If you’ve ever wanted to invest in cryptocurrency but didn’t know where to start, this guide to cryptocurrency for beginners will teach you how to make money in cryptocurrency. You’ll learn the pros and cons of investing in the new world of peer-to-peer digital currencies and where to start. 

We’ll run through the fundamentals and other basics to give you a solid understanding of what you could be in for; the good, the bad and the ugly. 

We’ll help you deep dive into the nitty-gritty of the crypto world, show you how to make money in cryptocurrency, what scams to look out for and how to get started with your first investment when you’re ready to dip your toe in the fast-moving rapids.   

Why Cryptocurrency is Worth Understanding

Cryptocurrency might sound intimidating at first, but at its core, it’s simply money that lives on the internet instead of in your wallet or at the bank. Over the last 16 years, it’s gone from an experiment in online cash (Bitcoin in 2009) to a multi-trillion-dollar global market with thousands of projects.

Why should you care? Because cryptocurrency is no longer just a buzzword. It’s being used by governments, big companies and millions of individuals worldwide. Some people have made fortunes, others have lost plenty, but one thing is certain: crypto has reshaped how we think about money.

You don’t need to be a tech wizard or a ‘crypto bro’ to understand it. With the right guidance, anyone can learn how it works and whether investing in it makes sense for them. This crypto guide for beginners will cover the basics: what cryptocurrency is, how it works, the risks, the opportunities and practical steps to get started.

What is Cryptocurrency?

If you want to know what crypto currency is, let’s break it down. Cryptocurrency is digital money. Unlike dollars or euros, it doesn’t exist as physical coins or notes; it only exists online. 

What makes it special is that it runs on blockchain technology. This is essentially a giant shared (decentralised) spreadsheet that anyone can see, but no one can cheat. One key difference between traditional money and crypto is how it works compared to fiat. With dollars, euros or AUD, banks and governments manage the supply. With cryptocurrency, supply is coded into the blockchain itself, so it is untouchable by anyone in authority. This means it is peer-to-peer, although regulations could change down the track. 

Understanding Coins vs Tokens

A coin is a currency that runs on its own blockchain, like Bitcoin or Ethereum.

A token is built on top of another blockchain. For example, most DeFi (decentralised finance) projects and NFTs are tokens on Ethereum.

A Short History of Crypto

In 2009, Bitcoin was launched by a mysterious creator called Satoshi Nakamoto.

As Bitcoin grew, new projects (altcoins) emerged, each trying to solve problems that Bitcoin didn’t (like speed, fees and flexibility).

Today, there are over 20,000 cryptocurrencies, from serious contenders like Ethereum and Solana to joke coins like Dogecoin. There’s even a direct spin-off from Bitcoin called Bitcoin Cash. 

Key Crypto Terminology for Beginners

Stepping into the crypto investing world can feel like learning a new language. Here are some must-know terms explained simply:

• Wallet: Where you store your crypto. Think of it as a bank account app, but it can be:
  • Hot wallet: Online and easy to use, but less secure.
  • Cold wallet: Hardware or paper, offline, but much safer.
• Exchange: The website or app where you buy and sell crypto (CoinSpot, Binance, Coinbase).
• Bull market: Prices are rising. Optimism is everywhere.
• Bear market: Prices are falling. People panic.
• HODL: Originally a typo for ‘hold,’ it now means holding your coins long-term, no matter what.
• Short: Betting the price will go down.
• Long: Betting the price will go up.
• Market cap: Total value of a coin = price × number of coins in circulation.
• Whale: Someone who owns a massive amount of a coin and can move the market.

We’ve included an expanded glossary of crypto terms and phrases at the end of this article. 

How Cryptocurrency Works

The very first cryptocurrency, Bitcoin, was built on a new idea called blockchain technology. Since then, all other cryptos have either:

• Built their own blockchain (these are called coins, like Bitcoin, Ethereum or Cardano) or
• Piggybacked on an existing blockchain (these are called tokens, like Shiba Inu on Ethereum).

Blockchain Explained Simply

Think of blockchain like a train.

• Each block is a train carriage.
• Inside each carriage is a notebook with pages of transactions.
• Once the notebook is full, it’s sealed up, stamped and connected to the next carriage.
• Together, this makes an unbreakable chain of verified records.

And here’s the genius part: thousands of people have a digital copy of the whole train, so cheating or faking a page is nearly impossible. But in the world of digital, we never say never. 

Mining vs. Staking

Cryptocurrencies keep their networks secure in two main ways: mining and staking.

Mining (Proof of Work, like Bitcoin)

• Big computers compete to solve math puzzles.
• The first one to solve the puzzle confirms the transactions in the next block.
• The miner earns new coins as a reward.
• Cost: expensive computers + lots of electricity.

Analogy: Mining is like a race. Whoever burns the most fuel and gets to the finish line first wins the prize.

Staking (Proof of Stake, like Ethereum and Cardano)

• You first buy the cryptocurrency. 
• Then you ‘lock it up’ (stake it) to show you have skin in the game. 
• The network randomly chooses from stakers to confirm the next block. 
• You earn rewards, a bit like earning interest in a savings account.

Analogy: Staking is like putting your money in a raffle jar. The more tickets (coins) you have locked in, the better your chances of being picked. Instead of burning energy, you’re proving trust with your coins.

Decentralisation: Why It Matters

Unlike banks or governments, no one owns the blockchain. It’s spread across thousands of computers around the world. This means no single entity can shut it down, change the rules or control your money.

Smart Contracts: Apps Without Middlemen

Some blockchains (like Ethereum) don’t just record transactions. They also run smart contracts, which are like self-executing computer programs. These power:

• Lending and borrowing apps
• NFT marketplaces
• Games
• Decentralised finance (DeFi).

Factors Driving Crypto Value

It’s important to know what drives the prices of cryptocurrencies. Once you understand how the value is affected, you can understand what you should look out for when considering investing. 

1. Supply and demand: Just like any market, price depends on how many people want the asset versus how much is available. For Bitcoin, a capped supply of 21 million coins plus strong demand, pushed prices sky-high.
2. Unique features or utility: A coin’s value often ties to what makes it stand out, or its unique selling point (USP). For example, Algorand promotes itself as environmentally friendly, with a carbon-negative footprint. This appeals to eco-conscious investors. Bitcoin, on the other hand, consumes enormous energy, which some see as a drawback. If enough people value carbon-negative investment and invest in Algorand, the price will rise.  
3. Smart contracts and ecosystem potential: This is where things get really interesting. Some cryptocurrencies are more than ‘money.’ They are platforms. Ethereum, Solana, Cardano and Algorand allow developers to create smart contracts (self-executing programs) that power apps like:
   • DeFi (Decentralised Finance): lending, borrowing and trading without banks. 
   • NFTs and gaming: digital art, collectibles and play-to-earn economies.
   • Supply chains and real estate: tokenising assets for transparency and easy transfer. 
4. Mass adoption: The more useful and widely adopted the ecosystem becomes, the more valuable its native coin can be. In other words, Bitcoin is considered like digital gold, but Ethereum and other smart-contract platforms are like app stores for the decentralised world. If a currency were set to be adopted by a country as its digital currency of choice, it would likely drive up the value on speculation alone. 
5. Trust and transparency: Investors want to know the project is safe, open-source and audited. A strong team, transparent code and verifiable partnerships help drive confidence.

Is Investing in Cryptocurrency Like the Stock Market?

Similarities:

• Both involve buying an asset (stocks or crypto) with the hope that its price will rise so you can sell for profit.
• Both are traded on exchanges.
• Both prices move according to supply and demand.
• Both carry risk and volatility.

Differences:

• Ownership: With stocks, you own part of a company. With crypto, you own a digital token, not equity in a business.
• Regulation: Stock markets are heavily regulated, with protections for investors. Crypto markets are less regulated, meaning more freedom but also more scams to watch out for.
• Trading hours: Stocks have set trading hours. Crypto trades 24/7 worldwide.
• Custody: Stocks are held by your broker. Crypto can be held by an exchange, but safer if you move it to your own wallet.

What Kind of Investor Are You?

Not all crypto investors are the same. Your philosophy for investing affects how you play the game and the results you get. You will probably see yourself in one of these groups:

• HODLers: They buy and hold, believing crypto will grow long-term. They ignore short-term dips and market panic. 
• Traders: They try to profit from short-term price moves, buying and selling daily or weekly.
• Speculators: They chase hype coins or memes, often hoping for overnight riches. This activity is high risk, often with high losses.
• Fundamental Investors: They study projects deeply, looking at the team, technology and use cases before investing.

And within those categories, there are some colourful sub-types:

• The Degens (Degenerate Traders): They will throw money at anything trending on X, TikTok or Telegram, just in case it moons. Names, memes and hype play a huge role here.
• The Speculative Researchers: They will check tokenomics, team credibility and maybe skim the whitepaper, but still lean heavily on community sentiment and gut feel.
• The Fundamentals Crowd: They focus on utility, adoption potential, partnerships and market cap compared to competitors. These are the ones who actually dig into whether the project does something useful.

How to Invest in Cryptocurrency for Beginners

If you’re reading this guide, you’ve likely been considering investing in cryptocurrency for some time but have been uncertain about how to take the leap. 

But now you’re doing your research and learning the fundamentals. This is a smart way to move forward. And getting started is easier than most people think.

Choosing the Right Crypto Websites and Tools

When you’re setting up for the first time, it helps to treat your crypto toolkit like building a starter pack. Each tool has its purpose, and the safer you set things up at the start, the smoother your investing journey will be.

Step-by-Step: How to Invest in Cryptocurrency for Beginners

1. Choose a Crypto Exchange: Popular exchanges include CoinSpot, Binance, Coinbase and Kraken. These act like stock brokerages, where you buy and sell. When you sign up, expect to provide ID (passport or driver’s licence) for KYC (Know Your Customer) rules.
2. Deposit money into your account: You can usually fund your account with a bank transfer, debit card or sometimes PayPal. Start small; even $50 is enough to test how it works.
3. Place your first order: A Market Order buys immediately at the current price. A Limit Order lets you set the price you want to pay, and the order goes through only if the market reaches it. For beginners, a market order is the simplest option to get started. 
4. Decide where to keep your crypto:
   • On the exchange: It’s convenient, but if the exchange gets hacked or collapses (like FTX did), you could lose your money.
   • Hot wallet: An app like MetaMask or Trust Wallet. Easy access, but still online. 
   • Cold wallet: A hardware wallet like Ledger or Trezor. Best security, since it’s offline.

Remember, not your keys, not your coins. If you don’t control the private key, you don’t truly own the crypto.

5. Track your investment: Use apps like CoinGecko, CoinMarketCap or portfolio trackers like Delta or Blockfolio. Set price alerts instead of constantly checking, because crypto prices swing a lot.
6. Understand how to sell: Just like buying, you sell through the exchange. You can convert crypto back into AUD/USD or trade into another crypto. Always check the fees before selling, as they can eat into small profits. 
7. Stay informed: Crypto changes daily. Use news and data sources to cut through hype. Crypto Market News will help you follow trends, regulation updates and real adoption stories.

Other Ways to Get Yourself Some Crypto

Crypto ATMs

In some cities, there are Bitcoin and crypto ATMs. You can insert cash or use a card to buy small amounts of Bitcoin (sometimes other cryptos too). It’s fast, but fees are usually much higher.

Earn Instead of Buy

Some people earn crypto instead of buying it with cash:

• Get paid in crypto for freelance work (many platforms now offer this option).
• Play-to-earn games or participate in projects that reward tokens.
• Staking or mining, if you already hold crypto.

Remember: Start Small and Research

Whatever path you choose, the golden rules are:

• Start with an amount you can afford to lose (even $50 is fine).
• Do your own research (DYOR). Learn what the coin does, who is behind it, and whether it solves a real problem.
• Avoid chasing hype. If everyone on social media is shouting ‘buy now,’ you’re probably already too late.

There’s no single best way to start investing in cryptocurrency. It depends on what you value most: simplicity, control or security.

Quick Guide: Best Starting Method for New Investors

How Do You Make Money with Cryptocurrency?

Here are the main ways people earn (or lose) money in crypto:

• Price appreciation: Buy low, sell high. The simplest strategy, but harder than it sounds.
• Trading: Day trading or swing trading can be profitable, but it requires skill and discipline.
• Staking & yield farming: Earn interest by locking up or lending your coins.
• NFTs & play-to-earn games: Risky but popular among younger investors.

Always remember: high returns mean high risk.

Is Cryptocurrency Safe?

The truth: Cryptocurrency investing can be very unsafe if you don’t know what you’re doing. And even if you do know what you’re doing, the entire industry is built on volatility, with many people out there taking advantage of people who are eager to invest. It’s for this reason that you should never play with more than you can afford to lose, and never trust anyone without doing exhaustive research. 

Always approach investing in crypto with a slight air of scepticism until you’re satisfied that you’re happy with your investment decision. 

Here are several ways to lose money investing in cryptocurrency: 

• Volatility: Prices can jump or crash 20% in a single day.
• Scams: Fake projects, phishing emails and rug pulls are common.
• Hacks: Exchanges and wallets have been hacked for millions.

Safety tips:

• Use 2FA (two-factor authentication).
• Never share your private keys or seed phrases.
• Stick with reputable platforms.

Common Crypto Scams and How to Avoid Them

The crypto world is exciting, but it also attracts scammers who prey on beginners. Here are the most common traps to watch for and avoid:

1. Phishing Scams

• Fake websites or emails mimic real exchanges or wallets. They trick you into entering your login or seed phrase.
• How to avoid it: Always double-check the URL, never click suspicious links, and bookmark the official site.

2. Rug Pulls

• A new token launches with hype, social buzz and promises of ‘going to the moon.’ After investors buy in, the developers disappear and take the money. 
• How to avoid it: Research the team, check if the code is open-source and be cautious with projects that seem too good to be true.

3. Ponzi or Pyramid Schemes

• Promises of guaranteed high returns if you bring in more investors.
• Early participants may get paid, but it collapses once no new money flows in.
• How to avoid it: If someone guarantees profits in crypto, it’s a scam.

4. Fake Wallets and Apps

• Scammers release fake apps that steal your funds as soon as you deposit.
• How to avoid it: Only download apps from verified sources (Google Play, Apple App Store, or official project websites).

5. Giveaway Scams

• Fake Elon Musk or ‘official’ accounts on X/Twitter claim they’ll send you double your crypto if you send them some first. 
• How to avoid it: Real companies or influencers never ask you to send them crypto to get more back. 

6. Pump and Dump Groups

• Coordinated groups on Telegram or Discord push a token to pump up the price. Once outsiders jump in, insiders dump their holdings, crashing the price. 
• How to avoid it: If someone urges you to buy a coin ‘right now’ in a group chat, walk away. 

7. Impersonation Scams

• Fake customer support agents slide into your DMs offering to ‘help.’ They’ll ask for your private key or to ‘verify’ your wallet. 
• How to avoid it: No legitimate company will ever ask for your private key.

8. Malware Attacks

• Downloading shady files or browser extensions can install malware that drains your wallet. 
• How to avoid it: Keep antivirus up to date, don’t download random files, and stick to trusted crypto tools. 

Golden Rule: Never share your private keys or seed phrase with anyone. If you lose it, your crypto is gone forever.

Examples of Real Crypto Scams: 

1. Squid Game Rug Pull

The infamous Squid Game token surged over 100,000% in value, fueled by hype around the Netflix series. But investors soon discovered they couldn’t sell their holdings because the token restricted selling, and its creators vanished with about $3.3 million of investor funds 

This classic rug pull shows why even ‘cool’ themes like Netflix can mask enormous risk.

2. PlusToken Ponzi Scheme

Launched in 2018, PlusToken posed as a high-yield crypto wallet offering 9–18% monthly returns. It turned out to be a Ponzi scam that defrauded roughly $2–$3 billion, mostly from investors in China and South Korea, before collapsing in 2019.

3. Serial Rug Pulls Linked to NFT Packs

Crypto investigator ZachXBT flagged a new token presale linked to individuals behind the widely known Squiggles NFT rug pull and a promoter nicknamed ‘Raichu.’ This raises alarm bells about recycled scam spirits trying to re-enter the illicit spotlight.

Why These Cases Matter

Beginner Mistakes to Avoid

Everyone starts out as a beginner. Many people have made many mistakes with cryptocurrency investing, from losing their hard drive, password, investing in scam coins and the other types of mistakes out there. So we hope to learn from their example and not make those mistakes ourselves. 

Common traps beginners fall into:

• Investing more than they can afford to lose.
• Panic selling when prices dip.
• Forgetting about fees (small trades can add up).
• Following hype and influencers instead of facts and doing your due diligence. 

Bottom Line:

• If something seems too good to be true, it usually is.
• Always verify identities, study tokenomics, and check if tokens are refundable or stuck.
• Real-world examples like Squid Game and PlusToken are more than cautionary tales. They’re alarms telling you to DYOR (Do Your Own Research).

Getting Started Today

If you’re ready to dip your toe in, start small. Consider opening an account at an exchange like CoinSpot, buy a little Bitcoin or Ethereum and get comfortable watching your investment over the weeks and months. 

Continue to read as much as you can about crypto pricing. Remember to always do your research and never stop learning. There is no end to what you can learn in this industry. 

Crypto is exciting but unpredictable. The people who succeed are the ones who treat it like a marathon, not a sprint and come prepared with the knowledge that sometimes it’s hard and sometimes easy. 

Disclaimer

Please be aware that this guide is not financial advice. Cryptocurrency is risky, and you could lose your entire investment. Always do your own research and consult with a financial professional before making investment decisions. Your financial position is unique to you, so your decisions should be based on your own choices and risk profile. 

Expanded Glossary of Crypto Investing Terms for Beginners

🚀 Market & Trading Basics

• Long: Buying because you think the price will go up.
• Short: Selling borrowed coins because you think the price will go down.
• Spot Trading: Buying/selling at the current market price.
• Limit Order: Buying/selling at a specific price you set.
• Market Order: Buying/selling immediately at the best available price.
• Bull Market: General trend of rising prices.
• Bear Market: General trend of falling prices.
• Volatility: How much and how quickly the price changes.
• Liquidity: How easily you can buy/sell without moving the price much.
• Volume: The amount of a coin traded in a set period (often 24 hours).

💰 Investment & Risk

• Market Cap: Price × number of coins in circulation = total value of the project.
• Circulating Supply: Coins/tokens currently available for trading.
• Total Supply: All coins/tokens that exist (including locked ones).
• Max Supply: The maximum number that will ever exist.
• Tokenomics: The economics of a token: supply, distribution, incentives.
• Vesting: Coins locked for a set time before they can be sold.
• Cliff: The initial locked period before vesting begins.
• Linear Vesting: Gradual release of coins over time (e.g., monthly).
• Whale: A person or entity holding a large amount of a particular crypto.
• Whale Dumping: A whale selling lots at once, often crashing the price.
• Pump and Dump: Artificially boosting the price, then selling off quickly.

🔗 Blockchain & Technology

• Coin: A cryptocurrency that runs on its own blockchain (e.g., Bitcoin).
• Token: Runs on another blockchain (e.g., ChainGPT on Binance Smart Chain).
• On-Chain: Transactions and actions recorded on the blockchain.
• Off-Chain: Actions done outside the blockchain.
• Smart Contract: Code that runs automatically when set conditions are met.
• Consensus Mechanism: How a blockchain agrees on transactions (e.g., Proof of Work, Proof of Stake).
• Gas Fee: The fee paid to process blockchain transactions.
• Layer 1: A base blockchain like Bitcoin or Ethereum.
• Layer 2: A network built on top of a Layer 1 to improve speed/cost (e.g., Polygon).

📦 Crypto Products & Features

• DEX (Decentralised Exchange): Exchange run by smart contracts, no central owner.
• CEX (Centralised Exchange): Exchange run by a company (e.g., Binance).
• Staking: Locking coins to support a network and earn rewards.
• Farming / Yield Farming: Earning rewards by lending or providing liquidity.
• Liquidity Pool: Funds in a smart contract for trading without a traditional order book.
• Stablecoin: Token pegged to a stable value (e.g., US dollar).
• NFT (Non-Fungible Token): Unique digital asset on a blockchain.
• Airdrop: Free coins/tokens given to promote a project.

⚠️ Scams & Red Flags

• Rug Pull: Developers vanish with investors’ money.
• Honeypot: A token you can buy but not sell.
• Phishing: Tricking you into giving up your private keys or passwords.
• Fake Token / Clone: Scam coins pretending to be legit projects.

🌐 Culture & Slang

• HODL: Slang for ‘hold,’ keeping a coin long-term.
• Moon / Mooning: Price going up very quickly.
• FOMO: Fear of Missing Out.
• FUD: Fear, Uncertainty, Doubt (often used to describe negative news).
• Bagholder: Someone stuck holding a coin that has dropped a lot in value.
• Rekt: Slang for losing a lot of money.