Welcome to another article of the beginner’s section here at the Vaultavo Academy. Today’s topic is the basics of cryptocurrencies. We’ll take a look at everything that makes it tick.

The most important skill that you can have in your arsenal is a solid understanding of the fundamentals. If you know exactly how the technology works, you can begin to gather some insights towards its price performance. Let’s dive right in and see what the crypto basics cover.

Crypto basics

If we look at the word cryptocurrency, we immediately recognize the end. Currency. To understand what is, you first need to have the traditional view of currency in mind, “a standardization of money in any form, in use or circulation as a medium of exchange”, Wikipedia. Just as you complete transactions with your local currency, so too can cryptocurrency be used in transactional exchanges. The key difference being that this money does not have any physical form.

This was worrisome to the public at first, if it’s not physically stored, what’s to stop someone from simply running off with all of your funds? Well, the entire system is decentralized. By this we mean that one person is not sitting behind their computer and watching as every person purchases the digital tokens. There is also no ‘server’ housing all of your personal details, the computational power to keep the cryptocurrency running required is shared by the network.

That brings us to the start of the word, crypto. Cryptography, “the practice and study of techniques for secure communication in the presence of adversarial behavior.” It’s been around for centuries but we’ve never really had the means of perfecting it to guarantee information will never be revealed without the key. That is, until computers arrived. Networks of computers are able to solve hundreds of quintillions of computers in a second. That’s right, you’ve probably never even come across the word quintillion before.

Crypto basics help us understand that this immense computing power has allowed us to generate a digital ledger that is secure and capable of replacing traditional financial systems. If someone was hoping to exploit your online crypto trading wallet, they’d need more time than what is available in the universe. This is all thanks to the rapid progress made in cryptography. Let’s explore how cryptocurrencies work.

How it works

With a brief overview of what it is, you might be wondering, ‘how does crypto work?’. We’ve all been there. And it takes some time to grasp the concept, so let’s run over some of the fundamental operating mechanisms.


The blockchain, once again, creators of the technology went for an explanatory naming system as the blockchain is literally a chain of blocks. Blocks are crypto transactions and you can imagine them as little receipts that show the sender, receiver, amount and verification. As transactions are completed, the next block relies on previous to validate the transaction and transfer the funds, forming the chain.

What makes blockchain so powerful is that once it has been recorded, there is no way to go back and edit the entry. The chain relies on every link to continue operating. What if one person edits a link and crashes the whole system? Well, that’s also impossible thanks to the distribution of the ledger. Every user of the network, even the beginner traders, will have a copy of the ledger stored on their device. If one edit is made, the millions of other nodes all identify it as incorrect and it’s rejected. The only way to edit a block would be to have the majority of nodes on the network and that is fairly impossible.


With so much data being generated and stored, a solution to the computational processing needed to be solved. Fortunately, the creator of Bitcoin had the perfect idea. Miners. These miners would never have to pick up a pick, they’d only need to offer up their computational power in return for some of the digital tokens, Bitcoins or BTC. At first the reward was a staggering 50 BTC when the block was completed and each miner would be awarded a portion of it. After a certain number of blocks had been mined they would halve in value in order to limit the amount of Bitcoins that are produced.

Each block on the blockchain would have its own hash, a string of characters which is the key to validating the transaction. The miners are then put to a race to determine the key first. Each miner can be seen as an entire network of nodes and the fortunate one that strikes gold by arriving at the correct answer first will reap the reward. As you can imagine, this network boasts the largest computational power on earth.

Getting involved

If all of this information sounds good to you, there are plenty of ways you could get involved with the industry and learn how to fund crypto trading accounts. If you’d simply like to invest, you only need to trade your fiat currency, otherwise, you could earn cryptocurrency for doing a variety of tasks.

Digital tokens

Purchasing the digital tokens is the route that most traders take. You exchange a set amount of fiat currency for some division of the digital tokens. In Bitcoins case, we refer to these as Satoshis and they amount to one hundred millionth of a Bitcoin. That makes it fairly easy to exchange any amount of any currency for a piece of the token. Investing in cryptocurrency can be quite tricky as the prices are very volatile, be sure to browse through some of our crypto trading guides before you decide to invest your funds.

Becoming a miner

This option of involvement is a bit more tricky and capital demanding. At first, you could mine with any computational device and make some cryptocurrency, unfortunately the scene has become so competitive now that miners join into pools in hopes of greater chances of success. Specialized computational devices called application-specific integrated circuits or ASICs are also used to determine the hashes. They trump any conventional computing system when it comes to guesses per second, so you may have to invest in one of those to stand a decent chance.

Trading platforms for beginners

If you’re more interested in the tokens, you’re going to have to learn how to trade. And these aren’t the conventional stock options that have specific trading times during the day, this is a decentralized network with miners all over the world. You could go to bed one night and the price could have changed for the better or worse by morning. For this reason, you’re going to need a trading platform, one that allows you to set limits on when things are going well and one that allows you to get out when the price drops.

Be sure to browse through the rest of our Academy and learn more about trading platforms to use with your beginner trading account. We have guides that show you how to use all of their tools and what key attributes you should be on the lookout for when you use their services. Crypto basics will help you identify the options that interest you most so you will have to take a look at each platform to determine if your market is one offer.

Storage solutions

Once you’ve got yourself some digital tokens, you’re going to need a secure place to store them. The value of cryptocurrency has risen dramatically and many criminals are looking to exploit crypto owners. Fortunately, Vaultavo has the perfect opportunity to keep digital assets safe and ensure that only authorized parties have access to the funds. We offer military-grade security when it comes to the protection of account information and our biometric crypto card will allow only you access for Bitcoin trading and any other digital market from anywhere in the world. Browse through the rest of our site to see what else we have on offer.


This brings us to an end of the crypto basics. You should have a solid understanding of what the word cryptocurrency actually means now and you can begin to explore the wonderful world of cryptography if you’re interested. Understanding what crypto is should also give you a headstart when it comes to identifying a new option that might seem to outperform the rest and be sure to apply some crypto trading strategies. You could also opt for mining cryptocurrency if you’re in an area that does not have exorbitant electricity costs.

It’s easy to get involved with cryptocurrencies and it’s now readily available to the general public. If you’d like to get started be sure to visit the rest of our beginners section here at the Vaultavo Academy as we run through all the information that you’ll need to know. Be sure to make use of the correct trading platform for your needs, there are many offers out there and you might find that your preferred option is not available. Finally, always remember that Vaultavo offers secure storage with transactional convenience with most cryptocurrencies if you’d like to keep your digital assets safe.

Crypto Trading FAQs

What is cryptocurrency?

Cryptocurrency is a form of blockchain technology that has grown to be one of the most active trading markets in the world. The definition of a cryptocurrency abides by three general characteristics although the large number of new options arriving to market have distorted the lines a little bit. Before you decide to buy a digital token, be sure to visit our Academy here at Vaultavo to learn more about the benefits and drawbacks of each option. You can also discover a range of other topics from the industry covered in depth.

Can anyone buy cryptocurrency?

With the digital asset being decentralized and anonymous, you might be wondering if anyone could purchase it? Well, theoretically, yes. But the process is rather complicated if you are seeking the original route. Many services have now been put on offer which make signing up easy. You’ll need a couple of documents to verify your account and an active email address. Beyond that, the requirements do differ from operator to operator. Head to our page now to learn about this and more.

How can I buy crypto?

Getting started is always a leap of faith. You’ve hopefully done the necessary research to have a certain degree of confidence before you invest in your chosen cryptocurrency. Now the time has come to make the purchase. If it’s your first time, you’ll need to make use of your fiat currency to buy a fraction of the digital token for its going rate. There are many considerations to be made here, you definitely don’t want to enter at a peak. Visit our page for some detailed guides on how you should approach crypto basics.

Is crypto legal?

Cryptocurrencies’ legality has been a point of debate all around the globe. Some nations have opted to outright ban it, while others have embraced it completely. It really depends on your country of residence or where you are looking to trade from at the moment. We’ve put together a number of pages to help you on your way to identifying whether the market is legal in your area or not. It’s an important journey to go on as you don’t want to have any trouble once you’ve begun trading.

Are cryptocurrencies a scam?

At first many thought cryptocurrencies to be a fad but they managed to endure the controversy and now trade at incredible values. That being said, there will always be fraudsters trying to exploit members of the public and you might find that one or two crypto options are a scam. We help you to identify recognized options here at the Vaultavo Academy and also detail what makes them special. Head to our page now to find all of this information and more as we get you started with your trading career.