What Is Cryptocurrency?

A cryptocurrency is a decentralized digital currency that uses cryptography for security and runs on a blockchain — a public ledger that records all transactions.

Examples of Major Cryptos:

• Bitcoin (BTC) – The first and most popular; often seen as “digital gold.”
• Ethereum (ETH) – Enables smart contracts and decentralized apps (DeFi, NFTs).
• Binance Coin (BNB) – Used in Binance’s ecosystem.
• Solana (SOL) – High-speed blockchain for decentralized apps.
• Stablecoins (USDT, USDC) – Pegged to the US dollar to reduce volatility.

How the Crypto Market Works

• Traded on crypto exchanges (e.g., Binance, Coinbase, Kraken, Bybit).
• Prices are based purely on supply and demand — no central authority sets them.
• Transactions are peer-to-peer, verified by miners or validators on the blockchain.

Ways to Invest or Trade

1. Buy and Hold (HODL)

Buy crypto and hold long-term, expecting future growth.

👉 Similar to long-term investing in stocks.

2. Trading

Buy and sell frequently to profit from price movements.

• Spot trading: Immediate buying/selling.
• Futures trading: Speculate on price direction with leverage.
• Margin trading: Borrow funds to trade larger positions (high risk!).

3. Staking & Yield Farming

Lock your crypto to earn rewards or interest.
Example: Stake ETH on the Ethereum network for ~4–5% APY

4.DeFi (Decentralized Finance)

Use smart contracts to lend, borrow, or trade without banks.

Risk

• Volatility: Crypto prices can change 10–30% in a day.
• Security risks: Hacks, scams, and lost wallets are common.
• Regulation: Rules differ by country and can affect prices.
• No protection: Unlike banks, there’s no FDIC insurance or central backup.

How to Stay Safe

• Use reputable exchanges (Binance, Coinbase, Kraken).
• Store large amounts in a hardware wallet (Ledger, Trezor).
• Enable 2FA and never share your private keys.
• Beware of rug pulls, fake tokens, and “guaranteed profit” schemes.

Example

If you believe Ethereum will rise:

• Buy ETH on Binance or Coinbase.
• Hold it in a wallet or stake it for rewards.
• If you think the market will fall, you could short crypto futures — but this is risky.