Cryptocurrencies can be a daunting prospect when you’re starting out. Understanding the basics can help your first steps into crypto be a lot less confusing and stressful.

Cryptocurrencies are digital or virtual currencies that operate on decentralized systems and which use cryptography as a security method. They use blockchain technology, which records transactions on a publicly distributed ledger, and they bypass the need for central authorities such as banks or governments.

Other key features of cryptocurrencies are their peer-to-peer functionality, which allows direct transactions between users. The limited supply of crypto (many cryptocurrencies have a capped maximum supply) also helps to create scarcity and drive value.

There are currently more than 30,000 different cryptocurrencies listed on cryptorank.io, but the most popular, well-known and established are Bitcoin and Ethereum.

One of the simplest ways to get started with crypto is by choosing a reputable exchange, and setting up a digital wallet to securely store your crypto. When it comes to making those first purchases, start small so that you give yourself a chance to learn, develop further knowledge and better understand how the market works. Thorough research of a coin before investing is essential.

There are risks involved, with market volatility a constant consideration. Regulation is also an evolving landscape, with jurisdictional nuances. Security and protection of your digital wallet also needs to be carefully managed.

The descriptions provided above are all based on publicly available information, and as such cannot be considered as financial advice or encouragement to invest. Sources of information used in this post include Investopedia and cryptorank.io. All transactions involving digital assets involve certain risks, which you should familiarize yourself with prior to any investment.