Cryptocurrency Explained: Definitions, Skills, and Opportunities

Cryptocurrencies have changed the way people interact with the digital world. The early history of Bitcoin, the largest cryptocurrency, shows explosive growth from $0.0008 to $70,000 in a little over a decade, with a lot of volatility in between [1].

There have been new and emerging opportunities for trading crypto or jobs in the sector. In this article, discover various cryptocurrency jobs, from technical to traditional business roles, and uncover ways to get involved in this industry. Whichever role you're interested in, get to know the definitions and fundamentals of how cryptocurrency works with this guide.

What is cryptocurrency?

Cryptocurrency is a type of digital money used to trade assets and represent value. In order for cryptocurrency to remain authentic and legitimate, it uses cryptography to help maintain security during the verification, creation, and distribution of coins or tokens. 

Cryptocurrency is generally not controlled by a third party, such as a bank, government, or company, making it a decentralized currency. Some are coins, and some are a separate category of cryptocurrency called tokens. To understand what cryptocurrency is, learn more about how the technology works.

Read more: Cryptocurrency: What Is It and How Does It Work?

How cryptocurrencies work

Cryptocurrencies have similarities to traditional money, like the USD, GBP, and EURO. Each banknote in these currencies has a serial number that allows it to be tracked, and each cryptocurrency coin  also has a unique number too. When that unit of cryptocurrency is transferred between parties or to a digital wallet, it gets tracked. Only around 20 percent of US transactions were in the form of physical money in 2021 [2]. The majority of money sits as records in databases, just like cryptocurrency.

Blockchain technology makes cryptocurrencies possible, securing transactions in a distributed ledger (a database held across many computers) without needing third parties. Cryptocurrencies are a way of storing and transacting value. They don’t require banks, credit card companies, or other intermediaries. 

What is a blockchain?

Blockchains are digital ledgers that record cryptocurrency transactions. The blockchain grows as completed blocks are added with new data in chronological order. The data is also immutable, making it unchangeable or removable to ensure that it’s secure and is a system that can’t be tampered with. Major cryptocurrencies, like Bitcoin, have many computers storing the data, meaning that the transactions are almost impossible to falsify.

How blockchains work

When you send a cryptocurrency payment to another person’s digital wallet, the transaction details are in the blockchain across the entire network of computers, known as nodes. Blockchain nodes across the network confirm the status of coins. If someone interferes with one node, the rest of the nodes will easily identify it as holding incorrect data. An attacker needs to change data in more than 50 percent of nodes to change data in the cryptocurrency network. Therefore, the more extensive the distributed ledger network, the more secure the cryptocurrency tends to be. 

What is cryptography?

Cryptography technology is designed to keep unauthorized users from gaining access to information. This is the crypto part of cryptocurrency. Cryptographic processes encrypt and decrypt data using mathematic calculations. This helps ensure that only authorized users can access and alter the data.

Tokens vs. coins

Tokens and coins are cryptographic entities on a blockchain but with different economic properties. Coins are currencies that can be used to make transactions. Cryptocurrency coins, such as Bitcoin (BTC) and Litecoin (LTC), work like conventional fiat currencies. 

Tokens are digital assets with specific uses within a particular platform; they contain a value assigned to them and often come with specific utility functions. For example, non-fungible tokens (NFTs) are cryptographic tokens tied to a digital or physical asset.

Why is cryptocurrency volatile?

Uncertainty and instability around the global markets at a macroeconomic level reflect in the crypto market. The total number of cryptocurrencies in May 2022 approached 19,000, with a $1.75 trillion combined market capitalization [3]. By November 2022, the total number of cryptocurrencies was 21,844(9,314 were considered active or valuable), with a combined market capitalization of $830 billion.  [4].

The cryptocurrency market has been an investment vehicle for those speculating on this new asset class.  Cryptocurrencies have prices based on the value they are perceived to have, just like gold or USD, and on supply and demand. However, they are a new asset class and at the mercy of more factors that can change the global perception of them. In its short history, cryptocurrency prices have been swayed greatly by tweets from Elon Musk, for example. 

What are crypto exchanges?

Crypto exchanges are online platforms that allow you to buy, trade, and sell crypto. These platforms work similarly to stock brokerage apps and websites but are devoted to cryptocurrencies. There are three types of crypto exchanges: centralized, decentralized, and hybrid. To choose the one that’s right for you, learn more about each. 

Centralized

A centralized crypto exchange functions as a middleman between buyers and sellers. This type of exchange holds your deposited money. In this way, it functions similarly to a traditional bank. The platform lets you watch different crypto and understand the market. Once an order is placed, the exchange finds a buyer or seller that matches your desired action and coins or tokens. Some exchanges include:

• Robinhood

• Gemini

• Coinbase

• Webull

Keep in mind that centralized exchanges often charge higher transaction fees than its decentralized counterparts and are more vulnerable to hacking.  

Decentralized

Decentralized crypto exchanges enable peer-to-peer buying, selling, and trading. Instead of having a third-party act as a middleman, these exchanges let you directly interact with others to fulfill the actions you’re seeking. 

Benefits:

• Greater privacy

• Protection from market manipulate

• Lower risk of hacking

Decentralized crypto exchanges are complex and typically for those who have experience trading. Understanding how to interact with a decentralized platform gives you complete control over your crypto assets instead of having a centralized authority in control.

Keep in mind that losing your keys and passwords will put you at risk of crypto wallets forever. These exchanges also struggle with liquidity because most transactions go through centralized networks, so they usually have lower trading volumes. 

Hybrid

Hybrid exchanges, the first launched in 2018, aim to provide the user-friendly functionality of centralized crypto exchanges with the privacy of decentralized exchanges. Some people believe that these options will be the future of cryptocurrency trading. 

What are valuable cryptocurrencies in 2023? 

Bitcoin and Ethereum have been around for a long time, released in 2009 and 2015, respectively, and have built a large community of users and developers. While it's difficult to predict which cryptocurrencies will be the most valuable in the future, these eight are currently valuable as of February 2023 [5]:

• Bitcoin (BTC)

• Ethereum (ETH)

• Tether (USDT)

• US Dollar Coin (USDC)

• Binance Coin (BNB)

• Cardano (ADA)

• Solana (SOL)

• Dogecoin (DOGE)

Industry outlook and careers available

Job websites and crypto companies advertise different roles in the cryptocurrency sector, including developers, architects, analysts,, and more. Instead of pursuing specialist jobs in crypto technology, you could also work in the traditional business sector, such as human resources, marketing, journalism, and more. Take a look at some of the technical jobs in the cryptocurrency sector and their respective average annual US salaries:

*All salary data is sourced from Glassdoor as of February 2023 

• Artificial intelligence engineer: $101,947  [6]

• Blockchain analyst: $75,452  [7]

• Blockchain architect: $101,546  [8] 

• Blockchain consultant: $74,462  [9] 

• Blockchain developer: $90,648 [10]

• Blockchain engineer: $100,687  [11]

• Cryptocurrency analyst: $64,162  [12] 

• Cryptocurrency manager: $84,039 [13]

What qualifications do you need to learn cryptocurrency?

The qualifications you’ll need to work in cryptocurrency will depend on your target job. For example, to work in a technical cryptocurrency role, such as a software developer or blockchain architect, you’ll need technical skills like competence with programming languages, blockchain, databases, and machine learning. Many job advertisements list the following skills as requirements for the position:

• Java

• Python

• Amazon Web Services

• C/C++ 

You can learn these skills in bachelor's degree programs in computer science and related majors. However, it’s also possible to learn and demonstrate these valuable skills through practical experience on projects and courses.

Get started

If you’re looking to build your technical skills with blockchain, the Blockchain Specialization offered by the State University of New York is a course to consider. It focuses on job-ready skills, primarily based on smart contracts and programming for Ethereum blockchain projects.

Frequently asked questions (FAQ)