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Cryptocurrency Explained: What You Really Need to Know

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Forget everything you think you know about money. Cryptocurrencies are not physical money that you keep in your wallet—they are digital records on a decentralized network called blockchain. No banks, no governments, no fixers sticking their nose in.

Why is it called that?

The word “cryptocurrency” comes from the advanced encryption that protects each transaction. Think of it this way: while traditional banks verify your movements, cryptography takes care of doing it securely and anonymously. It's like having a mathematical lock on every transaction.

The actual operation

Cryptocurrencies operate on a distributed public ledger. Everyone can see the transactions, but no one knows who is who ( unless you reveal it ). When you send Bitcoin to someone, you are not sending an object—you are sending the key that proves that coin belongs to you and now belongs to another person.

New coins are created through mining: computers solve complex mathematical problems and receive coins as a reward. It is competitive, requires energy, but that's how it works.

The most well-known

Bitcoin (2009): The grandfather of it all. It still remains the queen of the crypto market, created by someone (or a group) under the pseudonym Satoshi Nakamoto—its true identity remains a mystery.

Ethereum (2015): It's not just money, it's a platform. Its coin is called Ether (ETH) and it revolutionized the crypto world by enabling smart contracts and decentralized applications.

Litecoin: The “faster” version of Bitcoin. It processes transactions more quickly and with greater capacity.

Ripple (2012): Another oddity. It's not just for cryptocurrencies—it's a system for tracking all kinds of transactions. Banks have a certain fondness for it.

The data that matters

There are thousands of cryptocurrencies today. Those that are not Bitcoin are called “altcoins”. Most will die. Some will make millionaires. That is the nature of the game.

The most important thing: when you have cryptocurrencies, you don't have a paper or anything physical. You have a private key. Losing that key = losing everything. That's how real it is.

BTC1.66%
ETH5.13%
LTC3.77%
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This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
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