Crypto for Beginners

Cryptocurrency is a digital asset that runs on a blockchain – a public, tamper-proof ledger of transactions verified by thousands of computers worldwide. The first and most important cryptocurrency is Bitcoin (BTC), launched in 2009 by Satoshi Nakamoto.

The second-largest is Ethereum (ETH) – a platform launched in 2015 that powers smart contracts and ERC-20 tokens. Together, BTC and ETH make up more than 70% of the entire crypto market's value.

Unlike fiat currencies (USD, EUR, etc.), cryptocurrencies aren't issued by a central bank and don't require trusting an intermediary – anyone can hold and send them directly, as long as they control the private key.

A blockchain is a database organized as a chain of blocks, where each new block cryptographically references the one before it. This means a recorded transaction can't be altered or deleted.

Every transaction is signed with the owner's private key and verified by the entire network through a process called consensus. Bitcoin uses Proof of Work (mining); Ethereum has used Proof of Stake (staking) since 2022.

All transactions are public – anyone can check them on a block explorer (mempool.space for BTC, etherscan.io for ETH). What's not public is the identity behind an address, unless it's linked to a real identity, for example through an exchange's verification process.

Bitcoin (BTC) – digital gold, the most decentralized and secure cryptocurrency, with a hard cap of 21 million coins.

Ethereum (ETH) and altcoins (SOL, ADA, BNB) – platforms for running smart contracts and DeFi applications.

Stablecoins (USDC, USDT, EURC, PYUSD) – cryptocurrencies pegged 1:1 to a fiat currency. Under the EU's MiCA framework, only certain fully compliant stablecoins are approved for retail use in the EU.

Meme coins (DOGE, SHIB, PEPE) – tokens with no underlying technology, driven by community hype. High risk – most lose 90% of their value within the first year.

NFTs – non-fungible tokens representing unique digital or physical assets.

The cheapest and safest option is a licensed exchange compliant with the EU's MiCA framework or an equivalent local regulator. Recommended exchanges for beginners include:

[Kraken](/api/go/kraken) – deep liquidity, audited reserves, one of the longest track records in the industry.

[Bybit](/api/go/bybit) – fast deposits, multilingual support, bonus up to $30,100.

[Bitget](/api/go/bitget) – fast deposits, a $300M protection fund, bonus up to $6,200.

[BingX](/api/go/bingx) – copy trading, bonus up to $11,000.

See our full ranking of 25 exchanges and comparisons in Best crypto exchange and Where to buy crypto.

App-based or hardware-key 2FA (Google Authenticator, YubiKey 5). Never SMS – it's vulnerable to SIM-swap attacks.

Withdrawal address allow-list – only allow withdrawals to pre-approved wallets.

Only log in via a bookmarked link or the official mobile app. Search ads can sometimes lead to phishing sites.

Larger amounts on a hardware wallet (Ledger or Trezor). Backup codes stored on a metal plate like Cryptosteel.

Full list of best practices: What is a CEX – security.

In most countries, crypto profits are subject to capital gains tax, calculated as proceeds minus documented acquisition costs and fees, though exact rates and rules vary widely.

File your taxes by your country's annual deadline – in many places you must report even if you only bought crypto, or had no sales, in order to preserve your cost basis.

Swapping crypto for crypto (for example BTC for ETH) is often not a taxable event – tax usually applies only when you sell for fiat or pay for goods or services. Always confirm local rules.

Losses can often be carried forward to offset future gains – check your local tax authority.

Crypto for beginners comes down to education plus a licensed exchange plus DCA into BTC/ETH plus a hardware wallet plus staying on top of your local tax obligations. Skip meme coins and 'guaranteed' tips from social media.

First exchange: Kraken, Bybit or Bitget. See the full ranking of 25 exchanges on our homepage.