Today, it’s going to be pretty hard to find someone who’s never heard of cryptocurrency. However, just as everybody probably knows what a smartphone is, only a few really understand what crypto is.
We’ll get into more details later, but spoiler: cryptocurrency is a form of digital money built on blockchain technology.
Let’s dive in, learn how it works, what its advantages and risks are, and where it can be used in 2025.
What Is Cryptocurrency and Why Is It Called “Crypto”?
The term “crypto” naturally refers to “cryptocurrency” which is, in very brief, a digital currency that uses cryptography, an advanced encryption method that secures the network. It is often called “crypto” simply because it’s faster, same as saying “app” instead of “application” or “memo” instead of “memorandum” for example. Just a common everyday language thing.
Definition and General Overview of Digital Currencies
A bit more precisely now, a crypto is a decentralized digital asset that exists on a network without the involvement of banks and intermediaries. Instead, it relies on blockchain technology. You can think of this technology as a public ledger stored in multiple computers, containing digital transactions that everyone can view.
In theory, we all have equal theoretical control over this digital asset. Meaning, the holders of the crypto have influence on the network, and how much is directly related to how much crypto you’re holding within the specific blockchain (but that depends on the network).
The Role of Cryptography in Securing Transactions
The cryptocurrency transactions recorded in the blockchain are authenticated through a process known as a cryptographic signature. This is the proof that the crypto fund's owner initiates this digital transfer.
However, cryptography doesn’t work alone. It tags teams with encryption, which makes the transaction practically impossible to alter or reverse.
How Does Cryptocurrency Work Behind the Scenes?
From the end of the wallet owner, any crypto transfer works the same as transferring fiat money from a bank account. But when you pierce the veil, you’ll learn that there are a lot of forces at work to transmit and verify crypto transactions securely. We’ll talk about the most critical processes in the following subsections.
Blockchain Technology: The Foundation of All Cryptocurrencies
Blockchain is a distributed ledger where each transaction is recorded as a block and protected against forgery. You can’t alter the details of the transfer once it’s added to the block, almost like a bad picture from your high school yearbook. It’s immortalized and everyone in the network has a copy of the same ledger.
The longer ago the buy has occurred, the more secure and trustworthy it becomes. With new transactions coming in, new blocks are created, placing you deeper into the blockchain.
This makes any attempt at fraud too expensive and time-consuming for the hacker, as they need to go through every block that comes after before they can modify yours (and they need control of at least 51% of the network to do it, so basically they can’t).
Decentralized and Peer-to-Peer Transaction Networks
The decentralized nature means that each of us has a role in keeping accurate records. As we’ve established, every time you buy or exchange something involving crypto, it’s recorded in the blockchain. Every node, which is what you use to connect to the crypto network, checks the validity of the transfer.
But there’s another layer to the blockchain’s checks and balances: the validators. They’re the ones who put the details of the transfer in the block.
Mining, Staking, and Consensus Mechanism
Let’s say a transaction is validated. Consider this a “test” that the transaction has to pass before it’s immortalized on the blockchain. This is done through any of the following validation methods:
There are other ways that the validation process can work. But so far, only these three have taken off.
Which Are the Most Popular Cryptocurrencies Today?
There are more than 17,000 crypto coins in circulation today, but most of them haven’t made an impact. Among all cryptocurrencies, some have managed to stand out in terms of adoption, market value, or real-world use.
Bitcoin (BTC): The Original Digital Currency
Bitcoin was the pioneer cryptocurrency, the one that kickstarted the ecosystem and inspired so many others. It’s now considered a major investment asset to consider for anyone and still drives the crypto market and adoption. Its price increased immensely over time, through cycles (called bullrun), and the more it did, the more it gained popularity. In 2017, one family even sold everything they had to buy as many bitcoins as they could afford.
It was originally created by Satoshi Nakamoto in 2009 (with its whitepaper published in 2008), a time of crisis when many people were starting to not trust the banks anymore. And while only tech enthusiasts were initially interested in it, BTC gained mainstream attention when it reached $5,000 for the first time in 2017, and even more recently when it passed the $100,000 bar.
Today, Bitcoin is more than just the first of its kind. It’s considered the gold standard of crypto because its value drives the value of other cryptocurrencies.
Ethereum (ETH): Smart Contracts and Decentralized Apps
Ethereum pioneered Web3 with the use of cryptocurrency for smart contracts. These are contracts encoded into the blockchain that are automatically executed once the specified conditions are met. Let’s say that you and a friend decided to exchange tokens after a specific date. The smart contract enforces it automatically, meaning you don’t need an intermediary to facilitate the transfer.
Another innovation that ETH introduced to the world is decentralized apps, or dApps. Unlike Candy Crush and other time-consuming apps that are stored on a single server, dApps are run directly on the blockchain itself. Since the blockchain doesn’t have a single point of control, dApps become less prone to fraud and downtime compared to traditional apps that rely on centralized servers.
Litecoin (LTC) and Other Longstanding Coins
BTC and ETH are easily considered the two main powerhouses in the crypto world. However, they’re not the only coins worth examining. Throughout the years, other coins have managed to build and maintain interesting projects.
Before ETH came into the picture, there was Litecoin (LTC), sometimes seen as the silver to Bitcoin’s gold. Like BTC, it uses proof-of-work to validate transactions. However, because it has a faster block time and validation time, it’s preferred for transactions.
There are other long-standing coins that managed to stay in the game. This includes XRP, which is widely used for cross-border payments, and DOGE, which thrives due to its active community and use in microtransactions.
How Does Cryptocurrency Differ from Traditional Fiat Money?
Both fiat and cryptocurrencies can be used to make transactions and as a store of value, but that’s where the similarities end. For a very quick summary, you can refer to the table below:
Let’s take a closer look at the differences now.
Structural and Technological Differences
Fiat money, such as USD or EUR, is issued by the central bank. It relies on a traditional banking infrastructure to circulate the currency. So, even if the internet completely disappears tomorrow, people can still exchange them through paper cash.
On the other hand, crypto won’t survive without the internet, unless you’re using trusted hardware. This is because it’s decentralized via the blockchain which means that for there to be crypto transactions or access your hot wallet, you need some form of internet access.
Regulation, Control, and Trust Models
- Regulation – Local financial and international authorities regulate fiat money, and they establish rules that impact the integrity of the financial institution itself. This includes interest rates and the amount of money in circulation, among other factors. Although crypto is regulated too, no one can change how many BTC will be issued.
- Control – With cryptocurrencies, you’re the only owner of your assets and can forget about the bank blocking your transaction or asking for justification. The trust is based on code and system transparency, rather than a central authority.
- Trust – People trust fiat money because governments say it has value. Banks and other financial institutions help make sure that records are accurate. However, with cryptocurrencies, transactions are publicly recorded on the blockchain. Cryptography and encryption serve as a substitute for central authorities to secure and validate every buy and sell transaction.
Inflation Management and Supply Limitations
With fiat money, the central bank can print more money or restrict the amount of cash in circulation based on the economy's needs. And when inflation is high, they can control it by creating more restrictive monetary policies to help stabilize prices (in theory).
Meanwhile, cryptocurrencies can fluctuate in either direction. For example, there is a maximum supply of 21 million Bitcoins. And once all of those have been mined, no one can magically produce more. And even though Ethereum doesn’t have a maximum supply, both utility demand and the burning mechanism help maintain its value from taking a nosedive.
In both cases, scarcity helps protect crypto from inflation.
What Are the Main Benefits of Using Crypto for Digital Transactions?
There are numerous items that you can purchase now using cryptocurrency. And for the most part, this has been welcomed by consumers because of the following:
- You have more freedom to spend your money how you want – There’s no bank or central authority constantly snooping on how much money is going in and out. So, if you hypothetically want to spend $1 million in one go, you’re free to do so.
- There’s no need for constant conversions – A unit of cryptocurrency is recognized everywhere in the world, which may eliminate the need to convert currencies and pay any associated fees. This makes crypto an excellent option for cross-border payments.
- There’s a higher level of security and transparency – Blockchains are designed to have redundant security measures to prevent double-spending. At any time, you can verify the details of your transaction without revealing any sensitive information.
- Higher growth potential – Crypto value is based on the project, technology developer, and tokenomics, all of which contribute to creating interesting investment opportunities.
What Are the Common Risks and Challenges of Cryptocurrency?
Although cryptocurrencies have advantages over fiat money, they’re not perfect. It’s just as important to learn about the potential downsides so that you can protect yourself against them.
Unfortunately, despite recent developments in regulating crypto, many countries still lack robust legal frameworks. If you are scammed, it may be more challenging to pursue the scammer in a country with limited crypto-related laws. Transactions are also irreversible. So, even if you find the culprit, you can’t necessarily make them give you your money back.
Another concern is how wallets are secured by private keys instead of your personal details. So, if you lose the keys, the funds are gone forever. And if you put your eggs in the crypto market, be prepared to ride out the volatility. The value of a coin may be able to go way higher than your traditional stock, but it can also go down just as quickly.
Fortunately, you can mitigate many of these issues by being smart about how you use crypto. Stick with safe storage and exchange options and diversify your investments. Just doing these can save you a lot of trouble.
How Can You Buy Crypto Safely?
Safely buy and invest in cryptocurrencies and assets by following these steps:
- Limit the risk to your devices – This means updating the device, as well as all its apps, to receive the latest security patches. Remove any suspicious apps or extensions as well.
- Use a reputable exchange – The same way that you won’t just get in a shady man’s car, you shouldn’t just go with any crypto exchange. Choose a trusted and regulated platform like Venga (secured by Ledger Enterprise and registered with the Bank of Spain and the Polish Ministry of Finance).
- Ramp up security – When possible, don’t forget to activate the multi-factor authentication or use biometric login. You can also use a reliable password manager to securely store long and unique passwords.
- Verify your identity – To comply with regulations, regulated platforms require a quick identity verification, also known as KYC, which only takes a few minutes to complete.
- Fund your account – Once your account is set, you can deposit funds there, but feel free to start small to test it out first.
After these, you’re safe to buy your first crypto!
How Do You Store Cryptocurrency Securely?
There are three ways to secure your crypto. Use the table below to understand each of them and which is the best for you:
If you’re just getting started, Venga lets you buy, sell, swap, earn, and exchange crypto very easily in just one app. We’ve made our platform beginner-friendly to make crypto investment more accessible.
What Can You Buy with Cryptocurrency in 2025?
This will largely depend on where you’re planning to buy. But to give you an idea, here are the purchase possibilities when using crypto: literally, everything! From everyday items to physical real estate properties, cryptocurrency can now be used to make purchases using a related card, which automatically swap your crypto into euros at the payment.
Cryptocurrencies have come a long way from being just novelty tokens that tech enthusiasts can purchase. Today, if you can buy something with fiat currency, then you can also buy it with cryptocurrency.
Still, the places where direct crypto payments are accepted are relatively limited depending on the countries. However, the gap between what fiat and crypto can purchase is now dwindling,
Conclusion: Is Cryptocurrency the Future of Global Finance?
We do not doubt that the market share of crypto will continue to grow, such as its daily usage. More industries are now accepting cryptocurrencies as a form of payment. So, people are more confident that it will gather even a greater level of interest in the future.
However, we don’t see it having the same impact as precious metals replacing salt as currency. Although blockchain technology may be secure, cryptocurrencies are simply too volatile. So, as heavily used as crypto assets may be today, Bitcoin is still treated with skepticism, especially against centuries-old institutions that are just “too big to fail”.
Cryptocurrency remains an era-defining technology that has created numerous opportunities to secure financial transactions and generate wealth. It is set to evolve with technologies and infrastructures, and the crypto actors are striving to make it more widely adopted as a mainstream financial tool.
Disclaimer: The content provided in this article is for educational and informational purposes only and should not be considered financial or investment advice. Interacting with blockchain, crypto assets, and Web3 applications involves risks, including the potential loss of funds. Venga encourages readers to conduct thorough research and understand the risks before engaging with any crypto assets or blockchain technologies. For more details, please refer to our terms of service.