Crypto in 3 minutes
Lesson 1 of 39 in the course “Crypto”. Free, with animations and a quiz.
Exchange, wallet, blockchain
Three words you need in crypto. An exchange is a website where people buy and sell coins, like a shop. A wallet is an app or device that stores the keys to your coins. A key is a secret code that gives you control over them. The blockchain is a shared ledger where every transfer is recorded. You buy a coin, and the record is visible to everyone.
Whose keys, whose coins
Keep coins on an exchange and the exchange holds the keys. Handy, but if the exchange gets hacked or shuts down, the coins can be lost. In your own wallet only you hold the keys. Nobody can take them, but nobody can recover them for you either. Hence the crypto saying "Not your keys, not your coins".
Bitcoin: digital gold
Bitcoin (BTC) is the first and best-known cryptocurrency. The rules of its network are written into the software, and they allow no more than 21 million coins ever. Nobody can print more: no bank or government gets to decide that. Gold cannot be printed either, it has to be mined with effort. Hence the comparison. In short: scarce and no reprints.
Big swings are normal
The crypto market runs 24/7: no weekends, no night breaks. Prices also jump more than typical stocks do. For example, a coin can gain 10% in one day and lose 10% the next. In crypto that is routine, not the end of the world. So first you learn how it all works, and only then you risk your own money.
Check yourself
- Your coins sit on an exchange. Who holds the keys?
Correct answer: The exchange. On an exchange, the exchange controls the coins because it holds the keys. Only in your own wallet are the keys yours alone. - How many bitcoins can exist in total?
Correct answer: No more than 21 million. The 21 million cap is written into the rules of the Bitcoin network. Nobody can change it alone. - What does a blockchain record?
Correct answer: Every coin transfer. A blockchain is a shared ledger of transfers that anyone can view. No passwords or forecasts live there.