What is Cryptocurrency? For Beginners

What is cryptocurrency?

Cryptocurrency is a virtual currency that uses cryptographic mathematics to securely send coins from one party to another. It is designed as an entirely digital alternative to fiat currency (like AUD) that is printed and controlled by an authoritative figure. 

Most digital currencies leverage a distributed ledger called “blockchain technology”. This allows control of cryptocurrencies to be spread among hundreds (or thousands) of participants, rather than in the hands of a select few financial institutions like with fiat currency.

What is the origin of cryptocurrency?

Cryptocurrency was born out of the 2009 Global Financial Crisis amid growing distrust of centralised banking systems and the power they held. As a response, an anonymous developer(s) known only as Satoshi Nakamoto released the world’s first cryptocurrency and associated blockchain, Bitcoin.

Although Bitcoin was the first official digital currency that could be transferred between two people, the concept of a virtual, decentralised currency was first floated in 1983 by David Chaum.

The industry has come a long way since then. Today, there are over 25,000 different cryptocurrencies – some with almost the exact same coding framework as Bitcoin’s blockchain, but with minor adjustments.

How do you make money from crypto?

We’ve all heard the stories of people who became teenage millionaires by purchasing Bitcoin. Some estimates suggest that there are over 88K crypto millionaires across the globe. 

There are several ways to make money from crypto, but only a couple apply to beginners. Those new to the industry should stick to holding assets with strong development backgrounds, excellent use cases and long-term viability. 

If cryptocurrencies see greater adoption, and eventually demand, their spot price will likely increase and those holding the assets will profit from their growth. 

Novice investors can also make money from staking cryptocurrencies on-chain, locking up digital assets in a savings account.

Experienced traders can leverage the advantages of crypto’s 24/7 and highly volatile market to create all sorts of money-making opportunities. However, trading with a short-term outlook is not recommended for beginners.

What can you do with cryptocurrencies?

Satoshi Nakamoto’s original vision for Bitcoin (and blockchain technology) was rather simple. They designed BTC as an anonymous means of exchange that didn’t require an intermediary like a bank.

However, as the ecosystem has evolved, so too has the potential applications. Cryptocurrencies can now be used for:

• Improving ownership of real-world and digital assets (NFTs)
• Powering decentralised finance (DeFi) and other money-making opportunities
• Tracking supply chain integrity
• Native reward systems for merchants
• Gaming
• Identity verification

And much more.

What are the most popular cryptocurrencies?

Bitcoin (BTC)

Bitcoin has been a household name for quite some time now, and is by far the most popular cryptocurrency. Its market cap and trading volume dwarfs that of any other non-stablecoin. Checkout more Bitcoin resources below: 

• Bitcoin price (AUD)
• Bitcoin news
• How to buy Bitcoin in Australia

Ethereum (ETH)

Ethereum has grown in stature since its release in 2015 and has quickly become known as “the King of DeFi”. This blockchain easily has the biggest ecosystem, hosting thousands of decentralised applications and projects.Checkout more Ethereum resources below: 

• Ethereum price (AUD)
• Ethereum news
• How to buy Ethereum in Australia

Dogecoin (DOGE)

Dogecoin is another old-school crypto project that has gained mainstream attention. Although the cryptocurrency doesn’t have a huge range of functions, the cultural impact of DOGE is undeniable. Checkout more Dogecoin resources below: 

• Dogecoin price (AUD)
• Dogecoin news

Other popular cryptocurrencies include:

• Litecoin (LTC)
• USD stablecoins (USDC and Tether)
• XRP 
• Solana (SOL)
• Cardano (ADA)

Where can you buy cryptocurrencies?

The best place for beginners to buy cryptocurrencies is a regulated Australian cryptocurrency exchange, such as Swyftx and Coinjar. 

These platforms must abide by all government laws, making them safer than other unregulated exchanges. Most Australian crypto exchanges are geared toward novices, making buying incredibly simple.

More experienced investors may consider a decentralised exchange, P2P broker or a global exchange with advanced trading features.

Related: What is a crypto exchange?