What Is Cryptocurrency?
Cryptocurrency is a type of digital money that exists only online. Unlike traditional money, like New Zealand Dollars, it’s not controlled by banks or governments. It was invented to create a new way to send and receive money without relying on central authorities, offering more freedom, lower costs, and a sound money system. This guide explains crypto in simple terms for beginners.
Why Was Crypto Invented?
Crypto was created to address flaws in traditional money systems. In 2008, Bitcoin, the first cryptocurrency, was invented by an anonymous person (or group) called Satoshi Nakamoto. The aim was to allow people to send money directly to each other without banks or governments charging high fees or exerting control. Bitcoin was also designed to be a sound money system, with a fixed supply (21 million coins) to resist inflation, unlike traditional currencies that can be printed endlessly. Crypto seeks to give people more control over their money, make global payments faster, and help those without access to banks, especially in regions with unstable economies.
How Does Cryptocurrency Work?
Think of cryptocurrency as digital cash you can send to anyone, anywhere, without a middleman. Here’s how it works:
It’s Powered by Blockchain
A blockchain is like a public digital ledger that records every transaction. It’s stored on thousands of computers worldwide, so no single person or company controls it. This makes it secure and hard to tamper with. Blockchain was invented alongside crypto to ensure transactions are transparent and trustworthy without needing banks.
You Store It in a Wallet
To use crypto, you need a digital wallet - a secure app or device that holds your crypto. It’s like a bank account, but you’re in charge. Wallets have a private key (like a password) you must keep safe.
You Can Send or Receive It
You can send crypto to anyone, anywhere in the world providing they have a crypto wallet address (like a bank account number). Transactions are fast, often cheaper than bank transfers, and work globally, which was a key reason crypto was invented - to make payments easier, more accessible, and inflation-resistant worldwide.
Why People Use Cryptocurrency?
Crypto’s design offers unique benefits tied to why it was invented:
No Middleman: You don’t need a bank to send money, cutting fees and delays, as crypto was meant to do.
Global Access: Anyone with internet can use it, especially in places with limited banking, fulfilling crypto’s goal of financial inclusion.
Privacy: Transactions don’t require personal details, though they’re visible on the blockchain, aligning with the aim of user control.
Sound Money: Bitcoin’s fixed supply of 21 million coins protects against inflation, offering a stable alternative to traditional currencies.
Innovation: Crypto supports new ideas, like digital art (NFTs) or decentralised apps, building on its vision to rethink finance and technology.
But there are risks, like price swings and scams. Always research before jumping in, and check our Crypto Scams guide for tips on staying safe.
Popular Cryptocurrencies
There are thousands of cryptocurrencies, but here are the main ones:
Bitcoin (BTC): The first major cryptocurrency, created in 2008 and the largest by market cap.
Ethereum (ETH): Built to power apps and contracts on its blockchain, expanding crypto’s use beyond just money.
Tether (USDT): A “stablecoin” linked to the US dollar, designed to keep a steady value for easier transactions.
Our Thoughts On Cryptocurrency
We believe cryptocurrency plays an important role in today’s world and will become even more significant in the future. Traditional money systems are faltering - governments and central banks keep printing money, causing inflation that erodes its value. Bitcoin, with its fixed supply of 21 million coins, offers a solution as “sound money,” designed to resist inflation and hold its worth over time.
Crypto also makes practical sense. It enables fast, global transfers that are often cheaper than bank fees, cutting out middlemen like financial institutions. This efficiency empowers individuals, especially in regions with limited banking access, to manage their money directly.
The growing adoption of cryptocurrency by governments, major corporations, and institutions worldwide further strengthens its case. From companies like Tesla investing in Bitcoin to countries exploring digital currencies, crypto is gaining mainstream trust. This trend signals a future where digital money could redefine finance, offering security, transparency, and freedom.
That said, crypto isn’t without risks—price volatility and scams are real concerns. We recommend staying informed and cautious. In our view, cryptocurrency’s potential to transform money, backed by its sound principles and increasing acceptance, makes it a compelling part of the financial future.
Want To Learn More?
If you’re curious about crypto and want to dive deeper, CryptoHub offers online 1-on-1 crypto courses tailored for beginners or anyone interested in learning. Our expert-led sessions teach you everything you need to know, from understanding blockchain to safely buying and storing crypto. You can find our available courses here.
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