A Clear and Simple Guide to Crypto

At its core, cryptocurrency is digital money. Unlike pounds or dollars, it isn’t issued by governments or stored in a bank. Instead, it operates on blockchain technology, a secure and transparent digital ledger that records every transaction.

Think of blockchain as a giant public spreadsheet shared across thousands of computers worldwide. Once a transaction is added, it’s permanent and can’t be altered, ensuring trust and transparency.

Decentralisation - No single authority (like a bank) controls it.

Borderless Transaction - Send money instantly, anywhere in the world.

Lower Costs - Skip expensive fees from banks or payment processors.

Several factors influence the value of cryptocurrencies:

Supply and Demand - Limited supply (e.g., Bitcoin’s cap of 21 million coins) and high demand can push prices higher.

Hype and Sentiment - Social media trends, celebrity endorsements, and news coverage can spark dramatic price swings.

Technology Improvements - Updates to a cryptocurrency’s technology or network often increase its appeal and price.

Regulation - Positive or negative government regulations can either boost or hurt adoption and value.

Utility and Adoption - The more a cryptocurrency is used for real-world applications, the more valuable it becomes.

The Fear and Greed Index is a tool used to measure the emotions driving the cryptocurrency market. It operates on a scale of 0 to 100, where:

0-24 Extreme Fear

Investors are highly cautious and selling, often leading to falling prices. This can also present buying opportunities for long-term investors.

25-49 Fear

Sentiment is still negative, but less extreme. Investors are hesitant, and prices may continue to decline or stagnate.

50-74 Greed

Optimism is rising, and more people are buying, which often pushes prices higher.

75-100 Extreme Greed

Euphoria sets in, and prices may surge unsustainably. This is often a sign that the market could face a correction.

The index is influenced by factors such as volatility, trading volume, and social media trends. It helps investors gauge market sentiment and avoid emotional decision-making.

It’s understandable to have doubts about cryptocurrency. Here’s why some people view it as a scam:

Fraudulent Projects - Scams and poorly regulated coins have cost investors billions.

Volatility - The dramatic price swings can make crypto seem unstable.

Complexity- The technical jargon and new concepts can lead to misunderstanding and mistrust.

However, cryptocurrencies are far from just scams or speculation:

Major companies like Visa, PayPal, and Tesla use them.

Governments are introducing regulations to protect investors.

They power real-world applications like cross-border payments and supply chain tracking.

Market capitalisation measures the total value of a cryptocurrency and is calculated as:

Market Cap = Current Price of the Cryptocurrency × Total Circulating Supply

Market cap and price increase when demand for a cryptocurrency rises relative to its supply. Here’s how each is influenced:

How Price Goes Up

The price of a cryptocurrency rises when more people want to buy it than sell it. This is driven by factors such as:

Increased Demand - More buyers entering the market.

Positive News - Favourable developments like partnerships, adoption by institutions, or regulatory clarity.

Scarcity - Cryptocurrencies with a limited supply (e.g., Bitcoin) see higher prices as demand grows.

Market Sentiment - Optimism about the future value or utility of the cryptocurrency.

Price movements happen on exchanges, where buyers and sellers set prices based on supply and demand.

Market cap increases in two ways:

Price Increases - If the price of a cryptocurrency rises while its circulating supply remains constant, its market cap will grow.

Example - A coin priced at £1 with a supply of 1 million has a market cap of £1 million. If the price rises to £2, the market cap becomes £2 million.

Increased Circulating Supply - Some cryptocurrencies periodically release more coins (e.g., through mining or staking rewards). If this coincides with a stable or rising price, the market cap also increases.

Adoption - Greater usage in payments, smart contracts, or institutional investments.

FOMO (Fear of Missing Out) - Traders and investors rush to buy during bullish trends.

Network Improvements - Upgrades or technological innovations (e.g., Ethereum moving to Proof of Stake).

Macroeconomic Factors - Events like inflation or economic uncertainty push people toward cryptocurrencies as alternative assets.

Speculation - Anticipation of future gains can drive demand.

Both price and market cap reflect investor confidence, but market cap provides a better measure of the overall size and importance of a cryptocurrency in the market.

Purpose - Designed as digital money to replace traditional currencies.

Examples - Bitcoin (BTC), Litecoin (LTC), XRP (XRP)

Value- They offer faster, cheaper, and borderless payments.

Purpose - Provide access to services or products within a blockchain ecosystem.

Examples - Ethereum (ETH), Chainlink (LINK)

Value - These tokens are essential for using their platform’s features, like paying transaction fees or enabling smart contracts.

Purpose - Minimise price volatility by being tied to a stable asset (like USD).

Examples - Tether (USDT), USD Coin (USDC)

Value - Ideal for trading, payments, or storing value without the wild price swings of other cryptocurrencies. 

Purpose - Allow holders to participate in decision-making for a project.

Examples - Uniswap (UNI), Maker (MKR)

Value - They empower users to shape the project’s future, such as voting on updates or funding. 

Purpose - Coins that start as jokes but gain popularity through communities and social media.

Examples - Dogecoin (DOGE), Shiba Inu (SHIB)

Value - Their value often depends on hype, not utility.

A typo-turned-acronym for “Hold On for Dear Life,” meaning to hold onto your coins even during downturns.

Refers to someone who holds their investment despite volatility or pressure to sell.

The opposite of diamond hands—someone who sells at the first sign of trouble.

“Fear of Missing Out,” when investors rush in due to hype.

A temporary price drop, often seen as a buying opportunity.

A scheme where the price of a coin is artificially inflated (“pumped”) and then sold off quickly (“dumped”).

When a coin’s price skyrockets.

Individuals or entities holding large amounts of cryptocurrency, often influencing price movements.

A scam where developers abandon a project after taking investors’ funds.

Promoting a coin, often excessively, to boost its price.

Any cryptocurrency that isn’t Bitcoin.

“Do Your Own Research,” a reminder to evaluate projects independently.

A reference to the hope of getting rich enough to afford a Lamborghini.

A period of declining prices.

A period of rising prices.

NFTs (Non-Fungible Tokens) are digital certificates of ownership for unique items - art, music, collectibles, or even real-world assets. Unlike cryptocurrencies, which are interchangeable, each NFT is one of a kind.

A crypto Exchange-Traded Fund (ETF) allows investors to gain exposure to cryptocurrencies without owning them directly.

Think of it as buying a stock that tracks the value of Bitcoin or another coin.

Aiming to be a global payment platform, XRP is designed to facilitate fast, low-cost cross-border transactions. Its goal is to become a central piece in the financial system, working seamlessly with traditional banks and payment providers. Imagine sending money overseas in seconds without high fees - this is XRP’s vision.

With a focus on financial inclusion, Stellar is built to serve people in underbanked or unbanked regions. Its mission is to enable secure, low-cost transactions for anyone, anywhere. I believe XLM could revolutionise access to banking services in emerging markets.

Cardano takes a unique approach to blockchain by prioritising sustainability and environmental impact. With its focus on energy efficiency and rigorous academic research, ADA stands out as a “green” cryptocurrency. As the world shifts towards more eco-conscious solutions, ADA could lead the way.

As a playful homage to the internet’s favourite frog meme, PEPE has captured the imagination of meme coin enthusiasts. What makes it stand out is its bold ambition to become the most memeable meme coin ever. This light-hearted mission, combined with its community-driven nature, highlights the creative and fun side of the crypto world, making PEPE a personal favourite.

The original meme coin and the face of crypto fun, Dogecoin started as a joke but has since earned its place in the spotlight. Known for its low transaction costs and strong community, DOGE has even seen backing from notable figures like Elon Musk. It remains a symbol of how a simple idea can grow into something extraordinary with the right support.

Dubbed the “Dogecoin killer,” Shiba Inu has grown far beyond its meme roots. With an active ecosystem including a decentralised exchange (ShibaSwap) and plans for more utility, SHIB has evolved into a serious project with a loyal community. Its journey from meme to mainstream demonstrates the power of a strong vision and community support.