What is an NFT?

NFT stands for “non-fungible token.” That sounds hard, so let’s break it down.

“Fungible” means swappable. A dollar bill is fungible. If you trade your dollar for my dollar, nothing changes. Each one is worth the same.

“Non-fungible” means one of a kind. Think of a concert ticket for seat 12B. It’s not the same as a ticket for seat 40F, even if they look alike.

A token is a type of crypto built on top of a blockchain. A blockchain is a shared list of records, kept by many computers. So an NFT is a one-of-a-kind token. The blockchain keeps a public record of who owns it.

NFTs are often linked to digital art, music, game items or event tickets. Many are made on Ethereum using smart contracts. A smart contract is a set of rules written in code that runs by itself.

Here’s something many people don’t know. Owning an NFT usually doesn’t mean you own the art itself or the right to copy it. Often, you own the token that points to it. The exact rights depend on what the creator says.

Also, the picture or file is often stored somewhere else, not on the blockchain. If that place goes offline, the NFT may point to nothing.

NFTs became very popular around 2021. Since then, interest has gone up and down a lot.

This is an explanation, not financial advice.

What does ‘not your keys, not your coins’ mean?

“Not your keys, not your coins” is a saying you’ll hear a lot in crypto. It’s about who is really in control of your crypto.

First, a quick reminder. Keys are the secret codes that let someone move crypto. Whoever holds the keys can move the coins.

When you keep crypto on an exchange, the company usually holds the keys for you. An exchange is a website or app where people trade regular money for crypto. Letting a company hold your keys is called “custody.” It’s a bit like a coat check. You hand over your coat and get a ticket. Most of the time, you get your coat back. But if the coat check closes or loses things, you’re stuck waiting.

That has happened in crypto. In November 2022, a big exchange called FTX stopped letting customers take out their money. Days later, it went bankrupt. Many customers waited years in the courts to get some or all of their money back.

The other choice is called “self-custody.” That means you hold your own keys, often in a wallet app or a hardware wallet. A wallet is a tool that holds your keys. With self-custody, no company can freeze your crypto. But it also means you are fully in charge. If you lose your keys or your seed phrase, no one can reset them for you.

Both ways have trade-offs. The saying is a reminder to know who holds your keys.

This is an explanation, not financial advice.

What is a hardware wallet?

A hardware wallet is a small device, often about the size of a USB stick. Its job is to keep your crypto keys safe. Keys are the secret codes that prove your crypto is yours and let you move it.

Here’s the big idea. A phone or computer is almost always online. That makes it easier for hackers or bad apps to reach your keys. A hardware wallet keeps your keys offline, away from the internet. Keeping keys offline like this is called “cold storage.” Keeping them on an online device is called a “hot wallet.”

Think of it like this. A hot wallet is like keeping your house key in your pocket. It’s handy, but easier to lose. Cold storage is like keeping the key in a safe at home.

So how do you use it? When you want to send crypto, you plug in the device or connect it to an app. The payment is approved on the device itself, usually by pressing a button. Your keys never leave it.

A hardware wallet also gives you a seed phrase. That’s a list of 12 or 24 words that can rebuild your wallet if the device is lost or broken. Keep those words safe and private.

A few simple tips: buy a device only from the maker or a trusted store, not used. And never type your seed phrase into a website.

This is an explanation, not financial advice.

What is a rug pull?

A rug pull is a type of crypto scam. The name comes from the saying “pulling the rug out from under someone.” Everything seems fine, and then, suddenly, it isn’t.

Here’s how it usually goes. Someone makes a new token. A token is a type of crypto built on top of an existing blockchain. Making one can be fast and cheap. The makers then hype it up online. They may promise huge, quick gains or pay people to promote it. Lots of people put money in. Then the makers sell their share, take the money and disappear. The token’s price crashes, and the people left holding it can lose almost everything.

Rug pulls are just one kind of crypto scam. Here are a few others to watch for:

Fake support. Someone says they’re from a wallet or exchange and asks for your seed phrase. A seed phrase is the list of words that can unlock your wallet. Real support will never ask for it.

Giveaway tricks. A post says “send 1 coin and get 2 back.” That’s always a scam.

Romance or friend scams. A new online friend slowly gets you to “invest” through a site they pick.

Some simple habits help keep you safe:

Slow down. Scammers love to rush you.

Be careful with promises of big, sure profits. Nothing is guaranteed.

Check who is behind a project.

Never share your seed phrase or private key.

If something feels off, it’s okay to walk away. Asking a trusted person first is always a good idea.

This is an explanation, not financial advice.

What is Bitcoin mining?

Bitcoin mining is how new payments get added to Bitcoin’s blockchain. It’s also how new bitcoin is made. A blockchain is a shared list of records, kept by many computers.

The name comes from gold mining. Miners do hard work and sometimes find something valuable. But no one digs in the dirt. It’s all done by computers.

Here’s how it works. Every so often, payments are grouped into a “block.” Miners’ computers race to solve a very hard math puzzle about that block. The puzzle is really a guessing game. Computers make trillions of guesses until one gets the right answer. This system is called “proof of work,” because finding the answer proves the computer did a lot of work.

The winner gets to add the block to the blockchain. They also earn a reward. Right now, that reward is 3.125 new bitcoin per block, plus the fees people paid to send money. A new block is added about every 10 minutes.

About every four years, the reward is cut in half. This is called the “halving.” The last one was in April 2024. The next is expected around 2028. Over time, this slows down how fast new bitcoin is made, until the limit of 21 million is reached.

Mining uses special machines and a lot of electricity. That’s one reason people debate its effect on the environment.

Not all crypto is mined. Ethereum, for example, stopped mining in 2022 and now uses a different system called “proof of stake.”

This is an explanation, not financial advice.

What are gas fees?

When you send crypto or use an app on Ethereum, you pay a small fee. This is called a gas fee. Ethereum is a blockchain, which is a shared list of records kept by many computers.

Why “gas”? Think of a car. A car needs gas to drive. Ethereum needs “gas” to do work, like sending money or running a smart contract. A smart contract is a small program on the blockchain that runs by itself. Bigger jobs need more gas, just like a longer trip.

Gas fees are paid in ether, or ETH, which is Ethereum’s own coin. The price is often shown in “gwei.” A gwei is a tiny piece of ETH, one-billionth of one ETH. It’s a bit like how a penny is a tiny piece of a dollar, only much smaller.

Why do fees change? It’s like a delivery service on a busy holiday. When lots of people want to send things at once, prices go up. When it’s quiet, prices go down. You can also add a small tip so your transaction goes through faster.

Where does the money go? Part of the fee is destroyed for good. This is called “burning.” The tip goes to the validators, the people who help check and add transactions.

Gas fees also stop people from flooding the network with junk. Every action costs a little, so spamming gets expensive.

Other blockchains charge fees too, but they may call them something else, like a “network fee.”

This is an explanation, not financial advice.

What’s the difference between a coin and a token?

People often use the words “coin” and “token” as if they mean the same thing. They are close, but there is a difference.

First, a quick reminder. A blockchain is a shared list of records, kept by many computers. Each blockchain has its own rules.

A coin is the main money of its own blockchain. Bitcoin is the coin of the Bitcoin blockchain. Ether, or ETH, is the coin of the Ethereum blockchain. Coins are often used to pay the small fees for using their network.

A token is made on top of a blockchain that already exists. It doesn’t need its own. Many tokens are built on Ethereum using smart contracts. A smart contract is a set of rules written in code that runs by itself.

Here’s an everyday way to picture it. Think of a theme park. The park’s own money is like a coin. Now think of the ride tickets that a food stand inside the park makes for its own customers. Those are like tokens. They use the park, but they are not the park’s money.

Tokens can stand for lots of things. Some are stablecoins, which are tokens that try to stay worth $1. Some give you a vote in a project. Some are game items or digital art.

Making a token can be quick and cheap, so anyone can do it. That means some tokens are real projects, and some are not. It’s smart to learn who made a token and what it’s for.

This is an explanation, not financial advice.

What’s the difference between a private key and a public address?

In crypto, there are two codes you will hear about a lot. One is a public address. The other is a private key. They work as a pair, but you treat them very differently.

A public address is a long string of letters and numbers. It’s where people send you crypto. Think of it like your mailbox at home. Anyone can know where your mailbox is and drop a letter in. Sharing your address is safe.

A private key is a secret code. It proves the crypto at your address is yours, and it lets you send it out. Think of it as the only key that opens your mailbox. If someone else gets it, they can take whatever is inside. So you never share your private key with anyone.

How are they linked? Your address is made from your private key using math. The math only works one way. It’s easy to go from the key to the address. But it’s almost impossible to go backward from the address to the key. That’s why showing your address doesn’t put your key at risk.

Most people never see their private key directly. Their wallet keeps it for them. A wallet is a tool that holds your keys. Many wallets also give you a seed phrase. That’s a list of 12 or 24 words that can rebuild your keys if you lose your phone.

One more tip: always double-check an address before you send. Crypto sent to the wrong address usually can’t be undone.

This is an explanation, not financial advice.

What is a crypto exchange?

A crypto exchange is a website or app where people trade regular money, like dollars, for crypto. Crypto is short for cryptocurrency, which is money that lives online, like Bitcoin. You can also use an exchange to trade one kind of crypto for another.

Think of it like a currency booth at an airport. You hand over dollars and get euros back. An exchange works in a similar way, just online.

Most big exchanges are run by companies. You sign up, prove who you are with an ID, and link a bank account or card. The company matches people who want to trade and takes a small fee each time.

Many exchanges also hold your crypto for you. That means the company keeps the keys. Keys are the secret codes that let someone move crypto. This is easy to use, a bit like keeping money in a bank. But if the company gets hacked or goes out of business, you could lose access. This has happened before.

Some people move their crypto from an exchange to their own wallet. A wallet is a tool that holds your keys. That way, they are in control, not the company.

There are also exchanges that run on code instead of a company. These are called “decentralized exchanges,” or DEXs for short. They let people trade straight from their own wallets.

Before using any exchange, check that it is allowed to work where you live. Also read its fees and safety rules.

This is an explanation, not financial advice.

What is a stablecoin?

The price of most crypto can jump up or drop down very fast. A stablecoin is a kind of crypto that tries not to do that. It’s made to stay worth the same amount. Most stablecoins aim to be worth one US dollar each.

Staying tied to a dollar like this is called a “peg.” Think of a tent tied to a peg in the ground. The peg keeps it from blowing away.

Why use one? People use stablecoins to send money quickly online. Or to hold something steady without leaving the crypto world.

How do they stay at $1? There are a few kinds:

Backed by real money. This is the most common kind. The company that makes the coin says it keeps real dollars, or things almost as safe, for every coin. It’s like a ticket you can trade back for cash.

Backed by other crypto. These keep extra crypto locked up, in case prices drop.

Run by code. These try to stay steady using computer rules alone. Some of these have failed and lost almost all their value.

Here’s the key thing: “stable” is a goal, not a promise. If the company or the plan behind a stablecoin fails, it can lose its peg. Stablecoins are also usually not protected the way money in a bank is.

This is an explanation, not financial advice.

What’s the difference between Bitcoin and Ethereum?

Bitcoin and Ethereum are the two best-known kinds of crypto. Both run on a blockchain. A blockchain is a shared list of records, kept by many computers. But the two were made for different jobs.

Bitcoin started in 2009. It was made mainly to be money on the internet. You can save it or send it. There will only ever be 21 million bitcoin.

Ethereum started in 2015. It can be used to send money too. But it can also run small programs called “smart contracts.” A smart contract is a set of rules written in code that runs by itself. Think of a vending machine. You put in money, press a button, and get a snack. No store clerk needed. Smart contracts work in a similar way. People use them to build apps for games, trading and digital art.

The coin used on Ethereum is called ether, or ETH. People use it to pay small fees to use the network. Unlike Bitcoin, ether has no fixed limit.

They also keep things safe in different ways. Bitcoin uses “proof of work,” where computers race to solve hard puzzles. Ethereum switched to “proof of stake” in 2022. That means people lock up coins as a promise to play fair.

Easy way to remember it: Bitcoin is like digital cash. Ethereum is like a shared computer anyone can build on.

This is an explanation, not financial advice.

What is a seed phrase?

When you set up a crypto wallet, it often shows you 12 or 24 simple words in a set order. Words like “apple, river, candle.” This list is your seed phrase. Some people call it a recovery phrase.

Your seed phrase is like a master key to your house. If you lose your phone or your wallet device breaks, you can type these words into a new wallet. Then you get your crypto back.

But that also means anyone who has your words can take your crypto. And there is usually no way to get it back. So keep it safe with a few easy habits:

Write the words on paper and keep it somewhere safe and private. Some people use metal so it can’t burn.

Don’t take a photo of it. Don’t save it in a notes app or an email.

Never type it into a website. Never tell it to anyone, even if they say they work for “support.” Real helpers will never ask for it. If someone asks, it is a scam.

Check the spelling and the order. Both matter.

If you use an account at a crypto company, you might never see a seed phrase. That’s because the company holds the keys for you.

This is an explanation, not financial advice.

What is a blockchain?

A blockchain is a list of records that many computers share. For crypto, the records are payments, like “Sam sent Alex one coin.”

Picture a notebook. Every time someone pays someone else, it gets written down. When a page is full, it’s called a “block.” Each new block is linked to the one before it, like links in a chain. That’s where the name comes from.

Here’s the clever part. Thousands of computers each keep their own copy of the notebook. If one person tried to change an old page, their copy would not match everyone else’s. The other computers would spot it and ignore the change. That’s why a blockchain is very hard to cheat.

But who gets to add the next page? Each blockchain has its own rules.

Bitcoin uses “proof of work.” Computers race to solve a very hard math puzzle. The winner adds the next block and gets a reward. It’s like a contest where the prize is the right to write the next page.

Ethereum uses “proof of stake.” People lock up some of their own coins as a promise to play fair. If they cheat, they can lose those coins. It’s like putting down a deposit.

Most blockchains are public. Anyone can look at the payments. Names are usually not shown, but amounts are.

This is an explanation, not financial advice.

What is a wallet?

A crypto wallet is what you use to keep, send and get crypto. Crypto is short for cryptocurrency, which means money that lives online, like Bitcoin.

Here’s a surprise: your coins are not really inside your wallet. They are recorded on the blockchain. That’s a shared list of who owns what, kept by many computers.

So what does a wallet hold? It holds your keys. A wallet is like a keychain. A private key is a secret code that proves the coins are yours. It’s what lets you send them. Keep it secret, like the PIN for a bank card.

Your wallet also gives you an address. An address is like your email address, but for crypto. You can share it so people can send you coins. Sharing your address is safe. Sharing your private key is not.

Wallets come in a few kinds:

An app wallet lives on your phone or computer.

A hardware wallet is a small device, a bit like a USB stick. It keeps your keys off the internet, which makes them safer.

Some people use an account at a crypto company instead. In that case, the company holds the keys for you. If you hold the keys yourself, you’re in full control. But if you lose them, no one can reset them for you.

This is an explanation, not financial advice.

What is Bitcoin?

Bitcoin is money that lives only on the internet. You can’t hold it in your hand. But you can send it to almost anyone in the world, any time.

Most money is tracked by banks. Bitcoin is different. No bank or company runs it. Instead, thousands of computers around the world keep track of it together. They all share the same list of who sent what to whom. This list is called a blockchain. Think of it like a class notebook that everyone has a copy of, so no one can secretly change it.

Bitcoin started in January 2009. It was invented by a person or group using the name Satoshi Nakamoto. To this day, nobody knows for sure who that is.

There will never be more than 21 million bitcoin. New ones are made slowly, as a reward for the computers that help run the network. About every four years, that reward gets cut in half. This is called the “halving.”

You don’t need to own a whole bitcoin. Each one can be split into 100 million tiny pieces. These pieces are called “sats,” short for satoshis. It’s a bit like how a dollar is made of 100 cents.

The price of bitcoin can go up and down a lot, and fast. That’s good to know as you learn more.

This is an explanation, not financial advice.