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Maya Maceka | 26 Mar, 2023

What Is Cryptocurrency? The Ultimate Guide to Crypto in 2024


Cryptocurrency has taken the world by storm in recent years, with Bitcoin's value surging to an all-time high in 2021 and the market capitalization of all cryptocurrencies reaching over $2 trillion.

In 2024, the crypto market continues to be as exciting and volatile as ever, with new developments and trends emerging constantly. Whether you're a seasoned crypto investor or a curious beginner, understanding the ins and outs of cryptocurrency is essential.

In this ultimate guide, we'll explore everything you need to know about crypto, including the latest trends, how to buy and invest, the most popular cryptocurrencies, where they're legal, and much more. So, buckle up and get ready to dive into the exciting world of cryptocurrency!

What Is Cryptocurrency? 

So, what is cryptocurrency and how does crypto work? Cryptocurrencies are digital currencies that are decentralized, secure, and verifiable through cryptographic techniques. They operate independently of central authorities, making them resilient to government intervention and economic fluctuations.

The first cryptocurrency, Bitcoin (BTC), emerged in 2009 courtesy of an anonymous entity called Satoshi Nakamoto. Bitcoin employs a distributed ledger known as the blockchain, ensuring secure, transparent, and tamper-proof transactions.

Why cryptocurrency has become so popular can be attributed to its unique attributes and advantages, such as decentralization, transparency, security, and growth potential. As such, thousands of distinct cryptocurrencies have emerged over the past decade, each with unique characteristics, applications, and communities.

As the crypto ecosystem matures, individuals must understand the technology, risks, and opportunities involved. Fortunately, numerous resources like the best crypto courses and the best crypto books can help in comprehending and investing in cryptocurrencies.

What Is Cryptocurrency Graphics

The crypto landscape is swiftly transforming, with several notable trends emerging in 2024:

  1. Bitcoin Pressure: Rising regulations and competition from cryptocurrencies like Ethereum may pressure Bitcoin. However, some analysts predict Bitcoin’s value could exceed $100k.
  1. Cryptocurrency Regulations: Comprehensive regulatory frameworks aim to foster trust, deter fraud, and bridge the gap between crypto and traditional finance. The securities and exchange commission (SEC) will likely remain vigilant.
  1. NFT Market Expansion: The NFT market's rapid growth should persist, with collectors and artists fueling demand and industries exploring NFT applications for unique digital assets.
  1. Crypto Casinos: The popularity of online casinos accepting cryptocurrencies is rising, providing anonymity, speedy transactions, and enticing sign-up offers.
  1. Ethereum 2.0: Upgrades like EIP 1559 and PoS will reduce Ether supply and expedite transactions, revolutionizing the industry and stimulating DeFi and NFT growth.

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How to Buy Cryptocurrency: Step-by-Step Guide 

If you're curious about how cryptocurrency works and why people are interested in it, the first step is to learn how to buy it. Various methods exist, including using exchanges or trading platforms, which typically involve these steps:

  1. Research: Explore different cryptocurrencies, their applications, and growth potential. Understand the technology behind your chosen crypto and its market position.
  1. Choose a wallet: Select a digital wallet to securely store your cryptocurrency. Options include hardware, software, and online wallets. Weigh the pros and cons before deciding.
  1. Pick an exchange or platform: Use an exchange or trading platform, such as Coinbase, Binance, or Kraken, to buy cryptocurrencies with your local currency.
  1. Create an account and deposit funds: Register by providing personal information and verifying your identity. Connect your financial details and deposit your desired investment amount.
  1. Purchase your cryptocurrency: With funds available, select your desired cryptocurrency and place a market or limit order.
  1. Secure your cryptocurrency: Transfer your purchased crypto to your wallet for safekeeping. Refrain from storing large sums on exchanges due to hacking risks.

Alternative Ways to Buy Cryptocurrency 

  • Decentralized Exchanges (DEXs): Exchanges on decentralized networks like Ethereum use smart contracts to automate transactions.
  • Peer-to-Peer (P2P) Exchanges: Platforms like Binance enable users to trade cryptocurrencies directly, often using escrow services for secure transactions.
  • Crypto ATMs: Some cities feature cryptocurrency ATMs allowing cash purchases, locatable via Coin ATM Radar.
  • Financial Services: Platforms like PayPal and Robinhood offer cryptocurrency trading but often impose heavy restrictions.

How to Store Cryptocurrency

One of the most important things to consider when investing in cryptocurrency is how to store it securely. This is where crypto wallets come in – digital tools designed to help you safely store and manage your cryptocurrencies. 

Custodial vs. Non-Custodial Wallets

Before we dive into the different types of crypto wallets, it's important to understand the difference between custodial and non-custodial wallets.

A custodial wallet is managed by a third-party service, such as an exchange, which holds the private keys to your cryptocurrency and has control over your funds.

A non-custodial wallet gives you full control over your private keys, meaning you are solely responsible for the security of your funds.

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Hot vs. Cold Wallets

Another way to categorize cryptocurrency wallets is by their connection to the internet. Hot wallets are digital wallets connected to the internet, making them more convenient but also more susceptible to hacking and cyber currency attacks.

Cold wallets are offline, making them more secure for long-term storage. However, they may be less convenient to access and use for everyday transactions. Both hot and cold wallets come in different forms.

Types of Crypto Wallets

Type of Wallet

Type of Storage

How it Works

Pros

Cons

Examples

Hardware

Cold, Non-custodial

Stores private keys on a physical device

Highly secure, immune to online hacking, portable

Can be lost or damaged, more expensive than other options

Ledger, Trezor, KeepKey

Software

Hot, Non-custodial

Stores private keys on a digital device (computer, smartphone)

Convenient, easy to use, supports multiple cryptos

Vulnerable to malware and hacking

Exodus, Electrum, Mycelium

Exchange

Hot, Custodial or Non-custodial

Private keys are stored by the exchange or retained by the user 

Convenient for trading and managing investments, easy to access

Susceptible to hacks, limited control over funds 

Coinbase, Binance, Ambire 

Paper

Cold, Non-custodial

Private keys are printed on paper or stored on a physical medium

Extremely secure, not connected to the internet, inexpensive

Can be lost, damaged, or stolen, not user-friendly for everyday use

N/A

Important Note on Exchange Wallets

It’s important to know that exchange wallets can be custodial or non-custodial, with some platforms offering users the option of choosing the style they prefer.

Custodial wallets are managed by the exchange, meaning users do not have direct access to their private keys, and the security of the funds is dependent on the exchange. Non-custodial wallets allow users to retain control over their private keys, providing greater control and security over their funds.

It is crucial for users to understand the difference between these types of wallets and choose the option that best aligns with their needs and risk tolerance.

How to Invest in Cryptocurrency

If you're interested in investing in cryptocurrency, there are a few different ways you can get started. Here are some of the most common types of cryptocurrency investing:

Investment

Description

Benefits

Drawbacks

Buy and Hold

Purchasing cryptocurrency and holding it for the long-term

Potential for high returns if the cryptocurrency appreciates in value

High risk of volatility and potential for significant losses

Trading

Buying and selling cryptocurrency frequently with the aim of profiting from short-term price movements

Potential for high returns if executed correctly

Requires knowledge of technical analysis and market trends

Mining

Using computer hardware to solve complex mathematical problems to validate transactions and earn cryptocurrency rewards, also called Proof-of-Work (POW) mining.

Potential for passive income through mining rewards

High upfront investment in hardware and electricity costs

Staking

Holding a certain amount of cryptocurrency in a wallet to participate in the network's consensus algorithm and earn rewards, also called Proof-of-Stake (POS) mining.

Potential for passive income through staking rewards

Requires a minimum balance of cryptocurrency and a compatible wallet

Initial Coin Offerings (ICOs)

Investing in a new cryptocurrency project by buying its tokens before it is listed on exchanges

Potential for high returns if the project succeeds

High risk of scams and fraudulent projects

Decentralized Finance (DeFi)

Investing in decentralized financial protocols and platforms built on blockchain technology

Potential for high returns through interest and yield farming

High risk of smart contract vulnerabilities and security breaches

What Are the Different Types of Cryptocurrency?

There are over 10,000 cryptocurrencies in circulation, making it essential to understand the various types and their potential value.

Let’s take a closer look at the different types of crypto assets and the top 10 most popular cryptocurrencies of 2024 based on their market capitalization.

What Are the Different Types of Crypto Assets?

There are various types of crypto assets, each with its own unique features, cryptocurrency uses, and potential benefits. By understanding the characteristics of each type, you can better evaluate their potential for investment or personal use.

Crypto Asset Type

Description

Examples

Payment Currencies

Digital currencies primarily used for crypto transactions and store of value.

Bitcoin, Litecoin, Ripple, Dash

Blockchain Economies

Platforms that enable the creation of decentralized applications (dApps) and smart contracts.

Ethereum, Cardano, Polkadot, Solana

Privacy Coins

Cryptocurrencies that focus on providing enhanced privacy and anonymity for transactions.

Monero, Zcash, Horizon, PIVX

Utility Tokens

Tokens that provide users with access to a product or service within a specific ecosystem.

Chainlink, Uniswap, Basic Attention Token, Polygon

Stablecoins

Cryptocurrencies designed to maintain a stable value, typically pegged to a fiat currency (USD-backed stablecoins) or collateralized by other cryptocurrencies (Algo stablecoins).

Tether (USDT), USDC, Binance USD (BUSD), Paxos Standard, DAI

Security Tokens

Tokens representing ownership in an asset, such as shares in a company or real estate.

tZERO, Blockchain Capital, SpiceVC, Lottery.com

Non-Fungible Tokens (NFTs)

Unique digital assets representing ownership of art, collectibles, or other digital goods.

CryptoKitties, CryptoPunks, Bored Ape Yacht Club, Rarible (Marketplace)

Decentralized Finance (DeFi)

Financial services built on blockchain technology, enabling lending, borrowing, and trading.

Chainlink, Compound, Aave, MakerDAO, Compound, Yearn.Finance 

Most Popular Cryptocurrencies

1. Bitcoin (BTC)

  • Crypto Asset Type: Payment Currency
  • Market Cap: $385 billion (as of March 2024)
  • Supply: 21-million coins limit

Bitcoin, the first-ever cryptocurrency, was created in 2008 by an individual or group of individuals known as Satoshi Nakamoto. In honor of Satoshi, each Bitcoin can be divided into cryptocurrency units called Satoshis or sats

Bitcoin uses blockchain technology, a distributed ledger secured through a proof-of-work algorithm to record all transactions. Before BTC, it would not have been possible to answer a question like, how does crypto currency work, but since its inception, BTC has paved the way for thousands of other crypto tokens.

Bitcoin's value has been highly volatile, with its worth increasing from $1 in 2011 to almost $20,000 in 2017. Despite losing its undisputed dominance, BTC remains the largest and most popular cryptocurrency, with a market capitalization that surpassed the $1 trillion mark in 2021.You can track the price of Bitcoin here

2. Ethereum (ETH)

  • Crypto Asset Type: Blockchain Economies
  • Market Cap: $172 Billion (as of March 2024)
  • Supply: Unlimited

Ethereum (ETH) is an open-source blockchain system that launched in 2015, with its own cryptocurrency, Ether. The platform can host other cryptocurrencies, called "tokens," through its ERC-20 compatibility standard.

In 2022, Ethereum transitioned to proof-of-stake, reducing energy consumption by 99.9% by merging the Beacon Chain with the existing Ethereum blockchain. Since its inception, Ethereum has experienced explosive growth, increasing from about $11 to around $1,565 by 2022, marking a +14,000% increase. You can track the price of Ethereum here

3. Tether (USDT)

  • Crypto Asset Type: Stablecoin
  • Market Cap: $72 Billion (as of March 2024)
  • Supply: Unlimited

Tether (USDT) is a stablecoin that mirrors the price of the U.S. dollar and was launched in 2014 as Realcoin (and later, USTether) on top of Bitcoin's blockchain.

Although it has faced controversies regarding its USD reserve claims and lack of public audit by an independent third party, it is still widely used and has expanded into Latin America with the launch of MXNT, a stablecoin backed by the Mexican Peso. You can track the price of Tether here.

4. Binance Coin (BNB)

  • Crypto Asset Type: Payment Currency
  • Market Cap: $43.5 billion (as of March 2024)
  • Supply: 200-million coins limit

Binance Coin (BNB) was launched in 2017 by Binance, the world's largest crypto exchange. It's used in Binance projects like Smart Chain and Trust Wallet and can be traded for other cryptocurrencies. 

BNB has a deflationary mechanism called BNB Auto Burn, permanently removing coins from circulation. Over 38 million tokens, accounting for 19.34% of its initial supply, have been destroyed to date. BNB's value has increased dramatically, rising from $0.10 in 2017 to around $289 in March 2024, a gain of nearly +288,000%. Track the price of BNB here.

5. USD Coin (USDC)

  • Crypto Asset Type: Stablecoin
  • Market Cap: $37.45 billion (as of March 2024)
  • Supply: Unlimited

USD Coin (USDC) is a stablecoin pegged to the US dollar, launched in 2018 by the Centre Consortium (founded by Circle and Coinbase). It's backed by cash and short-term US Treasury bonds, offering a safe haven for traders during times of volatility and enabling businesses to accept payments in digital assets. 

USDC is regulatory compliant, with verified cash reserves, and has partnerships with traditional financial institutions like BlackRock and BNY Mellon. As of July 31, 2022, the total reserves held by Circle consist of $42.3 billion in US Treasury Securities and $12.2 billion in cash deposits. You can track USDC here.

6. XRP Ledger (XRP)

  • Crypto Asset Type: Payment Currency
  • Market Cap: $18.75 billion (as of March 2024)
  • Supply: 100-billion coins limit

XRP Ledger (XRPL) was created in 2012 by Ripple Labs, featuring decentralized exchange and tokenization capabilities. Its applications include payments, DeFi, CBDCs, and stablecoins, with fast transaction speeds popular for businesses and cross-border travelers. XRP is a digital settlement token used on XRPL.

There are over 80 billion XRP coins in circulation, and as of March 2024, the price of XRP has risen by 6400% since the beginning of 2017, going from $0.006 to $0.39, making it one of the most promising cryptocurrencies on the market. You can track XRP here.

7. Cardano (ADA)

  • Crypto Asset Type: Blockchain Economies
  • Market Cap: $11 billion (as of March 2024)
  • Supply: 45-billion coins limit

Cardano is a proof-of-stake blockchain platform founded in 2017. Its native token, ADA, is used to operate the network and vote on changes. The platform aims to create a more transparent and fair society by allowing decentralized apps and smart contracts to be developed with modularity.

Cardano is energy efficient due to its use of proof-of-stake, and its technology is peer-reviewed for durability and stability.

Despite having relatively modest growth compared to other major cryptocurrencies, the price of ADA has still increased significantly since 2017, reaching an all-time high of $2.96 in 2021. You can track Cardano here.

8. Polygon (MATIC)

  • Crypto Asset Type: Utility Tokens
  • Market Cap: $9 billion (as of March 2024)
  • Supply: 10-billion coin limit

Polygon (MATIC) is a sidechain for Ethereum that offers faster and cheaper transactions using proof-of-stake and Plasma technologies. It was founded in 2017 to address Ethereum's scalability issues for decentralized applications (dApps). MATIC is the native cryptocurrency used for paying transaction fees and network governance on the Polygon network.

The value of MATIC tokens has grown significantly since its ICO, reaching $1.05 as of March 2024, a gain of +39,000%, making it one of the most successful ICOs in history. You can track MATIC here.

9. Dogecoin (DOGE)

  • Crypto Asset Type: Payment Currency (altcoin)
  • Market Cap: $8.63 billion (as of March 2024)
  • Supply: Unlimited

Dogecoin (DOGE) was founded in 2013 as a fun, light-hearted cryptocurrency based on the popular "doge" internet meme.

Despite having no real use case or technological innovation behind it, the crypto coin gained a significant following over the years, especially on social media platforms like Reddit and Twitter. This has led to many filling their Dogecoin wallets, hoping for massive gains on their way to the moon!

Most recently, Dogecoin has gained even more attention due to the public endorsement of Tesla CEO Elon Musk, who has repeatedly tweeted about the cryptocurrency and even sent it to the moon (literally) on a SpaceX mission.

While there is no limit on the number of Dogecoins that can be created, the coin's popularity and community support have led to impressive growth in its value. In March 2024, it skyrocketed to $0.07, representing a massive increase of +34,000%. You can track the price of Dogecoin here.

10. Binance USD (BUSD)

  • Crypto Asset Type: Stablecoin
  • Market Cap: $8.4 billion (as of March 2024)
  • Supply: 200-million coins limit

Binance USD (BUSD) is a stablecoin pegged to the US dollar, issued by Paxos in partnership with Binance and regulated by NYDFS. It was launched in September 2019 to combine the stability of USD with blockchain technology.

BUSD is the third-largest stablecoin by market cap after USDC and Tether. Its market cap grew from $1 billion to over $14.6 billion in 2021 and it is used for charity purposes due to its low-risk nature. Track BUSD here.

The legal status of cryptocurrencies varies. Currently, there are around 150 countries that have legalized the use of cryptocurrencies to some extent. In most cases, cryptocurrencies are treated as assets or commodities, subject to taxation and regulation.

However, there are also several countries where crypto currencies are either illegal or their legal status is unclear. Let’s take a closer look at these.

  • Algeria, Bangladesh, Bolivia, China, Egypt, Iraq, Morocco, Nepal, Pakistan, Qatar, Tunisia, and Vietnam: These countries have explicitly banned cryptocurrencies.
  • India: In 2018, the Reserve Bank of India banned banks from dealing with cryptocurrency, effectively restricting the use of digital currency in the country.
  • Iran: In 2019, Iran’s central bank banned the trading of cryptocurrencies, but the government has since approved their use for imports (with strict regulations). 
  • Russia: In 2022, the government banned the use of cryptocurrency as payment for goods and services in the country. 

The legal status of cryptocurrencies is constantly evolving, and regulations can change quickly. For example, many countries have recently introduced laws to combat money laundering and terrorism financing in cryptocurrency. As such, checking the latest laws and regulations in your jurisdiction is always recommended before investing in or using cryptocurrencies.

What Are the Pros and Cons of Cryptocurrency?

While cryptocurrencies offer many advantages, such as decentralization and low transaction fees, they also have their fair share of drawbacks, including volatility. Let’s have a look at a quick overview of the benefits and challenges associated with this emerging technology. 

Pros

Cons

Decentralized: Not controlled by any central authority or subject to government or banking regulations.

Volatility: Known for their volatile nature, which can lead to significant price fluctuations.

Anonymity: Transactions made with cryptocurrencies provide a level of privacy that is not possible with traditional payment methods.

Security: Vulnerable to hacking and cyberattacks.

Low Transaction Fees: Cryptocurrency transactions typically have lower fees than traditional payment methods.

Adoption: Not widely accepted as a form of payment, which limits their usefulness in everyday transactions.

Accessibility: Can be easily traded and accessed by anyone with an internet connection, regardless of their location or financial status.

Complexity: Can be difficult to understand and use, especially for those with no prior background in finance. 

Potential for high returns: Have the potential to generate significant investment returns.

Lack of Regulation: The lack of regulation in the cryptocurrency market can make it more vulnerable to fraud and scams.

Conclusion

If you’ve been pondering what is cryptocurrency or what's crypto for anyway, know this: it has the potential to transform the way we think about money and finance. This means that understanding crypto currency has become essential in our ever-evolving global economy.

With its decentralized nature and powerful cryptography, it offers many advantages over traditional currencies and payment systems. However, it's important to understand that cryptocurrency has risks and challenges and that the technology is still evolving and maturing.

By keeping up with the latest trends, staying informed about the most popular cryptocurrencies, and taking the necessary precautions to protect your investments, you can become a successful cryptocurrency user and investor in this exciting and rapidly changing field.

Want to learn even more about Crypto? Check out

The Best Crypto Courses

Frequently Asked Questions

1. What Is Cryptocurrency and How Does It Work?

So, what are crypto coins? Well, cryptocurrency is a digital currency that operates independently of a central bank or government. It uses a technology called blockchain that records transactions across a network of computers, ensuring security and transparency.

2. Is Cryptocurrency Real Money?

If you’re wondering what is crypto money, or is it real? Well, some consider cryptocurrency to be real money, but others argue that it lacks some of the key characteristics of traditional currencies, such as stability and widespread acceptance. 

3. What Is a Cryptocurrency Example?

The most popular example of a cryptocurrency is Bitcoin (BTC). Other examples include Ethereum (ETH), Litecoin (LTC), Ripple (XRP), and Dogecoin (DOGE), among many others. 

4. How Do You Explain Cryptocurrency to a Beginner?

Ever had someone ask, what are cryptos? Well, cryptocurrency is a digital currency that is not controlled by a government or a bank. You can use it to buy things, just like regular money, or you can hold onto it as an investment, hoping its value will increase over time.

5. Can Cryptocurrency Be Converted to Cash?

Yes, cryptocurrency can be converted to cash through various methods, such as selling it on a cryptocurrency exchange platform, peer-to-peer trading, or using cryptocurrency ATMs. 

6. Why Is Cryptocurrency the Future of Finance?

If you’re still wondering, what's the point of cryptocurrency? Well, for many, it’s the future of finance because it offers several advantages over traditional financial systems. This includes fast transactions, decentralization, and the potential to make financial services more accessible and affordable. 

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By Maya Maceka

Maya Maceka is a writer from Canada who is passionate about technology and innovation. She is a specialist in DeFi, including blockchain technology, cryptocurrencies, and NFTs. "Blockchain is going to change the way our world works — it's the future of content."

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