Crypto
Cryptoassets are digital tokens recorded on a blockchain, a shared ledger that no single company controls. Bitcoin, launched in January 2009, was the first. Thousands have followed.
What it is used for
- Bitcoin is mostly held as a scarce digital asset, with a fixed supply of 21 million coins.
- Ethereum and similar networks run programs, called smart contracts, for lending, trading and other services.
- Stablecoins are tokens designed to track a currency such as the US dollar.
What moves the price
- Global liquidity and interest rates. Crypto has often traded like a high-risk tech asset.
- Regulation and access, such as the approval of spot bitcoin ETFs in the US in January 2024.
- Sentiment, leverage on trading platforms and large holders moving coins.
How it can hurt you
Bitcoin has fallen more than 70% from a peak several times, including in 2018 and 2022, and many smaller tokens never recovered. Exchanges can fail, wallets can be hacked, and lost keys cannot be restored. There is usually no deposit insurance.
The rhyme
FTX and the bank run, 2022In November 2022 FTX, then one of the largest crypto exchanges, collapsed within days after customers rushed to withdraw and the money was not there. It was a classic bank run in a new setting, with the same ingredients as the bank panics of the 1800s and 1930s: customer funds used for risky bets, too little in reserve, and confidence that vanished overnight.
Terms you will hear
- Blockchain
- A shared, append-only record of transactions.
- Wallet / private key
- The software and secret code that control your tokens.
- Stablecoin
- A token designed to keep a fixed value, usually $1.
- Halving
- The roughly four-yearly cut in new bitcoin issued to miners.
Cryptoassets are highly volatile and largely unregulated in many countries. You can lose all the money you put in. This page is general education, not a recommendation or an offer to buy or sell any cryptoasset.