What is cryptocurrency? / Cryptocurrency for beginners STEP-3

Frequently Asked Questions (FAQ)

1.  What Is Cryptocurrency in Simple Words?

Cryptocurrencies are digital assets and decentralized systems that allow for secure online payments.

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2. How Do You Get Cryptocurrency?

Any investor can purchase cryptocurrency from popular crypto exchanges like Coinbase, apps like Cash app, or through brokers. Another popular way to invest in cryptocurrencies is through financial derivatives, such as CME’s Bitcoin futures, or through other instruments, such as Bitcoin Trusts and Bitcoin ETFs.

3. What Is the Point of Cryptocurrency?

Cryptocurrencies are a new paradigm for money. Their promise is to streamline existing financial architecture to make it faster and cheaper. Their technology and architecture decentralize existing monetary systems and make it possible for transacting parties to exchange value and money without the use of intermediary institutions like banks.

4. Can You Generate Cryptocurrency?

Cryptocurrencies are generated by mining. For example, Bitcoin is generated using Bitcoin mining. The process involves downloading software that contains a partial or full history of transactions that have occurred in its network. While anyone with a computer and an internet connection can mine cryptocurrency, the energy- and resource-intensive nature of mining means that the industry is dominated by large firms.

5 . What Are the Most Popular Cryptocurrencies?

Bitcoin is by far the most popular cryptocurrency, followed by other cryptocurrencies such as Ethereum, Binance Coin, Solana, and Cardano.

6. Are Cryptocurrencies Securities?

The SEC has said that Bitcoin and Ethereum, the top two cryptocurrencies by market cap, are not securities. It has not commented on the status of other cryptocurrencies.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.

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Related Terms

Bitcoin Definition: How Does Bitcoin Work?

Bitcoin is a digital or virtual currency created in 2009 that uses peer-to-peer technology to facilitate instant payments. 

Blockchain Explained

A blockchain is a digitally distributed, decentralized, public ledger that exists across a network. It is most noteworthy in its use with cryptocurrencies and NFTs.


What Is Ethereum?

Ethereum is a blockchain-based software platform with the native coin Ether. Ethereum smart contracts support a variety of distributed apps across the crypto ecosystem.

Digital Money Definition

Digital money or digital currency is any type of payment that exists purely in electronic form and is accounted for and transferred using computers.


Virtual Currency

Virtual currency is a digital representation of value in purely electronic form. It can be open or closed and centralized or decentralized.

Convertible Virtual Currency Definition 

Convertible virtual currency is an unregulated digital currency that can be used as a substitute for real and legally recognized currency.