As of 2025, digital currencies have been around for over 16 years, so it’s safe to say they’ve moved well beyond the novelty phase, when acceptance and adoption levels were extremely low. The general population has warmed up to crypto quite a bit over time, a fact confirmed by the existence of a growing crypto user base, which currently amounts to more than 560 million cryptocurrency owners. As crypto continues to expand its presence and role into the mainstream, public awareness and understanding of this asset class are also naturally expected to increase.
However, crypto and blockchain are far from being accessible topics. They represent elaborate innovations whose inner workings and technical features remain quite difficult to comprehend for the average individual. People may be familiar with the likes of Bitcoin and Ethereum, but when it comes to more complicated matters like making sense of crypto predictions, whitepapers, price dynamics, or the regulatory landscape, confusion usually sets in.
Most still have a lot of questions about crypto, and rightfully so, since the industry continues to evolve rapidly, adding new layers of complexity to an already dense and intricate domain. Since it’s pretty clear that crypto is not going anywhere, but will most likely become more integrated into our daily lives and financial systems, advancing your crypto education is probably a smart thing to do. So, let’s start by answering some of the most common crypto-related questions.
What is crypto?
Crypto, short for cryptocurrency, is a new type of money, one that has no physical presence as it only exists in digital format, which is why it’s also referred to as digital currency. Bitcoin, Ethereum, Solana, Binance Coin, or Dogecoin are all examples of cryptocurrencies. Crypto introduces a new paradigm for transferring value that doesn’t require intermediaries, like fiat money does, allowing users to send and receive payments directly via electronic means.
Over the years, there have been many attempts at creating digital currencies that could transcend central controls, with the earliest efforts dating back to the 80s and 90s, when cryptographer David Chaum invented eCash. Each venture contributed to some extent to the development of crypto as we know it today. However, Bitcoin was the first project that managed to put the concept of digital money into practice and make it available to the general public in 2009.
How do cryptocurrencies function?
To answer this question, we have to go behind the scenes and delve into the technology that supports their existence. The vast majority of cryptocurrencies, including market leaders Bitcoin and Ethereum, are underpinned by blockchain technology. Blockchains are distributed digital ledgers that can register transactions by grouping them into interrelated blocks on a chain, secured by cryptography. A network of computers, also known as nodes, is in charge of validating these transactions and adding them to the chain.
This means there is no central entity, like a bank or financial institution, that controls these operations. Users can simply transfer digital coins directly to one another, ensuring faster, safer, and more transparent transactions. Crypto projects use different protocols like Proof-of-Work (PoW) or Proof-of-Stake (PoS) to reach consensus and validate transactions, which changes the mechanics of how blockchains function quite a lot.
What gives crypto its value?
Critics often say that digital currencies are worthless because they are not issued by an official authority and don’t have any intrinsic qualities to justify their value. But then why is Bitcoin currently estimated at around $115,499? Well, virtual coins derive their value from a combination of interconnected factors, with supply and demand dynamics playing the most significant role, as is the case with all types of assets.
There are various things that can drive demand for a crypto. People are usually drawn to digital coins because of their decentralization, but most tend to favor projects that have a clear value proposition and real-world applications. For example, Ether powers smart contracts, while XRP plays a key role in supporting Ripple’s services. Other aspects like scarcity, market sentiment, innovation and development, regulations, user base, and macroeconomic forces also have a say in the matter.
What is crypto used for?
Digital currencies boast various use cases, but they’re mostly used for trading and investing, storing value, and making digital payments. Beyond these primary functions, cryptocurrencies can also serve other purposes depending on their technical structure and characteristics.
Some are used to facilitate decentralized finance (DeFi) services, or send money across borders, enhancing financial inclusion and offering an alternative to traditional remittance systems. Others represent ownership of real-world assets or aid with digital identity verification. Crypto can be used in many ways, and with new innovative projects launched all the time, its use cases are expanding across new domains.
What can one purchase with crypto?
Quite a lot of things, actually. Crypto may have gone from a means of payment to an investment mechanism, but it can still be used to purchase goods and services, as many companies have started accepting it as a payment option, either directly or through third-party apps.
Some of the things you can buy with crypto include:
- travel and hospitality services – companies like Expedia, Travala, and Destinia allow you to book hotels and flights using Bitcoin or other cryptocurrencies.
- electronics – on platforms like Newegg or through gift card services
- foods and drinks – at select cafes and restaurants in crypto-friendly locations
- luxury goods – high-end items like clothes, watches, cars, and jewelry from brands like Gucci, Balenciaga, Hublot, and Lamborghini.
Is crypto a legitimate currency?
That’s a very nuanced topic, as are most things in the crypto realm. First of all, crypto legality varies significantly by country, with some nations accepting and regulating digital currencies while others banning them entirely. Crypto is currently accepted as a legal tender in El Salvador. As for the rest of the world, every jurisdiction has its own approach to crypto regulation, which leads to a very fragmented legal landscape.
The one thing you need to keep in mind is that for now, crypto is not on par with national currencies, since it remains a highly volatile financial instrument that doesn’t benefit from government backing or the same protections as traditional assets.
There are certainly many other interesting and important aspects of crypto to explore, so we encourage you to continue your research and do your due diligence to increase crypto literacy.