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Cryptocurrencies 101: A Beginner's Guide

Explore how cryptocurrencies and blockchain technology work, including Bitcoin, Ethereum, altcoins, and stablecoins. Learn the key differences between tokens and cryptocurrencies, learn about stablecoins pegged to traditional assets, and get essential tips for properly researching projects before investing.

Published 2025-03-18
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Physical currency in reference to a cryptocurrency
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    If you’re new to the crypto ecosystem or want to relearn key concepts, we’ve put together this guide with basic (and not-so-basic) knowledge that will be very useful.

  1. What Are Cryptocurrencies?

    2. A cryptocurrency is a digital currency that can be used to invest, save, or purchase goods, secured by cryptography, which makes counterfeiting nearly impossible. Many cryptocurrencies are networks built on blockchain technology, acting as a distributed ledger reinforced by a network of computers, with strong cryptography to secure online transactions.

    One characteristic of cryptocurrencies is that they are decentralized—that is, they are generally not issued by any central authority, which makes them theoretically immune to interference or “manipulation” by any government.

  2. How Do They Work and What Is Blockchain?
    • Blockchain: a way of recording decentralized databases.
    • Its technology enables the use of cryptocurrencies.
    • Bitcoin’s blockchain was the first.
    • Records are immutable and cannot be falsified.

    Unlike the U.S. dollar or the euro, a cryptocurrency has no central authority managing and maintaining its value. Instead, these tasks are distributed across the internet among users of the cryptocurrency.

    Cryptocurrencies operate using blockchain technology, which is decentralized technology spread across multiple computers that manage and record transactions. These are organizational approaches to ensure the integrity of transactional data, and they’re a necessary component of many cryptocurrencies.

    Is there only one blockchain? No, there are several. For example, Ethereum has its own blockchain. Other development teams, like IBM, are working on their own. Bitcoin has the oldest and longest blockchain, as well as the one with the highest number of transactions.

  3. Bitcoin, the First Cryptocurrency
    • It was the first blockchain-based cryptocurrency network.
    • bitcoin (lowercase) is the cryptocurrency, while Bitcoin is the network.
    • BTC is the symbol for bitcoin.
    • It will have a maximum supply of 21 million bitcoins.

    Bitcoin is the first cryptocurrency, a type of digital money based on an accounting system that works peer-to-peer, without any bank or state needing to validate transactions.

    One of its most significant innovations was the technology it relies on: blockchain, which enables the creation of immutable records of each transaction through cryptographic systems and mathematical problems.

    This currency, bitcoin (BTC), acts as a unit of value, a way to store funds, and a method of carrying out transactions and payments.

    Where does bitcoin’s price come from? Although fluctuations in supply and demand affect bitcoin’s value minute by minute, there are two other factors that influence its price on a larger scale:

    • Bitcoin has value because 25 million people trust it and use it.
    • Bitcoins are valuable because they have a limited supply: there will only ever be 21 million, with 18 million already in circulation. They are valuable because they are difficult and costly to create and mine. This price isn’t set by a government, central bank, or corporation.

    What is cryptocurrency mining? In the cryptocurrency ecosystem, we use the term “mining” to refer to the process of validating transactions on a blockchain. However, despite its name, this operation does not involve any physical extraction of soil or rocks. It’s a software process—a computational effort.

    Key Information

    • They’re not printed; they’re mined.
    • Each bitcoin is unique and cannot be counterfeited, duplicated, or altered.
    • They’re divisible, and currently you can transact up to 8 decimal places of bitcoin.
    • They’re convertible to dollars or any other legal currency.
    • No days, no hours, no places: Bitcoin works all the time, everywhere.
    • Due to network engineering, bitcoin accounts cannot be frozen, and payments cannot be blocked or canceled.
  4. Ethereum, an Entire Ecosystem
    • Enables the creation of distributed applications regulated by smart contracts.
    • Ether is its cryptocurrency, while Ethereum is the network.
    • ETH is the symbol for ether, which has no maximum supply.
    • Its creator is Vitalik Buterin.
    • It allows tokens to be created on its blockchain.

    Ethereum is the second most popular cryptocurrency in terms of price or market capitalization.

    Ethereum also functions as a decentralized online digital computer. This allows for many more applications beyond just transferring and storing value or payments.

    Ethereum enables the development of a wide range of decentralized applications (DAPPS). It’s a marketplace for financial services, video games, and countless applications, as well as a value transfer platform.

    Ethereum allows for the creation of altcoins (alternative cryptocurrencies). For example, projects like DAI, USDC, and TrueUSD rely on Ethereum technology.

    Today, Ethereum is the blockchain with the greatest number of innovations and initiatives for building new services, playing a dominant role in the crypto world. In recent years, it has been the leading network for hosting the boom of new decentralized finance (DeFi) solutions, as well as the trend of selling collectibles and art in the form of NFTs.

    Successful Projects Based on Ethereum

    • Decentraland: virtual reality game with its own token (MANA) and virtual land sales.
    • Uniswap: decentralized exchange that enables crypto swaps without an order book, instead using a “liquidity pool” system.
    • USDC: stablecoin pegged 1:1 to the U.S. dollar.
    • BAT: token rewarded to Brave users in exchange for viewing online ads.
    • DAI: stablecoin pegged 1:1 to the U.S. dollar, with Maker as its governance platform (which also has its own token, MKR).

  5. What Is an Altcoin?

    6. Altcoins means “alternative coins.” Alternatives to what? To Bitcoin. The first altcoins were Litecoin, Dash, Monero, or Ripple, each with its own utility and distinctiveness. Even Ethereum is an altcoin.

    By enabling the creation of smart contracts that can, in turn, be used to create other tokens, Ethereum’s launch in 2015 supercharged the crypto ecosystem and the proliferation of hundreds of new coins, many of which you’ve probably already heard of.

    Before investing in any cryptocurrency, you must research the project behind your choice. If you’re interested in crypto, do your homework: read the whitepaper, check it on social media, and don’t be fooled just because a relative or friend invested in it. Many projects look “promising” but end up being scams.

    There are different crypto assets in the market, and one good strategy to reduce risk is to split your investment across several that you’ve researched thoroughly. Cryptocurrencies are volatile, especially in the short term, but usually they don’t all crash at once. While some projects grow, others depreciate, and vice versa. Having different coins in your portfolio helps reduce the risk of major devaluations in a single asset.

  6. What Is a Stablecoin?
    • Cryptocurrencies whose price remains stable over time.
    • Smart contracts on Ethereum enabled their emergence.
    • In trading, they help protect against the drop of a cryptocurrency.
    • Because they always hold the same value, they eliminate the volatility of other cryptocurrencies.

    Stablecoins are a type of digital asset whose price is tied to another asset through parity. Unlike other cryptocurrencies, whose price is determined by supply and demand.

    The most popular cases are pegged 1:1 to the U.S. dollar, while others are tied to gold, precious metals, or land. Some of the most common stablecoins are:

    • USDT: To preserve its peg to the U.S. dollar, the Tether stablecoin is backed by fiat currency. That is, with dollar reserves in a bank account determined by the amount of USDT in circulation. In fact, these are titles and bonds in dollars, not just cash or electronic transfers.
    • USDC: USDC is another stablecoin pegged to the U.S. dollar. It was created by Coinbase and Circle, two well-known crypto companies. USDC is also backed by fiat currency, though in this case with stricter audit and monitoring policies, where external international auditors verify the existence of reserves.

  7. What’s the Difference Between a Token and a Cryptocurrency?

    8. Cryptocurrencies are digital coins that operate on blockchain networks. Bitcoin created its own blockchain for its cryptocurrency, bitcoin (BTC). Ethereum is another distributed network with its own coin, ether (ETH).

    The biggest difference is that a token does not have its own network; it’s created on an existing blockchain. While the Ethereum network has its own currency, it also allows for the generation of alternative tokens with economic value using its ERC-20 and ERC-721 protocols.

    Checking CoinMarketCap, the reference website for the crypto ecosystem, is an easy way to see which is a token and which is a cryptocurrency. It lets you view all listed crypto projects and get more information about them.

    Currently, these are the top 10 cryptocurrencies by market capitalization. It’s important to understand that, except for stablecoins, cryptocurrencies are a risky asset and their price fluctuates.

If you’re new to the crypto ecosystem or want to relearn key concepts, we’ve put together this guide with basic (and not-so-basic) knowledge that will be very useful.

What Are Cryptocurrencies?

A cryptocurrency is a digital currency that can be used to invest, save, or purchase goods, secured by cryptography, which makes counterfeiting nearly impossible. Many cryptocurrencies are networks built on blockchain technology, acting as a distributed ledger reinforced by a network of computers, with strong cryptography to secure online transactions.

One characteristic of cryptocurrencies is that they are decentralized—that is, they are generally not issued by any central authority, which makes them theoretically immune to interference or “manipulation” by any government.

How Do They Work and What Is Blockchain?

  • Blockchain: a way of recording decentralized databases.
  • Its technology enables the use of cryptocurrencies.
  • Bitcoin’s blockchain was the first.
  • Records are immutable and cannot be falsified.

Unlike the U.S. dollar or the euro, a cryptocurrency has no central authority managing and maintaining its value. Instead, these tasks are distributed across the internet among users of the cryptocurrency.

Cryptocurrencies operate using blockchain technology, which is decentralized technology spread across multiple computers that manage and record transactions. These are organizational approaches to ensure the integrity of transactional data, and they’re a necessary component of many cryptocurrencies.

Is there only one blockchain? No, there are several. For example, Ethereum has its own blockchain. Other development teams, like IBM, are working on their own. Bitcoin has the oldest and longest blockchain, as well as the one with the highest number of transactions.

Bitcoin, the First Cryptocurrency

  • It was the first blockchain-based cryptocurrency network.
  • bitcoin (lowercase) is the cryptocurrency, while Bitcoin is the network.
  • BTC is the symbol for bitcoin.
  • It will have a maximum supply of 21 million bitcoins.

Bitcoin is the first cryptocurrency, a type of digital money based on an accounting system that works peer-to-peer, without any bank or state needing to validate transactions.

One of its most significant innovations was the technology it relies on: blockchain, which enables the creation of immutable records of each transaction through cryptographic systems and mathematical problems.

This currency, bitcoin (BTC), acts as a unit of value, a way to store funds, and a method of carrying out transactions and payments.

Where does bitcoin’s price come from? Although fluctuations in supply and demand affect bitcoin’s value minute by minute, there are two other factors that influence its price on a larger scale:

  • Bitcoin has value because 25 million people trust it and use it.
  • Bitcoins are valuable because they have a limited supply: there will only ever be 21 million, with 18 million already in circulation. They are valuable because they are difficult and costly to create and mine. This price isn’t set by a government, central bank, or corporation.

What is cryptocurrency mining? In the cryptocurrency ecosystem, we use the term “mining” to refer to the process of validating transactions on a blockchain. However, despite its name, this operation does not involve any physical extraction of soil or rocks. It’s a software process—a computational effort.

Key Information

  • They’re not printed; they’re mined.
  • Each bitcoin is unique and cannot be counterfeited, duplicated, or altered.
  • They’re divisible, and currently you can transact up to 8 decimal places of bitcoin.
  • They’re convertible to dollars or any other legal currency.
  • No days, no hours, no places: Bitcoin works all the time, everywhere.
  • Due to network engineering, bitcoin accounts cannot be frozen, and payments cannot be blocked or canceled.

Ethereum, an Entire Ecosystem

  • Enables the creation of distributed applications regulated by smart contracts.
  • Ether is its cryptocurrency, while Ethereum is the network.
  • ETH is the symbol for ether, which has no maximum supply.
  • Its creator is Vitalik Buterin.
  • It allows tokens to be created on its blockchain.

Ethereum also functions as a decentralized online digital computer. This allows for many more applications beyond just transferring and storing value or payments.

Ethereum enables the development of a wide range of decentralized applications (DAPPS). It’s a marketplace for financial services, video games, and countless applications, as well as a value transfer platform.

Ethereum allows for the creation of altcoins (alternative cryptocurrencies). For example, projects like DAI, USDC, and TrueUSD rely on Ethereum technology.

Today, Ethereum is the blockchain with the greatest number of innovations and initiatives for building new services, playing a dominant role in the crypto world. In recent years, it has been the leading network for hosting the boom of new decentralized finance (DeFi) solutions, as well as the trend of selling collectibles and art in the form of NFTs.

Successful Projects Based on Ethereum

  • Decentraland: virtual reality game with its own token (MANA) and virtual land sales.
  • Uniswap: decentralized exchange that enables crypto swaps without an order book, instead using a “liquidity pool” system.
  • USDC: stablecoin pegged 1:1 to the U.S. dollar.
  • BAT: token rewarded to Brave users in exchange for viewing online ads.
  • DAI: stablecoin pegged 1:1 to the U.S. dollar, with Maker as its governance platform (which also has its own token, MKR).

What Is an Altcoin?

Altcoins means “alternative coins.” Alternatives to what? To Bitcoin. The first altcoins were Litecoin, Dash, Monero, or Ripple, each with its own utility and distinctiveness. Even Ethereum is an altcoin.

By enabling the creation of smart contracts that can, in turn, be used to create other tokens, Ethereum’s launch in 2015 supercharged the crypto ecosystem and the proliferation of hundreds of new coins, many of which you’ve probably already heard of.

Before investing in any cryptocurrency, you must research the project behind your choice. If you’re interested in crypto, do your homework: read the whitepaper, check it on social media, and don’t be fooled just because a relative or friend invested in it. Many projects look “promising” but end up being scams.

There are different crypto assets in the market, and one good strategy to reduce risk is to split your investment across several that you’ve researched thoroughly. Cryptocurrencies are volatile, especially in the short term, but usually they don’t all crash at once. While some projects grow, others depreciate, and vice versa. Having different coins in your portfolio helps reduce the risk of major devaluations in a single asset.

What Is a Stablecoin?

  • Cryptocurrencies whose price remains stable over time.
  • Smart contracts on Ethereum enabled their emergence.
  • In trading, they help protect against the drop of a cryptocurrency.
  • Because they always hold the same value, they eliminate the volatility of other cryptocurrencies.

Stablecoins are a type of digital asset whose price is tied to another asset through parity. Unlike other cryptocurrencies, whose price is determined by supply and demand.

  • USDT: To preserve its peg to the U.S. dollar, the Tether stablecoin is backed by fiat currency. That is, with dollar reserves in a bank account determined by the amount of USDT in circulation. In fact, these are titles and bonds in dollars, not just cash or electronic transfers.
  • USDC: USDC is another stablecoin pegged to the U.S. dollar. It was created by Coinbase and Circle, two well-known crypto companies. USDC is also backed by fiat currency, though in this case with stricter audit and monitoring policies, where external international auditors verify the existence of reserves.

What’s the Difference Between a Token and a Cryptocurrency?

Cryptocurrencies are digital coins that operate on blockchain networks. Bitcoin created its own blockchain for its cryptocurrency, bitcoin (BTC). Ethereum is another distributed network with its own coin, ether (ETH).

The biggest difference is that a token does not have its own network; it’s created on an existing blockchain. While the Ethereum network has its own currency, it also allows for the generation of alternative tokens with economic value using its ERC-20 and ERC-721 protocols.

Checking CoinMarketCap, the reference website for the crypto ecosystem, is an easy way to see which is a token and which is a cryptocurrency. It lets you view all listed crypto projects and get more information about them.

Currently, these are the top 10 cryptocurrencies by market capitalization. It’s important to understand that, except for stablecoins, cryptocurrencies are a risky asset and their price fluctuates.