Cryptocurrencies operate on a decentralized public ledger known as blockchain, which records all transactions. This ledger is continuously updated and maintained by those who hold the currency.

New cryptocurrency units are generated through a process called mining. Mining uses computer processing power to solve complex mathematical puzzles, which in turn create new coins. Alternatively, users can purchase cryptocurrency through exchanges and store or spend them using digital wallets secured with cryptography.

When you own cryptocurrency, you don’t possess a physical asset. Instead, you control a cryptographic key that enables you to transfer a digital record or unit from one person to another without the need for an intermediary like a bank.

While Bitcoin has been in existence since 2009, the broader financial applications of cryptocurrencies and blockchain technology are still in their early stages. As this technology evolves, it could transform how financial assets like bonds, stocks, and other investments are traded in the future.