How does cryptocurrency work?
Cryptocurrencies work by recording transactions on a blockchain that a network of computers maintains and agrees on. Your keys authorize spending; the network verifies and permanently records each transfer.
Keys, addresses, and the network
You hold a private key that controls funds at your address. To send, your wallet signs a transaction with that key. The network checks the signature and the balance, then records the transfer on the shared ledger.
Reaching agreement
Because there's no central authority, the network uses a consensus method — most commonly proof of work or proof of stake — to agree on which transactions are valid and in what order.
The mechanics are similar across most cryptocurrencies. Learn them once and you can reason about almost any of them.
Picture a shared notebook thousands of people hold identical copies of. To add a line, you sign it with a key only you have; everyone checks it before writing it in, so no single person can cheat.
- A confirmed transaction generally can't be reversed.
- Network fees and speeds vary by chain and demand.
- Different chains have different rules — sending on the wrong one can lose funds.
Explore the ecosystem map
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Last reviewed 2026-06-25. This topic can change over time; always confirm current specifics from primary sources.