BASICS6 min read

What is Cryptocurrency?

Name: Awarizon SDK
Author: Awarizon

Digital money secured by mathematics and running on blockchain

Cryptocurrency is digital money that runs on blockchain technology. Unlike the money in your bank account, no government prints it and no bank controls it. It is created, sent, and received through a global network of computers using cryptographic mathematics.

What makes it "crypto"?

The "crypto" in cryptocurrency refers to cryptography — the mathematical science of securing information. Every transaction on a blockchain is signed with a private key (a long string of random numbers) that is mathematically impossible to fake. Only the rightful owner of the private key can authorize a transaction.

This means two strangers can transact directly — without a bank in the middle to verify identity or hold funds. The cryptography does the verification work instead.

◆Bitcoin (BTC) — the first and largest cryptocurrency. Created in 2009. Designed to be digital gold: a scarce, censorship-resistant store of value. Fixed supply of 21 million coins.
◆Ethereum (ETH) — the first programmable blockchain. Not just currency but a platform for smart contracts, DeFi, NFTs, and DAOs. Powers the majority of the Web3 ecosystem.
◆Stablecoins (USDC, USDT, DAI) — crypto designed to maintain a stable price, usually pegged 1:1 to the US dollar. Used for payments, savings, and DeFi.
◆Altcoins — all other cryptocurrencies. Some are built on Ethereum (ERC-20 tokens), others run on their own blockchains. Thousands exist, with varying legitimacy.

💡Best entry point for most users

Stablecoins like USDC are often the most practical entry point. They have crypto's benefits (instant transfers, self-custody) without the price volatility — making them ideal for payments, savings, and cross-border transfers anywhere in the world.

Every crypto user has a wallet with two components: a public address (like your bank account number — share it freely to receive funds) and a private key (like your PIN — never share this with anyone).

01You create a transaction: "Send 0.01 ETH to wallet address 0x123..."
02You sign the transaction with your private key (your wallet does this automatically)
03The signed transaction is broadcast to the blockchain network
04Nodes verify your signature is valid and you have sufficient funds
05The transaction is included in the next block
06After a few block confirmations, the transaction is final and irreversible

ℹGas fees

Most blockchain transactions require a small fee paid to the validators who process them. On Ethereum, this is called "gas." On faster chains like Polygon or BNB Chain, fees are fractions of a cent.

Mining (Proof of Work)

–Computers solve complex math puzzles
–Winner adds the next block
–Earns newly created crypto as reward
–Energy-intensive
–Used by Bitcoin

Staking (Proof of Stake)

–Validators lock up crypto as collateral
–Randomly selected to add blocks
–Earns transaction fees as reward
–Energy-efficient
–Used by Ethereum, Solana, most modern chains

KEY TERMS GLOSSARY

Wallet

Software or hardware that stores your private keys and lets you send/receive cryptocurrency.

Private Key

A secret number that proves ownership of a wallet. Anyone with it controls the funds.

Public Address

Your crypto "account number" — safe to share. Derived mathematically from your private key.

Gas

The fee paid to process a transaction on Ethereum and EVM-compatible chains.

Token

A cryptocurrency that runs on an existing blockchain (e.g., USDC on Ethereum), as opposed to a native coin (ETH on Ethereum).

Staking

Locking up cryptocurrency to participate in network validation and earn rewards.

What is Cryptocurrency?

What makes it "crypto"?

What is Blockchain?

Custodial vs Non-Custodial Wallets

What is DeFi?