Crypto glossary

Cryptocurrency

A cryptocurrency is a digital asset that is transferred over a network and secured by cryptography. Ownership is recorded on a shared ledger, usually a blockchain, rather than in a single company's database.

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How cryptocurrencies work

Each user controls a pair of keys. The public side becomes an address that others can send to; the private key, kept secret, is used to sign transactions. The network checks the signature and updates the shared ledger, which thousands of computers keep in sync through a consensus mechanism such as proof of work or proof of stake.

Because the ledger is maintained by many independent participants, no single bank or company can freeze it or quietly change balances. Most cryptocurrencies are open source, and their transaction history is public.

Main types

Coins are the native assets of their own blockchain, such as bitcoin (BTC) or ether (ETH). Tokens are built on top of an existing blockchain using smart contracts. Within these, there are many categories: stablecoins designed to track a currency like the US dollar, governance tokens that give voting rights in a protocol, privacy coins with stronger confidentiality, and meme coins driven mostly by community and attention.

Bitcoin, launched in 2009, was the first. Since then thousands of others have been created, many of which have failed or been abandoned.

Why people use them

Uses include saving outside the traditional banking system, cross-border payments, trading, and access to decentralized finance (DeFi) applications for lending and swapping without an intermediary. Stablecoins are widely used to move dollar value around the world quickly.

Risks to know first

Prices can swing by double-digit percentages in a day. Transactions are generally irreversible, and lost keys usually mean lost funds. Scams, rug pulls, hacked platforms and fraudulent projects are common, as the collapses of Terra/UST and of the exchange FTX in 2022 showed. Rules on taxes, consumer protection and licensing differ by country and keep changing.

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Frequently asked questions

Is cryptocurrency legal?

In many countries, including the EU and Switzerland, owning and trading crypto is legal and regulated. Some countries restrict or ban it, so it depends on where you live.

What is the difference between a coin and a token?

A coin is the native asset of its own blockchain; a token is created on an existing blockchain through a smart contract.

Who sets the price of a cryptocurrency?

Supply and demand across many trading venues. There is no official price; what you see is the latest trade or an average across exchanges.

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All glossary terms · Educational reference only — not investment, legal, tax or financial advice.