Cryptocurrency has become a trillion-dollar industry that offers consumers and investors benefits, but also poses economic risks when used by bad actors. It’s important to understand the underlying technology behind these digital assets before you buy or sell.

Crypto is a digital ecosystem through which information and computer applications are transported, stored, and even created. The value of a cryptocurrency like Bitcoin is determined by trading, and many were developed to serve a monetary function, while others, such as Dogecoin or Shiba Inu coin, have novelty values based on popularity and trading.

Most cryptocurrencies are secure by design, and a crucial component of that security is cryptography. The process of cryptography involves encrypting and decrypting information using complex mathematics. This makes it very difficult for hackers to gain access to your digital assets.

In addition, most cryptocurrencies are distributed through what’s known as a blockchain. A blockchain is a global digital ledger that records transactions in a decentralized way. The blockchain is secured by a cryptographic key, which acts as a digital fingerprint that can’t be altered or counterfeited. Cryptocurrencies can be traded on exchanges and are backed by the promise of future supply, demand, and other factors.

The number of cryptocurrencies is limited, and each one has a distinct identity that is linked to the blockchain. In order to create new units of a cryptocurrency, powerful computers called miners use their processing power to add and verify transactions on the blockchain. For their work, they earn a unit of the currency or at least a small fraction of it. Mining requires a huge amount of energy, which can raise the cost of acquiring and storing cryptocurrencies.

When buying or selling a cryptocurrency, always choose a reputable exchange and check its security features. Make sure you enable two-factor authentication (2FA), which uses a text message or mobile app to verify your identity before you can log in or make a transaction. This protects you from attacks that aren’t the exchange’s fault, such as hacking or malware.

Cryptocurrency investments are risky, and the value of each can change dramatically over time. If you invest in a cryptocurrency, you should only do so with money you can afford to lose. To help protect yourself, look for transparent investment strategies and details from honest investment managers or advisors. And be careful of scammers who make big claims without offering evidence or detail.

You can spend your cryptocurrency on furniture and home goods, as well as video games. Use the BitPay app or extension to turn your crypto into gift cards for popular retailers including World Market, Pottery Barn, Home Depot and more. You can also turn your crypto into gaming gift cards for Xbox, PlayStation, Nintendo and more.