What Is Cryptocurrency?

Cryptocurrency in plain language

Cryptocurrency is digital money whose ownership and transaction history are recorded on a shared ledger called a blockchain, rather than in a single bank's private database. No physical coins or notes exist — what exists is a verifiable record of which address controls which units.

How it differs from money in a bank account

A bank account balance is a private record that one institution maintains and can freeze, reverse, or restrict. Many cryptocurrencies are instead recorded on a public, shared ledger that no single company controls, and can potentially be held directly by an individual rather than through an intermediary account. That difference brings real benefits and real responsibilities — there is usually no customer support line that can reverse a mistaken transaction or recover lost access.

Not every cryptocurrency has the same purpose

Bitcoin was designed primarily as a payment and store-of-value network. Ethereum was designed to run programmable applications, with its own asset used to pay for that computation. Stablecoins are designed to track the value of a traditional currency rather than fluctuate freely. Other tokens represent things like governance votes or access rights. The word "cryptocurrency" covers all of these, even though their designs and purposes differ substantially.

How prices are set

Most cryptocurrency prices are set by open markets: what buyers are willing to pay and what sellers are willing to accept at a given moment, on the exchanges where the asset trades. There is no central authority guaranteeing a price floor, and prices can move quickly and substantially in either direction.

What to remember

• Cryptocurrency ownership is recorded on a shared blockchain ledger, not a bank's private database.
• Different cryptocurrencies are built for different purposes — payments, programmable applications, stable value, or access rights.
• Prices are set by open markets and can be highly volatile, with no guaranteed floor.
• This guide is a starting point — the next guide explains how the underlying blockchain technology actually works.