Crypto basics
Last reviewed November 1, 2026
You don't need to code to understand Bitcoin or Ethereum. A handful of ideas gets you most of the way, and they're all on this page.
A cryptocurrency is a digital asset that works without a bank or central bank in the middle. Instead of one institution keeping the books, thousands of computers around the world hold copies of the same ledger: the blockchain. The ledger records how much each address holds, and only whoever has that address's private key can move the funds.
Strip it down and there are three parts: keys made with cryptography, a network of computers that treat each other as equals, and a rule that gets them all to agree on one version of the ledger.
What a blockchain is
A blockchain is a database that grows in blocks. Each block holds a batch of transactions plus the hash of the block before it, a kind of fingerprint. Change an old record and the fingerprint no longer matches, so every other node notices straight away.
Because many independent computers keep a copy, there's no single place to switch off or bribe. That is what people mean by decentralised.
Public keys, private keys and seed phrases
Every address comes from a key pair. The address is safe to share, much like a bank account number. The private key works like a signature: whoever has it can spend what's in the address.
Most wallets turn the private key into 12 or 24 English words called a seed phrase or recovery phrase. Lose it and no support desk can get it back. Let someone else see it and you should assume the funds are gone.
Consensus
To stop the same money being spent twice, the network needs a rule for who writes the next block. Bitcoin uses proof of work: miners spend electricity and hardware to win that right. Ethereum has used proof of stake since 2022: validators lock up their own ETH as collateral.
Both make cheating expensive. The differences are energy use and who ends up with influence over the network.
Coins and tokens
A coin is the native asset of its own blockchain, such as BTC on Bitcoin or ETH on Ethereum. A token is created on an existing blockchain by a smart contract. Stablecoins like USDC are tokens, as are most DeFi and gaming currencies.
Where to start
Learn how wallets work and how the common scams run before you look at exchanges. And only put in money you could lose without it hurting.