What Are Cryptocurrencies? A Beginner’s Guide for Businesses in 2025

What are cryptocurrencies? A beginner’s guide to digital money

Cryptocurrencies are becoming increasingly popular and integrated into everyday life. For both individuals and businesses, this means that crypto is becoming increasingly accessible in various aspects of modern finance, serving as a payment method, an investment opportunity, or even a strategic business move. But, between Bitcoin, blockchain, altcoins, and stablecoins, the crypto vocabulary alone can feel like a significant hurdle to jump.

We’re here to help: in this guide, we’ll break down what cryptocurrencies actually are, how they work, the types you’ll encounter, and where platforms like Slash fit in to provide access and tools to a vast ecosystem of digital money that moves faster, farther, and with fewer middlemen than traditional coin.

Stop putting off the inevitable and keep reading to finally get in on the blockchain:

What are cryptocurrencies?

Cryptocurrencies are digital assets, a form of “digital money.” Unlike traditional, or “fiat,” currencies regulated by banks or central authorities, cryptocurrencies operate on decentralized databases called blockchains.

A blockchain is a system that records new entries by linking each one to the previous entry, creating a continuous chain of data. Instead of being stored in one central place, identical copies of the blockchain, known as a distributed ledger, are maintained across a network of computers. This structure allows cryptocurrencies to be decentralized, meaning no single entity controls the system. It also makes the records highly secure and resistant to tampering, ensuring that crypto assets can’t be easily created, altered, or destroyed.

Examples of cryptocurrencies include Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), and USD Coin (USDC), with each distinguished either as a coin or a token.

• A coin, such as Bitcoin, runs on its own blockchain.
• A token, like many DeFi assets, such as Dogecoin or USDC, runs on another blockchain, such as Ethereum.

Cryptocurrencies are powerful financial tools and digital currencies used for payments, investments, and as building blocks for other innovations, including everything from collectibles (NFTs) to lending protocols. At the heart of cryptocurrency is an innovative approach to money and transactions built on transparency, security, and accessibility.

How do cryptocurrencies work?

At their core, cryptocurrencies operate through a decentralized network of nodes, or independent computers that connect to the given blockchain network to store, validate, and share the blockchain’s data. Technically, anyone can participate as a node; however, how you participate and earn rewards depends on the blockchain’s consensus mechanism (more on that below). Before jumping too deep into the weeds, let’s break down a crypto transaction down from the beginning:

1. You control a wallet.

Set up your digital wallet to store essential keys, including a private and public key:

• Private key: used to authenticate your ownership of a crypto asset (like a password). You need your private key to access and authorize crypto transactions.
• Public key: like a bank account number, your public key is used for others to send you transactions.

2. You initiate a transfer.

When you request to send cryptocurrency (for example, 0.05 BTC) your wallet signs the transaction with your private key. This digital signature verifies that you own the crypto being sent and are authorized to move it. The assets themselves don’t live in your wallet, but on the blockchain; your wallet simply provides secure access to them.

3. The network validates the transaction.

The signed transaction is broadcast to the blockchain network, where nodes independently verify its legitimacy by checking your balance and ensuring the signature matches. Once validated, the transaction is grouped into a block with other transactions.

4. Consensus adds the block.

Nodes agree on the new block through a consensus mechanism, either:

• Proof of Work (PoW): Through Proof of Work, miners compete to solve cryptographic puzzles. An example of this is Bitcoin (BTC), where new cryptographic puzzles are released roughly every 10 minutes, and miners compete to solve them in order to validate transactions and earn newly created or “minted” BTC as a reward.
• Proof of Stake (PoS): In Proof of Stake systems, validators stake tokens (like ETH) as collateral to help secure the network. By staking their assets, they earn the ability to propose and approve new blocks of transactions. For example, on the Ethereum network, a validator might stake their ETH to participate in block validation. When it’s their turn, they verify that transactions are legitimate and then add the block to the chain. In return, they earn small rewards, similar to interest, for keeping the network running smoothly. However, if a validator tries to cheat the system, such as approving fraudulent transactions or going offline too often, part of their staked ETH can be automatically forfeited, or “slashed,” as a penalty.

5. Finalized transactions.

After enough confirmations, the transaction becomes permanently added to the blockchain and is immutable. No chargebacks or reversals are possible, ensuring trust through a decentralized network rather than through intermediaries.

6. Fees.

Every transaction includes a small fee (called “gas fees” on Ethereum) to compensate miners or validators for securing the network. These fees fluctuate based on the network you are using and associated activity and demand. 

These core mechanics are what drive cryptocurrencies across the board, including associated technology like NFTs, EFTs, and other DeFi protocols.

Types of cryptocurrencies

There are a number of different types of crypto, differentiated by blockchains, consensus mechanisms and more. Here’s a breakdown of some of the key types:

1. Bitcoin (BTC)

Even if you’re brand new to crypto, you may have already heard of Bitcoin. Bitcoin is the original and most widely recognized cryptocurrency. Created in 2009 by pseudonymous creator, Satoshi Nakamoto, Bitcoin runs on its own native Proof of Work blockchain, where miners validate transactions and earn BTC in reward.

Bitcoin’s value stems from its built-in scarcity: only 21 million coins will ever exist, and periodic halving events reduce the rate of new issuance, reinforcing its deflationary design. Despite this, Bitcoin remains highly volatile, with frequent price swings. Still, many view and use Bitcoin as a store of value, a cross-border payment network, a transaction method, and more.

2. Ethereum (ETH)

Ethereum expanded what blockchain technology could do. Launched in 2015 by Vitalik Buterin and a team of developers, it introduced smart contracts, which are self-executing programs that run directly on the blockchain. This innovation enabled the development of decentralized applications (dApps), powering DeFi protocols and creating tokens and NFTs that represent ownership, access, or value on-chain. Its native asset, Ether (ETH), fuels all of this activity and is used to pay transaction fees (“gas”) and interact with applications across the Ethereum ecosystem.

Since migrating to Proof of Stake, Ethereum now relies on validators who stake ETH to secure the network, rather than miners using computational power. Users and developers interact with Ethereum for everything from decentralized finance and gaming to digital identity and governance. It’s both a programmable blockchain platform and the foundation for much of today’s broader crypto economy.

3. Altcoins

Altcoins refer to any cryptocurrency that isn’t Bitcoin (and, depending on who you ask, sometimes not Ethereum either). In short, they’re alternative coins that build on or branch away from Bitcoin’s original model.

Examples include Solana, Cardano, and Dogecoin (DOGE), each with its own goals and design structure. Some altcoins focus on faster transactions or lower fees, while others emphasize privacy, energy efficiency, or the consensus mechanisms they use to validate transactions. They also differ in how their tokenomics work (i.e., how supply, value, and incentives are structured).

Because of their variety, Altcoins can range from serious long-term blockchain projects to fun experiments that gain value through niche communities and interest groups (like Dogecoin or $HAWK).

4. Stablecoins

Stablecoins are cryptocurrencies designed to maintain a steady value by being pegged to a reference asset, like a fiat currency. Examples include USDC and USDT, which are pegged to the U.S. dollar. In general, stablecoins are useful as they combine the stability and familiarity of traditional currencies with the speed and DeFi capabilities of crypto.

Stablecoins are especially useful for individuals and businesses to conduct payments and cross-border transactions, as they offer a reliable value that can be moved internationally more easily, cheaply, and quickly. At Slash, we make it easy to unlock the usefulness of stablecoins in everyday business financing, allowing users to accept payments in stablecoins, hold USDC, USDT, or USDSL, and easily convert stablecoins to fiat or USD through integrated on- and off-ramps, all while staying compliant and accounting properly through Slash’s accounting tools. Learn more about stablecoins for business at https://www.slash.com/platform/usdsl.

How to use cryptocurrencies

There are myriad use cases for cryptocurrencies; however, because crypto isn’t a typical fiat currency or cash, putting your crypto to work can be puzzling. Here are some common ways you can use digital currencies:

Spend with merchants.

Pay for goods and services through merchants or payment processors that support crypto checkout. Some platforms accept Bitcoin or Ethereum, while others focus on stablecoins to reduce volatility. Increasingly, major online retailers and payment gateways are integrating crypto as a direct payment option, including Slash, which lets you send, receive, and on- and off-ramp with stablecoins.

Receive payments.

Invoice clients and accept stablecoins like USDC, USDT, or USDSL with Slash for faster, borderless payments without traditional banking delays or foreign exchange fees. This is particularly valuable for freelancers, contractors, and global businesses seeking efficient settlement across time zones and currencies.

Convert between crypto and fiat.

Use a crypto exchange or an integrated wallet service to convert assets between cryptocurrencies and traditional currencies such as USD. With Slash, easily send and receive funds with stablecoins and convert to USD.

Hold as treasury.

Some businesses maintain part of their treasury in stablecoins to benefit from near-instant settlement, on-chain transparency, and reduced transfer costs, while keeping the remainder in fiat for predictable expenses like payroll and rent. This hybrid model supports liquidity without exposing the company to significant price volatility, which is common in Bitcoin and other cryptocurrencies. Access both through Slash today.

Is it safe to invest in crypto?

Like most investments, crypto includes a spectrum of potential risks to be aware of before investing, including:

• Volatility. Some cryptocurrencies, like Bitcoin, can have sharp value swings.
• Scams and security. Phishing, fake apps, and hidden value structures can create security risks around crypto. Relying on reputable wallets, verifying URLs and addresses, and choosing secure options like multi-factor authentication-backed security for your wallets is essential to mitigate risks.
• Regulatory uncertainty. Crypto rules and regulations are evolving. Ensure you understand regional, exchange, and tax-specific regulations before investing.

Mitigate risks by:

• Research first. Before investing, understand the cryptocurrency as best as possible, including value structure, issuer information, and regulations.
• Diversify. Diversification can be helpful in any investment; ensure you rely on more than one crypto to smooth the risks associated with a single coin or token.
• Use secure platforms. Stick with crypto wallets and platforms like Slash that follow KYC, compliance, and security practices to protect you from scams and maintain the privacy of your private keys.

For businesses, Slash provides a secure banking environment for crypto transactions with stablecoins (e.g., USDC, USDT, USDSL). By including built-in controls, transaction records, and integrations with accounting systems, Slash offers an all-in-one place to invest in and access the power of crypto while staying on top of audits, tax reporting, and general oversight.

Benefits of using cryptocurrencies

Despite any risks, cryptocurrencies offer a number of benefits for businesses. Here’s a brief overview of some of the key ways your business could benefit from integrating crypto into your operations:

Fast cross border payments

Crypto unlocks the ability to move money domestically and across borders without traditional bank processing and other timely intermediaries. Crypto can be sent year-round, 24/7, instantly. Stablecoins like Slash’s USDSL can be especially useful in this case, allowing you to send USD-pegged assets quickly and efficiently without the delays or high bank fees.

Accessibility.

Anyone with internet can access crypto wallets and blockchains. This has a number of advantages, especially for young entrepreneurs and teams with limited access to traditional banking and card networks. Further, crypto can grant access to send and receive USD with stablecoins, helpful for businesses with non-U.S. entities with operations in the U.S..

Programmability.

Crypto systems, including smart contracts, support built-in automation. With Slash, you can also automate your payouts and more using the Slash API.

Potential growth.

Crypto is a developing asset class and infrastructure, so getting in on crypto now can mean potential for significant future growth. Cryptocurrencies are also helpful payment forms and can be used for your business’s ongoing and scaling operations and development.

Decentralization

One of the key benefits of cryptocurrencies is that they are decentralized assets. This means money flow doesn’t rely on traditional banking and spend networks, saving you time and money on fees and processing as well as enabling more global, direct access to funds and payment networks.

Manage crypto payments and accounting with Slash

Cryptocurrencies can be helpful tools for your business, offering access to fast, global payments, and so much more. Slash fits in by giving you crypto access alongside banking tools like checking accounts, cards, and accounting integrations. With Slash, all of this is accessible through one intuitive dashboard:

• Stablecoin on/off-ramps for USDC, USDT, and USDSL, allowing you to accept crypto, pay vendors, or cover fiat expenses with seamless and easy on- and off-ramping.
• Slash can help you handle compliance with real-time expense and cash flow tracking and integrations with accounting.
• High, up to 2% cash back corporate cards and banking tools built to align with your business operations and seamlessly integrated with your off-ramp workflows.
• QuickBooks and Xero integrations, ensuring you’re staying compliant and maintaining accurate bookkeeping and reporting.
• Multi-entity visibility to organize different business divisions for growing or complex teams.

Slash helps you integrate crypto into your business operations in a way that makes it easy, not overly confusing or complicated. Simple on/off ramping with access to crypto where it delivers most let’s you reap the benefits of the growing digital asset without jumping to quickly into the deep end. Learn more about how Slash stablecoins and crypto can help your business at slash.com.

Frequently Asked Questions

What’s the difference between cryptocurrency and traditional currency?

Cryptocurrency is a virtual currency secured by cryptography and recorded on a blockchain; no single bank controls it. Traditional or fiat currency, like the dollar, is issued by a government and managed through banks and payment networks. Both are currencies, but they move through different rails.

What affects cryptocurrency prices?

Cryptocurrency prices may be affected by supply schedules, demand, network health, and regulation. However, stablecoins are pegged to fiat and offer less volatile crypto options. For businesses seeking reliable value, Slash’s stablecoins can be valuable tools that provide stability with the power and access of cryptocurrency.

What are some tips to invest in crypto safely?

Use reputable wallets and exchanges, enable multi-factor authentication, spread risk, don’t share private keys, verify URLs, and keep good records of your transactions and crypto operations.