Money·2 min read

Everyone's Talking About Crypto, But What Is It? Here's Your Non-Techie Guide

accessibility, woman reviewing digital wallet
Design: theSkimm | Photo: iStock
July 8, 2022

Everyone’s talking about crypto. But a 2021 Pew Research poll found that only 16% of Americans invest, trade, or use any. Partly because many people don’t understand how cryptocurrency works.

Yeah, that sounds like me. What is cryptocurrency?

It’s digital money built on cryptography (hint: sending secure, encrypted messages). And transactions are recorded on a digital ledger. Aka a database called the blockchain. Which makes it almost impossible to counterfeit or double-spend. 

I’m following. So how does cryptocurrency work?

Cryptocurrencies are created through a mining process. Let’s look at Bitcoin, for example. In order for a Bitcoin to be created, it needs to be mined. Hint: Mining happens as the result of specialized computer networks solving a math puzzle. Once the puzzle’s solved, the winner gets a newly minted coin — in this case, a Bitcoin. But mining equipment can cost thousands of dollars. Those who want to get in on crypto without mining can buy cryptocurrencies through a crypto exchange (​​think: Coinbase, Gemini, and Binance).

PS: Most crypto mining is not environmentally friendly. Because it takes a lot of electricity to power those competing computer networks.

How does cryptocurrency gain value?

Our cash has value because it’s issued by a centralized authority and used in our economy. Cryptocurrency is decentralized (aka not backed by any one authority) and isn’t widely used in the same way. Instead, its value comes from scarcity and high demand. Kinda like gold and other precious metals. And it gains value when demand rises.

Got it. Now, how do you spend crypto?

First, you’ll need a digital wallet to store your crypto. Then you’re ready to make your purchases. Hint: Major companies like Microsoft and accept crypto payments. So do some service providers, like AT&T, Dish Network, and Twitch.

Is cryptocurrency safe?

The Fed is working on ways to regulate it. Because fraud. Just last year, scammers stole over $14 billion worth of crypto. But you can help keep your digital money secure by picking and managing your wallet wisely.   


If you don’t understand cryptocurrency, you aren’t alone. But it may be the future of money, so it’s worth learning about now. And you don’t have to be a tech genius to get how to buy, spend, and store it.

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