Getting to Know How Crypto Works: A Complete Guide for Beginners

Jakarta, Pintu News – Amid the trend of financial digitalization, cryptocurrency or crypto is gaining popularity as a medium of exchange and investment. But, how does crypto actually work? Why is it so different from conventional currencies such as rupiah or dollar?

In this article, you’ll learn the basics of how crypto works, the technology behind it, and the benefits and risks-including how crypto is being used in Indonesia today.

What is Crypto and Blockchain?

Cryptocurrency is a digital currency that uses cryptographic technology to secure transactions and control the creation of new units. Unlike fiat currencies issued by central banks, crypto is decentralized-it is not regulated by any central authority.

The main technology underlying crypto is blockchain. Blockchain is a digital record-keeping system that is transparent and cannot be modified unilaterally. Every transaction that occurs is recorded in a “block”, then the blocks are connected to each other in a chain of data called a blockchain.

How Cryptocurrency Works in General

The working process of cryptocurrency involves three important elements:

1. Public keys and private keys: each user has two types of cryptographic keys. Public keys serve as crypto wallet addresses, while private keys are used to access and secure assets.
2. Digital transactions: when you send crypto to someone else, the transaction is broadcasted to the blockchain network.
3. Verification by the network: transactions are verified by thousands of computers (nodes) through consensus algorithms.

Once the transaction is verified, the data is permanently recorded on the blockchain. That’s why crypto transactions are transparent and almost impossible to fake.

Also read: What are Covered Calls: Definition, How They Work, and Examples of Strategies for Investors

Mining and Consensus Process

Some cryptocurrencies, such as Bitcoin (BTC), use a mining system to verify transactions and add them to the blockchain. In this system, computers on the network compete to solve complex math puzzles. Those who succeed are rewarded with new coins.

This method is known as Proof of Work (PoW). In addition, there is also Proof of Stake (PoS) used by Ethereum (ETH), which relies on staking (locking up assets) as a condition of transaction verification.

Each of these consensus methods has advantages and disadvantages-in terms of energy efficiency, transaction speed, and security.

Crypto Wallet: Storing and Managing Assets

To transact crypto, you need a crypto wallet or digital wallet. There are two main types:

• Hot wallet: connected to the internet and easily accessible, like an app on a smartphone.
• Cold wallet: stored offline and more secure from hacker attacks, usually a physical device such as Ledger or Trezor.

Crypto wallets store your private keys. If you lose this key (e.g. forget your seed phrase), then your crypto assets can be lost forever.

Crypto Exchange and Trading Platform

To buy or sell crypto, you need to use an exchange or exchange platform. There are two types:

• Centralized Exchange (CEX) such as Binance, Coinbase, or Pintu, where transactions are managed by a third party.
• Decentralized Exchange (DEX) such as Uniswap or PancakeSwap, which works automatically through smart contracts.

In addition, stablecoins like USDT and USDC also play an important role as digital dollar substitutes in the crypto ecosystem.

Read also: What is a Broker: Definition, Types, and How They Work in the Financial World

Smart Contracts and Blockchain Applications

Smart contracts are automated programs that run on the blockchain. They enable transactions without the need for intermediaries. For example, in the DeFi (Decentralized Finance) app, you can borrow or lend crypto with just a smart contract.

Crypto is also used in:

• NFTs (unique digital assets)
• DAO (community-based autonomous organization)
• GameFi and other Web3 applications

Examples of blockchains that support this are Ethereum (ETH), Solana (SOL), and BNB Chain.

Benefits and Risks of Using Crypto

Conclusion

Crypto is a revolutionary technology that is changing the way we understand money, investment, and digital ownership. By understanding how crypto works, you can utilize its potential more wisely and avoid unnecessary risks.

That’s the latest information about crypto. Follow us on Google News to get the latest information about the world of crypto and blockchain technology. Check today‘ s bitcoin price, today‘ s solana price, pepe coin and other crypto asset prices through Pintu Market.

Enjoy an easy and secure crypto trading experience by downloading Pintu crypto app via Google Play Store or App Store now. Also, get a web trading experience with various advanced trading tools such as pro charting, various types of order types, and portfolio tracker only at Pintu Pro.

*Disclaimer

This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Crypto trading activities have high risk and volatility, always do your own research and use cold cash before investing. All activities of buying and selling bitcoin and other crypto asset investments are the responsibility of the reader.

Reference:

• Coursera. How Does Cryptocurrency Work? A Beginner’s Guide. Accessed July 18, 2025
• Featured Image: Generated by AI