” process, which also ensures the security of the network.

BTC is a genuine cryptocurrency as it was created to allow direct, trust-less peer-to-peer payments. However, BTC has moved away from its intended purpose of being a peer-to-peer payments network towards a ‘store of value’. It’s beginning to gain popularity as the go-to asset in the traditional world for an inflation hedge as companies such as Tesla and MicroStrategy add BTC to their balance sheets.

Altcoins

Alternative cryptocurrencies that emerged after Bitcoin, such as Ethereum and XRP. Ethereum (ETH) and XRP differ from BTC as they are considered to be utility cryptos, rather than pure cryptocurrencies.

Ethereum is an open-source, distributed computing platform and operating system featuring smart contract functionality. It allows developers to build blockchain applications using the platform. ETH is the token that operates as the “fuel” for the Ethereum engine, particularly for DeFi and NFT applications.

XRP (colloquially often just called Ripple) has utility via its ability to operate as a purpose-built fiat currency settlement and foreign exchange network. It aims to revolutionise the 40-year-old traditional banking and SWIFT payment system. XRP is the token native to the Ripple network and plays a pivotal role in providing liquidity to accommodate foreign exchange transactions.