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What Is Cryptocurrency? A Guide for Beginners

Cryptocurrencies let you buy goods and services, use apps and games or trade them for profit. Here's more about what cryptocurrency is and how it works.

  • There are thousands of cryptocurrencies created for specific purposes, but generally, they're used to pay for services or as speculative investments.
  • Cryptocurrencies are powered by a technology known as blockchain.
  • Crypto prices are extremely volatile, and the industry is filled with uncertainty.
  • There are tax consequences to buying and selling cryptocurrencies.

What is cryptocurrency?

Cryptocurrency (or “crypto”) is a class of digital assets that are used for various purposes. For example, Bitcoin was developed primarily to be a form of payment that isn't controlled or distributed by a central government; Ethereum lets developers build automated applications in what has become known as Decentralized Finance; and Tether is a stablecoin whose value is pegged to the U.S. dollar.

Cryptocurrencies get their name from the cryptographic techniques that enable people to buy, sell or trade them securely without the need for a third-party, such as a government or financial institutions, to validate a transaction.

» Jump to the most popular cryptocurrencies.

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