Introduction to Cryptocurrency

Researched by Thomas DeMichele Published - May 1, 2015
Last Updated - August 18, 2024

Cryptocurrency facts takes a simplified look at digital currencies like Bitcoin to help explain what cryptocurrency is, how it works, and its implications. On this site, we cover everything you need to know about:

TIP: If you are new to cryptocurrency, check out our guide to cryptocurrency for beginners for a crash course on the basics. Or, check out our cryptocurrency investing starter kit.

Welcome to Cryptocurrency Facts.

What is Cryptocurrency?

Cryptocurrency is a digital currency that uses encryption (cryptography) to generate money and verify transactions. Transactions are added to a public ledger – also called a Transaction Block Chain – and new coins are created through a process known as mining.
This video discusses Bitcoin, but most of what they talk about here is common among all cryptocurrencies. We suggest watching this video before moving on as it gives what we consider to be one of the best explanations of Bitcoin available on the internet.

As of 2023, cryptocurrency has been used as a decentralized alternative to traditional fiat currencies (which are usually backed by some central government), such as the US dollar (USD). Meanwhile, cryptocurrency technology, including smart contracts and blockchain, has been used for a number of other purposes, like apps, cloud computing, and more.

For the average person, using cryptocurrency is as easy as:

For advanced users, the possibilities are vast.

How do I get cryptocurrency? If you want to get cryptocurrency, you can mine it, trade goods and services for it, or buy it via brokers and exchanges using dollars and other cryptocurrencies. Check out Coinbase for a broker/exchange/wallet solution.

What is a cryptocurrency address?: A public address is a unique string of characters used to receive cryptocurrency. Each public address has a matching private address that can be used to prove ownership of the public address. With Bitcoin, the address is called a Bitcoin address. Think of it as a unique email address that people can send currency to instead of emails.

The History of Cryptocurrency

The first decentralized digital cryptocurrency can arguably be traced back to “bit gold” (not to be confused with Bitgold), which was worked on by Nick Szabo between 1998 and 2005 but was never implemented.

Although bit gold is widely considered the first precursor to bitcoin, cryptocurrency pioneer David Chaum’s company DigiCash (a company founded in 1989 that attempted to innovate digital currency), Wei Dai’s b-money (a conceptual system published in 1998, which Satoshi cites it in the Bitcoin white paper), and “e-gold” (a centralized digital currency that started in 1996) are all notable early mentions.

With that history noted, modern digital currency started in 2008 when Satoshi Nakamoto (an anonymous person and/or group) released a paper detailing what would become Bitcoin.

Bitcoin became the first decentralized digital coin when it was created in 2008. It then went public in 2009.

As of 2020, Bitcoin is the most commonly known and used cryptocurrency. Meanwhile, other coins, including Ethereum (ETH), Ripple (XRP), Litecoin (LTC), and more are all notable mentions.

Given the popularity of Bitcoin as well as its history, the term “altcoin” is sometimes used to describe alternative cryptocurrencies to Bitcoin (especially coins with small market caps).

As of January 2015, there were over 500 different types of cryptocurrencies – or altcoins – for trade in online markets. However, only 10 of them had market capitalizations over $10 million.

As of September 2017, there were over 1,100 cryptocurrencies, and the total market capitalization of all cryptocurrencies reached an all-time high, surpassing $60 billion! Then, by December 2017, the total market cap reached $600 billion (a multiple of 10 in only two months).

As of April 2021, there were over 6,700 cryptocurrencies, and the total market capitalization of all cryptocurrencies reached an all-time high, surpassing $2 trillion!

Today, in 2024, despite ups and downs, the industry keeps growing.

The total amount of coins continues to grow while the market cap ebbs and flows, but one can clearly see the direction of the trend over time toward more coins and a higher total market cap.

Although the future is uncertain, cryptocurrency is proving itself to be more than just a fad. Today, cryptocurrency is shaping up to be a growing market that (despite the pros and cons) is likely here for the long haul.

On this site, we explore every aspect of cryptocurrency. Simply choose a page from the menu, visit our “what is cryptocurrency” page for a more detailed explanation of cryptocurrency, or jump right into the “how cryptocurrency works” section to start learning about transactions, mining, and public ledgers.