What is cryptocurrency? Understanding digital assets in 2025

In 2025, the question "What is cryptocurrency?" is more relevant than ever. Once considered a niche topic for tech-savvy investors, cryptocurrency has become a global phenomenon shaping the future of finance. With a total market capitalization exceeding $3.46 trillion and over 37 million tokens in circulation, cryptocurrency is no longer experimental – it is foundational.

What is cryptocurrency?

Cryptocurrency, in short, refers to digital assets built on blockchain technology—a decentralized ledger that records transactions transparently and securely. Unlike traditional fiat currencies (such as the US dollar or Vietnamese dong), cryptocurrencies operate without a central bank. They utilize cryptographic techniques for issuance, verification, and storage.

Popular cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) have multiple functions: store of value, medium of exchange, and in many cases, access to decentralized applications (dApps) or decentralized finance protocols (DeFi).

Market Overview: Cryptocurrency in 2025

By July 2025, the global cryptocurrency market has rebounded strongly, with a total value exceeding $3.46 trillion, and trading activities remain active. Bitcoin continues to dominate as the top cryptocurrency asset, followed by Ethereum and a range of emerging altcoins such as Arbitrum, Sui, Pepe, and various AI or DePIN-based tokens.

Layer-2 network expansions, such as zkSync, Base, and Scroll, enable faster transactions at lower costs, promoting the growth of real-world application cases in decentralized finance, gaming, and artificial intelligence.

How Blockchain Powers Cryptocurrency

Blockchain is the backbone of all cryptocurrency assets. It is a public, immutable ledger that records every transaction, which are stored in the form of blocks. These blocks are securely linked together using cryptographic hashes.

Consensus mechanisms such as Proof of Work (PoW) and Proof of Stake (PoS) verify these transactions without the need for intermediaries. This creates a trustless system that is both transparent and resilient.

Types of Cryptocurrency

The cryptocurrency market includes several categories:

• Tokens: Native assets like BTC, ETH, and BNB that run on their own blockchains.
• Tokens: Built on existing blockchains (e.g., USDT on Ethereum, PEPE on BNB Chain).
• Stablecoins: Pegged to fiat currencies like the US dollar (e.g., USDC, DAI), providing stability for transactions and payments.

Practical Applications of Cryptocurrency

In 2025, the application of cryptocurrencies far exceeds speculation. It now supports:

• DeFi (Decentralized Finance): Permissionless lending and trading.
• GameFi: Play-to-earn games with an in-game token economy.
• NFTs: Ownership of digital assets, such as artwork, collectibles, and music copyrights.
• AI x Crypto: Infrastructure for decentralized data and AI model training.
• DePIN (Decentralized Physical Infrastructure): Supports projects like io.net. Helium has real-world utility.

Is cryptocurrency a good investment?

Cryptocurrency investment carries high risks but also high potential returns. In 2025, many altcoins saw increases of over 200%-400%, while other coins remained highly volatile.

For beginners, it is wise to start with larger market cap cryptocurrencies like BTC and ETH. Adopting a Dollar-Cost Averaging (DCA) strategy helps reduce exposure to short-term volatility. Traders also use indicators such as RSI, MACD, and candlestick charts to grasp entry and exit timing.

What is a cryptocurrency wallet?

A cryptocurrency wallet stores your private keys and allows you to access and manage your digital assets. There are primarily two types:

• Hot Wallet: A wallet based on applications or web pages; convenient but more susceptible to online risks.
• Cold Wallet: A hardware wallet that provides enhanced security for long-term storage.

Frequently Asked Questions about Cryptocurrencies

1. What is cryptocurrency? Cryptocurrency is a decentralized digital currency or asset that is secured through blockchain technology.

2. Is it legal to own cryptocurrency? The legal status varies by country. In many regions, owning and trading cryptocurrencies is allowed, but they are not recognized as legal tender.

3. Can I profit from cryptocurrencies? Yes. You can profit by trading, staking, participating in decentralized finance (DeFi), and even through blockchain-based games and airdrops.

4. How much should I invest in cryptocurrency? A cautious starting point is 5-10% of the portfolio, ensuring good risk management.

5. Where can I trade cryptocurrencies? Platforms like Gate provide access to thousands of tokens, low fees, high liquidity, and professional trading tools.

Conclusion

"What is cryptocurrency?" This question is no longer just a manifestation of curiosity—it marks the readiness to explore a new financial paradigm. With a market value exceeding $3.46 trillion, evolving infrastructure, and mainstream adoption, cryptocurrency is defining the future of ownership, value, and online identity. Whether you are a beginner or an experienced investor, 2025 offers an ideal environment to explore digital assets. From understanding the basic concepts to deploying trading strategies, the opportunities are open. Start small, keep learning, and always prioritize security. The era of cryptocurrency is not coming—it is already here.

Author: Blog Team *The content of this article does not constitute any offer, solicitation, or recommendation. You should always seek independent professional advice before making any investment decisions. *Please note that Gate may restrict or prohibit the use of all or part of its services in restricted areas. For more information, please refer to the user agreement.