Reprinted from 1440
Background
Colloquially known as “crypto,” cryptocurrencies are forms of digital currency that have evolved to have a wide variety of uses in recent years. Among their key features is decentralization, meaning that unlike traditional money, they generally aren’t controlled by a single authority like a bank or government.
As of early 2025, cryptocurrencies had a cumulative market cap of almost $3.4T, making them worth more than some of the world’s most valuable companies, like Google and Amazon (both valued at roughly $2.3T).
The sector has seen significant growth since 2017, when the total market capitalization of all cryptocurrencies was still under $20B. A recent survey found roughly 17% of US adults had invested in, traded, or used cryptocurrency.
History and Uses
While modern cryptocurrency took off in the 2010s, some point to eCash—an early ’90s private peer-to-peer transfer system—as the forerunner to the modern crypto ecosystem.
Currently, the most established and well-known cryptocurrency is bitcoin, which was created in 2009 following a now-famous white paper written by a programmer using the pen name Satoshi Nakamoto. It is mostly used as a substitute for traditional money and a store of value and has been referred to as “digital gold”—a limited resource not controlled by a central government.
Bitcoin’s value remained relatively low until around 2017 but has peaked above $100K per coin as of this writing. Explore 1440’s Bitcoin topic page here.
Ethereum, the second-most valuable cryptocurrency, was launched in 2015. Unlike bitcoin, Ethereum is more than just a digital currency. Instead, it operates similarly to a platform (think Apple’s iOS system on an iPhone), enabling applications ranging from smart contracts to decentralized financial tools to gaming, gambling, file sharing, road mapping, and more (how it works).
A third type is referred to as “memecoins.” These easy-to-create tokens usually have no utility and are treated as speculative investments, many of which trade near zero. The first memecoin, Dogecoin—inspired by a popular internet meme featuring a Shiba Inu—was created in 2013 by software engineers as a joke (watch explainer). Unlike others, it is now one of the top 10 most valuable cryptocurrencies as of early 2025.
As of this writing, the top three cryptocurrencies ranked by market cap are bitcoin, Ethereum, and XRP (see full list). See a timeline of crypto’s history and how it became so popular here.
Blockchains and Investing
Most cryptocurrencies rely on blockchain technology. Blockchains are the digital equivalents of public ledgers: On a blockchain, every transaction is recorded and bundled into a “block.” That block is then added to a long “chain” of blocks that anyone—aside from certain instances of private blockchains—can view and verify.
Some cryptocurrencies function like Ethereum—highly technical projects that use their underlying blockchains for more decentralized applications.
Many believe such approaches may lead to a flourishing ecosystem of next-generation applications and businesses. Ethereum and Solana are the leading examples of the technology; see the differences here.
There are many ways to invest in crypto, including using a traditional broker, a payment app like Venmo, a peer-to-peer marketplace (P2P), or a bitcoin ATM. One of the most common ways to invest is via an exchange like Coinbase or Kraken.
Pros and Cons
Advocates of cryptocurrency point to several advantages: instant transfer of funds, protection against inflation, ease of access, the ability to build decentralized applications, and much more.
Conversely, critics argue cryptocurrencies help facilitate crime and can have an outsized environmental impact due to high energy consumption (though new approaches are addressing the energy challenge).
Finally, many types of cryptocurrencies are susceptible to boom-and-bust cycles, making investments risky for those without a clear understanding of the ecosystem.
