Cryptocurrencies are digital assets that use cryptography to authorize transactions and are usually recorded on a shared ledger, the blockchain. They let you transfer value over the internet, often without a bank as an intermediary, but security, cost and the degree of decentralization vary from network to network.
What cryptocurrency is in practice
Imagine sending a digital amount to someone without your bank having to notify theirs. On a decentralized network, recording and checking are handled by computers that follow shared rules. You aren’t sending a file that anyone can copy at will: the network checks that the same units aren’t spent twice.
Bitcoin was the first cryptocurrency to work as a decentralized system of this kind. Satoshi Nakamoto published its white paper in 2008, and the network launched in 2009. Other networks followed, with different uses and trade-offs.
The balance in your banking app is also digital, but it is a claim against the bank. A cryptocurrency like Bitcoin is not a bank deposit, a company share or a claim redeemable in euros.
How cryptocurrencies work
The blockchain and transaction checks
A blockchain is a ledger in which transactions are grouped into blocks that are cryptographically linked to one another. On public networks, many computers, called nodes, maintain and check copies of the data according to the protocol’s rules.
Picture a shared accounting ledger that doesn’t just sit in one accountant’s drawer. Many participants can check whether an entry is valid. Changing old entries becomes difficult when the network is sufficiently secure, not because blockchain is some technology that rules out every attack.
What happens when you send crypto
- The wallet creates a transaction with a recipient, an amount and a network fee.
- You sign it digitally with your private key, without revealing it.
- The transaction is broadcast to the network and checked.
- Once accepted, it is recorded and gains confirmations or reaches finality, depending on the protocol.
Speed and fees are not the same everywhere. They depend on the network, congestion and the transfer method. An international transaction can be cheap, but that isn’t automatically true for every cryptocurrency.
Mining and staking
Not all cryptocurrencies are created through mining. On Bitcoin, the Proof of Work mechanism requires computational work from miners who compete to add blocks. The reward includes new coins, according to the protocol, and transaction fees.
In practice, Bitcoin mining requires specialized equipment and comes with electricity costs. A home computer is not a realistic promise of easy income.
Other networks, such as Ethereum, use Proof of Stake. Validators lock up crypto through staking to help secure the network. Staking is not bank interest: it can involve withdrawal restrictions, penalties and the risk of losing capital.
Bitcoin, Ethereum, coins and tokens
Bitcoin is used to transfer and hold digital value. Ethereum also supports smart contracts, which are programs that run on the network. Its native currency is ether, with the ticker ETH.
One distinction matters here: not every cryptocurrency has its own blockchain. A native currency, usually called a coin, belongs to its own network. A token can be issued on an existing blockchain and serve an application, a governance process or another purpose.
The existence of a token doesn’t prove that a project needs one. We look at whether it has a real function and who controls its issuance, upgrades and distribution.
Where the value of cryptocurrencies comes from
The price is set by supply and demand in the markets. It is affected by utility, network security, circulating supply, future issuance, liquidity and expectations. Speculation can also carry a lot of weight.
Limited supply isn’t enough on its own. Think of a rare item nobody wants: scarcity doesn’t guarantee it a buyer. Likewise, a useful application doesn’t necessarily mean its token gains value.
To read a valuation correctly, keep these apart:
- Unit price: how much one coin costs, for example in euros.
- Market cap: price times circulating supply, not money that has been deposited into the project.
- Liquidity: how easily a trade can be made without moving the price much.
- Dilution: how new issuance or token unlocks change the available supply.
A coin with a low unit price is not necessarily “cheap.” For the value in euros, the exchange rate also matters when the market you follow shows prices in dollars.
What are stablecoins
Stablecoins are tokens that aim to keep a stable exchange rate with a currency or another asset. USD Coin, for example, aims to stay pegged to the US dollar. There are different models, using reserves, crypto collateral or algorithmic mechanisms.
A stable target peg does not mean guaranteed safety. There are reserve, issuer, redemption and de-peg risks. For someone who budgets in euros, a dollar stablecoin also carries currency risk.
Holding a stablecoin doesn’t automatically earn rewards. Any yield comes from additional services or protocols with their own risks, and it is not the same as protected bank savings.
Wallets, exchanges and control of your money
A digital wallet manages the keys you use to control assets on the blockchain. The coins don’t sit as files on your phone. The private key authorizes transactions and must stay secret.
With self-custody, you manage the keys. The seed phrase (recovery phrase), where one is used, lets you restore access. Anyone who gets hold of it can control the corresponding funds, so never give it to supposed tech support.
With custody on an exchange, the provider manages the keys. Services such as Binance (affiliate link) offer trading and custody, but they add the risk of the provider failing, suspending withdrawals or being hacked. This particular link contains a referral code and is not a recommendation to use the service.
The ability to fully control your digital assets comes with full responsibility for their keys.
To move funds to a regular bank account, you usually convert to euros first and then withdraw through a supported provider. Fees, limits and checks vary.
Where they are used and what the risks are
Uses include payments where crypto is accepted, donations, international transfers and decentralized finance (DeFi) applications. With cards that convert crypto into euros, the merchant may receive euros rather than crypto.
Most public blockchains are pseudonymous, not anonymous. Transactions are visible, and addresses can be linked to identities. Blockchain transparency does not rule out scams, price manipulation or key theft.
The main pitfalls are high volatility, fake platforms, software bugs and sending to the wrong address or network. A confirmed transfer usually can’t be reversed like a card payment. Promises of “guaranteed returns” call for extra skepticism.
Greek cryptocurrencies and the rules in Greece
The term “Greek cryptocurrencies” usually describes projects with a Greek team or community. Greek origin is not a certification, a state guarantee or proof of trustworthiness. We look at documentation, a working product, admin privileges and token distribution, not just where the creators come from.
For users in Greece, the EU’s MiCA regulation sets rules for specific crypto-assets and service providers. It doesn’t cover every product in the same way, and it doesn’t guarantee a token’s value or that you’ll get your money back.
For tax treatment, you need to check the current provisions and AADE (Greece’s Independent Authority for Public Revenue) guidance with an accountant. Keep a record of transactions, fees and valuations in euros. Transferring money to your bank is not the only event that may need to be looked at for tax purposes.
Our take
We consider the ability to transfer value and keep personal control without being forced to depend on a provider to be a real innovation. We don’t believe, however, that every problem needs a blockchain or that every token justifies its existence. The question is who controls the system, what it offers and what can go wrong.
Frequently asked questions
Are all cryptocurrencies decentralized?
No. Concentration among validators, in token holdings or in admin privileges can give significant control to a few participants.
Do I need to buy a whole Bitcoin?
No. Bitcoin is divisible into smaller units. Minimum transaction amounts and fees depend on the service and the network.
Can a cryptocurrency lose all its value?
Yes. A collapse in demand, fraud, technical failure or a lack of liquidity can lead to a total or near-total loss.
What happens if I lose my wallet?
With self-custody, recovery depends on whether you still have the necessary keys or the seed phrase. If they are lost for good, there is usually no central authority that can restore them.
Are cryptocurrencies the same as the digital euro?
No. A central bank digital currency is issued under the responsibility of the relevant monetary authority. Bitcoin works with a different model of issuance and control.