Cryptocurrency Basics: Pros, Cons and How It Works

Cryptocurrency (or “crypto”) is digital currency, such as Bitcoin, that is used as a payment method or investment. Cryptocurrencies are named for the cryptography that lets people use them securely without the need for a government or bank.

Here are a few examples:

• Bitcoin was initially developed as a form of payment that isn't controlled by a central bank. Financial institutions have traditionally been needed to check that a payment went through. But Bitcoin does this automatically, without that central authority.
• Ethereum uses the same underlying technology as Bitcoin. However, it can be used to pay for transactions on the Ethereum blockchain, as well as peer-to-peer payments. This network enables entire financial ecosystems to operate without a central authority. (Think insurance without the insurance company, or real estate titling without the title company.)
• Many altcoins (smaller cryptocurrencies) try to capitalize on other use cases for blockchain tech.
• Meme coins, a subcategory of altcoins, are joke cryptocurrencies that represent internet memes. Some meme coins, such as Dogecoin, have risen to large market caps, despite having no real use cases.
• Stablecoins have been around for years, but recently rose to the fore with the passage of the GENIUS Act. Stablecoin prices aren't meant to fluctuate; they're pegged to assets like the U.S. dollar. They're meant to deliver many of the benefits of crypto without the big, chaotic price swings.