A cryptocurrency is a digital currency that no central bank issues and no bank holds. Instead, every transaction is recorded in a shared ledger, usually a BlockchainBlockchainA public ledger where transactions are grouped into blocks, each linked to the one before, so past records can't be altered without it showing., which many computers maintain together. CryptographyCryptographyMathematical methods that protect information and prove who sent it, forming the basis of security in crypto. makes sure that only whoever controls the coins can send them.
How does cryptocurrency work?
In your online bank you see a balance that the bank keeps a record of. A cryptocurrency has no such central record. You hold keys in a crypto wallet and use them to sign transactions. The network checks the signature and adds the transaction to the ledger. After that, it can't be changed.
The first cryptocurrency was BitcoinBitcoinThe first and largest cryptocurrency: a digital currency that no single party controls, with a fixed limit of 21 million coins., and its first block was created on 3 January 2009. Thousands more have followed. Some are meant as a means of payment, others to run applications, and stablecoinsStablecoinA cryptocurrency designed to keep a steady price, usually by tracking the US dollar or another currency. aim to track the price of a traditional currency.
Cryptocurrency or crypto-asset?
In everyday speech people say cryptocurrency, or just crypto. The legal term is Crypto-assetCrypto-assetThe legal term for cryptocurrencies and tokens, meaning a digital representation of value or rights that can be transferred and stored on a blockchain., which is broader. In Iceland, Act No. 101/2025 on markets in crypto-assets applies. It is based on the EU's MiCA regulation and took effect on 1 January 2026.
What should you know?
Cryptocurrency is not legal tender, and no deposit guarantee covers it. Prices can swing sharply in a short time, and crypto sent to the wrong place usually can't be recovered. So it pays to learn the basics before you buy.
Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 18 October 2026.