Crypto Fundamentals
What Is Cryptocurrency?
Coins, exchanges, and wallets — the practical building blocks.
In this lesson
- What makes something a cryptocurrency
- Where crypto's value comes from
Key takeaways
- 1Crypto is digital money secured by cryptography on a blockchain
- 2Value comes from supply, demand, utility, and trust
- 3It can move globally, permissionlessly, and 24/7
Lesson summary
Cryptocurrency is a digital asset controlled by cryptographic keys and usually settled on a blockchain.
Mental model
Getting cryptocurrency straight
Cryptocurrency is a digital asset controlled by cryptographic keys and usually settled on a blockchain. What matters for users is what the asset does, where it settles, and who controls the keys.
- What makes something a cryptocurrency
- Where crypto's value comes from
Mechanics
How to reason about cryptocurrency
Coins native to a chain pay fees or secure the network.
Tokens are issued by smart contracts or protocols on top of a chain.
Market value comes from supply, demand, liquidity, utility, and belief in the network.
- Crypto is digital money secured by cryptography on a blockchain
- Value comes from supply, demand, utility, and trust
- It can move globally, permissionlessly, and 24/7
Example
Cryptocurrency in practice
ETH can be used to pay gas on Ethereum, while a token such as USDC can move on Ethereum but follows a separate issuer and reserve model.
Common mistakes
Where people slip up with cryptocurrency
Seeing a balance in an app does not always mean you hold the on-chain asset yourself. The app may be showing a custodial claim.
Risk notes
Reading the risk in cryptocurrency
Crypto risk includes volatility, smart-contract bugs, exchange failure, chain congestion, and irreversible transfers to wrong addresses.
- Identify whether it is a coin or token.
- Check where it settles.
- Know who controls withdrawal keys.
Practice
Practise cryptocurrency before moving on
- Identify whether it is a coin or token.
- Check where it settles.
- Know who controls withdrawal keys.
Review
Key terms
- Blockchain
- A shared, append-only ledger replicated across many computers, secured by cryptography and consensus.
- Custody
- Who controls the private keys. Custodial = a third party holds them; non-custodial = you do.
- Ethereum (ETH)
- A programmable blockchain — a 'world computer' that runs smart contracts and dApps.
- Liquidity
- How easily an asset can be bought or sold without moving its price much.
- Smart Contract
- Self-executing code on a blockchain that runs exactly as written when conditions are met.
Source notes
Editorial references
These references are starting points for verifying the mechanisms, risk checks, and product context behind this lesson.
Before you continue
Can you do these?
- Identify whether it is a coin or token.
- Check where it settles.
- Know who controls withdrawal keys.
Related learning
Keep reading
Checkpoint
Finish this lesson
Pass the check to save progress, then continue through the track in order.
Lock in this lesson
Answer every question correctly to complete the lesson.
Cryptocurrency is best described as…