What Are Cryptocurrencies and Blockchain? How This New Technology Works

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In mid-May, when one of British artist Banksy’s most iconic pieces was auctioned at Sotheby’s in New York, the attention it received wasn’t surprising. But what made headlines that week was a unique twist: the auction house accepted cryptocurrency payments, including Bitcoin (BTC) and Ether (ETH), alongside traditional U.S. dollars.

This marked a historic moment—the first time such a high-profile auction allowed digital currency. The artwork, Love Is in the Air, ultimately sold for the equivalent of 10.6 million euros. While standard auction fees had to be paid in fiat currency, the transaction symbolized a major milestone in the mainstream adoption of digital assets.

Understanding Cryptocurrencies

At their core, cryptocurrencies are digital or virtual currencies that use cryptographic techniques to secure transactions and control the creation of new units. Unlike traditional money managed by central banks, cryptocurrencies operate on decentralized networks based on blockchain technology.

👉 Discover how decentralized finance is reshaping the future of money.

This decentralization removes intermediaries like banks from financial transactions, allowing peer-to-peer transfers that are faster, more transparent, and often cheaper. Every participant in the network helps verify and record transactions, ensuring system integrity without relying on a central authority.

Key Features of Cryptocurrencies:

Major Cryptocurrencies in the Market

Over the years, several cryptocurrencies have gained widespread recognition—not just for their technological innovation but also for their market value and investor interest.

Among the most prominent are:

These digital assets rank among the top by market capitalization, reflecting both public trust and adoption. While Bitcoin remains the gold standard, Ethereum has expanded blockchain’s utility beyond payments into areas like decentralized finance (DeFi) and non-fungible tokens (NFTs).

What Is Blockchain Technology?

Blockchain is the foundational technology behind most cryptocurrencies. It functions as a decentralized, public ledger where all transactions are recorded in blocks that are cryptographically linked and secured.

Javier Sáez, Inbound & Growth Manager at IEBS Business School, explains:

“Blockchain is like a shared, immutable accounting book written simultaneously by thousands of computers. Every participant can view and verify transactions, ensuring transparency and trust.”

Each block contains:

Once added, altering any data would require changing every subsequent block across the entire network—a near-impossible task due to computational and consensus requirements.

It's important to distinguish between blockchain and cryptocurrency:
While cryptocurrencies are applications built on top of blockchain, the technology itself has broader uses—ranging from supply chain tracking to digital identity verification.

Origins of Blockchain: Born from Crisis

The concept emerged during the global financial crisis of 2008, when a group of cryptography enthusiasts—often called cryptopunks—began questioning centralized financial systems. They envisioned a way to conduct verifiable transactions without relying on banks or governments.

This led to the invention of the blockchain, a system where trust is established through code and consensus rather than institutions. The idea culminated in 2009 with the launch of Bitcoin, introducing the world to decentralized digital money.

Can a Blockchain Network Be Hacked?

While no system is entirely immune to attack, major blockchains like Bitcoin are exceptionally secure.

Adrián Bernabéu, creator of the Master in Investing program, clarifies:

“It depends on the project, its consensus mechanism, and size. For Bitcoin, it’s practically impossible to shut down because an attacker would need to control over 51% of the network’s computing power—something currently unfeasible.”

Smaller networks with fewer participants may be more vulnerable to so-called “51% attacks,” where a single entity gains majority control and manipulates transaction records.

Bernabéu adds:

“Asking if blockchain can be taken down is like asking if a wheel can burst. It depends on the type of wheel, the vehicle it’s on, and how it’s used.”

In essence, security varies by network design and scale. Bitcoin’s resilience is so strong that Bernabéu notes:

“To take down Bitcoin’s network, you’d likely have to shut down the entire internet. And if that happened, humanity would face far bigger problems than a halted cryptocurrency.”

What Is Bitcoin?

Bitcoin (BTC), created in 2009 by the pseudonymous Satoshi Nakamoto, is the first and most influential cryptocurrency. Described in its foundational whitepaper as a “peer-to-peer electronic cash system,” Bitcoin enables direct online payments between parties without intermediaries.

Key principles from the original document include:

The solution? A distributed ledger where each transaction is verified and added sequentially—making fraud extremely difficult without redoing the entire chain.

👉 Learn how peer-to-peer networks are revolutionizing financial transactions today.

How Much Is One Bitcoin Worth?

As of writing, one Bitcoin is valued at approximately €53,507. Prices fluctuate constantly due to market demand, regulatory news, macroeconomic trends, and investor sentiment.

Some countries have embraced Bitcoin legally. Notably, El Salvador became the first nation to adopt Bitcoin as legal tender alongside the U.S. dollar—a bold move signaling growing governmental recognition of digital currencies.

Despite this progress, many economists warn about Bitcoin’s volatility and speculative nature. It’s crucial for investors to understand that while returns can be high, risks are equally significant.

How Are Bitcoins Mined?

Bitcoin mining is a critical process that secures the network and introduces new coins into circulation.

According to Adrián Bernabéu:

“Mining is a technological masterpiece—imagine solving a complex Sudoku puzzle with a multi-faced die. Every 10 minutes, miners compete to solve a cryptographic challenge through trial and error—known as Proof of Work.”

The first miner to solve it adds a new block to the chain and receives a reward—in current terms, 12.5 BTC, worth around $775,500.

This reward halves roughly every four years in an event known as the Halving, reducing new supply growth. Historically, halvings have preceded major price increases due to increased scarcity amid rising demand.

Is It Safe to Invest in Cryptocurrencies?

While today’s crypto market attracts millions of investors, it’s vital to remember that many cryptocurrencies—including Bitcoin—were never designed primarily as investment vehicles. Their original purpose was to decentralize finance and enhance privacy.

Investing in crypto carries inherent risks:

Therefore, thorough research and risk assessment are essential before allocating savings to this asset class.

👉 Explore secure ways to start your journey into digital assets.

Frequently Asked Questions (FAQ)

Q: What’s the difference between blockchain and cryptocurrency?
A: Blockchain is the underlying technology—a secure, decentralized ledger. Cryptocurrency is one application of blockchain used as digital money.

Q: Can I use cryptocurrency for everyday purchases?
A: Yes—some businesses accept Bitcoin and other cryptos for goods and services, especially in countries like El Salvador or via crypto debit cards.

Q: Is blockchain only used for money?
A: No—blockchain is used in supply chains, voting systems, healthcare records, and more due to its transparency and security.

Q: How do I store my cryptocurrency safely?
A: Use secure wallets—hardware wallets for long-term storage or trusted software wallets with strong passwords and two-factor authentication.

Q: Will Bitcoin ever be worth zero?
A: While theoretically possible, given its widespread adoption and scarcity model (only 21 million will ever exist), many experts believe it will retain some value long-term.

Q: Are all blockchains public?
A: No—blockchains can be public (like Bitcoin), private (restricted access), or consortium-based (managed by a group).

Core Keywords:

By understanding these fundamentals, readers gain insight into one of the most transformative innovations of the 21st century—one that continues to evolve across finance, technology, and global policy.