Let’s make the basics feel familiar.
You do not need to buy anything to begin. By the end of this lesson, you should be able to explain what cryptocurrency is, how ownership is recorded, and why its price can change.
1. What is cryptocurrency?
Cryptocurrency is a digital asset that can be transferred using a computer network. Bitcoin and ether are two examples. A unit of crypto is not a physical coin, and owning it does not automatically mean you own part of a company.
Digital asset is a broader term for something represented electronically that can have ownership or value. Cryptocurrency is one kind of digital asset—not every digital asset is cryptocurrency.
2. Where is the ownership recorded?
Your bank keeps a record of your account balance in its own system. Many cryptocurrencies use a blockchain: a shared record maintained and checked by participants in a network.
Think of a shared notebook whose new entries must follow the network’s rules. The notebook records transactions; the rules help prevent someone from spending the same units twice. A blockchain does not guarantee that every project or website using it is trustworthy.
3. A coin, a token, a wallet, and an exchange are different things.
- Coin
- An asset native to its own network. Bitcoin (BTC) belongs to the Bitcoin network; ether (ETH) is native to Ethereum.
- Token
- A digital asset created on an existing blockchain. Its purpose and risks depend on how the project works.
- Wallet
- A tool for managing access to crypto. In a self-custody wallet, private keys authorize transactions; the crypto itself is recorded on the network.
- Exchange
- A service where people can buy and sell assets. Holding crypto with an exchange usually means the service controls custody for you.
Granma’s reminder: a public address is for receiving crypto. A private key or recovery phrase is secret. Never send that secret to someone offering help.
4. Why can you make—or lose—money?
Volatility means prices can move sharply. Demand, available supply, news, and trading conditions can affect prices. A useful technology or popular project does not guarantee that its price will rise.
Suppose you buy one practice coin for $40. If you sell it for $44, your gain is $4 before fees. If you sell it for $36, your loss is $4 before fees.
With a simulated 0.1% fee on both trades, the first example earns about $3.92; the second loses about $4.08.
Profit or loss = sell proceeds − buy cost − both fees. An unsold holding’s changing value is an unrealized result; selling turns it into a realized result.
5. What should you check before buying?
- Purpose: what is the asset meant to do, and can you explain it without repeating advertising?
- Costs: check trading fees, the difference between buying and selling prices, and any withdrawal or network fees.
- Custody: who controls access, and what would happen if you lost your login or recovery information?
- Risk: could the price fall substantially? Do not treat promised or guaranteed returns as evidence.
Crypto transfers are often difficult to reverse. Verify the asset, network, and recipient before sending anything. Learning first gives you time to ask better questions.
6. Your short practice step
In your own words, explain the difference between a wallet and an exchange. Then write one possible use for crypto and one risk you would check.
A Free account lets you complete one simulated buy and one matching sell of the same coin in Practice Portfolio. Review your paper result after fees. Pro unlocks full CryptoGranma Paper Trading Lab™ access.
Try your free practice cycleEducational information only. The examples are hypothetical and are not recommendations or promises of returns.