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What is cryptocurrency?
A cryptocurrency is digital money that exists only electronically and is recorded on a blockchain rather than in a bank's ledger. Bitcoin and ether are well-known examples; many others exist and new ones keep being created.
What it means for you
Crypto held in an account is not insured by a government the way FDIC-insured bank deposits are, and its value can change by the hour. A payment made in crypto can usually only be returned if the person you paid sends it back.
How it works
Ownership is recorded as entries in a shared ledger that many computers keep and check, not in an account at a bank. Control comes from keys: a transaction moves value only if it carries a valid digital signature from the private key that controls it, and every node checks that signature before accepting it. A wallet stores the keys, not the coins. On Ethereum the native coin, ether, also pays for computation: each transaction pays a fee in ETH, which gives participants an economic reason to verify and execute requests.
Sources: FTC: What to know about cryptocurrency and scams, ethereum.org: Intro to Ethereum, Bitcoin whitepaper (PDF), Satoshi Nakamoto, SEC Office of Investor Education: Crypto asset custody basics for retail investors · checked 4 October 2026
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Educational content, not financial advice. Written by hand and checked against the source named above. Something wrong? Tell us and we reply within two business days.