Guide to Cryptocurrencies: What they are and what you need to know (and do)

I just realized that these questions are not very easy to answer so I organized a sort of a quick guide on what cryptocurrencies are, why we talk about them? what can they be used for? what can you and I as individuals use them for? what do you and I need to get started using them now? and what opportunities they present to you and me? etc.

So let's get started:

 1. What are cryptocurrencies?

Cryptocurrencies are digital monies or digital currencies that are developed as alternatives to paper money or coins (commonly known as fiat), and are usually controlled by a central bank or government through various jurisdictions.

Cryptocurrencies aren't controlled by any central authority. They can be owned, spent and sent/stored by anyone anywhere in the world. They're based on a technology called the blockchain, which ensures that they are securely stored, can be sent securely from one person to another, and can be spent to buy goods and services.

On top of all of this, they're also called digital coins. Bitcoin is the most popular of the cryptocurrencies and was the first, having been created in 2008. At this point, over 2000 cryptocurrency projects exist, among the most popular being Ethereum, Litecoin, and the aforementioned Bitcoin. For more examples, you can check a list of cryptocurrencies here, together with their market caps or market shares.

The most compelling use cases of cryptocurrencies is that they can be used as a medium of exchange and can, therefore, be sent from one party to another on a peer-to-peer basis within minutes/seconds and at very minimal cost compared to fiat. If you have engaged in international money transfers or some international money payment systems, then you know what am talking about, the delays and the costs.

Besides that, cryptocurrencies can also be used as ordinary money, which means as a store of value, as a speculative vehicle for the purposes of selling when their prices change, and more. For now, it's probably easiest to conceptualize them as commodities or utilities with value that can be transferred or exchanged between parties..just digital assets. That depends on which crypto project you are talking about.

Cryptocurrencies are also different from the electronic versions of central-bank-controlled money given the above characteristics.

Other terms you might encounter regarding cryptocurrencies include: tokens, altcoins, and digital assets, among other classifications. Bitcoin was the first cryptocurrency and so when others were created, they came to be known as "altcoins," which means alternative coins to Bitcoin. Digital assets is the name that classifies cryptocurrencies as form of asset in a digital form, while tokens has to do with the way which crypo-assets are generated by computers. These terms should not scare you: they are talking about one and the same thing in most cases.

2. Are cryptocurrencies legal or illegal to deal in?

Most countries, in a regulatory sense, treat cryptocurrencies as legal, digital assets, utilities and commodities of value, and which can be transferred and exchanged between parties at will and legally. Clearly, they fall under the category of digital assets.

Nevertheless, many countries are largely developing specific frameworks for regulating cryptocurrencies, in relation to matters such as taxation, etc.

You can read these resources on how different countries are treating crypto. Luckily for crypto users, none of them mention a country in which crypto is illegal and not being used.

3. Who controls cryptocurrencies or their value? Which company?

Ideally, Bitcoin was established to deal with the inefficiencies of centralized money. In other words, the fact that it is easier for a government in a centralized political system to control the value of money for its benefit is a problem that causes inflation and all kinds of problem. It is an ideology. Plus many other challenges of a centralized monetary system: can be hacked, etc.

Therefore, the central idea about cryptocurrencies is to move that possibility of central control and power to another form we call 'decentralization' where value is more of controlled by a decentralized network or more people.

Every other cryptocurrency that takes these issues seriously, capitalizes on decentralization where a network of individuals own the project and share the power to influence how it runs and goes and the value of the digital coin or cryptocurrency. Therefore, these cryptocurrencies are issued via Initial Coin Offerings where as many people buy into the project or invest into the project and own the digital coins to the project and afterwards, market economics determine the value of the cryptocurrency as the project grows, gains more people and its project matures in the market.

Therefore, they are not controlled by any one company or individual or bank.

4. Enough. Where are these cryptocurrencies?

Cryptocurrencies can be bought or sold digitally. They exist in digital version on  technology called blockchain. Blockchain is nice tech because it allows running of distributed networks, stores digital information such as transaction records in immutable ledgers, and these can be shared by any party on the network.

Usually, a user who buys or gets cryptocurrencies has to have a wallet or some form of it to store them and will get issued with a private key with which they can control ownership -- the sending, spending, sharing, etc. of their cryptocurrencies. Therefore, cryptocurrencies are cryptographic money secured by cryptography or encryption.

When a project is starting out, blockchain technology allows creation of these tokens or cryptocurrencies by developers and project leaders and these are sold via Initial Coin Offerings, but are also available to buy via cryptocurrency exchanges. Afterwards, these tokens are listed in a crypto exchange for public to trade them willingly. Therefore, anyone can buy cryptocurrencies on a cryptocurrency exchange and then to store them in their wallet in which they can sell later when prices change or send them in exchange for other goods and services or other cryptocurrencies or as a giveaway.

Cryptocurrency wallets can be based on desktops, mobile devices, etc. and allow one to track the number of coins they have. A person can also send the cryptocurrencies from their wallet to another user's wallet through the second parties wallet address.

A wallet to use for your cryptocurrency or to which you should send depends on what coins you have or want to own. With projects such as Divi, there will be mobile based wallets through which you can buy, hold, store, spend crypto. Already there are mobile apps you can use to trade any crypto at the comfort of your home and we are also talking about 3 decades of www invention and now we can browse most of the things on our mobile devices, trade over the web etc.

Read on type of wallets here:

5. What types of cryptocurrencies do we have?

There are over 2000 types of cryptocurrencies each with their own names and defining features including: Bitcoin, Ethereum, Litcoin, Divi etc.

Nevertheless, we can take an educated and focused approach to all cryptocurrencies. There are either utility tokens or security tokens. To term cryptocurrencies or tokens as securities means they are traditional assets and should be governed under the same regulations that governs bonds, stocks, and all other existing assets under government control. 

That means if a crypto company is selling security tokens, they are guaranteeing investors that they will earn a dividend or other as profit from the efforts of the managers involved.

Even so, for now, most of the cryptocurrencies out there are utility tokens. Thus, utility tokens are not governed by any kind of "securities" regulations, by way of declaration or formation. In other words, issuer of the tokens is not selling tokens that can guarantee dividends or something of the sort.

Read more on the types of cryptocurrencies here.

Read on what are security tokens here.

6. Enough. How can I benefit from cryptocurrencies?

You're in the right place. The most exciting thing is that we're all in the middle of a digital money revolution, in which everyone, at last, will be able to perform transactions freely (meaning regardless of the bank or platform they use) at almost no cost, with anyone else, instantly, and without any limitations. Currently, if you send money internationally, you experience delays and high fees, whether you are an individual, a group or a bank or NGO. Crypto helps in a big way here!

Whether you are receiving money or sending money to peers or workers like is the case with freelance efforts, crypto will let you do it instantly and at a lesser cost, save for the handling fees in doing conversions to fiat. I personally started freelancing in 2008 and I know what am talking about. In those days, PayPal was nowhere in Kenya and you literally had to go online to look for peers you could exchange Moneybookers for PayPal with. Back then, it also took a week to receive payments from abroad. So crypto is part of that revolution. In those days, it was also almost cost-prohibitive to freelance.

Nevertheless, another very important use case of cryptocurrencies is speculation. As a wise trader, regardless of the prices, you can buy cryptocurrencies, hold, and sell later when the price changes. Here, we have all of the relevant info to help you in this respect. Very many people enjoy crypto trading on a daily and even, minute by minute, basis.

You can also spend crypto by buying products online, perhaps even at a discount. 

Besides, there are many other cryptocurrency products popping up from all over. We have places where you can stake crypto and earn money every month like is the case with the Divi Project, which also lets you run a masternode and earn passive income. You can also choose to mine cryptocurrencies, which means you invest in a cryptocurrency miner and start sort of 'digging' with your computer to find coins (Ethereum is used as an example in this link, but there are hundreds of cryptos you can decide to mine); plus several other crypto products (the CFDs, Index Funds, EFTs, savings-for-profit, etc.) which you can trade and earn a profit from doing so. Overall, use this info as a starting point, find what you like, and work with it.

You can also decide to chase faucets, and if you have the vision of starting a crypto company or project, you can learn crypto and start writing about crypto like me.

7. How and where can I buy cryptocurrency?

It depends on which crypto you want to buy. Once you have money, you need to convert it to Bitcoin. Head over to websites such as, create an account, ensure to save that thing they call a "seed," which helps you to recover your wallet if you forget the password. 

On or, it takes seconds to buy Bitcoin with MPESA or your local currency. I have ever done it works. Just ensure the user selling is verified although the Bitcoin is held in escrow and will be sent to you once you send payment. Make sure to screenshot proof that you sent in case of a dispute. Once this happens and you have Bitcoins, you have your Bitcoin in your wallet. You can copy the wallet address and use it elsewhere too, ask someone to send Bitcoins etc.

From there, you can use Bitcoins to buy pretty much any other cryptocurrency including: Ethereum, Litecoin, and even Divi. Apart from a few more like Dash, BitcoinCash, Monero, right now it may not be possible to buy any others directly with local currencies such as Kenya Shillings, although Paxful does allow anyone to buy any crypto with local currencies. Overall, the easiest options for doing so are Paxful plus the others that I spoke about:,,, and

Once you have Bitcoin at, you can head over to any of these other cryptocurrency exchanges to exchange Bitcoin with the crypto of your choice.These ones offer other cryptocurrencies in addition to the mainstream ones for sale but be sure to check from their specific website the fees and whether the cryptocurrency you are interested in buying is listed as a pair on them usually from their "markets" page. You can also check a number of decentralized cryptocurrency exchanges as an additional list of whether they offer the crypto you are interested in trading. They do things very nicely.

Different exchanges will list different cryptocurrencies, so check whether the crypto you want to buy is listed on that crypto exchange before you deposit your Bitcoins from LocalBitcoins to that particular exchange. For Divi, you might try Bitrex and a few others.

So, all in all, the process is simple: you can withdraw Bitcoins from to the exchange of your choice and then once the transaction is done, you can exchange Bitcoin with the crypto of your choice.

Read about peer-to-peer crypto exchanges where to buy Bitcoins and crypto immediately with local currencies.

Read about decentralized exchanges.

Read about more exchanges here.

If you want to keep trading crypto, then the process is almost the same, but you can bet there are skills you would appreciate having to get the most out of this experience, and this website is full of tips in that respect. 

David Kariuki

David Kariuki likes to regard himself as a freelance tech journalist who has written and writes widely about a variety of tech issues that affect our society daily, including cryptocurrencies (see and; climate change (, OpenSim and virtual reality (see He is currently pursuing a MSc in Environmental Management at Open University. He does write here not to offer any investment advise but with the intention of informing audience, and articles in here are of his own opinion. Anyone willing to use any opinion here as advise to invest in crypto should obviously take own responsibility and accountability of their losses (or benefits) thereof. You can reach me at [email protected] or [email protected]

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