Understanding the basics of cryptocurrency
The financial landscape has changed dramatically since the inception of cryptocurrency. If you don’t know where to start with it all, try this article. Here, we provide a detailed overview, discover its purpose and explain how you can get started with crypto trading.
What is cryptocurrency?
In layman’s terms, cryptocurrency is just a digital form of money. Unlike traditional currencies, such as the Canadian dollar, cryptocurrencies operate on decentralized networks through something called blockchain technology.
A blockchain is a distributed ledger that hosts and records all transactions across a network of computers, helping to ensure transparency and security.
Bitcoin was introduced in 2009 and is the most well-known cryptocurrency. Since then, thousands of cryptocurrencies have emerged, including Ethereum, Litecoin and Ripple, each with its own value.
How and why were cryptocurrencies created?
It’s widely believed that crypto was created to offer an alternative to traditional financial systems. Many are centralized, meaning they’re controlled by governments and large financial institutions.
Bitcoin, the first cryptocurrency, was developed in response to the 2008 financial crisis. It aimed to create a peer-to-peer system that enables individuals to conduct transactions without intermediaries like banks – the organisations that caused the global economic crash.
Along with financial security and inclusion, cryptocurrencies enable faster and cheaper transactions. This is valuable for cross-border payments, which are more costly and complex when using conventional banking systems.
What are cryptocurrencies used for?
Cryptocurrencies can be used for many different things, just like traditional money:
- Payments: Crypto is accepted by some companies and individuals as a form of payment for goods and services.
- Investment: Many buy, hold and sell cryptocurrencies as investments, hoping their value will increase over time. Derivatives based on their value can also be traded.
- Decentralized Finance (DeFi): A wave of new financial services using crypto, including lending and borrowing. These can happen without the need for traditional intermediaries.
How to get started with cryptocurrency trading
If you’re interested in exploring crypto trading, here’s how to begin:
- Research: Start by researching the different types of cryptocurrencies and their markets. Bitcoin and Ethereum are the biggest and most established, but small ones can be just as rewarding.
- Choose a trading platform or crypto exchange: You can buy and sell crypto assets or trade derivatives based on their underlying value. To do the first, you’ll have to sign up for a crypto exchange. For the second, you’ll need to find the right crypto trading platform.
- Create a wallet: Cryptocurrencies are stored in digital wallets. Some exchanges offer integrated wallets but, for added security, you may want to consider using an external one. These can be software (hot wallet) or hardware-based (cold wallet).
- Start small: As with any investment, start small and gradually increase your exposure as you become more familiar with the market. Crypto can be highly volatile, so invest more than you can afford to lose.
Last Updated on September 7, 2025
