Cryptocurrencies – often abbreviated as “crypto” – are a new form of acquired and digitally exchanged money.
Cryptocurrencies are “designed to operate outside the direct control of central banks or unique entities,” explains Rahul Bhushan, managing director of Ark Investment Management. “It is propelled by cryptography and recorded to the public, distributed the books called blockchains.”
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Bitcoin was invented in 2008, but the price of a single Bitcoin did not succeed in $ 1 before 2011. When writing the editorial’s time (August 27, 2025), Bitcoin is now worth $ 111,022.33, an increase of 11102 133% in the last 14 years, or an annual yield of 129.29%.
How does the crypto work?
Cryptocurrencies work on Blockchain technology. A blockchain is indeed a decentralized database. It stores information on a network of computers or servers. It makes data immutable – which means that it cannot be changed.
“While some networks are more decentralized than others, most aim to execute open protocols where anyone with an internet connection can participate,” explains Bhushan.
Although often confused, crypto and blockchain are two different things. Blockchain is underlying technology and has other applications beyond cryptocurrencies. For example, it is often used in the management of the supply chain: the capacity to create immutable records of each stage of a supply chain can improve its efficiency and transparency. Crypto, on the other hand, specifically refers to digital currencies which are exchanged using blockchain technology.
Each cryptocurrency has its own unique features, but in general, they must be “extracted”. Crypto minors are actually large data centers that deploy massive quantities of computing power in order to solve complex cryptography problems – from which Crypto takes its name. This process is often called “proof of work” and is the traditional way in which cryptocurrency units exist.
Why is the crypto so popular?
Crypto has always been popular among people who want their money to be independent of any form of influence, either nation states or the traditional banking system. This has led to a number of emerging stereotypes, for example the myth that it is only used by criminals.
But there are certain advantages of crypto beyond its private life and its libertarian appeal.
First, it can work as a means of exchange which was not based on the owner infrastructure (such as Mastercard or Visa technology). This can make it a cheaper way to exchange money abroad, and blockchain technology is considered by many as a safer exchange method.
Second, it is perceived as a Inflation coverage. Fiduciary currencies tend to depreciate in value over time because central banks can (and make) push more money in the offer. Cryptocurrencies, however, tend to resist inflation because their supply is more limited.
There will be, for example, only 21 million bitcoins exploited thanks to the way it was designed. The rate at which new bitcoins are also born also decreases approximately every four years, in an event known as Bitcoin, which limits Bitcoin diet more. In June 2025, there were about 1.5 million more bitcoins to mine – but due to the reduction in half, it should take up to 2140 to exploit them all.
Bitcoin is “often compared to digital gold because of its limited diet and potential as a reserve of value”, explains Bhushan.
Crypto’s independence from central banks and the global economic system also makes it popular in certain development economies which are frequently bitten by volatile changes in exchange rates, in particular compared to the dollar.
Should you buy crypto?
Cryptocurrencies are extremely volatile assets. Bitcoin is in a way an aberrant value in the publication of consistent gains for more than a decade, and even then, it has known several periods of rapid drops along the way.
Ethereum (the second largest cryptocurrency by market capitalization) has earned more than 1,000% in the past five years and has recently reached a summit of $ 4,955.90.
But during this time, it fluctuated wildly. Between November 2021 and June 2022, Ethereum fell from its peak (about $ 4,600) to just over $ 1,000. It returned to more than $ 4,000 by December 2024 before falling at less than $ 1,600 by March 2025.
Bitcoin and Ethereum are two of the most stable cryptocurrencies. The smallest and more niche can be even more volatile, and unlike Bitcoin and Ethereum, there is little for the general public institutional (in the form of Crypto ETPS) to support demand.
In addition, there are security risks. Crypto buyers are often targets for scams, and exchanges like Coinbase make promising targets for cyber attacks.
Thus, while investment in the crypto has undoubtedly paid many people, in particular early adopters of Bitcoin, the new participants should proceed to caution and to consider the quantity of their investment that they would be ready to lose in the case of sudden crash in the price.
This article is intended for information purposes only and should not be considered as a financial advice.