What is a cryptocurrency? An explanation without the jargon

A cryptocurrency is a digital unit of value whose ownership and transfers are recorded by a distributed network of computers rather than by a single institution. The records are protected by cryptography, meaning mathematical methods of encryption and digital signatures, which is why altering the transaction history is very hard. The oldest and best-known cryptocurrency is bitcoin, but thousands exist, with very different goals and quality.

In practice, a cryptocurrency can be a means of payment, an asset for speculation, or “fuel” that pays for running a network. Its price changes with supply and demand, often sharply. A common mistake is equating all cryptocurrencies with bitcoin or treating them as a guaranteed investment. They are risky assets, and some projects fail or turn out to be scams.