What is Cryptocurrency?

Released on

Mar 10, 2020

What is Cryptocurrency?

Cryptocurrency is a form of internet money that exists as encrypted, digital information. It operates independently of any banks and uses sophisticated mathematics to regulate its creation and transfer of ownership.

This means that cryptocurrency is hack-proof, not controlled by governments or authorities, and can be transferred internationally without additional foreign exchange fees. Therefore, cryptocurrency is the first digital money that you completely own!

Sound complicated? We’ll do our best to break it down for you. To understand what cryptocurrency really is, we need to first understand the two main categories of money that we see today: cash and digital money.

What is Money?

Background: Let’s take a brief detour through history to understand the concept of money.

In its most basic form, money is simply any method to transfer value from one person to the next. Food, salt, animal hides, gold, silver, IOU coupons, coins, etc., have all served as a form of “money” over the years. This value that we call money can then be converted into all kinds of other things, such as products or services.

Over the years, money has changed shape: from goods and services, to physical coins, to more digital versions.

Cash vs Digital Money

  • Cash is physical money that allows us to transact in physical shops and in-person.
  • Digital money is the money that is in our bank accounts, in PayPal, and any other e-wallet service we might use. It allows us to transact without carrying physical cash.

The Problem: Lack of Ownership

The main limitation of digital money today is that we are not the sole owner of our money. When it goes into a bank account or an e-wallet, someone else — be it a bank or a service — owns and controls our money.

We feel this lack of ownership most commonly when the bank's ATM network is down (or on holiday!) and we are unable to withdraw our money, or when we are unable to transfer our money into a different country, much less to a different bank.

You have limited control of your money, even though it is your money.

The Answer: Cryptocurrency!

Because cryptocurrency operates independently of banks, it is the first digital money that you can truly own. One important aspect of this ownership is that cryptocurrency is programmable money. What this means is that it allows anyone, anywhere, to build on top of it.

Before cryptocurrencies, most people have had to rely on banks to provide financial services. Sometimes the services that are required can take decades to build, or a problem is not profitable enough to justify a bank building a solution.

Today, anyone with expertise can build on top of cryptocurrencies to create the financial services that they need, regardless of scale. If you need a service that no bank currently provides, you can build a custom financial solution using cryptocurrencies, even if it serves just your family.

How are cryptocurrencies created?

Let’s take a look at the first cryptocurrency, before we explain the process.

The origin of cryptocurrency: Bitcoin

Bitcoin is the first known cryptocurrency. It was published anonymously under the pseudonym “Satoshi Nakamoto” as an open-source code and released in January 2009. According to its anonymous founder, Bitcoin was built as a peer-to-peer network to generate "a system for electronic transactions without relying on trust".

One and a half years later, Florida software developer and early Bitcoin contributor, Laszlo Hanyecz, made the first publicly-recorded bitcoin spending transaction: 10,000 BTC, valued at $41 USD at that time, for the delivery of two large pizzas to his house.

The payment took two days to organise. Today, 10,000 BTC is worth more than $100 million USD, and you can now spend bitcoin instantly - one way of doing that is to use the TenX Visa Card.

Mining: How bitcoin is created

Bitcoin mining is the process of adding more bitcoin to the cryptocurrency ecosystem. The term ‘bitcoin mining’ is a little misleading as no one is actually knee-deep in a mine excavating bitcoin. Instead, this is done by letting computers calculate complex mathematical equations.

Mining is an important aspect of making cryptocurrencies secure and verifiable. Cryptocurrencies like bitcoin maintain a non-editable public record of all transactions, and mining is how new transactions are added to this record.

How many cryptocurrencies and altcoins exist today

Bitcoin is the most popular and best-known cryptocurrency. However, there are thousands of cryptocurrencies today.

They are sometimes referred to as “altcoins”. The term comes from the words “alternative” and “coin” and refers to alternatives of bitcoin, which is essentially every other cryptocurrency except for bitcoin.

As there are so many altcoins, some of them have completely different use cases and solve specific problems, such as cross-border payments, privacy, and distributed computing, just to name a few.

How can you use crypto as a payment method?

Remember that in 2010, Laszlo Hanyecz paid 10,000 BTC (valued at $41 USD at that time and more than $100 million USD now) for the delivery of two large pizzas to his house? That payment took 2 days to organize and transact.

Today, cryptocurrency can be used as a payment method instantly by using crypto debit cards.

What is a crypto debit card?

A crypto debit card basically lets you spend your cryptocurrency balance the same way you use a regular debit card: just swipe or tap to buy anything.

One example is the TenX Visa Card. You can pay anywhere in the world that accepts Visa, and spend the Bitcoin and Ether in your wallet just like your local currency.

Find out more about the TenX Visa Card.

The goal of cryptocurrencies

Cryptocurrencies aim to solve our modern problems with money. Here are some examples:

1. Money has inflation problems, cryptocurrency does not

Cash money can be printed by governments whenever it is needed, leading to massive inflation and loss of value of the currency. In comparison, bitcoin will never have inflation problems as there are 21 million bitcoin that exist. No additional bitcoin can be “printed” or “minted” by any government.

Based on a 2019 Credit Suisse report, we know that there are 42.2 million millionaires globally, and this number continues to grow exponentially every year. However, we know that only 21 million people will ever be able to own one full bitcoin.

Bitcoin thus retains value better and is not susceptible to the inflation problems of our money today.

2. Money is controlled by a central authority, cryptocurrency is not

Today’s money is controlled by central banks that keep track of all transactions. Because of this, we are completely dependent on our government's central bank in being accountable for the money.

For some people, this works out fine if the government can be trusted. However, if badly governed, such massive control by corrupt governments facilitates further corruption and the misuse of people’s money

Cryptocurrency, on the other hand, is not controlled by any government nor authority, as can be fully controlled by its owner—you—fully.

Advantages and disadvantages of cryptocurrencies


  • Digital currency you can truly own
  • Freedom from banks
  • A cryptocurrency like bitcoin is not subject to inflation
  • Not controlled by central authority


  • You must take full responsibility for taking care of your money (you are your own bank)
  • High risk and high volatility
  • Not regulated in every country yet

Want to learn more? Here’s a guide to being your own bank and storing your cryptocurrencies safely.