What is Cryptocurrency?

Cryptocurrency is a secure digital currency on decentralized networks, using cryptographic techniques to enable peer-to-peer transactions without the need for intermediaries like banks. Unlike traditional controlled by central banks, cryptocurrencies rely on blockchain technology, a distributed ledger that records all transactions across multiple computers. This system ensures transparency, security, and decentralisation by distributing the verification process across participants, known as nodes.

A key feature of cryptocurrencies is the ability to conduct peer-to-peer transactions globally, reducing costs and increasing accessibility. Bitcoin paved the way, and since then, thousands of other cryptocurrencies have been created, including Ethereum, which enables decentralised applications (dApps), and stablecoins like Tether, which are pegged to traditional currencies to minimise volatility. Cryptocurrencies are widely used for payments, investments, and decentralised finance (), reshaping the financial landscape by providing secure, decentralised transaction options​.

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A Brief History of Cryptocurrency

While cryptocurrency feels like a recent invention, its conceptual roots trace back to the 1980s. The core ideas were championed by the , a group of activists who advocated for the use of cryptography to protect privacy. 

One of the earliest pioneers was computer scientist David Chaum. In the 1980s, he laid the theoretical groundwork for anonymous digital cash. In 1989, he founded DigiCash, which created a form of cryptographic electronic money called eCash. While revolutionary at the time, eCash was ultimately centralised as it relied on Chaum’s company as an intermediary to verify transactions. The company went bankrupt in 1998. 

Chaum’s work, along with other projects like Adam Back’s Hashcash and Wei Dai’s b-money highlighted the central challenge of creating a decentralised digital currency. Without a central authority, how could you prevent someone from spending the same digital coin twice? This is called the . 

The breakthrough came in 2008 when a pseudonymous person or group named published the whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System”. Nakamoto’s solution was the blockchain, a decentralised and distributed ledger that allowed transactions to be verified by a network of participants. 

2009: The Launch of Bitcoin. The Bitcoin network officially launched. Satoshi Nakamoto mined the first Genesis Block, and the first-ever Bitcoin transaction soon followed. 

2010: The First Transaction. In a now-famous event, a programmer bought two pizzas for 10,000 BTC, marking the first time Bitcoin was used to purchase physical goods. 

2015: The Rise of Ethereum. Ethereum expanded on Bitcoin’s concept by introducing — self-executing contracts with the terms of agreement written directly into code. This paved the way for and . 

2017-Present: The App Explosion. Smart contracts led to the in 2017. Since then, the industry has seen the explosive growth of DeFi, the rise of NFTs, and the development of new, high-speed blockchains. 

How is Cryptocurrency Created?

New cryptocurrency units are created and introduced into a network through three primary methods: , , and token issuance.

Mining (Proof-of-Work): The original method most famously used by Bitcoin. In a Proof of Work (PoW) system, miners use powerful computers to solve complex mathematical problems. This process . In return, miners are rewarded with newly created cryptocurrency. This process is energy-intensive, requiring significant computational power.

Staking : A more energy efficient alternative, Proof-of-Stake is used by networks like Ethereum (after its merge update). In this system, users “stake” their own cryptocurrency as collateral. The network then chooses a validator from these stakers to create new blocks based on the amount of cryptocurrency they hold and stake in the network. Validators are rewarded with new coins or transaction fees for their services. This process is more energy-efficient than mining and is becoming more popular as a means of securing blockchain networks.

Token Issuance: This method doesn’t typically create a blockchain’s native coin (like BTC or ETH), but it creates new tokens that live on an existing blockchain. This is done through an initial coin offering (ICO) or , where a new project sells its tokens to the public to raise funds. These tokens can take any form, from a utility in a new app to a share in a project.

What Are the Advantages of Cryptocurrency?

One of the primary benefits of cryptocurrencies is the concept of decentralisation, which means no central authority, such as a government or bank, controls the network. This reduces the risk of interference, censorship, or manipulation, allowing for peer-to-peer transactions with lower fees, particularly for cross-border payments. Additionally, cryptocurrencies use blockchain technology, which ensures security and transparency by recording all transactions on an immutable public ledger. This makes it difficult for fraud or tampering to occur. 

Another advantage is inflation protection — cryptocurrencies like bitcoin have a fixed supply, arguably making them more resistant to inflation compared to traditional fiat currencies. Moreover, cryptocurrencies promote financial inclusion, providing individuals in underbanked or underserved regions globally access to financial services, as anyone with an internet connection can participate. These benefits are transforming how people interact with finance and enabling a more decentralised, accessible global economy.

What Are the Most Popular Cryptocurrencies?

There are thousands of cryptocurrencies in circulation today, but a few have gained widespread popularity due to their unique features and use cases.

Bitcoin (BTC)

The first and most well-known cryptocurrency, was created in 2009 by an anonymous figure known as Satoshi Nakamoto. Often referred to as “digital gold,” Bitcoin operates on a consensus mechanism and has a limited supply of 21 million coins, which helps to protect against inflation. It’s primarily used as a store of value and for peer-to-peer transactions​.

Ethereum (ETH)

Launched in 2015, is the second-largest cryptocurrency by market capitalisation. Ethereum’s blockchain supports smart contracts, enabling developers to build decentralised applications (dApps) on its platform.  In 2022, Ethereum transitioned from PoW to the more energy-efficient Proof of Stake (PoS) mechanism, making it an innovative leader in the cryptocurrency space​.

Tether (USDT)

is a stablecoin, meaning , in this case, the U.S. dollar. It provides price stability in the often volatile cryptocurrency market, making it a preferred option for traders looking to minimise risk​.

Binance Coin (BNB)

Created by the exchange, BNB was initially designed to pay for transactions on the platform. It has since evolved into a multifunctional cryptocurrency used for payments, smart contracts, and token burns that reduce its supply over time​.

Solana (SOL)

Known for its high-speed and low-cost transactions, is popular among developers looking to build scalable decentralised applications. It competes with Ethereum but offers faster processing times and lower fees​.

How to Choose a Cryptocurrency Platform in Singapore

When choosing a cryptocurrency platform, look for platforms that comply with MAS regulations for digital payment token (DPT) services under the Payment Services Act 2019 (PSA).

MAS-compliant platforms: Platforms that meet MAS requirements must follow strict standards for security, anti-money laundering (AML), and user protection. Gemini holds an for a Major Payment Institution license, which reflects a strong commitment to compliance and security in Singapore.

Security and Ease of Use: Look for platforms that offer robust security measures like , encryption, and cold storage for your assets to minimise hacking risks. Popular exchanges, including , are known for their security features and user-friendly interfaces, making them suitable for both beginners and experienced traders.

Local support and funding: Check that the platform supports convenient and fast funding methods for SGD, such as PayNow and FAST bank transfers, to ensure a seamless experience. 

Another consideration is whether to opt for a , which offers higher liquidity and an easier user experience but controls your private keys, or a , where you maintain control of your assets but may need more technical knowledge. 

CEXs like Gemini operate in line with MAS requirements, while DEXs generally do not operate under the same legal framework.

However, there are rare exceptions for specific licensed activities, such as DigiFT, which holds a Capital Markets Services license. Other DEXs like are most commonly used for token swapping and are not regulated entities. 

Lastly, be mindful of the fees associated with each platform and ensure that it supports the specific cryptocurrencies you're interested in trading, especially if you're focusing on niche or emerging altcoins​.

How to Buy Cryptocurrency in Singapore

The process of buying cryptocurrency in Singapore is straightforward.

1. Register on a MAS-Compliant Platform: A platform like offers user-friendly interfaces for trading digital currencies. 

2. Verify Your Identity (KYC): Platforms operating in line with MAS regulations must verify each user’s identity. In Singapore, the is fast and can usually be completed in minutes using Singpass. 

3. Deposit Funds: Once you’re verified, you need to fund your account with Singapore dollars (SGD). On Gemini, you can do so via methods like PayNow or FAST bank transfers, which are instant and have low or no deposit fees. You can also use debit cards or bank wire transfers. 

4. Start Buying Cryptocurrency: With funds in your account, you can navigate to the “trade” or “buy” section, select the cryptocurrency you want and confirm your purchase. For a detailed walkthrough, see this guide on .

Gemini is a secure way to buy and store crypto, and millions of people use our platform to diversify their portfolios. We are a full-reserve cryptocurrency exchange and custodian that operates under robust regulatory oversight in multiple jurisdictions.

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How to Store Cryptocurrency

To securely store cryptocurrency, you can choose between . Hot wallets are internet-connected and convenient for frequent transactions, making them suitable for daily use but more vulnerable to hacking. 

Examples include mobile or web-based wallets like those provided by exchanges such as Coinbase or . Cold wallets, like hardware wallets (e.g., Ledger, Trezor), store cryptocurrency offline, offering greater security and protection from cyber threats, making them ideal for long-term storage. 

Many users combine both methods, keeping smaller amounts in hot wallets for regular use and larger amounts in cold wallets for enhanced security​.

What Can You Use Cryptocurrency For?

Cryptocurrency has a wide range of use cases beyond simple transactions. One of the most common uses is making purchases, as more businesses, such as Microsoft and Shopify, now accept Bitcoin and Ethereum as payment for goods and services. This growing acceptance enables users to make purchases both online and in stores. 

Another key use of cryptocurrency is as an investment. Many people buy and hold cryptocurrencies like Bitcoin and Ethereum, hoping their value will appreciate over time, making them an attractive speculative asset​. Additionally, cryptocurrencies play a vital role in Decentralised Finance (DeFi), allowing users to lend, borrow, and earn interest on their assets without needing intermediaries like banks. DeFi platforms operate on , increasing accessibility to financial services globally. 

Some cryptocurrencies, like Tether, are also widely used for cross-border payments, providing faster and cheaper alternatives to traditional remittance services. With these diverse applications, cryptocurrency is transforming the way people engage with finance and commerce​.

Payments and Transfers

A growing number of businesses are accepting cryptocurrency for goods and services. In Singapore, crypto payment firms are actively partnering with traditional finance, and merchant adoption is on the rise. It also enables fast, low-cost cross border payments, bypassing traditional remittance services. 

DeFi and Yield Earning

Decentralised finance aims to recreate traditional financial systems (like lending, borrowing, and trading) on the blockchain, without intermediaries. You can lend your crypto to earn interest or borrow assets. In fact, staking (locking up your crypto to support a network and earn rewards) is one of the most popular crypto activities in Singapore. As you earn yield, it’s important to understand the tax implications. Learn more about how works in Singapore. 

NFTs and Gaming

Non-fungible tokens (NFTs) are unique digital tokens on a blockchain that represent ownership of a specific item, such as digital art, collectibles, or in-game items. Singapore has a vibrant NFT scene with many local creators. This has also fuelled the rise of Web3 gaming, where players can own their in-game assets and earn rewards for playing. 

Web3 and Decentralised Apps

is the vision for a new, decentralised internet built on blockchain technology. Cryptocurrencies are the “money” for this new era. Decentralised applications (dApps), which run on blockchains like Ethereum and Solana, are a core part of Web3, powering DeFi platforms and NFT marketplaces, as well as new forms of social networks and gaming. Singapore is a major global hub for this development. 

Is Cryptocurrency Safe?

Cryptocurrency transactions are generally safe due to the blockchain technology that underpins them, which ensures transparency and prevents tampering. However, the safety of your assets depends largely on how you store and protect them. Hot wallets (internet-connected) are . Cold wallets (offline storage) offer greater security, especially for long-term holdings.

It's also important to note that the is highly volatile, and prices can fluctuate significantly. Additionally, the rise in cryptocurrency use has attracted scammers, making it essential to practice good security measures, such as enabling two-factor authentication (2FA) and avoiding suspicious links or emails. Overall, while cryptocurrency is built on secure technology, users must take precautions to safeguard their investments.

Wrapping Up

Cryptocurrency is a secure, transformative digital asset on decentralised networks, offering an efficient and transparent alternative to traditional finance. Blockchain technology eliminates the need for intermediaries like banks, ensuring the security and immutability of transactions. 

Created through processes like Proof of Work (PoW) and Proof of Stake (PoS), cryptocurrency networks are maintained by a decentralised global community of participants. The advantages of cryptocurrency include decentralisation, reduced transaction costs, financial inclusion, and inflation protection.

Popular cryptocurrencies like Bitcoin, Ethereum, and Tether showcase the diverse applications of this technology, from peer-to-peer payments to supporting decentralized applications and stablecoins.  As cryptocurrency continues to evolve, it brings both exciting opportunities and challenges, particularly in terms of regulation, security, and adoption across various sectors.

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