Recently, many people still have a superficial understanding of blockchain and cryptocurrencies. Actually, what crypto means, how blockchain works—these concepts are not as complicated as they seem. Today, let’s briefly discuss these basic knowledge points.

First, let’s talk about Bitcoin. In 2008, a mysterious person named Satoshi Nakamoto published a paper describing a brand new electronic cash system. The following year, he released the first Bitcoin software, officially launching the entire ecosystem. To prevent unlimited inflation, the total supply of Bitcoin is fixed at 21 million coins, which is also the source of its scarcity. Bitcoin is actually the representative of cryptocurrencies; crypto means virtual currency created using modern cryptography techniques, completely different from traditional fiat currencies controlled by central banks.

Blockchain is the real core technology. Essentially, it is a decentralized shared ledger where all transaction records are stored, and once written, they cannot be tampered with. Every Bitcoin transaction must be registered on the blockchain to be valid. This tamper-proof feature has led many industries to consider applying it—banks, logistics, supply chain management are all experimenting with blockchain technology.

So, how can you obtain Bitcoin? The answer is mining. Miners need to solve complex mathematical problems to find a specific 256-bit number (called a hash value) before adding a new block to the blockchain. However, as Bitcoin transaction volume increases, mining difficulty also rises. Nowadays, miners have to use large specialized computers to compete, and the electricity costs have become quite substantial.

Besides Bitcoin, another important participant is Ethereum. Ethereum is an open-source blockchain platform supporting smart contracts, decentralized applications, token issuance, and other advanced features, making its application scope much broader than Bitcoin. Ethereum also has a mining mechanism, with rewards paid in Ether, but the development community is planning to shift to other new block generation methods. Due to its rich functionality, Ethereum is very popular among investors, ranking second in market capitalization after Bitcoin.

The 2017 ICO boom is also worth mentioning. ICO stands for “Initial Coin Offering,” a new fundraising method where companies issue tokens instead of stocks to raise capital. That year, Bitcoin’s surge drove the entire market, and ICO fundraising was quite successful. However, it also led to rampant scams. China and South Korea banned ICOs one after another, Vietnam and Indonesia prohibited cryptocurrency payments, and financial regulators in the US, EU, Japan, and other countries repeatedly warned investors to be cautious of risks.

In summary, crypto means a virtual currency ecosystem based on cryptography, while blockchain is the underlying technology supporting all of this. Once you understand these concepts, market news will become much clearer.