What is crypto?What is cryptocurrency?

Cryptocurrencies are digital coins without a bank in the middle. Below you'll read in plain language what crypto is, how it works and how to buy your first coin safely.

A cryptocurrency is a virtual means of payment that exists only digitally. The difference with the ten-euro note in your wallet: with crypto, no bank checks whether the transaction is valid, that's done by a network of thousands of computers together.

Our payment system wasn't built for the digital age. Pay with a paper ten-euro note and the recipient knows for certain they have a tenner. With a digital payment that gets harder: numbers on a screen are easy to copy. That's why banks centrally monitor every digital transaction. And that makes their role, and their power, grow along with it.

In 2009, Bitcoin was the first digital coin that could work without a bank. It uses an open network: anyone can join, nobody is in charge, and all transactions are verified by a worldwide network of computers instead of one central party.

The blockchain is the heart of every cryptocurrency. Picture a large, shared list recording every transaction, visible to everyone, controlled by no one alone. Thousands of computers each keep a copy. Want to change the history? You'd have to do it on thousands of computers at once. In practice, that's impossible.

When you send a transaction, this is what happens:

1. Your transaction goes to the network and is seen by thousands of computers.
2. Those computers check whether you have the balance to pay.
3. Approved transactions are bundled into a new "block" and added to the chain.
4. The block is copied by all participants, which makes the transaction final.

The people doing this computing work get new coins in return. That's how the system keeps itself running.

People buy crypto for all kinds of reasons. Three common ones:

• Storing value. Bitcoin is often compared to digital gold. Supply is capped at 21 million, so inflation has less grip on it.
• Sending money abroad quickly. Money across borders without a bank, without waiting for working days. Especially handy for people supporting family abroad.
• Access to new technology. Coins like Ethereum enable smart contracts and new applications, think of apps without a central operator.

To send crypto you pay a small fee (a transaction fee) to the network. The busier the network, the higher that fee. That's the working model: users pay for the work the computers do.

• Bitcoin (BTC). The original cryptocurrency from 2009. Often seen as digital gold. Buy Bitcoin.
• Ethereum (ETH). Platform for smart contracts and thousands of apps. Buy Ethereum.
• Ripple (XRP). Aimed at fast, cheap cross-border payments between banks. Buy Ripple.
• Litecoin (LTC). The "silver" to bitcoin's "gold", faster and cheaper for payments. Buy Litecoin.
• Bitcoin Cash (BCH). A split from bitcoin focused on faster transactions. Buy Bitcoin Cash.

Buying crypto takes three steps:

1. Create an account, registering is free and takes less than five minutes.
2. Complete the identity check, required under European regulation. You'll need a valid ID document and your bank card.
3. Place your first order, pick a coin, an amount (from 30 euros) and a payment method (SEPA transfer, credit card or instant bank transfer).

You don't have to buy a whole bitcoin. Most people start with a small amount to get to know the system, and only build up to larger positions later.