By
Tom Stelzer&
Stacie HurstUpdated
Everyone’s talking about bitcoin, blockchains and decentralization—but what is cryptocurrency? At Finder, our team of crypto experts have put together loads of useful guides to help you make sense of the crypt craze. If you’re looking for a simple guide to cryptocurrency, you’re in the right place. Here’s how cryptocurrency works.
This is not an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade or use any services.
Cryptocurrencies are digital assets that have value, just like a $10 bill is a physical item with 10 Canadian dollars of value assigned to it.
The difference is that crypto is electronic—it only lives on the internet. For a cryptocurrency to have value, its coin must be unique, verifiable and nonreplicable. The Bitcoin blockchain was the innovation that made this possible.
Crucial to crypto is the principle of decentralization. There’s no single authority or business like a bank or government that controls crypto, meaning you have much more control over your crypto than you have with your regular money (fiat currency).
This idea of sovereignty over your assets and removing reliance on any sort of intermediary is something you’ll hear about a lot. Decentralization also makes crypto a powerful medium of exchange because it minimizes the costs and processing times of transactions.
Thanks to these innovations, legacy companies like Visa, PayPal and several banks have also begun adopting cryptocurrency and blockchain technologies.
Cryptocurrency uses cryptographic technology to secure individual assets on a database called a “blockchain.” A blockchain records transactions on a network in a way that cannot be altered.
You can think of a blockchain as hundreds of connected computers sharing information with one another. This builds a ledger of data that can be used to validate the legitimacy and security of each crypto transaction.
Some blockchains use a variation of proof-of-work or proof-of-stake consensus algorithms to execute transactions. Proof of work is where the term “Bitcoin miners” comes from.
Miners operate powerful computers that solve complex mathematical problems, which helps secure the blockchain.
Proof of stake is a bit different. This algorithm uses staking—the process of locking up cryptocurrency on a specified blockchain wallet in exchange for a reward. Staking protocols use “nodes,” which are small copies of the blockchain being run on thousands of different computers.
Understanding how a crypto’s algorithm works in detail isn’t essential—or easy—but it can help explain movements in price.
There are a number of feature-rich trading platforms for Canadian crypto investors to choose from. If you’re just starting out, look for exchanges registered with the Financial Transactions and Reports Analysis Centre (FINTRAC) and the Canadian Securities Administrators (CSA). Choose a platform that offers Canadian dollar deposits via your preferred payment method.
Select Go to Site when you’re ready to create an account on any of these platforms.
To make comparing even easier we came up with the Finder Score. Supported coins, account fees and features across 28 cryptocurrency trading platforms are all weighted and scaled to produce a score out of 10. The higher the score, the better the exchange—simple.
Like stock investments, you can make money with cryptocurrency by selling it for more than you bought it. But you can also earn crypto from holding onto it.
Some cryptos let you stake (or lock up) your coins for a specific period to help validate transactions on the network. In return, you earn extra crypto. Major cryptos like Ethereum, Solana and Cardano support staking, but some don’t, including bitcoin.
Alternatively, you can earn interest by lending crypto through centralized platforms that act as intermediaries for crypto loans or through decentralized platforms that let lenders and borrowers transact directly with each other.
When you buy crypto, where does your money go? It goes to whoever sold the digital asset, usually an exchange or broker service. But it could also go to a stranger, if you used a decentralized finance or peer-to-peer (P2P) platform.
The cryptocurrency industry is packed with potential, but there are some risks you should be aware of. Let’s take a closer look at the pros and cons of cryptocurrency.
With crypto so frequently making the news, you might be wondering “Is crypto safe?” There are a number of risks associated with buying, storing and using digital currencies. Before jumping in, do plenty of research and make sure you understand how to keep your crypto safe. Some key risks to be aware of include:
Just over 21% of Canadians see cryptocurrencies like bitcoin and Ethereum as appealing investment choices in 2025, according to the Finder: Consumer Sentiment Survey January 2025. Crypto meme coins and crypto-themed ETFs are less popular choices, earning just 4% and 6% of votes.
We also asked Canadians where they plan to invest over the next two years, and over 18% said they would embrace crypto investments ahead of real estate (11%), real estate investment trusts (5%) and bonds (10%). While traditional investments like stocks (33%) and high-interest-savings accounts (28%) are still go-to options for many investors, crypto appears to be gaining ground as part of a diversified portfolio.
Yes, crypto is legal in Canada. But it's treated as a type of investment (for tax purposes), not fiat currency or legal tender. That means, cryptocurrency is not overseen by the Canadian government as the country's national currency.
But you can still buy, sell and exchange crypto using platforms that are provincially or territorially registered to offer crypto-related services. View the Canadian Securities Administrators (CSA) list of crypto exchanges authorized to do business with Canadians to learn more.
Finding a simple cryptocurrency definition can be tough, but here's what it boils down to: Cryptocurrency is like money people can exchange through computers, instead of giving each other physical dollar bills and coins. But wait, can't we already use computers to exchange Canadian dollars, US dollars and other types of money?
Yes, but not without banks overseeing and approving every transaction.
Cryptocurrency is sent and received through a network of computers that isn't owned or managed by any bank or person. The way crypto networks are designed, it's incredibly tough to fake transactions (commit fraud) or get personal information from people's transactions. As such, many consider crypto safer than traditional currencies.
That being said, no government has yet given crypto the "green light" to be used in place of regular money. So, for now, it's only usable in specific places online and (increasingly) in stores.
As of the time of writing, there are over 10,300 cryptocurrencies worldwide. The number almost doubles when you include inactive or discontinued cryptos. Notably, around 90% of the cryptocurrency market is made up of the top 20 coins and tokens, including Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Tether (USDT), Solana (SOL) and more.
Introduced to the public in 2009, Bitcoin is the world's first decentralized cryptocurrency. "Bitcoin" (with an uppercase "B") refers to the blockchain network used to exchange bitcoins (lowercase "b"), which are the individual units of cryptocurrency issued on the network.
Like buying stocks, you can use crypto trading platforms to trade bitcoin, meaning you can buy and sell it as an investment. Some platforms even let you convert bitcoin into fiat money to make purchases.
Cryptocurrency can be a good investment if you've conducted extensive research and understand fundamental trading strategies. Investing in a highly volatile asset like crypto comes with the potential of magnifying your losses as well as your profits, so only invest what you can afford to lose.
The best crypto to buy depends on your financial goals and your belief in the utility of individual coins, so there's no single best crypto for everyone. But bitcoin and Ethereum are widely considered to be the "blue chips" of crypto, because each has proven use-cases and a high market cap. Check out our guide to which cryptos to buy now for a look at what's trending.
Tom Stelzer is a writer for Finder specialising in personal finance, including loans and credit, as well as small business and business loans. He has previously worked as a freelance writer covering entertainment, culture and football for publications like FourFourTwo and Man of Many. He has a Master of Media Arts and Production and Bachelor of Communications in Journalism from the University of Technology Sydney. See full bio
Stacie Hurst is an editor at Finder, specializing in loans, banking, investing and money transfers. She has a Bachelor of Arts in Psychology and Writing, and she has completed FP Canada Institute's Financial Management Course. Before working in the publishing industry, Stacie completed one year of law school in the United States. When not working, she can usually be found watching K-dramas or playing games with her friends and family. See full bio
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