What Is Cryptocurrency?
Cryptocurrency is a type of digital asset that uses computer technology to record and transfer ownership.
Digital, not physical
Cryptocurrency exists digitally, can be transferred between digital wallets, and uses blockchain technology. It is not the same as money in a normal bank account.
Bitcoin
Bitcoin is the best-known cryptocurrency. It was designed as a digital system for transferring value without relying on a traditional bank to process every transaction.
What is a blockchain?
A blockchain is a shared digital record that keeps track of transactions — a bit like a shared notebook where copies of the records are kept across many computers. It isn't completely impossible to have problems or be attacked, but it's designed to make records very hard to secretly change.
💵 Traditional money
- Issued by governments
- Commonly held in bank accounts
- Used for everyday payments
₿ Cryptocurrency
- Digital
- Generally not issued by a government
- Held in digital wallets
- Values can change significantly
Cryptocurrency prices can move dramatically. People can lose some or all of the money they put into cryptocurrencies.
Cryptocurrency is never guaranteed wealth, easy money, a way to get rich quickly, or safer than normal investments.
Would you risk it all?
You have $100. Would you be comfortable putting all $100 into something whose value could change dramatically?
There's no single correct answer — this is exactly what risk means. Different people have different comfort levels.
What questions would you want answered before putting money into something?
How much could I lose? How volatile is it? Who's behind it? Is it regulated? What happens if I lose access to my account?
This topic is aimed at financial literacy, not encouraging children to own cryptocurrency. For younger children, focus on understanding what cryptocurrency is and why it can be risky.
Where to next
More on risk and digital money.